329 Nakpil vs CA, UNITED Construction, Juan A.

Carlos and the Philippine Bar Association GR 128024, May 9, 2000/ Gonzaga-Reyes FACTS Plaintiff-appellant Philippine Bar Association (PBA for short) decided to construct an office building on its 840 square meters lot located at the corner of Aduana and Arzobispo Streets, Intramuros, Manila. For the plans, specifications and design, PBA contracted the services of third-party defendants-appellants Juan F. Nakpil & Sons and Juan F. Nakpil (NAKPILS for short). For the construction of the building, PBA contracted the services of United Construction Company, Inc. (UNITED for short) on an administration basis. On August 2, 1968, an unusually strong earthquake hit Manila and its environs and the building in question sustained major damage. The front columns of the building buckled causing the building to tilt forward dangerously. As a temporary remedial measure, the building was shored up by UCCI at the expense of P13,661.28. On November 29, 1968, PBA commenced this action for recovery of damages against UCCI and its President and General Manager Juan J. Carlos, claiming that the collapse of the building was caused by defects in the construction. UNITED, in turn, filed a third-party complaint against the NAKPILS, alleging in essence that the collapse of the building was due to the defects in the architects" plans, specifications and design. Roman Ozaeta, the then President of PBA, was included as a third-party defendant for damages for having included Juan J. Carlos, President of UNITED as party defendant. PBA moved that the building be demolished but it was denied. When the motion was finally granted, more earthquakes already hit it and caused more damage The Commissioner found cause for damage the 3 parties, but the TC. CA, and the SC agreed. Thus this MR ISSUES & ARGUMENTS Who should shoulder the damages resulting from the partial and the eventual collapse of the building? HOLDING & RATIO DECIDENDI Nakpil and UNITED A party who negligently causes a dangerous condition cannot escape liability for the natural and probable causes thereof, although the act of a 3rd person or God for which he is not responsible, intervene to precipitate the cause. The wanton negligence of the parties in effecting the plans and designs is equivalent to bad faith. When it comes to the five-fold increase in damages, the court said that during the time when the commissioner gave out the rate of damages, wa 20 years before this decision. He did not consider the subsequent earthquakes, nor the tearing of the building.

G.R. No. L-65935, September 30, 1988 | 166 SCRA 155 FACTS

A case for damages was filed by Nestor B. Sunga Jr., a businessman and owner of the NBS Machineries Marketing and the NAP-NAP Transit. Plaintiff alleged that he purchased a passenger minibus Mazda from the Motor center, Inc and for which he executed a promissory note to cover the amount of P62,592.00 payable monthly in the amount of P2,608.00 for 24 months due and payable the 1st day of each month starting May 1, 1978 thru and inclusive of May 1, 1980. On the same date, however, a chattel mortgage was executed by him in favor of the Motor center, Inc The Chattel Mortgage and Assignment was assigned to the Filinvest Credit Corporation with the conformity of the plaintiff. Nestor Sunga claimed that on October 21, 1978, the minibus was seized by two (2) employees of the defendant Filinvest Credit Corporation upon orders of the branch manager Mr. Gaspar de los Santos, without any receipt, who claimed that he was delinquent in the payments of his vehicle. The plaintiff reported the loss to the PC and after proper verification from the office of the Filinvest, the said vehicle was recovered from the Crisologo Compound which was later released by Rosario Fronda Assistant Manager of the Filinvest The police blotter shows that Nestor Sunga sought the assistance of the Dagupan police and one Florence Onia of the Filinvest explained that the minibus was confiscated because the balance was already past due. After verification that his accounts are all in order, Florence Onia admitted it was their fault. The motor vehicle was returned to the plaintiff upon proper receipt. The court a quo rendered its decision ordering defendant Filinvest to pay the plaintiff Nestor Sunga Jr. the following damages, to wit: (a) Moral Damages P30,000.00(b) Loss on Income of the minibus for three days 600.00 (c) Actual damages 500.00(d) Litigation expenses 5,000.00(e) Attorney's Fees 10,000.00 IAC affirmed the same in toto except with regard to the moral damages which, under the circumstances of the accounting error incurred by Filinvest, was increased from P30,000.00 to P50,000.00. ISSUES & ARGUMENTS W/N respondent court erred in increasing the amount of moral damages HOLDING & RATIO DECIDENDI YES Respondent court committed a grave abuse of discretion in increasing extravagantly the award of moral damages and in granting litigation expenses. Plaintiff-appellee (respondent Sunga) did not appeal from the decision of the court a quo which awarded him the sum of P30,000.00 by way of moral damages. Well settled is the rule in this jurisdiction that whenever an appeal is taken in a civil case, an

330 Filinvest Credit vs. IAC | SARMIENTO, J

appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the decision of the court below Verily the respondent court disregarded such a well settled rule when it increased the award for moral damages from P30,000.00 to P50,000.00, notwithstanding the fact that the private respondent did not appeal from the judgment of the trial court. There is no dispute that the private respondent, a businessman and owner of the NBS Machineries Marketing and NAP-NAP Transit, is entitled to moral damages due to the unwarranted seizure of the minibus Mazda, allegedly because he was delinquent in the payment of its monthly amortizations, which as stated above, turned out to be incorrect Such intent tainted private respondent Sunga's reputation in the business community, thus causing him mental anguish, serious anxiety, besmirched reputation, wounded feelings, moral shock, and social humiliation. Considering, however, that respondent Sunga was dispossessed of his motor vehicle for barely three days and possession of which was restored to him soon after the accounting errors were ironed out, SC ruled that the award of moral damages even in the sum of P30,000.00 is excessive for it must be emphasized that "damages are not intended to enrich the complainant at the expense of a defendant. The award of moral damages is aimed at a restoration within the limits of the possible, of the spiritual status quo ante; and therefore it must be proportionate to the suffering inflicted. Therefore, petition is partially GRANTED. The award of moral damages is REDUCED to P10,000.00 and the grant of litigation expenses is ELIMINATED. The rest of the judgment is AFFIRMED. 331 Occena vs. Icamina | Fernan, C.J. G.R. No. 82146, January 22, 1990 | 181 SCRA 328 FACTS On May 31, 1979, herein petitioner Eulogio Occena instituted before the Second Municipal Circuit Trial Court of Sibalom, San Remigio Belison, Province of Antique, Criminal Case No. 1717, a criminal complaint for Grave Oral Defamation against herein private respondent Cristina Vegafria for allegedly openly, publicly and maliciously uttering the following insulting words and statements: "Gago ikaw nga Barangay Captain, montisco, traidor, malugus, Hudas," which, freely translated, mean: "You are a foolish Barangay Captain, ignoramus, traitor, tyrant, Judas" and other words and statements of similar import which caused great and irreparable damage and injury to his person and honor. Private respondent as accused therein entered a plea of not guilty. Trial thereafter ensued, at which petitioner, without reserving his right to file a separate civil action for damages actively intervened thru a private prosecutor. After trial, private respondent was convicted of the offense of Slight Oral Defamation and was sentenced to pay a fine of Fifty Pesos (P50.00) with subsidiary imprisonment in case of insolvency and to pay the

costs. No damages were awarded to petitioner in view of the trial court's opinion that "the facts and circumstances of the case as adduced by the evidence do not warrant the awarding of moral damages." ISSUES & ARGUMENTS

W/N the decision of the Second Municipal Trial Court of Sibalom, San-Remigio- Belison, Province of Antique constitutes the final adjudication on the merits of private respondent's civil liability; and W/N petitioner is entitled to an award of damages arising from the remarks uttered by private respondent and found by the trial court to be defamatory. HOLDING & RATIO DECIDENDI The decision of the Municipal Circuit Trial Court as affirmed by the Regional Trial Court in Criminal Case No. 1709 cannot be considered as a final adjudication on the civil liability of private respondent simply because said decision has not yet become final due to the timely appeal filed by petitioner with respect to the civil liability of the accused in said case. It was only the unappealed criminal aspect of the case which has become final. We tackle the second issue by determining the basis of civil liability arising from crime. Civil obligations arising from criminal offenses are governed by Article 100 of the Revised Penal Code which provides that "(E)very person criminally liable for a felony is also civilly liable," in relation to Article 2177 of the Civil Code on quasidelict, the provisions for independent civil actions in the Chapter on Human Relations and the provisions regulating damages, also found in the Civil Code. Underlying the legal principle that a person who is criminally liable is also civilly liable is the view that from the standpoint of its effects, a crime has dual character: (1) as an offense against the state because of the disturbance of the social order; and (2) as an offense against the private person injured by the crime unless it involves the crime of treason, rebellion, espionage, contempt and others wherein no civil liability arises on the part of the offender either because there are no damages to be compensated or there is no private person injured by the crime. 3 In the ultimate analysis, what gives rise to the civil liability is really the obligation of everyone to repair or to make whole the damage caused to another by reason of his act or omission, whether done intentional or negligently and whether or not punishable by law. 4 Article 2219, par. (7) of the Civil Code allows the recovery of moral damages in case of libel, slander or any other form of defamation This provision of law establishes the right of an offended party in a case for oral defamation to recover from the guilty party damages for injury to his feelings and reputation. The offended party is likewise allowed to recover punitive or exemplary damages. It must be remembered that every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable motive for making it is shown. And malice may be inferred from the style and tone of publication 5 subject to certain exceptions which are not present in the case at bar.

 Calling petitioner who was a barangay captain an ignoramus, traitor, tyrant and Judas is clearly an imputation of defects in petitioner's character sufficient to cause him embarrassment and social humiliation. Petitioner testified to the feelings of shame and anguish he suffered as a result of the incident complained of. 6 It is patently error for the trial court to overlook this vital piece of evidence and to conclude that the "facts and circumstances of the case as adduced by the evidence do not warrant the awarding of moral damages." Having misapprehended the facts, the trial court's findings with respect thereto is not conclusive upon us. From the evidence presented, we rule that for the injury to his feelings and reputation, being a barangay captain, petitioner is entitled to moral damages in the sum of P5,000.00 and a further sum of P5,000.00 as exemplary damages. 332 So Ping Bun v. CA| Quisimbing GR No. 120554. September 21, 1999 Topic: Interference in Contractual Relation (Under Article 1314, New Civil Code) Synopsis: Tek Hua Enterprises is the lessee of Dee C. Chuan & Sons, Inc. in the latters premises in Binondo but it was So Ping Bun who was occupying the same for his Trendsetter Marketing. Later, Mr. Manuel Tiong asked So Ping Bun to vacate the premises but the batter refused and entered into formal contracts of lease with DCCSI. In a suit for injunction, private respondents pressed for the nullification of the lease contracts between DCCSI and petitioner, and for damages. The trial court ruled in favor of private respondents and the same was affirmed by the Court of Appeals. There was tort interference in the case at bar as petitioner deprived respondent corporation of the latters property right. However, nothing on record imputed malice on petitioner; thus, precluding damages. But although the extent of damages was not quantifiable, it does not relieve petitioner of the legal liability for entering into contracts and causing breach of existing ones. Hence, the Court confirmed the permanent injunction and nullification of the lease contracts between DCCSI and Trendsetter Marketing. FACTS: In 1963, Tek Hua Trading Co, through its managing partner, So Pek Giok, entered into lease agreements with lessor Dee C. Chuan & Sons Inc. (DCCSI). Subjects of four (4) lease contracts were premises located at Soler Street, Binondo, Manila. Tek Hua used the areas to store its textiles. The contracts each had a one-year term. They provided that should the lessee continue to occupy the premises after the term, the lease shall be on a month-to-month basis. When the contracts expired, the parties did not renew the contracts, but Tek Hua continued to occupy the premises. In 1976, Tek Hua Trading Co. was dissolved. Later, the original members of Tek Hua Trading Co. including Manuel C. Tiong, formed Tek Hua Enterprising Corp., herein respondent corporation. So Pek Giok, managing partner of Tek Hua Trading, died in 1986. So Pek Gioks grandson, petitioner So

Ping Bun, occupied the warehouse for his own textile business, Trendsetter Marketing.

On August 1, 1989, lessor DCCSI sent letters addressed to Tek Hua Enterprises, informing the latter of the 25% increase in rent effective September 1, 1989. The rent increase was later on reduced to 20% effective January 1, 1990, upon other lessees demand. Again on December 1, 1990, the lessor implemented a 30% rent increase. Enclosed in these letters were new lease contracts for signing. DCCSI warned that failure of the lessee to accomplish the contracts shall be deemed as lack of interest on the lessees part, and agreement to the termination of the lease. Private respondents did not answer any of these letters. Still, the lease contracts were not rescinded. On March 1, 1991, private respondent Tiong sent a letter to petitioner, which reads as follows: March 1, 1991 Dear Mr. So, Due to my closed (sic) business associate (sic) for three decades with your late grandfather Mr. So Pek Giok and late father, Mr. So Chong Bon, I allowed you temporarily to use the warehouse of Tek Hua Enterprising Corp. for several years to generate your personal business. Since I decided to go back into textile business, I need a warehouse immediately for my stocks. Therefore, please be advised to vacate all your stocks in Tek Hua Enterprising Corp. Warehouse. You are hereby given 14 days to vacate the premises unless you have good reasons that you have the right to stay. Otherwise, I will be constrained to take measure to protect my interest. Please give this urgent matter your preferential attention to avoid inconvenience on your part. Very truly yours, (Sgd) Manuel C. Tiong Petitioner refused to vacate. On March 4, 1992, petitioner requested formal contracts of lease with DCCSI in favor Trendsetter Marketing. So Ping Bun claimed that after the death of his grandfather, So Pek Giok, he had been occupying the premises for his textile business and religiously paid rent. DCCSI acceded to petitioners request. The lease contracts in favor of Trendsetter were executed. In the suit for injunction, private respondents pressed for the nullification of the lease contracts between DCCSI and petitioner and as well prayed for damages. The Trial Court ruled in their favor as upheld by the Court of Appeals. ISSUE: WHETHER THE APPELLATE COURT ERRED IN AFFIRMING THE TRIAL COURTS DECISION FINDING SO PING BUN GUILTY OF TORTUOUS INTERFERENCE OF CONTRACT (Given that no award for damages were given to the private respondents)? HOLDING & RATIO DECIDENDI PETITION IS DENIED. The CA did not err in its decision. There can still be tortuous interference despite no award for damages were given by the Court. Damage is the loss, hurt, or harm which results from injury, and damages are the recompense or compensation awarded for the damage suffered. One becomes liable in an action for damages for a non-trespassory invasion of anothers interest in the private use and enjoyment of asset if (a) the other has property rights and privileges with respect to the use or enjoyment interfered with, (b) the invasion is substantial, (c) the defendants conduct is a legal cause of the invasion, and (d) the invasion is either

intentional and unreasonable or unintentional and 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 369 of 528 actionable under general negligence rules. The elements of tort interference are: (1) existence of valid contract; (2) knowledge on the part of the third person of the existence of contract; and (3) interference of the third person is without legal justification or excuse. In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the expense of respondent corporation. Though petitioner took interest in the property of respondent corporation and benefited from it, nothing on record imputes deliberate wrongful motives or malice on him. Section 1314 of the Civil Code categorically provides also that, Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. Petitioner argues that damage is an essential element of tort interference, and since the trial court and the appellate court ruled that private respondents were not entitled to actual, moral or exemplary damages, it follows that he ought to be absolved of any liability, including attorneys fees. It is true that the lower courts did not award damages, but this was only because the extent of damages was not quantifiable. We had a similar situation in Gilchrist, where it was difficult or impossible to determine the extent of damage and there was nothing on record to serve as basis thereof. In that case we refrained from awarding damages. We believe the same conclusion applies in this case. While we do not encourage tort interferers seeking their economic interest to intrude into existing contracts at the expense of others, however, we find that the conduct herein complained of did not transcend the limits forbidding an obligatory award for damages in the absence of any malice. The business desire is there to make some gain to the detriment of the contracting parties. Lack of malice, however, precludes damages. But it does not relieve petitioner of the legal liability for entering into contracts and causing breach of existing ones. The respondent appellate court correctly confirmed the permanent injunction and nullification of the lease contracts between DCCSI and Trendsetter Marketing, without awarding damages. The injunction saved the respondents from further damage or injury caused by petitioners interference.

As an access to P. Burgos St. from plaintiffs apartment, there are two possible passageways.

When plaintiff purchased the property, there were tenants occupying the premises and were acknowledged by Mabasa as tenants. When on the tenants vacated the apartment, plaintiff saw that there had been built an adobe fence in the first passageway, making it narrower in width. Said adobe wall was 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. It was then that the remaining tenants of said apartment vacated the area. Plaintiff Mabasa filed a civil case of easement of right of way, which was granted by the trial court. Not satisfied with the decision because it did not award damages, plaintiff represented by his heirs raised it to the CA, which affirmed the trial court decision. ISSUES & ARGUMENTS W/N the award of damages is in order? HOLDING & RATIO DECIDENDI NO. THE AWARD OF DAMAGES SUBSTANTIAL LEGAL BASIS. HAS NO

The decision of the CA which awarded 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 plaintiffs 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 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. These situations are often called damnum absque injuria. In order that a plaintiff may maintain an action for the injuries of which he complains, he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff, a concurrence of injury to the plaintiff, and legal responsibility by the person causing it. The underlying basis for the award of tort damages is the premise that an individual was injured in contemplation of law 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. The act of petitioners constructing a fence within their lot is a

333 Spouses Custodio vs. CA| Regalado G.R. No. 116100, February 9, 1996 | 253 SCRA 483 FACTS Original plaintiff Pacifico Mabasa died during the pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse. Plaintiff owns a parcel of land with a two-door apartment erected thereon. Said property was surrounded by other immovables pertaining to defendants therein.

valid exercise of their right as owners, hence not contrary to morals, good customs or public policy. At the time of the construction of the fence, the lot was not subject to any servitudes. The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie, although the act may result in damage to another, for no legal right has been invaded. 334 Air France v. CA | Padilla G.R. No. 76093 March 21, 1989| 171 SCRA 399 FACTS Private respondent Morales, thru his agent, bought an airline ticket from petitioners Manila ticketing office. The itinerary covered by the ticket included several cities with certain segments thereof restricted by markings of non endorsable and valid on AF (Air France) only. While in New York, respondent obtained medical certificates attesting to an ear infection which necessitated medical treatment. After a few more trips to other cities in Europe, he requested to the petitioner (twice) to shorten his trip by deleting some of the cities in his itinerary so that he can go back to Manila and have his ear checked. Petitioner informed respondent that as a matter of procedure, confirmation of the Manila ticketing office must be secured before shortening of the route. His requests were eventually denied. This prompted the respondent to buy an entirely new set of tickets to be able to go back home. Upon arriving in Manila, respondent sent a lettercomplaint to petitioner thru its Manila ticketing office. The petitioner advised the respondent to surrender the unused flight coupons in order to have them refunded but the respondent kept the said coupons and instead, filed a complaint for breach of contract of carriage and damages. RTC held in favor of respondent. CA modified the judgment but it was still for the respondent. ISSUES & ARGUMENTS W/N there was really a breach of contract of carriage on the part of the petitioner, as to justify the award to private respondent of actual, moral, and exemplary damages? HOLDING & RATIO DECIDENDI THERE WAS NO BREACH PETITIONER IS NOT LIABLE. OF CONTRACT.

the original itinerary on the ticket issued by AF Manila through ASPAC, its general sales agent. Considering the original restrictions on the ticket, it was not unreasonable for Air France to deny the request. Besides, a recurring ear infection was pleaded as reason necessitating urgent return to Manila. Assuming arguendo a worsening pain or discomfort, private respondent appears to have still proceeded to four (4) other cities covering a period of at least six (6) days and leaving open his date of departure from Hongkong to Manila. And, even if he claimed to have undergone medical examination upon arrival in Manila, no medical certificate was presented. He failed to even remember his date of arrival in Manila. With a claim for a large amount of damages, the Court finds it unsual for respondent, a lawyer, to easily forget vital information to substantiate his plea. It is also essential before an award of damages that the claimant must satisfactorily prove during the trial the existence of the factual basis of the damages and its causal connection to defendant's acts. Air France employees in Hamburg informed private respondent that his tickets were partly stamped "nonendorsable" and "valid on Air France only." Mere refusal to accede to the passenger's wishes does not necessarily translate into damages in the absence of bad faith. To our mind, respondent has failed to show wanton, malevolent or reckless misconduct imputable to petitioner in its refusal to re-route. Air France Manila acted upon the advise of its Manila ticketing office in denying private respondent's request. There was no evident bad faith when it followed the advise not to authorize rerouting. At worst, the situation can be considered a case of inadvertence on the part of petitioners Manila ticketing office in not explaining the non-endorsable character of the ticket. Of importance, however, is the fact that private respondent is a lawyer, and the restriction box clearly indicated the nonendorsable character of the ticket. Omissions by ordinary passengers may be condoned but more is expected of members of the bar who cannot feign ignorance of such limitations and restrictions. An award of moral and exemplary damages cannot be sustained under the circumstances, but petitioner has to refund the unused coupons in the Air France ticket to the private respondent. 335 Ateneo De Manila Univ vs. CA| Gutierrez G.R. No. L- 56180, Oct 16, 1986 | 145 SCRA 100 FACTS In a letter-complaint addressed to the Dean of Arts&Sciences of Ateneo (Fr. Welsh), Carmelita Mateo, waitress in the caf of Cervini Hall charged Juan Ramon Guanzon, boarder & college freshman, with unbecoming conduct. Juan Ramon allegedly cursed and hit Carmelita in public when Juan Ramon was asked to wait for his order (siopao). The univ conducted an investigation and dismissed Juan Ramon. Juan Ramons parents filed a complaint for damages against the univ stating that Juan Ramon was expelled

International Air Transportation Association (IATA) Resolution No. 275 e, 2., special note reads: "Where a fare is restricted and such restrictions are not clearly evident from the required entries on the ticket, such restrictions may be written, stamped or reprinted in plain language in the Endorsement/Restrictions" box of the applicable flight coupon(s); or attached thereto by use of an appropriate notice." Voluntary changes to tickets, while allowable, are also covered by (IATA) Resolution No. 1013, Art. II, which provides: "1. changes to the ticket requested by the passenger will be subject to carriers regulations. Private respondent wanted a rerouting to Hamburg, Geneva, Rome, Hongkong and Manila which shortened

w/out giving him a fair trial and that they were prominent residents of Bacolod. The lower vourt found for the Guanzons and ordered the univ to pay P92 as actual damages; 50K moral; 5K attys fees. CA initially reversed the lower court but upon MR, reinstated lower courts ruling. ISSUES & ARGUMENTS W/N respondents are entitled to the award of damages? HOLDING & RATIO DECIDENDI NO. THE UNIV OBSERVED DUE PROCESS, NO BASIS FOR THE AWARD OF DAMAGES. After the incident, the Board of Discipline conducted an investigation by interviewing the people who witnessed the incident. The accused was fully informed of the accusation against him and he admitted the truth of the charge. Notice of the meeting was posted on the bulletin board but Juan Ramon did not care to inform his parents/guardians. The Board decided unanimously that Juan Ramon be dropped from the roll of students. When the decision was about to be carried out, Juan Ramon voluntarily applied for honorable dismissal. The parents of Juan Ramon arranged for a full refund of tuition fees. Juan Ramon was never out of school as he was admitted at De La Salle College and was later on transferred to another Jesuit school. Juan Ramon was intelligent and mature enough to know his responsibilities and he was fully cognizant of the gravity of his offense. The fact that he chose to remain silent and did not inform his parents about the case is not the fault of the univ. The penalty was based on reasonable rules and regulations applicable to all students guilty of the same offense. No bad faith, malice on the part of Ateneo. 336 PAL V. MIANO G.R. No. 106664 March 8, 1995 FACTS: On August 31, 1988, private respondent took petitioner's flight PR 722, Mabuhay Class, bound for Frankfurt, Germany. He had an immediate onward connecting flight via Lufthansa flight LH 1452 to Vienna, Austria. At the Ninoy Aquino International Airport, he checked-in one brown suitcase weighing twenty (20) kilograms but did not declare a higher valuation. He claimed that his suitcase contained money, documents, one Nikkon camera with zoom lens, suits, sweaters, shirts, pants, shoes, and other accessories. Upon private respondent's arrival at Vienna via Lufthansa flight LH 1452, his checked-in baggage was missing. He reported the matter to the Lufthansa authorities. After three (3) hours of waiting in vain, he

proceeded to Piestany, Czechoslovakia. Eleven (11) days after or on September 11, 1988, his suitcase was delivered to him in his hotel in Piestany, Czechoslovakia. He claimed that because of the delay in the delivery of his suitcase, he was forced to borrow money to buy some clothes, to pay $200.00 for the transportation of his baggage from Vienna to Piestany, and lost his Nikkon camera.

In November 1988, private respondent wrote to petitioner a letter demanding: (1) P10,000.00 cost of allegedly lost Nikkon camera; (2) $200.00 for alleged cost of transporting luggage from Vienna to Piestany; and (3) P100,000.00 as damages. In its reply, petitioner informed private respondent that his letter was forwarded to its legal department for investigation. Private respondent felt his demand letter was left unheeded. He instituted an action for Damages docketed as Civil Case No. 89-3496 before the Regional Trial Court of Makati. Petitioner contested the complaint. It disclaimed any liability on the ground that there was neither a report of mishandled baggage on flight PR 722 nor a tracer telex received from its Vienna Station. It, however, contended that if at all liable its obligation is limited by the Warsaw Convention rate. Petitioner filed a Third-Party Complaint against Lufthansa German Airlines imputing the mishandling of private respondent's baggage, but was dismissed for its failure to prosecute. In its decision, the trial court observed that petitioner's actuation was not attended by bad faith. Nevertheless, it awarded private respondent moral and exemplary damages and attorney's fees hence this petition for review. ISSUE: Whether or not trial court erred in awarding moral and exemplary damages? HOLDING & RATION DECIDENDI YES. In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently or in bad faith. Bad faith means a breach of a known duty through same motive of interest or ill will. The trial court erred in awarding moral damages to private respondent. The established FACTS evince that petitioner's late delivery of the baggage for eleven (11) days was not motivated by ill will or bad faith. In fact, it immediately coordinated with its Central Baggage Services to trace private respondent's suitcase and succeeded in finding it. At the hearing, petitioner's Manager for Administration of Airport Services Department Miguel Ebio testified that their records disclosed that Manila, the originating station, did not receive any tracer telex. A tracer telex, an airline lingo, is an action of any station that the airlines operate from whom a passenger may complain or have not received his baggage upon his arrival. It was reasonable to presume that the handling of the baggage was normal and regular. Upon inquiry from their Frankfurt Station, it was however discovered that the interline tag of private respondent's baggage was accidentally taken off. According to Mr. Ebio, it was customary for destination stations to hold a tagless baggage until properly identified. The tracer telex, which contained information on the baggage, is matched with the tagless luggage for identification.

Without the tracer telex, the color and the type of baggage are used as basis for the matching, thus, the delay. We can neither sustain the award of exemplary damages. The prerequisite for the award of exemplary damages in cases of contract or quasi-contract is that the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. The undisputed FACTS do not so warrant the characterization of the action of petitioner. The award of attorney's fees must also be disallowed for lack of legal leg to stand on. The fact that private respondent was compelled to litigate and incur expenses to protect and enforce his claim did not justify the award of attorney's fees. The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. Petitioner is willing to pay the just claim of $200.00 as a result of the delay in the transportation of the luggage in accord with the Warsaw Convention. Needless to say, the award of attorney's fees must be deleted where the award of moral and exemplary damages are eliminated. 337 DBP v. CA | Davide, Jr. G.R. No. 118342 January 5, 1998 FACTS Lydia P. Cuba is a grantee of a Fishpond Lease the Government; She obtained several loans from the Development Bank of the under the terms stated in the Promissory Notes; As security for said loans, Cuba executed two Deeds of Assignment of her Leasehold Rights; Cuba failed to pay her loan on the scheduled dates thereof in accordance with the terms of the Promissory Notes; Without foreclosure proceedings, whether judicial or extra-judicial, DBP appropriated the Leasehold Rights of Cuba over the fishpond in question; After DBP has appropriated the Leasehold Rights of Cuba over the fishpond in question, DBP, in turn, executed a Deed of Conditional Sale of the Leasehold Rights in favor of Cuba over the same fishpond in question; In the negotiation for repurchase, Cuba addressed two letters to the Manager DBP, Dagupan City. DBP thereafter accepted the offer to repurchase in a letter addressed to Cuba; After the Deed of Conditional Sale was executed in favor of Cuba , a new Fishpond Lease Agreement was issued by the Ministry of Agriculture and Food in favor of Cuba only, excluding her husband; Cuba failed to pay the amortizations stipulated in the Deed of Conditional Sale; After Cuba failed to pay the amortization as stated in Deed of Conditional Sale, she entered with the DBP a temporary arrangement whereby in consideration for the deferment of the Notarial Rescission of Deed of Conditional Sale, Cuba promised to make certain payments; DBP thereafter sent a Notice of Rescission thru Notarial Act, and which was received by Cuba ; After the Notice of Rescission, DBP took possession of the Leasehold Rights of the fishpond in question;

That after DBP took possession of the Leasehold Rights over the fishpond in question, DBP thereafter executed a Deed of Conditional Sale in favor of defendant Agripina Caperal through a public sale; Thereafter, Caperal was awarded Fishpond Lease Agreement. ISSUES & ARGUMENTS W/N Cuba is entitled to recover damages HOLDING & RATIO DECIDENDI YES Article 2199 provides: 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. Actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of certainty. A court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual amount thereof. It must point out specific

FACTS which could afford a basis for measuring whatever compensatory or actual damages are borne. In the present case, the trial court awarded in favor of CUBA P1,067,500 as actual damages consisting of P550,000 which represented the value of the alleged lost articles of CUBA and P517,500 which represented the value of the 230,000 pieces of bangus allegedly stocked in 1979 when DBP first ejected CUBA from the fishpond and the adjoining house. This award was affirmed by the Court of Appeals. We find that the alleged loss of personal belongings and equipment was not proved by clear evidence. Other than the testimony of CUBA and her caretaker, there was no proof as to the existence of those items before DBP took over the fishpond in question. As pointed out by DBP, there was not "inventory of the alleged lost items before the loss which is normal in a project which sometimes, if not most often, is left to the care of other persons." Neither was a single receipt or record of acquisition presented. Curiously, in her complaint dated 17 May 1985, CUBA included "losses of property" as among the damages resulting from DBP's take-over of the fishpond. Yet, it was only in September 1985 when her son and a caretaker went to the fishpond and the adjoining house that she came to know of the alleged loss of several articles. Such claim for "losses of property," having been made before knowledge of the alleged actual loss, was therefore speculative. The alleged loss could have been a mere afterthought or subterfuge to justify her claim for actual damages. With regard to the award of P517,000 representing the value of the alleged 230,000 pieces of bangus which died when DBP took possession of the fishpond in March 1979, the same was not called for. Such loss was not duly proved; besides, the claim therefor was delayed unreasonably. From 1979 until after the filing of her complaint in court in May 1985, CUBA did not bring to the attention of DBP the alleged loss. The award of actual damages should, therefore, be struck down for lack of sufficient basis. In view, however, of DBP's act of appropriating CUBA's leasehold rights which was contrary to law and public policy, as well as its false representation to the then Ministry of Agriculture and Natural Resources that

it had "foreclosed the mortgage," an award of moral damages in the amount of P50,000 is in order conformably with Article 2219(10), in relation to Article 21, of the Civil Code. Exemplary or corrective damages in the amount of P25,000 should likewise be awarded by way of example or correction for the public good. 20 There being an award of exemplary damages, attorney's fees are also recoverable. 338 People v Roland Paraiso|Per Curiam G.R. No. 127840 November 29, 1999 | 319 SCRA 422 FACTS Paraiso and a certain John Doe confederating and mutually helping one another, with intent to gain, by means of violence and intimidation, willfully, unlawfully and feloniously entered the home of Lolita Tigley. Once inside, took, stole and carried away: a Role watch, assorted jewelries, 200 in cash, telescope and a video camera. On the occasion thereof, with intent to kill, dragged Lolita inside a room and thereafter assaulted, attacked and stabbed her on different parts of the body which caused her death shortly thereafter. These FACTS were corroborated by eyewitness Sheila Alipio (18yo), niece of the victim, who delivered a 1-gallon water container to Lolitas house during the time of the attack, and was pushed inside the house upon entry by one of the accused. She found Paraiso armed with a gun pointed at her aunts temple while the other accused had a Batangas fan knife, which the latter poked at her right side. The 3 sons of Lolita : Epifanio (15yo), Ferdinand (17yo), and Kim (13yo), who were tied and herded upstairs to one room with Sheila, corroborated Sheilas testimony before the NBI. NBI Medico Dr. Zaldarriaga explained the Necropsy Report of the victim and identified her cause of death as: hemorrhage, severe, secondary to stab wounds of the chest The RTC of Cebu adjudged: Roland Paraiso and a certain John doe guilty of robbery with homicide with 3 aggravating circumstances (committed in the dwelling, abuse of superior strength and disregard of age and sex). They were sentenced to death (by lethal injection) and made liable to pay: o actual damages of P200 (cash stolen) + 179,800 (assorted jewelries, Rolex wristwatch, videocam) o exemplary damages of 100k o moral damages of 200k Case is now on automatic appeal. ISSUES & ARGUMENTS CRIM: W/N Paraiso was guilty? TORTS: proper? GUILTY. The alibi that Paraiso was home, as testified by his father, will not proper because in fact he lived 5 houses away only from Lolitas home. Court did not give credence to his alibi because it doesnt discount the possibility that he couldve been in the scene and the fact that it was a self-serving testimony of his father. W/N the damages awarded were

They reported the case 2 days later after the incident, but it took 10 months before he was identified considering he has been a neighbor for 7 years. Court held that fact of delay in reporting the crime is not sufficient to doubt the truthfulness of the accusation. Witnesses were able to accurately describe and identify the accused later. The Court took note that the incident lasted for several minutes that the children had sufficient time to develop some kind of familiarity with the accused.

Paraiso claim non-flight as indication of innocence, but the court held that no law or principle guarantees that non-flight per se is a conclusive proof of innocence. Crime was aggravated by the fact that it was committed in the dwelling of the victim and abuse of superior strength. Disregard of sex and age was not present since robbery is a crime against property; this latter aggravating circumstance only applies to crimes against person or honor. DAMAGES WERE MODIFIED. CIVIL INDEMNITY FOR DEATH: P50,000 (basis, under jurisprudence PPL v Espanola). Fact death and accuseds responsibility merits such award; no further proof is necessary to determine award. ACTUAL DAMAGES is premised upon competent proof and best evidence obtainable. In this case, only the P200 is the only amount was sufficiently proven by prosecution. Actual damages were reduced to P200. The 178K valuation of jewelries prepared by Epifanio Sr (the husaband of victim) and the P47,600 burial expense prepare by Linda Alipio (sister-in-law of victim) were not proven, since both of them were not presented as prosecution witnesses. EXEMPLARY DAMAGES are awarded after proof that 1 or more aggravating circumstances (AC) attended the crime. Since only 2 AC were present, amount was reduced to P50,000. MORAL DAMAGES are awarded to compensate the victim (and/or the heirs) for injuries to their feelings; it is not awarded to enrich the heirs of the victim. Court reduced the amount to P100,000. 339 Victory Liner vs. Heirs of Malecdan | Mendoza G.R. No. 154278, December 27, 2002 | FACTS While crossing the National Highway on his way home from the farm a Dalin Liner bus on the southbound lane stopped to allowed farmer Malecdan and hi carabao tp cross. While he was crossing the highway, a bus of petitioner Victory Liner, driven by Joson bypassed the Dalin bus and hit farmer Malecdan. As a result, Malecdan was thrown off the carabao, while the beast toppled over. The Victory Liner bus sped past the old man, while the Dalin bus proceeded to its destination without helping him. The incident was witnessed by Malecdan's neighbor, Lorena, who was resting in a nearby waiting shed after working on his farm. Malecdan sustained a wound on his left shoulder, from which bone fragments protruded (his carabao died). He was taken by Lorena and another person to the Hospital where he died a few hours after arrival. Subsequently, a criminal complaint

HOLDING & RATIO DECIDENDI

for reckless imprudence resulting in homicide and damage to property was filed against the Actual, Moral and other damages were awarded to him in the manner as follows: a. P50,000.00 as death indemnity; b. P88,339.00 for actual damages; c. P200,000.00 for moral damages; d. P50,000.00 as exemplary damages; e. Thirty percent (30%) as attorney's fees of whatever amount that can be collected by the plaintiff; and f. The costs of the suit. ISSUES & ARGUMENTS W/N Victory Liner is liable for Actual damages when there are no receipts to substantiate Malecdans claim. HOLDING & RATIO DECIDENDI VICTORY LINER IS LIABLE BUT THE AMOUNT WAS REDUCED To justify an award of actual damages, there should be proof of the actual amount of loss incurred in connection with the death, wake or burial of the victim. We cannot take into account receipts showing expenses incurred some time after the burial of the victim, such as expenses relating to the 9th day, 40th day and 1st year death anniversaries. In this case, the trial court awarded P88,339.00 as actual damages. While these were duly supported by receipts, these included the amount of P5,900.00, the cost of one pig which had been butchered for the 9th day death anniversary of the deceased. This item cannot be allowed. We, therefore, reduce the amount of actual damages to P82,439.00.00. 340 Refractories Corporation of the Philippines v. IAC and Firestone Ceramic |Regalado G.R. No. 70839, August 17, 1989| 176 SCRA 539 FACTS In 1980, Refractories Corporation of the Philippines (Refractories) imported from Japan around 250 metric tons of magnesite "ube" green and magnesia clinker When the shipment arrived, they were discovered to be water-damaged and unfit for consumption hence they were stored in its warehouse and as a consequence, it declared the whole cargo a total loss and filed a claim with its insurer, Filriters Guaranty Assurance Corporation (Filriters) Subsequently, with the knowledge and consent of Refractories, Filriters placed said shipment on bid for salvage dispose and, in the public auction held by virtue thereof, Sangalang, acting for and in behalf of Firestone Ceramic, Inc. (Firestone), submitted a sealed bid, which resulted in awarding the shipment to it as the highest bidder After full payment of the price of the goods, Firestone attempted to withdraw the goods from the warehouse of Refractories, but it refused to release the same on the ground that it had not received its insurance claim payment and the question of whether or not the goods were exempt from customs duties and taxes had yet to be resolved. Later, Refractories withdrew its objection after entering into an agreement with Firestone When Firestone paid the custom duties and taxes on the goods, Refractories again refused to release the goods and demanded storage fees claiming that there

was delay on the part of Firestone in withdrawing the goods, to which Firestone refused to pay

Firestone then filed an action for specific performance and damages against Filriters and Refractories. During the pendency of the case, Firestone was able to obtain delivery of 159.28 metric tons of the cargo upon a deposit of the storage fee The CFI rendered judgment finding that it was Refractories which prevented the immediate removal of the cargo and if there was any delay on the part of Firestone, the same was caused by the imposition of custom duties and taxes, and ordered them to pay Firestone jointly and severally the sum of P 234,000.00 as and for actual and compensatory damages, and for attorney's fees and expenses of litigation On appeal, the IAC affirmed with modification the decision of the CFI regarding the interest which it reduced to 12% per annum ISSUES & ARGUMENTS W/N the action of Firestone is proper entitling it the damages awarded HOLDING & RATIO DECIDENDI THE ACTION FOR SPECIFIC PERFORMANCE WAS JUSTIFIED, BUT THE AWARD FOR DAMAGES AND ATTORNEYS FEES MUST BE MODIFIED Refractories demand for payment of storage fees was not one of Firestone's obligations under the agreement, hence there was no need to pay the same before the goods in question could be released However, with respect to the awards for damages and attorney's fees, the judgment of the trial court, as affirmed by IAC, require modification. Article 2219 of the Civil Code is explicit as to the requirements for entitlement to actual or compensatory damages, that is, 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." Indeed, before the award of actual or compensatory damages can be made, adequate proof of the pecuniary loss suffered is indispensable. These factual and legal bases must be clearly established and reliance on mere speculation, conjecture or guesswork on the part of the trial court will demand the reversal of the award. The same is true if the proof is flimsy and unsubstantiated The foregoing considerations appear to have been lost upon the trial court when it awarded two components of actual and compensatory damages, one for P234,000.00 and another in the sum of P276,672.00 in case of failure to deliver the remaining 96 tons of said water-damaged magnesite and magnesia clinker. With respect to the first, the absence of actual proof thereon to justify the same is evident from the records and transcripts of the proceedings in the case. Other than the recitation of the reliefs prayed for in the complaint, no evidence with respect to said damages was ever pleaded or adduced in court Likewise, the award of P276,672.00 which Refractories was ordered to pay is not sustained by the evidence. Such amount was claimed to be equivalent to the insurance payment, but no reason has been advanced, nor is any apparent, as to why the measure

of the amount to be paid by Refractories in case of nondelivery of the aforesaid balance of the shipment should be the insurance amount due from Filriters. The agreement is clear that the amount to be paid to Firestone in case of shortage or deficiency in delivery is P450.00 per metric ton. This amount is in fact the same monetary basis of the bid of Firestone which it actually paid for the salvaged cargo. Thus, if ever there should be any pecuniary loss because of the nondelivery of the goods, it should not be based on the insurance coverage or proceeds which would be due only to Refractories because of the declaration of total loss of the cargo since this represents the indemnity for the amount spent in importing the goods and is the value thereof at the time of the loss. Whatever additional damages may be suffered by Firestone because of nondelivery or incomplete delivery shall be covered by the legal interest on the principal amount due, which is 6% per annum from default Petition DISMISSED; Decision MODIFIED. 341 David v. CA| J. G.R. No. 111168 | 290 SCRA 727 Actual Damages FACTS On March 28, 1981, at about 10:00 p.m., while the Nora brothers Arturo, Arnel, Noel and Narciso were walking along Flerida Street in Malabon, Metro Manila on their way home to Capitan Tiago Street, they saw petitioner near the compound of his house. Noel, the deceased, confronted him about derogatory remarks allegedly made by the latter. Petitioner ran to his house to get a gun. When the Nora brothers reached the intersection of Flerida and Capitan Tiago Streets, he shouted at them Putang ina ninyo and other epithets, and then fired four times at them. One shot hit Noel, killing him. Another shot hit Narciso Nora on the ankle. Another nearly hit the zipper of Arturo Nora. After trial, petitioner was found guilty as charged. And was ordered to pay P37,000 as actual damages. ISSUES & ARGUMENTS W/N the amount of actual damages awarded is proper HOLDING & RATIO DECIDENDI Only expenses supported by receipts and which appear to have been actually expended in connection with the death of the victim should be allowed. The award of actual damages cannot be based on the allegation of a witness without any tangible document to support such claim. 342 PNOC Shipping and Transport Corporation vs. CA| Romero G.R. No. 107518, October 8, 1998 | 297 SCRA 402 FACTS The M/V Maria Efigenia XV, owned by Maria Efigenia Fishing Corporation collided with the vessel Petroparcel which at that time was owned by Luzon Stevedoring Corporation (LSC). The Board of Marine Inquiry declared Petroparcel to be at fault. After unsuccessful demands on LSC, Marie Efigenia sued the LSC and the Petroparcel captain before the CFI. It prayed for an award of P692,680.00,

allegedly representing the value of the fishing nets, boat equipment, and cargoes. During the pendency of the case, petitioner PNOC sought to be substituted in the place of LSC as it had already acquired ownership of Petroparcel. Meanwhile, Maria Efigenia sought to amend its complaint by also claiming for the amount of P600,000.00 as the value of the vessel, and alleging that it had also incurred unrealized profits and lost business opportunities. The lower court ordered PNOC to pay Maria Efigenia, based on some documentary evidence presented by the latter (in the form of price quotations). The CA affirmed in toto. Hence the instant recourse. ISSUES & ARGUMENTS W/N the award of actual damages was proper. HOLDING & RATIO DECIDENDI AWARD OF ACTUAL DAMAGES IMPROPER FOR LACK OF EVIDENTIARY BASIS THEREFOR. HOWEVER, THE AWARD OF NOMINAL DAMAGES IS IN ORDER. Under Article 2199 of the NCC, 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.

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In actions based on torts and quasi-delicts, actual damages include all the natural and probable consequences of the act or omission complained of. There are two kinds: one is the loss of what a person already possesses (dano emergente), and the other is the failure to receive as a benefit that which would have pertained to him (lucro cesante). In the case of profit-earning chattels, what has to be assessed is the value of the chattel as to its owner as a going concern at the time and place of the loss, and this means, at least in the case of ships, that regard must be had to existing and pending engagements. If the value of the ship reflects the fact that it is in any case certain of profitable employment, then nothing can be added to that value in respect of charters actually lost, since it would compensate the plaintiff twice over. On the other hand, if the ship is valued without reference to its actual future engagements, then it may be necessary to add to the value the anticipated profit. 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. He must establish his case by a preponderance of evidence. Damages cannot be presumed by the courts, in making an award it must point out specific FACTS that could afford a basis for measuring such damages. In this case, actual damages were proven through the sole testimony of Maria Efigenias general manager and certain pieces of documentary evidence. The price quotations are ordinary private writings, and should

have been proffered along with the testimony of the authors thereof. In the absence of which, they partake of hearsay evidence. Damages may not be awarded on the basis of hearsay evidence. Nonetheless, if there is lack of sufficient proof as to the actual damages suffered, the complainant is entitled to nominal damages. CA decision MODIFIED. 343 Bank of America vs. American Realty Corp | Buena G.R. No. 133876, December 29, 2999| FACTS Petitioner Bank of America NT & SA (BANTSA) is an international banking and financing institution duly licensed to do business in the Philippines, while private respondent American Realty Corporation (ARC) is a domestic corporation. Bank of America International Limited (BAIL), on the other hand, is a limited liability company organized and existing under the laws of England. BANTSA and BAIL on several occasions granted three major multi-million United States (US) Dollar loans to three (3) corporate borrowers all of which are existing under and by virtue of the laws of the Republic of Panama and are foreign affiliates of private respondent. Due to the default in the payment of the loan amortizations, BANTSA and the corporate borrowers signed and entered into restructuring agreements. As additional security for the restructured loans, private respondent ARC as third party mortgagor, executed two real estate mortgages over its parcels of land including improvements thereon located in Bulacan. Eventually, the corporate borrowers defaulted in the payment of the restructured loans prompting petitioner BANTSA to file civil actions before foreign courts for the collection of the principal loan. Thereafter, petitioner BANTSA filed before the Office of the Provincial Sheriff of Bulacan, an application for extrajudicial foreclosure of real estate mortgage. After due publication and notice, the mortgaged real properties were sold at public auction in an extrajudicial foreclosure sale. Private respondent filed before the Pasig RTC an action for damages against the petitioner, for the latter's act of foreclosing extrajudicially the real estate mortgages despite the pendency of civil suits before foreign courts for the collection of the principal loan. ISSUES & ARGUMENTS W/N petitioner is liable to pay damages to private respondent ARC for extradjudicially foreclosing on the property despite the pending civil actions in foreign courts? HOLDING & RATIO DECIDENDI PETITIONER LIABLE EXEMPLARY DAMAGES. FOR ACTUAL AND

splitting a cause of action well-enshrined jurisprudence and our statute books.

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in

We hold that the private respondent is entitled to the award of actual or compensatory damages inasmuch as the act of petitioner BANTSA in extrajudicially foreclosing the real estate mortgages constituted a clear violation of the rights of herein private respondent ARC, as third-party mortgagor. Actual or compensatory damages are those recoverable because of pecuniary loss in business, trade, property, profession, job or occupation and the same must be proved, otherwise if the proof is flimsy and non-substantial, no damages will be given. Indeed, the question of the value of property is always a difficult one to settle as valuation of real property is an imprecise process since real estate has no inherent value readily ascertainable by an appraiser or by the court. The opinions of men vary so much concerning the real value of property that the best the courts can do is hear all of the witnesses which the respective parties desire to present, and then, by carefully weighing that testimony, arrive at a conclusion which is just and equitable In the instant case, petitioner assails the Court of Appeals for relying heavily on the valuation made by Philippine Appraisal Company. In arriving at the amount of actual damages, the trial court justified the award by presenting the following ratiocination: The properties consist of about 39 hectares which are not distant from Metro Manila and are easily accessible through well-paved roads; The properties are suitable for development into a subdivision for low cost housing; The pigpens which used to exist in the property have already been demolished; Houses of strong materials are found in the vicinity of the property, and the vicinity is a growing community; It will not be hard to find interested buyers of the property; etc. Similarly, we affirm the grant of exemplary damages although the amount of Five Million Pesos (P5,000,000.00) awarded, being excessive, is subject to reduction. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Considering its purpose, it must be fair and reasonable in every case and should not be awarded to unjustly enrich a prevailing party. Petition denied. Decision of the Court of Appeals affirmed. 344 BPI v. Leobrera |Pardo, J. G.R. No. 137147. January 29, 2002 FACTS Leobrera is engaged in shell manufacturer, retail and shell craft export. He has been a valued client of Bank of Philippine Islands He obtained a loan of P500k with BPI, and executed a real estate mortgage over certain properties as a form of security. Darlene Shells (with which Leobrera had export transaction) sent a remittance in favor of Leobrera through BPI amounting to $8K+. Unfortunately, however, the latter maliciously and in bad faith, refused to accept the said remittance and credit the

Petitioner, by the expediency of filing four civil suits before foreign courts, necessarily abandoned the remedy to foreclose the real estate mortgages constituted over the properties of third-party mortgagor and herein private respondent ARC. Moreover, by filing the four civil actions and by eventually foreclosing extrajudicially the mortgages, petitioner in effect transgressed the rules against

same to Leobreras account with BPI. The latter reasoned that the name of the beneficiary in the remittance was not Carfel Shell Export but Car Sales Shell Export, notwithstanding earlier and repeated advice by plaintiff-appellee Leobrera upon defendantappellant BPI that the remittance of Carfel Shell Export from Darlene Shells is forth-coming, and that it could have verified that the correct beneficiary thereof is Carfel Shell Export. From the evidence on record, plaintiff-appellee Leobrera already had export business transactions with defendant-appellant BPI for more than ten (10) years. Because of this, Leobrera suffered business losses and its two real properties mortgaged to BPI was foreclosed RTC ruled in favor of Leobrera and awarded him, among others, P1M actual damages, this was affirmed by the CA ISSUES & ARGUMENTS W/N the Court of Appeals erred in awarding actual and moral damages and attorneys fees in amounts that were excessive and exhorbitant. HOLDING & RATIO DECIDENDI Yes. Whether there was preponderance of evidence to support an award of damages and whether the act from which liability might arise exists, are factual questions. However, the award of P1,000,000.00 as actual damages was not fully supported by evidence. The loss that respondent could only show was the $1,763.50 letter of credit and the remittance of $8,350.94 (totalling $10,114.44). the SC therefore reduced the award of actual damages to P200K. 345 Talisay-Silay Milling Co. vs. Associacion de Agricultores de Talisay-Silay, Inc. | Feliciano, J.: G.R. No. 91852, August 15, 1995 | 247 SCRA 361 FACTS EO 525 created Mill District No. 44, also known as the Talisay-Silay Mill District composed of the Talisay-SIlay Milling Co. and its adherent plantations EO 900 proportionately distributed among the various mill districts in the Philippines the entire quota of sugar to be exported from the Philippines to the United States A state national emergency was declared in Dec., 1934 creating a huge surplurs of unmarketable sugar, hence the Philippine legislature enacted the Sugar Limitation Act which provided that the Tydings McDuffie Act, insofar as the production of Sugar is concerned, would remain in force for 3 years commencing with the 1931- 1932 crop year, unless the Governor-General determined that the state of emergency declared had ceased On June, 1957, Congress approved RA 1825 which governed the transfer, under certain conditions, of a planters sugar production allowance or quota from one sugar mill to another o Sec. 4 provides: The production allowance or quota corresponding to each piece of land under the provisions of this act shall be deemed to be an improvement attaching to the land entitled thereto. In the absence of a milling contract or contracts, or

where such milling contract or contract shall have expired, such production allowance or quota shall be transferable preferable within the same district in accordance with such rules and regulations as may be issued by the Sugar Quota Office: Provided that a plantation owner may transfer his production allowance or quota from one district to another when the following conditions exist: (a) when there is no milling contract between the planter and miller or when said contracts shall have expired; and (b) when the mill of the district in which the land of the planter lies is not willing to give him the participation laid down in section one of Republic Act Numbered Eight Hundred Nine regarding the division of shares between the sugar mill and plantation owner. (Emphasis supplied) Petitioners filed a complaint against respondents for transferring its quota in violation of the said provision and was granted On appeal, the CA reduced the award of damages from approximately P15.4M to only P1M, hence the present petition ISSUES & ARGUMENTS W/N the CA erred in reducing the amount of damages W/N the amount of damages awarded by the TC is supported by the evidence of record HOLDING & RATIO DECIDENDI YES Fist, it must be noted that AATSI was found to have violated the provision of Sec. 4, RA 1825 for noncompliance with the 2nd requirement Now, the question of the propriety of the decrease of the awarded damages was based on the fact that petitioners failed to amend their complaint (Rule 10, Sec. 5) to conform to the evidence presented during trial which showed that TSMC and TSICA suffered damages amounting to more than P1M by virtue of the illegal transfer of export sugar quota from TSMC to FFMCI The court held that if the FACTS shown entitled plaintiff to relief other than that asked for, no amendment to the complaint was necessary, especially where defendant had himself raised the point on which recovery was based o The appellate court could treat the pleadings as amended to conform to the evidence although the pleadings were actually not amended o The rule on amendment need not be applied rigidly, particularly where no surprise or prejudice is caused the objecting party o The trial court should not be precluded from awarding an amount higher than that claimed in the pleadings notwithstanding the absence of the required amendment BUT this is upon the condition that the evidence of such higher amount has been presented properly, with full opportunity on the part of the opposing parties to support their respective contentions and to refute each others evidence NO Familiar is the rule that damages consisting of unrealized profits, frequently referred as ganancias frustradas or lucrum cessans are not to be granted

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on the basis of mere speculation, conjencture or surmise but rather by reference to some reasonably definite standard such as market value, established experience or direct inference from known circumstances Evidence of damages must be clear and apparent from the pronouncement of the court The court does not distinctly state what FACTS were considered in arriving at the different figures, what amounts plaintiffs failed to receive, and what were deducted to determine unrealized profits The courts judgment is purely a conclusion of law and not a finding of the essential ultimate FACTS Hence, the case was remanded for the proper determination of the amount of damages 3D 20092010 DIGESTS TORTS & DAMAGES Page 383 of 528 WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-G.R. No. 51350-R dated 30 October 1989 and 10 January 1990, respectively are hereby MODIFIED insofar as the award of actual damages due Talisay-Silay Milling Co., Inc. and Talisay-Silay Industrial Cooperative Association, Inc. are concerned. Subject to the rulings referred to herein, this case is REMANDED to the Court of Appeals for the determination, with all deliberate dispatch, of the amount of damages due Talisay-Silay Milling Co., Inc. and Talisay-Silay Industrial Cooperative Association, Inc. considering that this litigation among the parties has already lasted more that twenty-eight (28) years. The rest of the Decision of the Court of Appeals is hereby AFFIRMED. Cost against respondents. 346 G.A. Machineries, Inc. v. Yaptinchay | Gutierrez, Jr. G.R. No. L-30965, November 29, 1983 | 126 SCRA 78 FACTS Appellant G.A. Machineries, Inc. (GAMI), through its agent, sold to Appellee Horacio Yaptinchay, owner of the freight hauling business styled Hi-Way Express a Fordson Diesel Engine at the price of P7,590.00. This was subject to the representation relied upon by appellant that the engine was brand new. Within the week after its delivery, the engine started to have a series of malfunctions which necessitated successive trips to GAMIs repair shop. However, the malfunctioning persisted. On inspection, Yaptinchays mechanic noticed a worn out screw which made Yaptinchay suspicious about the age of the engine. He then wrote GAMI a letter protesting that the engine was not brand-new as represented. After the repeatedly recurring defects and continued failure of GAMI to put the engine in good operating condition, Yaptinchay sought the assistance of PC Criminal Investigation Service to check on the authenticity of the serial number of the engine. Tests revealed that the original motor number of the engine was tampered. Further inquiries from the Manila Trading Company disclosed that, unlike Yaptinchays engine whose body and injection pump were painted with 2 different colors, brand-new engines are painted with only 1 color all over. Yaptinchay made demands for indemnification for damages and eventually instituted the present suit.

GAMI interposed prescription of the action, denied the imputation of misrepresentation, and disputed the propriety and amount of damages claimed. TC ruled in favor of Yaptinchay, ordering GAMI to pay actual damages of P54,000.48. CA affirmed. ISSUES & ARGUMENTS

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W/N the cause of action against appellant had already prescribed at the time the complaint was filed in the TC. W/N the factual findings of both TC and CA as regards the engine are supported by evidence. W/N the award of damages was justified considering the evidence on record. HOLDING & RATIO DECIDENDI NO. The 6-month prescriptive period under Article 1571 of the Civil Code is not applicable. The main thrust of the complaint is the contention that the engine delivered by GAMI was not brand-new, contrary to its representations. Instead of a brand-new engine, another engine which was not brand new was delivered resulting in the damages sought to be recovered. Therefore, the complaint was for breach of contract of sale, rather than breach of warranty against hidden defects. Action for breach of warranty against hidden defects presupposes that the thing sold is the same thing delivered but with hidden defects. Consequently, the 6-month prescriptive period under Article 1571 of the Civil Code is not applicable. YES. Captain Garcia found that the original motor number of the engine was tampered as shown by the presence of fragmentary numbers which appeared in the engine. Captain Garcia positively stated the fragmentary numeral to be a numeral or a number but in the absence of key portions, he could not positively identify the exact number. He discounted the possibility that such fragmentary numerals could be mere scratches. He also did not categorically state that any molecular pressure could have caused the fragmentary number. NO. The award of actual damages is not warranted by the evidence on record. The engine delivered was not brand-new. GAMI committed a breach of contract. The misrepresentation of the quality of the engine is tantamount to fraud or bad faith. The return of the purchase price with legal interest from the date of purchase is justified. The fact that the defendant does not dispute the amount of this kind of damages does not necessarily imply that the other party outright is entitled to the award of damages. Article 2200 of the Civil Code entitles the respondent to recover as compensatory damages not only the value of the loss suffered but also prospective profits. Article 2201 entitles the respondent to recover all damages which may be attributed to the nonperformance of the obligation. However, in order to recover this kind of damages, plaintiff must prove his case. The injured party must produce the best evidence of which his case is susceptible and if that

evidence warrants the inference that he has been damaged by the loss of profits which he might with reasonable certainty have anticipated but for the defendants wrongful act, he is entitled to recover. In this case, the award of actual damages of P54,000.88 covers the probable income which respondent failed to realize because of the breach of contract. However, the evidence presented is insufficient to be considered within the purview of best evidence. The document merely shows that every time a truck travels, Yaptinchay earns P369.88. This is multiplied by the number of trips which the truck was unable to make. To prove actual damages, it would have been easy to present the average actual profits realized by the other freight trucks plying the ManilaBaguio route. Decision modified. The award of actual damages is deleted. 347 China Airlines Limited vs. Court of Appeals G.R. 94590|July 29, 1992|Feliciano FACTS: Manuel J. Ocampo bought, through the Ultraman Travel Agency, a round-trip ticket for Manila-San Francisco-Manila from petitioner China Airlines Limited ("CAL"). The ticket purchased was a GV-10, or a Group Tour, ticket for which Ocampo paid a special discounted (reduced) price of P6,063.00. A Group Tour ticket is issued to members of a group of at least ten (10) passengers travelling for a minimum of fourteen (14) days and for a maximum of thirty-five (35) days. It is a condition of a Group Tour ticket that the holder thereof must stay in the place of destination (in this case, the United States), for at least fourteen (14) but not exceeding thirty-five (35) days. The portion of the ticket covering the return trip may be used only after expiration of fourteen (14) days counted from the date of arrival at the place of destination; beyond the thirtyfive (35) allowable days, the return trip ticket is no longer valid. Ocampo, however, wanted to leave for Manila earlier than 24 May 1979 because he had several business meetings scheduled to be held here prior to 24 May 1979 and because of his desire to attend to his wife's and son's forthcoming departure for Europe scheduled on 24 May 1979. Ocampo sought to make special arrangements, through Ultraman Travel Agency, with CAL Manila for a change in schedule. The travel agency was, according to respondent Ocampo, assured that the necessary adjustments would be made and that Mr. Ocampo could definitely take the CAL flight from San Francisco on 18 May 1979. Ocampo left Manila for San Francisco's on 9 May 1979 and arrived in San Francisco also on the same day. Next day, he proceeded to CAL San Francisco' office to confirm his revised return flight schedule. CAL San Francisco, however, declined to confirm his return flight, since the date indicated on the ticket was not 18 May 1979 but rather 24 May 1979. Mr. Ocampo, however, apprised CAL San Francisco about the special arrangement that he had requested from CAL Manila. CAL San Francisco contacted CAL Manila by telex requesting verification of the revised schedule for respondent Ocampo. CAL San Francisco, however, received a negative reply from CAL Manila.

Ocampo persisted in his efforts to book himself on the CAL San Francisco- Honolulu flight on 18 May 1979. By telephone, he contacted his private secretary in Manila to make the necessary inquiry and verification at CAL Manila. His secretary later telephoned back to inform him that CAL Manila would forthwith send a communication to CAL San Francisco to correct the situation. With that information, respondent Ocampo proceeded once more to CAL San Francisco and left his telephone number and address where he could be contacted upon receipt of confirmation from CAL Manila. CAL San Francisco never sent any notice to private respondent. Upon arrival in Manila, respondent Ocampo demanded an explanation from CAL Manila. He was told candidly that a mistake had been committed by an employee of CAL Manila who had sent a negative reply to CAL San Francisco's request for confirmation without first consulting Ocampo's passenger reservation card. Another employee or representative of CAL Manila offered private respondent compensation for actual expenses incurred by him due to his inability to board the CAL 18 May 1979 flight from San Francisco.

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TC dismissed the complaint and ruled in favor of CAL and the CA reversed the decision ISSUES: W/N CAL was in bad faith and therefore liable for damages? RATIO: CAL is liable for damages but it was not attended by bad faith CAL Taipei had confirmed as early as 14 May 1979 the Taipei-Manila sector of Private respondent's return trip, public respondent Court of Appeals considered CAL San Francisco's refusal to board private respondent as an act of bad faith, and awarded private respondent the large amounts he sought by way of moral and exemplary damages totalling P400,000.00. We consider that private respondent was able to show that petitioner CAL had indeed confirmed a seat for Mr. Ocampo on the 18 May 1979 flight from San Francisco- Honolulu (and all the way to Manila). We agree, therefore, with the Court of Appeals that petitioner CAL had breached its contract of carriage with private respondent by such failure or refusal to board him on that flight. We are not, however, persuaded that that breach of contractual obligation had been attended by bad faith or malice or gross negligence amounting to bad faith. To the contrary, it appears to the Court that petitioner CAL had exercised diligent efforts to effect the change of schedule which it apparently had earlier stated to private respondent (prior to his departure from Manila) it would carry out. There was clearly a concerted effort among the involved CAL offices as shown by the flow of telexes from one to the others. The last two (2) telexes sent by CAL Manila to CAL San Francisco on 17 May and 18 May 1979 were presumably received by CAL San Francisco in time to have relayed to respondent Ocampo his acceptance as a passenger on the CAL flight out of San Francisco scheduled for 18 May 1979. Again, however, we do not believe that respondent Ocampo had convincingly shown that the employees of petitioner CAL were motivated by personal malice or bad faith, or that there was patently negligence so gross as to amount to bad faith. Bad faith under the law is not presumed; it must be established by clear and convincing evidence. Based on Art. 2201 and 2220 the law distinguishes a contractual breach effected in

good faith from one attended by bad faith. Where in breaching the contract, the defendant is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of the obligation and which the parties had foreseen or could reasonably have foreseen; and in that case, such liability would not include liability for moral and exemplary damages. 9 Under Article 2232 of the 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 386 of 528 Civil Code, in a contractual or quasi-contractual relationship, exemplary damages may be awarded only if the defendant had acted in "a wanton, fraudulent, reckless, oppressive or malevolent manner." We are unable to so characterize the behavior here shown of the employees of CAL Manila and of CAL San Francisco. Thus, we believe and so hold that the damages recoverable by respondent Ocampo are limited to the peso value of the Philippine Airlines ticket it had purchased for his return flight from San Francisco; and reasonable expenses occasioned to private respondent by reason of the delay in his return San FranciscoManila trip exercising the Court's discretion, we believe that for such expenses, US$1,500.00 would be a reasonable amount plus attorney's fees in the amount of P15,000.00, considering that respondent Ocampo was ultimately compelled to litigate his claim against petitioner. WHEREFORE, the Decision of the Court of Appeals dated 25 July 1990 is hereby REVERSED and SET ASIDE. A new judgment is hereby ENTERED requiring petitioner to pay private respondent Ocampo the Philippine Peso equivalent of US$2,101.00, at the rate of exchange prevailing at the time of payment thereof, as reasonable compensatory damages, plus attorney's fees in the amount of P15,000.00 and costs. Petitioner's counterclaim before the trial court is hereby DISMISSED. 348 Consolidated Dairy Products Co. vs. CA| Quisumbing G.R. No. 100401 August 24, 1992 FACTS In 1956, Consolidated Dairy Products Co. of Seattle agreed with Santiago Syjuco Inc. to form Consolidated Philippines Inc. to bring Darigold milk and other dairy products to the Phils. 51% was owned by Consolidated Seattle and 49% was owned by Syjuco Inc. Consolidated Seattle granted exclusive right to the tradename Darigold to Consolidated Phils. Initially, Consolidated Phils. imported its can requirements from the US. But due to economic conditions in this country, it began sourcing locally. In 1959, it entered in a 10-yr contract with private respondent Standard Can Company. In 1966, Dairy Export Company (Dexco), a subsidiary of Consolidated Seattle, started to do business in the Philippines. It even held its very own office in Consolidated Phils. building. In 1968, Standard, Consolidated Phils and Dexco entered into a memorandum of agreement to extend the can supply contract until 1981. In 1974, Consolidated Seattle transferred the right to the tradename Marigold to Dexco. It also offered Syjuco that it could sell its share or buy Syjucos, or Consolidated Phils. may file bankruptcy. Syjuco chose

to sell its share. Subsequently, Consolidated Phils. was dissolved.

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Before Consolidated Phils. was dissolved, however, Dexco already took over the marketing activities and selling of Marigold. Even earlier, Consolidated Phils. cancelled its contract with Standard Can. It resulted in the cessation of its operations. Standard can is now claiming against Consolidated Seattle and Dexco for the separation pay of the employees and unrealized profits. RTC ruled in favor of Standard Can and CA affirmed in toto. ISSUES & ARGUMENTS W/N the determination of the actual damages was proper HOLDING & RATIO DECIDENDI The computation for unrealized profits modified but all other awards affirmed. First, the court noted that the damages claimed by private respondents do not refer to claims which were already due from the can supply contract. The claims here are for damages caused by the fraudulent termination by petitioners of the can supply contract four (4) years before the end of its term and for such a short notice. Regarding the separation pay, evidence supports that the amount actually paid by Standard Can to the separated employee is P929,520.54 plus 10% production pay cost equals P1,022,472.59. It was obligated to pay by virtue of its CBA with its employees. According to Art. 2200 of the NCC, 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. Standard Cans profit for the last 5 years of its operation was P8,107,931.13 and it argued that it would have earned as much for the terminated 5 years more of the contract. However, the Court said that the more reasonable amount would be based on average profits. This amount multiplied by five is P5,205,478.80. Award on inventory losses was properly awarded by the appellate court. Standard Can incurred inventory losses due to cans which rusted and could not have been disposed of, administrative expenses connected with the cost of the cans, cost of raw materials and depreciated portion of the machinery all amounting to P1,150,197.80. These losses were due to the cancellation of the can supply contract before its agreed expiration date. It is only right that defendants be held liable for them. There is no doubt that the breach committed by the petitioners was made in a wanton and fraudulent manner. There was no reason for petitioners to terminate the can supply contract with Standard. The latter was purposely organized for the benefit of Consolidated Philippines. Neither was there a need to close Consolidated Philippines because Consolidated Seattle had all the intentions of continuing its business only this time to be undertaken by its sole subsidiary,

Dexco to the prejudice of Standard. Where a defendant violates a contract with plaintiff, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive and malevolent manner (Art. 2232, Civil Code). The claim for attorney's fees of 25% percent of all recoveries is unconscionable. It is hereby reduced to 15%. 349 People v. Degoma| Feliciano, J. G.R. Nos. 8940405 May 22, 1992 | FACTS Efren Degoma and Mariano D. Taborda were charged and convicted of the crime of Robbery with Homicide. They were sentenced to reclusion perpetua and to jointly and severally indemnify the owners of the Tagbilaran friendly Bazaar the sum of P200.00 and the equivalent of $300.00, indemnify the heirs of late Alexander Parilla in the sum of P36,000.00 for his death, P200,000.00 moral damages, P 87, 947.94 for actual expenses, and P,5,000 for attys fees. Only Mariano D. Taborda appealed the case. ISSUES & ARGUMENTS W/N the lower court erred in the award of damages HOLDING & RATIO DECIDENDI The lower court overlooked certain evidentiary FACTS in its award of damages. In delict, the defendant is liable for all damages which are the natural and probable consequences of the act or omission complained of. To seek recovery for actually damages, it is necessary to prove with reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable by the injured party, the actual amount of loss. Courts cannot assume and rely on speculation or guesswork. The court a quos award of actual damages in the amount of P87,947.94 is not sustained by a review of the evidence of record. The court can only give credence to those supported by receipt and which appear to have been genuinely incurred in connection with the death, wake or burial of the victim. The court cannot take into consideration expenses incurred before the death of the victim or those incurred after a considerable lapse of time from his burial and do not have any relation to the death, wake or burial of the victim. The court cannot take into consideration those expenses incurred for purely aesthetic or social purposes, such as the lining with marble of the tomb of the victim; those which appear to have been modified to show an increase in the amount of expenditure; those which could not reasonably be itemized or determined to have been incurred in connection with the death, wake or burial of the victim; those which were not in fact shouldered by the immediate heirs of the victim, those which would nonetheless have been incurred despite the death, wake or burial of the victim, the death, wake or burial being merely incidental. The court puts the gross expenses proved at P10,275.85. The court offsets the amount of P4,600.00 representing the alms received, leaving the amount of P3,775.85 as the actual amount of loss. The moral damages are unexplained and unsupported,

though incapable of pecuniary estimation, the court considered it proper to reduce it to P10,000.00. The Court increased the amount of indemnity to P50,000.00 in line with present jurisprudence.

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350 Hualam Construction and Devt Corp. v. CA | Davide Jr. G.R. No. 85466, October 16, 1992 | 214 SCRA 612 FACTS Private respondent State Investment House is the owner of State Center Building at 333 Juan Luna St., Binondo, Manila it is divided into several office condominium units for sale or lease. Private respondent entered into a contract to sell on 22 Sept. 1983 with petitioner for unit 1505 for total price of P622,653.71 with down payment of P128,111.02 payable in 4 installments and 6 monthly installments of P5218 for aircon rental and monthly amortization P11,590.46 for 60 monts. Contract provides for a clause giving automatic nullification of contract upon nonpayment of installment or interest and makes vendee an intruder upon nullification of contract due to non-payment Petitioner failed to pay despite repeated demands the accumulated downpayment, installments, utility charges and other assessments. Private respondent filed a complaint for ejectment in MTC of Manila. On 11 Sept. 1986 petitioner failed to appear, upon motion private respondent was allowed to present evidence ex-parte. MTC rendered a decision in favor of private respondents ordering petitioner to pay P161,478.41 and P5000.00 as attorneys fees and costs. Possession was restored to private respondents and personal properties of petitioner was levied ISSUES & ARGUMENTS W/N Petitioners needed to file supersedeas bond to stay execution HOLDING & RATIO DECIDENDI Petition denied The damages recoverable in forcible entry or unlawful detainer refer to rent or fair rental value. Petitioners admit that adjudged amount by MTC includes unpaid downpayment and installments, clause 12 of contract to sell treats paid installments and downpayment as rentals upon forfeiture. Ruling of respondent Court is erroneous in holding that supersedeas bond must cover whole amount, nonetheless filing of a supersedeas bond to cover that portion representing the unpaid downpayments and installments was necessary to stay the execution of judgment, this is a mandatory requirement. 351 Araos et. al. (petitioners) vs. Court of Appeals and Jovan Land, Inc.(respondents) 232 SCRA 770 FACTS: Petitioners are lessees of a ten-door apartment building located in Manila, which they have been occupying for some 25 years. The building was originally owned by one Vivien B. Bernardino with whom the petitioners had a written contract of lease

which expired on 31 January 1988. Nevertheless, after this period, the petitioners peacefully occupied their respective units and the lessor continued to collect monthly rentals from the petitioners despite the absence of a written contract. On 11 July 1991, the apartment was sold to private respondent Jovan Land, Inc. Three days after, or on 15 July 1991, demands to vacate the units the petitioners and other lessees were occupying were made simultaneously by Bernardino and the private respondent. When the demands went unheeded, ten separate cases for unlawful detainer were filed against the petitioners and other lessees by the private respondent. The MeTC rendered a joint Judgment holding that the contracts between the lessor and the lessees provided for a lease on a month-to-month basis and, in the light of Article 1687 in relation to Article 1670 of the Civil Code, that the lease period had expired. Accordingly, it ordered the defendants to vacate the premises and to pay respondents. This order was later on affirmed by the CA, reversing the decision of the RTC. ISSUES & ARGUMENTS: Propriety and validity of the increase in the monthly rates of rentals as decreed by the MeTC and sustained by the Court of Appeals. HOLDING & RATIO DECIDENDI The rule is settled that in forcible entry or unlawful detainer cases, the only damage that can be recovered is the fair rental value or the reasonable compensation for the use and occupation of the leased property. The reason for this is that in such cases, the only issue raised in ejectment cases is that of rightful possession; hence, the damages which could be recovered are those which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the use and occupation of the property, and not the damages which he may have suffered but which have no direct relation to his loss of material possession. 352 Asuncion vs. Evangelista| Puno GR 133491, October 13, 1999 | FACTS Evangelista was the owner of empire farms. In order to raise capital for the operations of the farms, he entered personally into several loan agreements with various institutions. Due to his defaulting in the payments of these loans, they ballooned amounting to 6 million pesos As a result of this, Asuncion and Evangelista entered into a Memorandum of Agreement where Asuncion agrees to assume all the liabilities of Evangelista and in turn Evangelista is to cede to him his share on Empire Farms its lands which were mortgaged to secure the loans. Although Asuncion had already paid some P3000000 of his obligation in the MOA, Evangelista still had not transferred the properties. Later on, Asuncion stopped making payments for the loans which caused the foreclosure of the properties. Asuncion filed for Recission of the contract.

Trial Court and CA ruled that Asuncion was guilty because the contract was actually a contract of sale and so Asuncion first had to make good his obligaton before Evangelista would transfer the properties ISSUES & ARGUMENTS W/N the MOA was a contract of sale? W/N Asuncion first reneged on the obligation? W/N Evangelista Asuncion? No is entitled to

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damages?

HOLDING & RATIO DECIDENDI The MOA was in the nature of a reciprocal obligaton in that both parties both had certain obligations to fulfill regarding the rehabilitation of Empire Farms. It was not a simple isolated sale of the properties of Evangelista. No Asuncion had already paid several amounts in fulfillment of his obligations in the MOA and yet Evangelista still failed to transfer the property. Evangelistas insistence that Asuncion execute an assumption of mortgage before making the deed of sale of the properties is untenable as the mortgage will follow the property notwithstanding the absence of the assumption of mortgage. Also, Evangelistas claim that Asuncion was the one who breached for his failure to assume the loans cannot be given credence as he had already substantially complied with the obligation when he stopped making payments because of Evangelistas failure to comply with his obligations. No The claim for compensatory damages in favor of Evnagelista cannot be given as it is based solely on amounts as specified in a schedule given by Evangelista who was not even present during the transactions in the schedule. Such exhibit was self serving and hearsay Also, claim for compensatory damages based on the value of the property foreclosed is not allowed as it runs contrary to the nature of recission. If he seeks to rescind the contract, he can no longer claim the amount Asuncion was supposed to pay. The effect of granting damages for the foreclosure would be that you are still requiring Asuncion to pay his obligation but Evangelista will no longer transfer the property as it has already been foreclosed. Asuncion may also not claim for damages for the amounts he had already paid as recission seeks mutual restitution. This however has been rendered impossible as Evangelista can no longer be restored to the management and conrol of empire farms considering that its holdings had already been foreclosed. 353 Woodchild Holdings v. Roxas Electric & Construction | Callejo, Sr. G.R. 140667 | August 12, 2004 FACTS Respondent owned 2 parcels of land both covered by TCTs. A portion of Lot 1 abutted Lot 2 and was a dirt road accessing Sumulong highway. At a special meeting, the Board of Directors of respondent authorized the corporation through its president, Roberto Roxas, to SELL Lot 2.

 Petitioner wanted to buy Lot 2 where it wanted to build a warehouse, and a portion of Lot 1 to allow its 45-foot container van to readily enter and leave its property. Its president, Jonathan Dy, wrote a letter to Roxas offering to buy Lot 2. The offer was accepted. On Sept. 5, 1991, a Deed of Absolute Sale was executed and receipt of P5,000,000 was acknowledged by Roxas. Petitioner was given a right of way from the highway to the property, and that in the event that the same be insufficient, the vendor agrees to sell more. The vendor undertook to eject the squatters within 2 weeks from the signing of the Deed. On Sept. 10, 1991, Wimbeco Builders Inc. (WBI) offered to construct the warehouse for P8,649,000, with construction commencing Oct. 1, 1991 and turnover of the warehouse on Feb. 29, 1992. The offer was accepted by petitioner but construction was not commenced until April 1992 after a renegotiation in the light of the expiration of the period contemplated. The construction commenced without a building permit. On Sept. 16, 1991, Ponderosa Leather Goods Co. confirmed its lease of the warehouse to be constructed. Ponderosa emphasized the need for the warehouse to be ready for occupancy before April 1, 1992. ISSUES & ARGUMENTS W/N respondents are liable for (a) the delay in the construction of the warehouse, and (b) for unearned income from the lease agreement with Ponderosa. HOLDING & RATIO DECIDENDI (a) Yes. Petitioner could not be expected to file its application for a building permit before April 1992 because the squatters were still occupying the property. Because of the respondent's failure to cause their eviction as agreed upon, the petitioner's contractor failed to commence the construction of the warehouse in October 1991 for the agreed price of P8,649,000. In the meantime, costs of construction materials spiraled. Under the construction contract entered into between the petitioner and the contractor, the petitioner was obliged to pay P11,804,160, including the additional work costing P1,441,500, or a net increase of P1,712,980. The respondent is liable for the difference between the original cost of construction and the increase thereon, conformably to Article 1170 of the New Civil Code. (b) Yes. Petitioner lost the amount of P3,900,000 by way of unearned income from the lease of the property to the Ponderosa Leather Goods Company. The respondent is liable to the petitioner for the said amount, under Articles 2200 and 2201 of the New Civil Code: Art. 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. Art. 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. 354 GSIS v. CA | Romero G.R. No. 117572 January 29, 1998 | 285 SCRA 430 FACTS Rosa Balais worked for the NHA since 1952. On December 1989 she was diagnosed to be suffering from Subarachnoid Hmorrhage Secondary to Ruptured Aneurysm. After undergoing craniotomy, she was finally discharged from the hospital January 20, 1990. Despite her operation, Rosa could not perform her duties as efficiently as she had done prior to her illness. This forced her to retire early from the government service on March 1, 1990 at the age of sixty-two (62) years. In the same month, she claimed from GSIS benefits. She was granted such under Temporary Total Disability (TTD) and was subsequently converted to Permanent Partial Diability (PPD) Rosa again applied for conversion of her classification to Permanent Total Disability (PTD). She was denied of this because the results of her physical examination conducted on June 5, 1990 did not satisfy the criteria for permanent total disability. ISSUE & ARGUMENTS W/N Rosa is entitled to conversion of benefits. HOLDING & RATIO DECIDENDI

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It is true that the degree of Rosas physical condition at the time of her retirement was not considered as permanent total disability, yet, it cannot be denied that her condition subsequently worsened after her head operation and consequent retirement. In fact, she suffered afterwards from some ailments like headaches, dizziness, weakness, inability to properly sleep, inability to walk without support and failure to regain her memory. All these circumstances ineluctably demonstrate the seriousness of her condition, contrary to the claim of petitioner. More than that, it was also undisputed that private respondent was made to take her medication for life. A person's disability may not manifest fully at one precise moment in time but rather over a period of time. It is possible that an injury which at first was considered to be temporary may later on become permanent or one who suffers a partial disability becomes totally and permanently disabled from the same cause. This Court has ruled that "disability should not be understood more on its medical significance but on the loss of earning capacity." Rosas persistent illness indeed forced her to retire early which, in turn, resulted in her unemployment, and loss of earning capacity. Jurisprudence shows that disability is intimately related to one's earning capacity., "permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of a similar nature that she was trained for or accustomed to perform, or any kind of work which a person of her mentality attainment could do." "It does not mean state of absolute helplessness, but inability to do substantially all material acts necessary to prosecution

of an occupation for remuneration or substantially customary and usual manner."

profit

in

The Court has construed permanent total disability as the "lack of ability to follow continuously some substantially gainful occupation without serious discomfort or pain and without material injury or danger to life." 16 It is, therefore, clear from established jurisprudence that the loss of one's earning capacity determines the disability compensation one is entitled to. It is also important to note that Rosa was constrained to retire the age of 62 years because of her impaired physical condition. This is another indication that her disability is permanent and total. As held by this Court, "the fact of an employee's disability is placed beyond question with the approval of the employee's optional retirement, for such is authorized only when the employee is physically incapable to render sound and efficient service' . . . ." Rosa has been employed with the NHA for 38 years with an unblemished record and who was compelled to retire on account of her worsening condition. Denying that conversion would indeed subvert the salutary intentions the law in favor of the worker 355 PNB vs. Pujol | Bellosillo G.R. No. 126152 September 28, 1999 FACTS Lily S. Pujol opened with petitioner Philippine National Bank an account denominated as "Combo Account," a combination of Savings Account and Current Account in private respondent's business name "Pujol Trading," under which checks drawn against private respondent's checking account could be charged against her Savings Account should the funds in her Current Account be insufficient to cover the value of her checks. Hence, private respondent was issued by petitioner a passbook on the front cover of which was typewritten the words "Combo Deposit Plan." On 23 October 1990, private respondent issued a check in the amount of P30,000.00 in favor of her daughter-in-law, Dr. Charisse M. Pujol. When issued and presented for payment, private respondent had sufficient funds in her Savings Account. However, petitioner dishonored her check allegedly for insufficiency of funds and debited her account with P250.00 as penalty charge.On 24 October 1990 private respondent issued another check in the amount of P30,000.00 in favor of her daughter, Ms. Venus P. De Ocampo. When issued and presented for payment petitioner had sufficient funds in her Savings Account. But, this notwithstanding, petitioner dishonored her check for insufficiency of funds and debited her account with P250.00 as penalty charge. On 4 November 1990, after realizing its mistake, petitioner accepted and honored the second check for P30,000.00 and re-credited to private respondent's account the P250.00 previously debited as penalty Private respondent Lily S. Pujol filed with the Regional Trial Court of Pasig City a complaint for moral and exemplary damages against petitioner for dishonoring her checks despite sufficiency of her funds in the bank. On 27 September 1994 the trial court rendered a decision ordering petitioner to pay private respondent

Pujol moral damages of P100,000.00 and attorney's fees of P20,000.00. It found that private respondent suffered mental anguish and besmirched reputation as a result of the dishonor of her checks, and that being a former member of the judiciary who was expected to be the embodiment of integrity and good behavior, she was subjected to embarrassment due to the erroneous dishonor of her checks by petitioner.The Court of Appeals affirmed in toto the decision of the trial court. ISSUES AND ARGUMENTS: W/N: PNB IS LIABLE FOR DAMAGES TO THE PETITIONER HOLDING & RATION DECIDENDI Petitioner does not dispute the fact that private respondent Pujol maintained a Savings Account as well as a Current Account with its Mandaluyong Branch and that private respondent applied for a "Combination Deposit Plan" where checks issued against the Current Account of the drawer shall be charged automatically against the latter's Savings Account if her funds in the Current Account be insufficient to cover her checks. There was also no question that the Savings Account passbook of respondent Pujol contained the printed words "Combo Deposit Plan" without qualification or condition that it would take effect only after submission of certain requirements. Although petitioner presented evidence before the trial court to prove that the arrangement was not yet operational at the time respondent Pujol issued the two (2) checks, it failed to prove that she had actual knowledge that it was not yet operational at the time she issued the checks considering that the passbook in her Savings Account already indicated the words "Combo Deposit Plan." Hence, respondent Pujol had justifiable reason to believe, based on the description in her passbook, that her accounts were effectively covered by the arrangement during the issuance of the checks. Either by its own deliberate act, or its negligence in causing the "Combo Deposit Plan" to be placed in the passbook, petitioner is considered estopped to deny the existence of and perfection of the combination deposit agreement with respondent Pujol. Estoppel in pais or equitable estoppel arises when one, by his acts, representations or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain FACTS to exist and such other rightfully relies and acts on such belief so that he will be prejudiced if the former is permitted to deny the existence of such FACTS. This Court has ruled that a bank is under obligation to treat the accounts of its depositors with meticulous care whether such account consists only of a few hundred pesos or of millions of pesos. Responsibility arising from negligence in the performance of every kind of obligation is demandable. While petitioner's negligence in this case may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and humiliation to private respondent Lily S. Pujol for which she is entitled to recover reasonable moral damages. 7 In the case of Leopoldo Araneta v. Bank of America 8 we held that it can hardly be possible that a customer's check can be wrongfully refused payment without some

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impeachment of his credit which must in fact be an actual injury, although he cannot, from the nature of the case, furnish independent and distinct proof thereof. Damages are not intended to enrich the complainant at the expense of the defendant, and there is no hardand-fast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own peculiar FACTS. The yardstick should be that it is not palpably and scandalously excessive. In this case, the award of P100,000.00 is reasonable considering the reputation and social standing of private respondent Pujol and applying our rulings in similar cases involving banks negligence with regard to the accounts of their depositors. The award of attorney's fees in the amount of P20,000.00 is proper for respondent Pujol was compelled to litigate to protect her interest. 3D 20092010 DIGESTS TORTS & DAMAGES Page 395 of 528 WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals which affirmed the award by the Regional Trial Court of Pasig City of moral damages of P100,000.00 and attorney's fees of P20,000.00 in favor of private respondent Lily S. Pujol is AFFIRMED. Costs against petitioner. 356 FORTUNE EXPRESS, INC vs COURT OF APPEALS, PAULIE U.CAORONG, and minor childrenYASSER KING CAORONG, ROSE HEINNI and PRINCE ALEXANDER, all surnamed CAORONG, and represented by their mother PAULIE U. CAORONG | G.R. No. 119756 March 18, 1999 | MENDOZA, J.: | FACTS Petitioner is a bus company in northern Mindanao. The private respondent are the widow of Atty. Caorong and their children. A bus of petitioner figured in an accident with a jeepney, resulting in the death of several passengers of such jeepney, including two Maranaos. It was later discovered in an investigation that the owner of the jeepney was also a Maranao, who was also planning to take revenge on the petitioner by burning some of its buses. Subsequently, On a certain date, three armed Maranaos pretended to be passengers and seized a bus of a petitioner. Among the passengers was Atty. Caorong. The leader of the Maranaos then ordered the driver to stop the bus, and ordered the passengers to get off the bus. Atty. Caorong also got off, but he then returned to retrieve something from the bus, as the armed Maranaos were putting gasoline on the bus. Caorong was then shot, as he was pleading to spare the life of the driver. The bus then burned, and although some of the passengers were able to get Atty. Caorong out of the bus, he still died while undergoing operation. The private respondents then brought this suit for breach of contract of carriage. ISSUES & ARGUMENTS Is the petitioner liable for damages? If yes, up to what extent? HOLDING & RATIO DECIDENDI

Petitioner is liable for damages.

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Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by a passenger on account of wilfull acts of other passengers, if the employees of the common carrier could have prevented the act through the exercise of the diligence of a good father of a family. In the present case, it is clear that because of the negligence of petitioner's employees, the seizure of the bus by Mananggolo and his men was made possible. Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to take revenge on the petitioner by burning some of its buses and the assurance of petitioner's operation manager, Diosdado Bravo, that the necessary precautions would be taken, petitioner did nothing to protect the safety of its passengers. Simple precautionary measures to protect the safety of passengers, such as frisking passengers and inspecting their baggages, preferably with nonintrusive gadgets such as metal detectors, before allowing them on board could have been employed without violating the passenger's constitutional rights. As for the amount of damages: Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides for the payment of indemnity for the death of passengers caused by the breach of contract of carriage by a common carrier. Initially fixed in Art. 2206 at P3,000.00, the amount of the said indemnity for death has through the years been gradually increased in view of the declining value of the peso. It is presently fixed at P50,000.00. Private respondents are entitled to this amount. Actual Damages. The trial court found that the private respondents spent P30,000.00 for the wake and burial of Atty. Caorong. Since petitioner does not question this finding of the trial court, it is liable to private respondent in the said amount as actual damages. Moral Damages. The trial court found that private respondent suffered pain from the death of her husband and worry on how to provide support for their minor children. The petitioner likewise does not question this finding of the trial court. Thus, in accordance with recent decisions of this Court, it was held that the petitioner is liable to the private respondents in the amount of P100,000.00 as moral damages for the death of Atty. Caorong. Exemplary Damages. Despite warning that the Maranaos were planning to take revenge against the petitioner by burning some of its buses, and contary to the assurance made by its operations manager that the necessary precautions would be take, the petitioner and its employees did nothing to protect the safety of passengers. Under the circumtances, it was deemed it reasonable to award private respondents exemplary damages in the amount of P100,000.00. Attorney's Fees. Pursuant to Art. 2208, attorney's fees may be recovered when, as in the instant case, exemplary damages are awarded. The private respondents are entitled to attorney's fees in that amount of 50,000.

 Compensation for Loss of Earning Capacity. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides that in addition to the indemnity for death arising from the breach of contrtact of carriage by a common carrier, 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." The petitioner is liable to the private respondents in the said amount as a compensation for loss of earning capacity. JR RUIZ 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 397 of 528 357 People v. Balgos| PER CURIAM No. 126115 , 26 January 2000 FACTS On 8 October 1995, at around 2:00 o'clock in the afternoon, Crisselle Fuentes went to the house of the accused-appellant ( Alfonso Balgos) to play with Michelle and Waday, both surnamed Balgos and nieces of the Alfonso Balgos.Since the house of the Balgos abuts a river, the three girls played near the window so they could watch the small crabs wallowing in the said river. While they were playing, Balgos went up to Michelle and asked her to go outside and buy cheese curls. When Michelle left the house, Balgos directed her attention towards Crisselle. He opened the zipper of his pants.He then took Crisselle by the right forearm and made her hold his penis for a short time. When Michelle came back, Balgos asked her and Waday to go outside and buy more cheese curls. The two girls acceded and left Crisselle with Balgos. Whereupon, he closed the door and locked the same. He then removed Crisselle's shorts and underwear, took off his own pants and brief and laid her down on a mat.5 Balgos next went on top of Crisselle and used his hand to direct his penis towards the opening of her vagina. He made a push and pull movement with his penis into Crisselle's vagina which caused her to feel pain. However, Balgos ould not penetrate Crisselle's vagina and was only able to push his penis against the opening of the same. Because of this, he re-positioned his penis and tried again to penetrate Crisselle's organ.9 Despite this effort, he still failed. Balgos stopped his bestial act when he noticed through the window that Michelle and Waday were returning and were about to unlock the door. He then put on his pants, covered Crisselle with a blanket and had her put on her underwear. When Michelle and Waday entered the house, Crisselle was still covered with a blanket Criselle did not tell anybody about the incident. It was her older brother who told her parents and was later on confirmed by Michelle, Waday, and Criselle. Balgos claims that he merely put his finger into the victims vagina and that he did not insert his penis. Trial Court: Convicted Baldos and imposed upon him the penalty of death. He is likewise ordered to indemnify Criselle Fuentes P50,000 as civil damages. ISSUES & ARGUMENTS W/N the trial court was correct in convicting Balgos and in awarding civil damages to the complainant Criselle Fuentes HOLDING & RATIO DECIDENDI YES. The trial court is correct in giving credence to Crisselle's testimony over that of the accusedappellant. Crisselle's testimony was simple, concise and cohesive. The trial court is correct in observing that the victim recounted her ordeal in a "straightforward, clear and convincing" manner. Her testimony is very typical of an innocent child whose

virtue has been violated. In any case, even if his organ merely touched the "hole" of Crisselle's vagina, this already constitutes rape since the complete penetration of the penis into the female organ is not necessary.The mere introduction of the penis into the aperture of the female organ, thereby touching the labia of the pudendum, already consummates the crime of rape. Since the labia is the outer lip of the genital organ,accused-appellant's act of repeatedly placing his organ in the "hole" of Crisselle's vagina was rape. The trial is court correct in imposing the supreme penalty of death on the accusedappellant. Under Article 335 of the Revised Penal Code as amended by Section 11 of Republic Act No. 7659,the penalty of death shall be imposed if the crime of rape is committed against a child below seven (7) years of age. In the present case, there is no dispute that the victim was six (6) years of age when the accusedappellant had carnal knowledge with her. The victim's age was duly established by the prosecution, through the testimony of the victim's mother, Criselda Fuentes, and further corroborated by Crisselle's Certificate of Live Birth. With respect to the award of damages, we have recently held that if the commission of rape is effectively qualified by any of the circumstances under which the penalty of death may be imposed,the civil indemnity for the victim shall not be less than Seventy-Five Thousand Pesos (P75,000.00).Based on the foregoing judicial prescription, the trial court's award of Fifty Thousand Pesos (P50,000.00) as civil indemnity should be increased to SeventyFive Thousand Pesos (P75,000.00). Moreover, the victim is entitled to moral damages under Article 2219 of the Civil Code, without the necessity for pleading or proof of the basis thereof. In line with current jurisprudence, accused appellant's victim is entitled to moral damages in the amount of Fifty Thousand Pesos (P50,000.00). 358 People vs. Quilatan September 28, 2000| FACTS ARMANDO QUILATAN was charged with incestuous rape and found guilty by the trial court. He was sentenced to death. He is now before the SC on automatic review. The trial court found him guilty of rape and sentenced him to death. He was also ordered to pay Oliva Quilatan P200,000.00 for moral and exemplary damages. Oliva is his daughter, then 13 years old. She was earlier raped by Quilatan on her 11th birthday. In both instances of rape, Quilatan threatened to kill her and her siblings if she would tell anyone what he was doing to her. Elenita (the wife) narrated that there was another incident when she found the accused no longer beside her. To her surprise she saw him lying beside their daughter Oliva. When she asked Armando the reason for his action he just kept silent. Offended by what she saw she dashed out of the house. The accused followed her and promised not to abuse Oliva again. Elenita then asked her daughter about her father's abuses and | G.R. No. 132725.

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Oliva revealed her painful and harrowing experiences, with her father. Elenita and Oliva went to the police station and filed their sworn statements charging Armando Quilatan with rape. Dr. Vergara of the PNP Crime Laboratory at Camp Crame conducted a medical examination of Oliva and found her hymen with shallow healed lacerations at 3 o'clock and 6 o'clock positions, as well as a deep healed laceration at 9 o'clock position. The accused interposed denial for his defense. He alleged that when he was still working abroad he learned from a neighbor, whose name he could not recall, that his wife Elenita had a paramour. He confronted her sometime in March 1993 about the P9,000.00 he was sending her every month. When she could not answer him he slapped her. Immediately after, his wife together with all their children left him. But two (2) months later they all returned to their house. Prosecution presented Olivas sister as eyewitness to the rape, she was then 8 years old. ISSUES & ARGUMENTS W/N damages awarded are enough HOLDING & RATIO DECIDENDI NO. There should be an additional fixed penalty of P75,000 The Court finds that the accused was correctly meted the supreme penalty of death, pursuant, to Art. 335 of the Revised Penal Code, as amended by RA 7659 and RA 8353, providing that the death penalty shall be imposed upon the perpetrator if the crime of rape is committed with any of the following aggravating/ qualifying circumstances: x x x x when the victim is under eighteen (18) years of age and the offender is a parent, ascendant, stepparent, guardian, relative by consanguinity or affinity within the third civil degree or the common-law spouse of the parent of the victim. This Court observes that the trial court did not award any indemnity to Oliva for the physical abuse she suffered although it granted her P200,000.00 by way of moral and exemplary damages. In People v. Prades we reiterated that civil indemnity is mandatory upon the finding of the fact of rape; it is distinct from and should not be denominated as moral damages which is based on different jural foundations and assessed by the court in the exercise of sound discretion. If the crime of rape is committed or effectively qualified by any of the circumstances under which the death penalty is authorized by law, the indemnity for the victim shall be P75,000.00. Moral damages may additionally be awarded to the victim in the criminal proceeding, in such amount as the court may deem just, without the need for pleading or proof of the basis thereof as has heretofore been the practice. With regard to exemplary damages, the same may be awarded in criminal cases committed with one or more aggravating circumstances. We find that the award by the trial court of moral and exemplary

damages in the amount of P200,000.00 should be split into P150,000.00 for moral damages and P50,000.00 for exemplary damages, the total amount of P200,000.00 for moral and exemplary damages not being disputed by the accused-appellant and is a factual matter binding on this Court. WHEREFORE, the Decision of the Regional Trial Court of Pasig City finding the accused ARMANDO QUILATAN guilty of Incestuous Rape and imposing on him the DEATH penalty is AFFIRMED, with the modification that the accused is ordered to pay his victim Oliva Quilatan the amounts of P75,000.00 for civil indemnity and P200,000.00 for moral and exemplary damages. 359 People v Willy Marquez | Ynares-Santiago G.R. Nos. 137408-10. December 8, 2000 | FACTS Willy Marquez (accused-appellant) is accused of raping 5-year-old girl, Maria Christina Agustin, in the month of October 1997 in the banana plantation located at the back of the latters house in Bacayao, Guimba, Nueva Ecija. It was only on January 8, 1998 when Maria Cristina confided to her mother in detail what appellant did to her. Upon the advice of the police, Maria Cristina was brought by her parents to the Cabanatuan Provincial Hospital for medical examination. Dr. Cora Lacurom, who examined Maria Cristina, found an old healed hymenal laceration at 6:00 oclock position, which could have been inflicted through forced sexual intercourse committed in or about October 1997. Denying he had anything to do with the offenses charged, Marquez testified that during daytime for the whole month of October 1997 he was at his place of work hauling palay hay for Honofre Arenas at Barangay Bacayao, Guimba, Nueva Ecija. He further claimed that he worked from Monday to Sunday from 6:00 a.m. to 5:30 p.m. and had a break time which lasted from 12:00 noon to 2:00 p.m. Aside from hauling palay hay, accused-appellants work included pasturing the cows and cleaning their wastes. During break time, accused would hang out at the workshop (talyer) of his employers brother-in-law which was just in front of his workplace. After his dismissal from work, he would proceed to the workshop of the brother-in-law in order to learn. He alleged that said place of his work is 250 meters away from the house of the victim and that the road is of muddy condition. RTC held the Marquez guilty beyond reasonable doubt and meted to him the penalty of death and likewise ordering him to pay offended party the amount of P150,000 as moral damages. ISSUES & ARGUMENTS W/N RTC erred in holding Marquez guilty of rape? o Accused-appellant: the prosecution failed to state in the informations the precise date of the commission of the alleged rapes. HOLDING & RATIO DECIDENDI

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NO. The exact date of the commission of the crime is not an essential element of the crime.

 In any event, even if the information failed to allege with certainty the time of the commission of the rapes, the defect, if any, was cured by the evidence presented during trial and any objection based on this ground must be deemed waived as a result of accusedappellant's failure to object before arraignment. His remedy was to move either for a bill of particulars or for the quashal of the information on the ground that it does not conform substantially to the prescribed form. In order to justify the imposition of death, there must be independent evidence proving the age of the victim, other than the testimonies of prosecution witnesses and the absence of denial by the accused. A duly certified certificate of live birth accurately showing the complainant's age, or some other official document or record such as a school record, has been recognized as competent evidence. In the case at bar, while the informations sufficiently allege the minority of Maria Cristina, the prosecution did not present proof to substantiate the age of the victim, such as her birth certificate. This becomes crucial considering that the prosecution must establish with moral certainty that the victim was below seven (7) years old at the time of the rape, to justify the imposition of the death penalty. Accordingly, the penalty imposed on accusedappellant must be reduced to reclusion perpetua. ON DAMAGES: The Court finally observes that while the trial court awarded moral damages, it did not award any indemnity ex delicto. A civil indemnity of P50,000.00 is automatically given to the offended party without need of further evidence other than the fact of rape. Consistent, therefore, with present case law which treats the imposition of civil indemnity as being mandatory upon the finding of rape, accused-appellant should likewise be ordered to pay the amount of P50,000.00 for each count of rape. This civil indemnity is distinct from and awarded in addition to moral damages, the two being based on different jural foundations and assessed by the court in the exercise of sound discretion. To curb the disturbing trend of a child being snatched from the cradle of innocence by some beast to sate its deviant sexual appetite, accusedappellant should likewise be made to pay exemplary damages, which, in line with prevailing jurisprudence, is pegged at P25,000.00, for each count of rape. All in all, Marquez was paid to pay: P150,000 civil indemnity, P150,000 moral damages and P75,000 exemplary damages. 360 Pedro Davila vs PAL| 49 SCRA 497 28 February 1973| FACTS On November 23, 1960 Pedro Davila Jr. boarded Philippine Airlines flight from Manduriao, Iloilo to Manila. The plane had 33 passengers and it did not reach its destination. It crashed at Mt. Baco, Mindoro 1 Hour and 15 minutes after take-off. The parents were bothered by the conflicting news reports not until they received, on December 19, a

letter from PALs president informing them that their son died in the crash. It was only on December 29 that his body was recovered and taken back to Iloilo.

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The findings of the investigation conducted by the Civil Aeronautics Administration showed that the prescribed Iloilo-Romblon-Manila Route was not followed as it being a straight line from Iloilo to Manila. The plane reported its position after take-off and again when it was abeam the Roxas homer. However, the pilot did not intercept airway Amber I as it was supposed to. The pilot also did not report its position then although Romblon was a compulsory checking point. This led to the conclusion that the plane deviated from the prescribed route by 32 miles to the west when it crashed at Mt. Baco. The reading of the altimeter when it crashed was 6,800 ft from the assigned 6,000 ft required elevation. Due to this accident the Court of First Instance ruled in favor of Pedro Davila Jr. and ordered PAL to pay the plaintiffs various sums of money: Php 6,000 for Jrs death; Php 60,000 for loss of earning capacity (Php 12,000 per annum times 5 years), Moral damages, Exemplary damages, Actual Damages and Attorneys Fees. ISSUES & ARGUMENTS Whether or not the damages awarded to Davila was proper? HOLDING & RATIO DECIDENDI 1. The Indemnity for Jrs death. Yes this must be increased. The CFI fixed the indemnity for his death in the amount of Php 6,000. Pursuant to the current jurisprudence on the point it should be increased to Php 12,000. 2. For the loss of earning capacity. Yes. Jr. was getting his income from 3 different sources: (1) Php 8,400/year as manager of a radio station; Php 3,600/year as a lawyer and junior partner in his fathers law firm and Php 3,000/year from farming. Art 2206 provides that the defendant shall be liable for the loss of earning capacity of the deceased and indemnity shall be paid to the heirs of the latter. This article is expressly made applicable to Art 1764 to the death of the passenger caused by the breach of contract by a common carrier, as in this case. In computing a deceaseds life expectancy, the formula is: (2/3) x (80age at the time of death). In this case Jr was single at 30 years of age when he died. Using the formula, his normal life expectancy is 33 and 1/3 years. However, his life expectancy must be reduced to 25 years since his medical history shows that he had complained of and had been treated for backaches, chest pains and occasional feeling of tiredness. In this case, taking into consideration JRs income from all 3 sources together with his living expenses, a yearly living income of Php 7,800 is left. This amount multiplied by 25 years (Php 195,000) is the amount which should be awarded to Jrs parents. 361 People vs. Quilatan September 28, 2000| FACTS ARMANDO QUILATAN was charged with incestuous rape and found guilty by the trial court. He was | G.R. No. 132725.

sentenced to death. He is now before the SC on automatic review. The trial court found him guilty of rape and sentenced him to death. He was also ordered to pay Oliva Quilatan P200,000.00 for moral and exemplary damages. Oliva is his daughter, then 13 years old. She was earlier raped by Quilatan on her 11th birthday. In both instances of rape, Quilatan threatened to kill her and her siblings if she would tell anyone what he was doing to her. Elenita (the wife) narrated that there was another incident when she found the accused no longer beside her. To her surprise she saw him lying beside their daughter Oliva. When she asked Armando the reason for his action he just kept silent. Offended by what she saw she dashed out of the house. The accused followed her and promised not to abuse Oliva again. Elenita then asked her daughter about her father's abuses and Oliva revealed her painful and harrowing experiences, with her father. Elenita and Oliva went to the police station and filed their sworn statements charging Armando Quilatan with rape. Dr. Vergara of the PNP Crime Laboratory at Camp Crame conducted a medical examination of Oliva and found her hymen with shallow healed lacerations at 3 o'clock and 6 o'clock positions, as well as a deep healed laceration at 9 o'clock position. The accused interposed denial for his defense. He alleged that when he was still working abroad he learned from a neighbor, whose name he could not recall, that his wife Elenita had a paramour. He confronted her sometime in March 1993 about the P9,000.00 he was sending her every month. When she could not answer him he slapped her. Immediately after, his wife together with all their children left him. But two (2) months later they all returned to their house. Prosecution presented Olivas sister as eyewitness to the rape, she was then 8 years old. ISSUES & ARGUMENTS W/N damages awarded are enough HOLDING & RATIO DECIDENDI NO. There should be an additional fixed penalty of P75,000 The Court finds that the accused was correctly meted the supreme penalty of death, pursuant, to Art. 335 of the Revised Penal Code, as amended by RA 7659 and RA 8353, providing that the death penalty shall be imposed upon the perpetrator if the crime of rape is committed with any of the following aggravating/ qualifying circumstances: x x x x when the victim is under eighteen (18) years of age and the offender is a parent, ascendant, stepparent, guardian, relative by consanguinity or affinity within the third civil degree or the common-law spouse of the parent of the victim. This Court observes that the trial court did not award any indemnity to Oliva for the physical abuse she

suffered although it granted her P200,000.00 by way of moral and exemplary damages.

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In People v. Prades we reiterated that civil indemnity is mandatory upon the finding of the fact of rape; it is distinct from and should not be denominated as moral damages which is based on different jural foundations and assessed by the court in the exercise of sound discretion. If the crime of rape is committed or effectively qualified by any of the circumstances under which the death penalty is authorized by law, the indemnity for the victim shall be P75,000.00. Moral damages may additionally be awarded to the victim in the criminal proceeding, in such amount as the court may deem just, without the need for pleading or proof of the basis thereof as has heretofore been the practice. With regard to exemplary damages, the same may be awarded in criminal cases committed with one or more aggravating circumstances. We find that the award by the trial court of moral and exemplary damages in the amount of P200,000.00 should be split into P150,000.00 for moral damages and P50,000.00 for exemplary damages, the total amount of P200,000.00 for moral and exemplary damages not being disputed by the accused-appellant and is a factual matter binding on this Court. WHEREFORE, the Decision of the Regional Trial Court of Pasig City finding the accused ARMANDO QUILATAN guilty of Incestuous Rape and imposing on him the DEATH penalty is AFFIRMED, with the modification that the accused is ordered to pay his victim Oliva Quilatan the amounts of P75,000.00 for civil indemnity and P200,000.00 for moral and exemplary damages. 362 PEOPLE vs. JEREZ FACTS Efren Jerez together with some companions went their way to look for carabao buyers in Camarines Sur. They were able to obtain information from a tricycle driver of the wherabouts of a prospective buyer in the name of Reynaldo Ochoa (49 years old). Subsequently, the latter together with another buyer by the name Joselito Balbastro (35 years old) went with Jerez and company in order to check the status of the carabaos. However, the two buyers by then, were stabbed to death by Jerez and company as they were divested of certain possessions including a sum of money amounting to PhP 37,000.00. Jerez, et. al. were consequently charged and convicted of the crime of robbery and double homicide. They were then ordered to pay the heirs of the victims PhP 100,000.00 (each of the victim), as cost of loss of earning capacity. ISSUES & ARGUMENTS payment was proper? Whether the order of

HOLDING & RATIO DECIDENDI No. The lower court made a wrong computation. They must have rendered the order using: NET EARNING CAPACITY = Life Expectancy X (Gross Annual Income Less: Necessary Life Expenses) Where: Life Expectancy = 2/3 (80 age at time of death) Hence: Jose = PhP 1,080,000.00 Reynaldo = PhP 756,000.00 363 Rosales vs. CA and MMTC| Quisumbing G.R. No. 126395, November 16, 1998| FACTS

 Metro Manila Transit Corporation (MMTC) is the operator of a fleet of passenger buses within the Metro Manila area. Musa was its driver assigned to MMTC Bus No. 27. 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 at 25 kilometers per hour, 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 and sentenced to imprisonment by the RTC of Quezon City. The spouses Rosales filed an independent civil action for damages against MMTC, Musa, MMTC Acting General Manager Conrado Tolentino, and the Government Service Insurance System (GSIS). On August 5, 1994, the Court of Appeals affirmed the decision of the trial court with the following modification of deleting the award of P150,000.00 as actual damages and awarding in lieu thereof the amount of P30,000.00 as death indemnity. The spouses Rosales filed a motion for reconsideration, which the appellate court, in a resolution, dated September 12, 1996, partly granted by increasing the indemnity for the death of Liza Rosalie from P30,000.00 to P50,000.00. ISSUES & ARGUMENTS W/N COMPENSATION FOR LOSS OF EARNING CAPACITY SHOULD BE AWARDED TO LISA ROSALIES HEIRS? HOLDING & RATIO DECIDENDI Y ES, COMPENSATION FOR LOSS OF EARNING CAPACITY SHOULD BE AWARDED 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.

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. 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. Considering her good academic record, extracurricular 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 capacity should be awarded to her heirs in accordance with the formula established in decided cases for computing net earning capacity, to wit: Net Earning Capacity = Life Expectancy x [Gross Annual Income Necessary Living 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 nonagricultural 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. 364 People vs. Mendoza | Puno GR. No.134004, December 15, 2000 | 348 SCRA 318 FACTS While celebrating his bestfriends (Christoper Huidem) birthday, Antonio Antholyn Laggui II met his death. At age 25, he was still at the prime of his life (contractual worker at Coca-Cola earning P180.00 per day) and less than one year into his marriage. The accused SPO3 Antonio Mendoza was behind his namesakes untimely demise. During the birthday inuman, Christopher and his brother Jonathan got into an argument. To cool off, Christoper went to his aunts store, a few houses away. Antonio then followed him. While Christopher and Antonio were talking with a neighbor named Andres Rodriguez, the accused Mendoza approached them and lighted their faces with a flashlight. Mendoza wore a bonnet, which left his singkit eyes and medyo matangos nose exposed. Mendoza asked Antonio if he was a barangay tanod and whether he was drunk. Antonio answered no and was shot thrice. (First was when he answered no; second when he was on the ground; and third the accused came back for a final shot.) Trial court convicted Mendoza of Murder and sentenced him to Reclusion Perpetua. ISSUES & ARGUMENTS

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 What is the proper award for damages due to lost earnings? HOLDING & RATIO DECIDENDI [Main issue is review of the conviction, which was affirmed by the Supreme Court. In fact, actual, moral and exemplary damages were awarded.] THE ACCUSED MENDOZA SHALL ALSO COMPENSATE THE HEIRS OF ANTONIO FOR THE LATTERS LOSS OF EARNING CAPACITY. The following factors should be considered in determining the compensable amount of lost earnings: (1) the number of years for which the victim would have otherwise lived; and (2) the rate of loss sustained by the heirs of the deceased. Jurisprudence provides that the first factor, or life expectancy, is computed by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality of the Actuarial Combined Experience Table of Mortality. On the other hand, the second factor is arrived at by multiplying the life expectancy by the net earnings of the deceased (i.e. the total earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses). The net earning is ordinarily pegged at 50% of the gross earnings. 1. Life Expectancy= 2/3 x (80-25) = 36.67 2. Gross Annual Salary= P180 x 261 days (working)= P46,980 3. Net earnings= P46, 980 x .50= P23,490 4. Lost Earnings= 36.67 x P23,490= P861,378.30. Petition DENIED. s 365 People vs. Dubria | Gonzaga-Reyes G.R. No. 138887, September 26, 2000 | FACTS This is an appeal from the decision of the RTC of Iloilo City, , finding accused Dubria guilty beyond reasonable doubt of murder and sentencing him to suffer the penalty of reclusion perpetua The information against Dubria alleged the abovenamed accused, armed with a long homemade firearm and a sharp instrument with treachery and evident premeditation, with deliberate intent and decided purpose to kill, did then and there willfully, unlawfully, and feloniously attack, assault, shoot and hack one Patricio Calambro, Jr. with said weapons he was then provided, hitting and inflicting upon the latter, wounds on the different parts of his body which caused his death thereafter. The RTC believed the testimony of three witnesses of the prosecution. Upon appeal, the SC affirmed the conviction. NOTE: Damages was NOT really an issue raised by the parties upon appeal, but the SC itself noted that the RTC FORGOT to award said damages (loss of earning capacity) ISSUES & ARGUMENTS W/N damages for loss of earning capacity must be awarded HOLDING & RATIO DECIDENDI YEZZZIR!!! using the AETM Expectancy Table of Mortality] [American

We note however that the trial court failed to award damages for the loss of earning capacity of the victim to the heirs of the deceased Patricio Calambro, Jr. The fact that the prosecution did not present documentary evidence to support its claim for damages for loss of earning capacity of the deceased does not preclude recovery of said damages.

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The testimony of the mother of the victim, Norma Calambro, as to the earning capacity of her husband sufficiently establishes the basis for making such an award. It was established that Patricio Calambro, Jr. was 23 years old at the time of his death in 1996. His average monthly income was P3,000.00. Hence, in accordance with the American Expectancy Table of Mortality that has been consistently adopted by the Courtthe loss of his earning capacity is to be calculated as follows: Award for = 2/3 [80-age at time of death]x[gross annual income-80%(GAI)] Lost earnings = 2/3 [80-23] x [P36,000.00 - 80%(P36,000.00)] = (38) x (P7,200.00) =P273,600.00 As such, accusedappellant should likewise be made to pay the amount of P273,600.00 representing the loss of earning capacity of the deceased. 366. Reformina vs. Tomol| Cuevas G.R. No. L-59096 October 11, 1985 |SCRA FACTS In an action for Recovery of Damages for injury to Person and Loss of Property, judgment was rendered by the CFI of Cebu ordering defendants Shell and Michael to pay jointly and severally Pacita F. Reformina and Francisco Reformina for the losses and damages suffered by them with legal interest. Upon execution, the Reforminas claim that the "legal interest" should be at the rate of twelve (12%) percent per annum, invoking in support of their aforesaid submission, Central Bank of the Philippines Circular No. 41623. Shell and Michael insist that said legal interest should be at the rate of six (6%) percent per annum only, pursuant to and by authority of Article 2209 of the New Civil Code in relation to Articles 2210 and 2211 thereof. ISSUES & ARGUMENTS W/N, by way of legal interest, a judgment debtor should pay a judgment creditor twelve (12%) percent per annum. Reforminas: Central Bank Circular No. 416 includes the judgment sought to be executed in this case, because it is covered by the second phrase the rate allowed in judgments in the absence of express contract as to such rate of interest ... " HOLDING & RATIO DECIDENDI No. By way of legal interest, a judgment debtor should pay a judgment creditor only six (6%) percent per annum. Central Bank Circular No. 416 was issued and promulgated by the Monetary Board pursuant to the authority granted to the Central Bank by P.D. No. 116, which amended Act No. 2655, otherwise known as the Usury Law. o Acting pursuant to this grant of authority, the Monetary Board increased the rate of legal interest from that of six (6%) percent per annum originally allowed under Section I of Act No. 2655 to twelve (12%) percent per annum. 23 By virtue of the authority granted to it under Section 1 of Act 2655, as amended,

otherwise known as the "Usury Law" the Monetary Board in its Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of interest for the loan or forbearance of any money, goods, or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall be twelve (12%) per cent per annum. This Circular shall take effect immediately. (Italics supplied) o It will be noted that Act No. 2655 deals with interest on (1) loans; (2) forbearances of any money, goods, or credits; and (3) rate allowed in judgments. WHAT KIND OF JUDGMENT IS REFERRED TO UNDER THE SAID LAW? o The judgments spoken of and referred to are Judgments in litigations involving loans or forbearance of any 'money, goods or credits. Any other kind of monetary judgment which has nothing to do with, nor involving loans or forbearance of any money, goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. o A word or phrase in a statute is always used in association with other words or phrases and its meaning may thus be modified or restricted by the latter. o Another formidable argument against the tenability of the Reforminas' stand are the whereases of PD No. 11624 which brought about the grant of authority to the Central Bank. The decision herein sought to be executed is one rendered in an Action for Damages for injury to persons and loss of property and does not involve any loan, much less forbearances of any money, goods or credits The law applicable to the said case is Article 2209 of the New Civil Code25. The above provision remains untouched despite the grant of authority to the Central Bank by Act No. 2655, as amended. To make Central Bank Circular No. 416 applicable to any case other than those specifically provided for by the Usury Law will make the same of doubtful constitutionality since the Monetary Board will be exercising legislative functions which was beyond the intendment of P.D. No. 116. Separate Opinion 24 WHEREAS, the interest rate, together with other monetary and credit policy instruments, performs a vital role in mobilizing domestic savings and attracting capital resources into preferred areas of investments; WHEREAS, the monetary authorities have recognized the need to amend the present Usury. Law to allow for more flexible interest rate ceilings that would be more responsive to the requirements of changing economic conditions; WHEREAS, the availability of adequate capital resources is, among other factors, a decisive element in the achievement of the declared objective of accelerating the growth of the national economy 25 Art. 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 interest agreed upon, and in the absence of stipulation, the legal interest which is six percent per annum. 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 407 of 528 PLANA, J., concurring and dissenting: o The Central Bank authority here in question is not premised on Section 1-a of Act No. 2655 (Usury Law). Sec. 1-a cannot include a provision on interest to be allowed in judgments, which is not the subject of contractual stipulations and therefore cannot logically be made

subject to interest (ceiling), which is all that Sec. 1-a covers. o Sec. 1 of the Usury Law is different from Sec. 1-a. The role of Section 1 is to fix the specific rate of interest or legal interest (6%) to be charged. It also impliedly delegates to the Central Bank the power to modify the said interest rate. Thus, the interest rate shall be 6% per annum or "such rate as may be prescribed by the Monetary Board of the Central Bank ..." o The authority to change the legal interest that has been delegated to the Central Bank under the quoted Section 1 is absolute and unqualified. The determination of what the applicable interest rate shall be, as distinguished from interest rate ceiling, is completely left to the judgment of the Central Bank. In short, there is a total abdication of legislative power, which renders the delegation void. Thus, it is unnecessary to make a distinction between judgments in litigations involving loans and judgments in litigations that have nothing to do with loans. o The Central Bank authority to change the legal rate of interest allowed in judgments is constitutionally defective; and incidentally, this vice also affects its authority to change the legal interest of 6% per annum as to loans and forbearance of money, goods or credits, as envisaged in Section 1 of the Usury Law. 367. Easter Shipping vs. CA and Mercantile Insurance GR 97412, July 12, 1994/ Vitug FACTS Two fiber drums of Vitamin B were shipped from Japan on SS Eastern Comet owned by petitioners Upon inspection in Manila, it was found out that one of the drums spilled, the rest of the shipment contents were fake. Defendant then sued petitioner in the RTc which ruled in their favor The award include a stipulation asking them to pay 12 percent interest. ISSUES & ARGUMENTS W/N the interest on the claim should commence from the date of the filing of the complaint at the rate of 12% contra from the date of decision only at a rate of 6% HOLDING & RATIO DECIDENDI 6% from the decision When an obligation regardless of its source is breached, the contravenor can be held liable for damages. The provisions under the civil code regarding Damages govern the measure of recoverable damages. But, with regard to interest in the concept of actual and compensatory damages, the rate of interest is imposed as follows: o When the obligation is breached and it consists of the payment of a sum of money like a loan or forbearance of money, the interest due is what it was written in the stipulation. This interest shall ITSELF earn legal interest from the time it is judicially demanded. In absence of such stipulation, it is 12% o When an obligation NOT in breach of a loan or forbearance of money, an interest of said damages may be given at the discretion of the court, at 6% per annum. There will be no interest though until the claims are liquidated except when the demand can be

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proven with reasonable certainty, and this interest shall run from the time judicially or extrajudicially. But if there is no certainty, it will be counted from the date of the judgment id made When the judgment reaches FINALLITY, there shall be a interest rate of 12% until it is satisfied. This is equivalent to a forbearance 368. Atlantic Gulf and Pacific Co. of Manila, Inc. vs. CA, Carlito Castillo and Heirs of Castillo | Regalado G.R. No. 114841-42, October 20, 1995 | FACTS Sometime in 1982, petitioner company commenced the construction of a steel fabrication plant in the Municipality of Bauan, Batangas, necessitating dredging operations at the Batangas Bay in an area adjacent to the real property of private respondents. Private respondents alleged that during the on-going construction of its steel and fabrication yard, petitioner's personnel and heavy equipment trespassed into the adjacent parcels of land belonging to private respondents without their consent. These heavy equipment damaged big portions of private respondents' property which were further used by petitioner as a depot or parking lots without paying any rent therefor, nor does it appear from the records that such use of their land was with the former's conformity. Respondents further alleged that as a result of the dredging operation of petitioner company, the sea silt and water overflowed and were deposited upon their land. Consequently, the said property which used to be agricultural lands principally devoted to rice production and each averaging an annual net harvest of 75 cavans, could no longer be planted with palay as the soil became infertile, salty, unproductive and unsuitable for agriculture. Petitioner now moves for the reconsideration of the judgment promulgated in this case on August 23, 1995 contending that private respondents are permitted thereunder to recover damages twice for the same act of omission contrary to Article 2177 of the Civil Code. ISSUES & ARGUMENTS W/N RESPONDENTS WERE PERMITTED TO RECOVER DAMAGES TWICE FOR THE SAME ACT? Petitioner: Affirmance of the judgment of the trial court granting damages for both the damage proper to the land and rentals for the same property runs afoul of the proscription in Article 2177. HOLDING & RATIO DECIDENDI NO, THERE WAS NO RECOVERY OF DAMAGES TWICE FOR THE SAME ACT Petitioner overlooks the fact that private respondents specifically alleged that as a result of petitioners dredging operations the soil of the formers property became infertile, salty, unproductive and unsuitable for agriculture. They further averred that petitioners heavy equipment used to utilize respondents land as a depot or parking lot of these equipment without paying any rent therefor. It is therefore clearly apparent that petitioner was guilty of two culpable transgressions on the

property rights of respondents, that is: o 1. For the ruination of the agricultural fertility or utility of the soil of their property o 2. For the unauthorized use of said property as a dump rile or depot for petitioners heavy equipment and trucks

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Consequently, both courts correctly awarded damages both for the destruction of the land and for the unpaid rentals, or more correctly denominated, for the reasonable value of its use and occupation of the premises. 369. Medel vs. CA | PARDO, J G.R. No. 131622, November 27, 1998 | 299 SCRA 481 FACTS Servando Franco and Leticia Medel obtained a loan from Veronica R. Gonzales who was engaged in the money lending business under the name "Gonzales Credit Enterprises", in the amount of P50,000.00, payable in two months. Veronica gave only the amount of P47,000.00, to the borrowers, as she retained P3,000.00, as advance interest for one month at 6% per month. Then Servando and Leticia executed a promissory note for P50,000.00, to evidence the loan, payable on January 7, 1986. Servando and Liticia obtained from Veronica another loan in the amount of P90,000.00. They received only P84,000.00, out of the proceeds of the loan. Servando and Leticia secured from Veronica still another loan in the amount of P300,000.00, maturing in one month, secured by a real estate mortgage over a property belonging to Leticia Makalintal Yaptinchay, who issued a special power of attorney in favor of Leticia Medel, authorizing her to execute the mortgage. Like the previous loans, Servando and Medel failed to pay the third loan on maturity. Servando and Leticia with the latter's husband, Dr. Rafael Medel, consolidated all their previous unpaid loans totaling P440,000.00, and sought from Veronica another loan in the amount of P60,000.00, bringing their indebtedness to a total of P500,000.00, payable on August 23, 1986. Then they executed a promissory note which provides that indebtedness of P500,000 shall bear an interest at the rate of 5.5 PER CENT per month plus 2% service charge per annum Said promissory note likewise provides that should they fail to pay any amortization or any portion thereof, all the other installments together with all interest accrued shall immediately be due and payable plus an additional amount equivalent to one per cent (1%) per month of the amount due and demandable as penalty charges in the form of liquidated damages until fully paid; Plus there shall be a further sum of TWENTY FIVE PER CENT (25%) thereof in full, without deductions as Attorney's Fee whether actually incurred or not, of the total amount due and demandable, exclusive of costs and judicial or extra judicial expenses Since the borrowers failed to pay, Veronica R. Gonzales, joined by her husband Danilo G. Gonzales

filed, a complaint for collection of the full amount of the loan including interests and other charges. Defendants Leticia and Rafael Medel alleged that the loan was the transaction of Leticia Yaptinchay, who executed a mortgage in favor of the plaintiffs over a parcel of real estate situated in San Juan, Batangas They also averred that the interest rate is excessive at 5.5% per month with additional service charge of 2% per annum, and penalty charge of 1% per month; that the stipulation for attorney's fees of 25% of the amount due is unconscionable, illegal and excessive, and that substantial payments made were applied to interest, penalties and other charges. the lower court declared that the due execution and genuineness of the four promissory notes had been duly proved, and ruled that although the Usury Law had been repealed, the interest charged by the plaintiffs on the loans was unconscionable. Hence, the trial court applied "the provision of the New Civil Code" that the "legal rate of interest for loan or forbearance of money, goods or credit is 12% per annum." ISSUES & ARGUMENTS W/N the stipulated rate of interest at 5.5% per month on the loan in the sum of P500,000.00, that plaintiffs extended to the defendants is usurious. HOLDING & RATIO DECIDENDI No, it is not usurious. However it is unconscionable which makes the stipulation void. SC agreed with petitioners that the stipulated rate of interest at 5.5% per month on the P500,000.00 loan is excessive, iniquitous, unconscionable and exorbitant. However, SC can not consider the rate "usurious" because this Court has consistently held that Circular No. 905 of the Central Bank, adopted on December 22, 1982, has expressly removed the interest ceilings prescribed by the Usury Law and that the Usury Law is now "legally inexistent The interest at 5.5% per month, or 66% per annum, stipulated upon by the parties in the promissory note iniquitous or unconscionable, and, hence, contrary to morals ("contra bonos mores"), if not against the law. The stipulation is void. The courts shall reduce equitably liquidated damages, whether intended as an indemnity or a penalty if they are iniquitous or unconscionable. The Court of Appeals erred in upholding the stipulation of the parties. Rather, SC agreed with the trial court that, under the circumstances, interest at 12% per annum, and an additional 1% a month penalty charge as liquidated damages may be more reasonable. 370. David vs. Court of Appeals | Quisumbing, J. G.R. No. 115821, October 13, 1999 | 316 SCRA 710 FACTS The parties do not dispute the FACTS in this case. The dispute concerns only the execution of the Decision of the Regional Trial Court of Manila, Branch 27, in Civil Case No. 94781, dated October 31, 1979, as amended by an Order dated June 20, 1980.1wphi1.nt The Regional Trial Court of Manila, Branch 27, with Judge Ricardo Diaz, then presiding, issued a writ of attachment over real properties covered by TCT Nos. 80718 and 10289 of private respondents. In his

Decision dated October 31, 1979, Judge Diaz ordered private respondent Afable to pay petitioner P66,500.00 plus interest from July 24, 1974, until fully paid, plus P5,000.00 as attorney's fees, and to pay the costs of suit. On June 20, 1980, however, Judge Diaz issued an Order amending said Decision, so that the legal rate of interest should be computed from January 4, 1966, instead of from July 24, 1974. Respondent Afable appealed to the Court of Appeals and then to the Supreme Court. In both instances, the decision of the lower court was affirmed. Entries of judgment were made and the record of the case was remanded to Branch 27, presided at that time by respondent Judge Edgardo P. Cruz, for the final execution of the Decision dated October 31, 1979, as amended by the Order dated June 20, 1980.

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Upon petitioner's motion, respondent Judge issued an Alias Writ of Execution by virtue of which respondent Sheriff Melchor P. Pea conducted a public auction. Sheriff Pea informed the petitioner that the total amount of the judgment is P270,940.52. The amount included a computation of simple interest. Petitioner, however, claimed that the judgment award should be P3,027,238.50, because the amount due ought to be based on compounded interest. Although the auctioned properties were sold to the petitioner, Sheriff Pea did not issue the Certificate of Sale because there was an excess in the bid price in the amount of P2,941,524.47, which the petitioner failed to pay despite notice. This excess was computed by the Sheriff on the basis of petitioner's bid price of P3,027,238.50 minus the amount of P270,940.52 computed in the judgment award. On May 18, 1993, petitioner filed a Motion praying that respondent Judge Cruz issue an order directing respondent Sheriff Pea to prepare and execute a certificate of sale in favor of the petitioner, placing therein the amount of the judgment as P3,027,238.50, the amount he bid during the auction which he won. His reason is that compound interest, which is allowed by Article 2212 of the Civil Code, should apply in this case. On July 5, 1993, respondent Judge issued an Order denying petitioner's Motion dated May 18, 1993, On August 11, 1993, petitioner moved for reconsideration of the Order dated July 5, 1993, reiterating his Motion dated May 18, 1993. On November 17, 1993, respondent Judge issued his Order denying the petitioner's motion for reconsideration. Petitioner elevated said Orders to the Court of Appeals in a petition for certiorari, prohibition and mandamus. However, respondent appellate court dismissed the petition in a Decision dated May 30, 1994. ISSUES & ARGUMENTS W/N respondent appellate court erred in affirming respondent Judge's order for the payment of simple interest only rather than compounded interest. HOLDING & RATIO DECIDENDI

However, this Court has already interpreted Article 2212, and defined standards for its application in Philippine American Accident Insurance vs. Flores, 97 SCRA 811. As therein held, Article 2212 contemplates the presence of stipulated or conventional interest which has accrued when demand was judicially made. In cases where no interest had been stipulated by the parties, as in the case of Philippine American Accident Insurance, no accrued conventional interest could further earn interest upon judicial demand. 5 In the said case, we further held that when the judgment sought to be executed ordered the payment of simple "legal interest" only and said nothing about payment of compound interest, but the respondent judge orders payment of compound interest, then, he goes beyond the confines of a judgment which had become final. Note that in the case now before us, the Court of Appeals made the finding that ". . . no interest was stipulated by the parties. In the promissory note denominated as "Compromise Agreement" signed by the private respondent which was duly accepted by petitioner no interest was mentioned. In his complaint, petitioner merely prayed that defendant be ordered to pay plaintiff the sum of P66,500.00 with interest thereon at the legal rate from the date of the filing of the complaint until fully paid. 6 Clearly here the Philippine American Accident Insurance ruling applies.

HOLDING & RATIO DECIDENDI NO. INTEREST RATES ARE INVALID.

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SC affirmed the CA ruling, striking down as invalid the 10% compounded monthly interest, the 10% surcharge per month stipulated in the promissory notes, and the 1% compounded monthly interest stipulated in another promissory note. The legal rate of interest of 12% per annum shall apply after the maturity dates of the notes until full payment of the entire amount due. The only permissible rate of surcharge is 1% per month, without compounding. SC upheld the award of CA of attorneys fees, reasonably reducing the stipulated 25% to 10% of the entire amount due. SC also equitably reduced the 3% per month or 36% per annum interest present in all four promissory notes to 1% per month or 12% per annum interest. SC based its decision on the Medel, Garcia, Bautista, and Spouses Solangon cases. An interest of 12% per annum is deemed fair and reasonable. The 1% surcharge on the principal loan for every month of default is valid. This surcharge or penalty stipulated in a loan agreement in case of default partakes of the nature of liquidated damages under Art. 2227 of the NCC, and is separated and distinct from interest payment. Although the courts may not at liberty ignore the freedom of the parties to agree on such terms and conditions as they see fit that contravene neither law nor morals, good customs, public order or public policy, a stipulated penalty, nevertheless, may be equitably reduced if it is iniquitous or unconscionable. 372. Cuaton v. Salud | Ynares-Santiago G.R. No. 158382 January 27, 2004| 421 SCRA 278 FACTS Petitioner Cuaton loaned P1M from Respondent Salud, which was secured by a REM. After petitioners default, respondent, joined by her husband, instituted foreclosure proceedings for a REM against petitioner and his mother. The RTC rendered a decision that the REM was void because it was executed by the petitioner without expressly stating that he was merely acting as a representative of his mother, in whose name the mortgaged lot was titled. Nevertheless, the RTC ordered petitioner to pay the P1M loan plus interest amounting to P610K, representing interests of 10% and 8% per month for the period of Feb-Aug 1992. CA affirmed the RTC decision. Petitioner then filed a motion for partial reconsideration with respect to the award of interest worth P610K, arguing that the same was iniquitous and exorbitant. Motion denied. ISSUES & ARGUMENTS W/N the 8% and 10% MONTHLY interest rates imposed on the P1M loan obligation of petitioner to respondent are valid. HOLDING & RATIO DECIDENDI

371. Ruiz vs. Court of Appeals | Puno G.R. No. 146942, April 22, 2003 | 401 SCRA 410 FACTS Petitioner Corazon Ruiz is engaged in the business of buying and selling jewelry. She obtained loans from private respondent Consuelo Torres on different occasions. These loans were consolidated under one promissory note and were secured by a real estate mortgage. The promissory note provided for a monthly interest rate of 3%, a surcharge of 1%, and 10% compounded monthly interest on remaining balance as of the maturity date. Petitioner obtained three more loans from private respondent and was secured by P571,000 worth of jewelry. Petitioner was unable to make interest payments as she had difficulties collecting from her clients in her jewelry business. Due to petitioners failure to pay the principal loan, as well as the interest payment, private respondent demanded payment. When petitioner failed to pay, private respondent sought the extrajudicial foreclosure of the real estate mortgage. Petitioner filed a complaint, with a prayer for the issuance of TRO to enjoin the sheriff from proceeding with the foreclosure sale and to fix her indebtedness to P706,000. ISSUES & ARGUMENTS W/N the rates of interests and surcharges on the obligation of petitioner to private respondent are valid?

NO. SUCH RATES ARE INIQUITOUS AND EXORBITANT. INTEREST RATE REDUCED TO 12% PER ANNUM. Although the Usury Law is suspended, lenders have no authority to raise interest rates to levels which will either enslave their borrowers or lead to a haemorrhaging of their assets. The stipulated interest rates are illegal if they are unconscionable. Stipulations authorizing iniquitous or unconscionable interests are contrary to morals, if not against the law. Under Art.1409 of the Civil Code, these contracts are inexistent and void from the beginning. They cannot be ratified nor the right to set up their illegality as a defense be waived. The SC has already declared unconscionable interest rates of 5.5% per month and 6% per month in previous cases for being excessive, iniquitous, unconscionable, and exorbitant. In both cases, the interest rates were reduced to 12% per annum. In the present case, the present 8% and 10% interest rates are even higher than those previously invalidated by the Court. Accordingly, the reduction of the said rates to 12% per annum is fair and reasonable. The case of Eastern Shipping Lines, Inc. v. Court of Appeals, laid down the following guidelines on the imposition of interest, to wit: 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 23 of the Civil Code. x x x 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. Applying the foregoing rules, the interest of 12% per annum imposed by the Court (in lieu of the invalidated 10% and 8% per month interest rates) on the P1M loan should be computed from the date of the execution of the loan on October 31, 1991 until finality of this decision. After the judgment becomes final and executory until the obligation is satisfied, the amount due shall further earn interest at 12% per year. 373. Commonwealth Insurance Corp vs. CA| Austria-Martinez G.R. No. 130886. January 29, 2004| FACTS RCBC granted 2 loans to Jigs Manufacturing (JIGS), 2.5M and Elba Industries (ELBA), 1M. The loans were evidenced by promissory notes and secured by surety bonds executed by Commonwealth Insurance Corp (CIC). The surety bonds totalled P4,464,128.00 JAGS and ELBA defaulted in their payment.

RCBC made a written demand to CIC which in turn CIC made several payments, 2M in total. RCBC made a final demand on the balance but CIC ignored. RCBC filed a complaint against CIC. Trial Court ruled in favor of RCBC and ordered CIC to pay the balance. The judgment made no pronouncement as to interest. RCBC appealed to CA praying that CIC be made liable to pay interest. CA granted and added a 12% legal interest on the award. ISSUES & ARGUMENTS W/N CIC should be held liable to pay interest over and above its principal obligation under the surety bonds issued by it? HOLDING & RATIO DECIDENDI YES. CIC is made to pay interest not on the basis of the surety bonds it issued but on basis of its default in paying its obligation.

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It has been held that if a surety upon demand fails to pay, he can be held liable for interest, even if in thus paying, its liability becomes more than the principal obligation. The increased liability is not because of the contract but because of the default and the necessity of judicial collection. As a general rule, a suretyshould not be made to pay more than its assumed obligation under the surety bonds. However, CICs liability for the payment of interest is not by reason of the suretyship agreement itself but because of the delay in the payment of its obligation under the said agreement. CIC offered no valid excuse for not paying the balance of its principal obligation when demanded by RCBC. Its failure to pay is unreasonable. The appellate court is correct in imposing 12% interest. When an obligation is breached, and it consists in the payment of a sum of money, the interest due should be that which may have been stipulated in writing. Absence of stipulation, the reate of interest shall be 12%. CICs obligation consists of a loan or forbearance of money. No interest has been agreed upon in writing between CIC and RCBC. Rate of interest is 12% to be computed from the time the extrajudicial demand was made. 374. DBP V. PEREZ G.R. No. 148541 FACTS On April 28, 1978, petitioner Development Bank of the Philippines (DBP) sent a letter to respondent Bonita Perez, informing the latter of the approval of an industrial loan amounting to P214,000.00 for the acquisition of machinery and equipment and for working capital, and an additional industrial loan amounting to P21,000.00 to cover unforeseen price escalation. On May 18, 1978, the respondents were made to sign four promissory notes covering the total amount of the loan, P235,000.00. Three promissory notes for P24,000.00, P48,000.00, and P142,000.00,

respectively, were executed, totaling P214,000.00. These promissory notes were all due on August 31, 1988. A fourth promissory note due on September 19, 1988 was, likewise, executed to cover the additional loan of P21,000.00. The promissory notes were to be paid in equal quarterly amortizations and were secured by a mortgage contract covering real and personal properties. On September 6, 1978, the petitioner sent a letter to the respondents informing them of the terms for the payment of the P214,000.00 industrial loan. On November 8, 1978, the petitioner sent another letter to the respondents informing them about the terms and conditions of their additional P21,000.00 industrial loan. Due to the respondents' failure to comply with their amortization payments, the petitioner decided to foreclose the mortgages that secured the obligation. However, in a Letter dated October 7, 1981, Mrs. Perez requested for a restructuring of their account due to difficulties they were encountering in collecting receivables. On April 1, 1982, the petitioner informed the respondents that it had approved the restructuring of their accounts. The loan was restructured, and on May 6, 1982, the respondents signed another promissory note in the amount of P231,000.00 at eighteen percent (18%) interest per annum, payable quarterly at P12,553.27, over a period of ten years. The first amortization was due on August 7, 1982, and the succeeding amortizations, every quarter thereafter. However, the respondents made their first payment amounting to P15,000.00 only on April 20, 1983 or after the lapse of three quarters. Their second payment, which should have been paid on November 7, 1982, was made on December 2, 1983 and only in the amount of P5,000.00. The third payment was then made at the time when the ninth quarterly amortization should have been paid. After this, the respondents completely stopped paying. The total payments they made after the restructure of the loan amounted to P35,000.00 only. This failure to meet the quarterly amortization of the loan prompted the petitioner to institute foreclosure proceedings on the mortgages. The sale of the properties covered by the mortgage contract was scheduled on October 30, 1985 ISSUES & ARGUMENTS Whether the interest rate agreed upon by the parties in the new promissory note is usurious? HELD YES.The CA held that under CB Circular No. 817, if the loan is secured by a registered real estate, the interest of eighteen percent (18%) is usurious. The petitioner, however, argues that usury has become legally inexistent with the promulgation of CB Circular No. 905. It contends that the interest rate should be eighteen percent (18%), the interest rate they agreed upon. For their part, the respondents argue that the Central Bank engaged in self-legislation in enacting CB Circular No. 905. We agree with the ruling of the CA. It is elementary that the laws in force at the time the contract was made generally govern the effectivity of its provision. We note that the new promissory note was executed on May 6, 1982, prior to the effectivity of

CB Circular No. 905 on January 1, 1983. At that time, The Usury Law, Act No. 2655, as amended by Presidential Decree No. 116, was still in force and effect. Under the Usury Law, no person shall receive a rate of interest, including commissions, premiums, fines and penalties, higher than twelve percent (12%) per annum or the maximum rate prescribed by the Monetary Board for a loan secured by a mortgage upon real estate the title to which is duly registered. In this case, by specific provision in the new promissory note, the restructured loan continued to be secured by the same mortgage contract executed on May 18, 1978 which covered real and personal properties of the respondents. We, therefore, find the eighteen percent (18%) interest rate plus the additional interest and penalty charges of eighteen percent (18%) and eight percent (8%), respectively, to be highly usurious. In usurious loans, the entire obligation does not become void because of an agreement for usurious interest; the unpaid principal debt still stands and remains valid, but the stipulation as to the usurious interest is void. Consequently, the debt is to be considered without stipulation as to the interest. In the absence of an express stipulation as to the rate of interest, the legal rate at twelve percent (12%) per annum shall be imposed. IN LIGHT OF THE FOREGOING, the assailed Decision dated February 28, 2001 of the Court of Appeals and Order dated June 11, 1993 of the Regional Trial Court, Makati City, Branch 145, are AFFIRMED WITH MODIFICATION. The case is hereby REMANDED to the trial court for determination of the total amount of the respondents' obligation according to the reduced interest rate of twelve percent (12%) per annum. 375. Landl & Company vs. Metrobank| YnarezSantiago G.R. No. 159622. July 30, 2004 FACTS

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Metrobank filed a complaint for sum of money against Landl and Company (Phil.) Inc. (Landl) and its directors. Metrobank alleged that Landl is engaged in the business of selling imported welding rods and alloys. On June 17, 1983, it opened Commercial Letter of Credit with the bank, in the amount of US$19,606.77, which was equivalent to P218,733.92 in Philippine currency at the time the transaction was consummated. The letter of credit was opened to purchase various welding rods and electrodes. Landl put up a marginal deposit of P50,414.00 from the proceeds of a separate clean loan. As an additional security, and as a condition for the approval of Landls application for the opening of the commercial letter of credit, Metrobank required Landls Directors Llaban and Lucente to execute a Continuing Suretyship Agreement to the extent of P400,000.00, excluding interest, in favor of the bank. Lucente also executed a Deed of Assignment in the amount of P35,000.00 in favor of the bank to cover the amount of Landls obligation to the bank. Upon compliance with these requisites, Metrobank opened an irrevocable letter of credit for the corporation. To secure the indebtedness of Landl, Metrobank required the execution of a Trust Receipt in an amount equivalent to the letter of credit, on the condition that petitioner corporation would hold the goods in trust for Metrobank, with the right to sell the goods and the obligation to turn over to the bank the proceeds of the

sale, if any. If the goods remained unsold, Landl had the further obligation to return them to respondent bank on or before November 23, 1983. Upon arrival of the goods in the Philippines, Landl took possession and custody thereof. Upon the maturity date of the trust receipt, Landl defaulted in the payment of its obligation to Metrobank and failed to turn over the goods to the latter. On July 24, 1984, the bank demanded that Landl, as entrustees, turn over the goods subject of the trust receipt. On September 24, 1984, Landl turned over the subject goods to the respondent bank. On July 31, 1985, in the presence of representatives of Landl and Metrobank, the goods were sold at public auction. The goods were sold for P30,000.00 to Metrobank as the highest bidder. The proceeds of the auction sale were insufficient to completely satisfy petitioners outstanding obligation to Metrobank, notwithstanding the application of the time deposit account of Lucente (Director of Landl). Accordingly, Metrobank demanded that Landl and the Directors pay the remaining balance of their obligation. After they failed to do so, the bank instituted the instant case to collect the said deficiency. RTC: In favor of Metrobank; Landl to pay the outstanding balance PLUS the interest at the rate of 19% per annum; service charge at the rate of 2% per annum starting; 10% per annum of the total amount due collectible by way of Attorneys Fees; Litigation Expenses of P3,000.00 and to pay the cost of the suit; and (6) to pay penalty charge of 12% per annum. CA affirmed. ISSUES & ARGUMENTS . W/N the RTC/CA erred in computing or imposing interests, attorneys fees and penalties against Landl. HOLDING & RATIO DECIDENDI No, except the Service Charges and Attorneys fees. The first issue involves the amount of indebtedness prior to the imposition of interest and penalty charges. The initial amount of the trust receipt of P218,733.92, was reduced to P192,265.92 as of June 14, 1984, as per respondents Statement of Past Due Trust Receipt dated December 1, 1993. This amount presumably includes the application of P35,000.00, the amount of petitioner Lucentes Deed of Assignment, which amount was applied by respondent bank to petitioners obligation. No showing was made, however, that the P30,000.00 proceeds of the auction sale on July 31, 1985 was ever applied to the loan. Neither was the amount of P50,414.00, representing the marginal deposit made by petitioner corporation, deducted from the loan. The net amount of the obligation, represented by Metrobank to be P292,172.23 as of April 17, 1986, would thus be P211,758.23. To this principal amount must be imposed the following charges: (1) 19% interest per annum, in keeping with the terms of the trust receipt; [16] and (2) 12% penalty per annum, collected based on the outstanding principal obligation plus unpaid interest, again in keeping with the wording of the trust receipt.[17] It appearing that petitioners have paid the interest and penalty charges until April 17, 1986, the reckoning date for the computation of the foregoing

charges must be April 18, 1986. A perusal of the records reveals that the trial court and the Court of Appeals erred in imposing service charges upon the petitioners. No such stipulation is found in the trust receipt. Moreover, the trial court and the Court of Appeals erred in computing attorneys fees equivalent to 10% per annum, rather than 10% of the total amount due. There is no basis for compounding the interest annually, as the trial court and Court of Appeals have done. This amount would be unconscionable. Doctrine: If an obligation consists in the payment of a sum of money, the indemnity for damages shall be the amount stipulated by the parties as liquidated damages. If no liquidated damages had been stipulated by the parties, then the indemnity for damages shall consist in the payment of the interest agreed upon and if there is no stipulation as to interest the indemnity shall be the payment of interest at six per cent (6%) per annum (Art. 2209). 376. CRISMINA GARMENTS, INC., petitioner, vs. COURT OF APPEAL AND NORMA SIAPNO, respondents.|Panganiban G.R. No. 128721. March 9, 1999| FACTS Crismina Garments entered into a contract for a piece of work for 20,762 girls denim pants with D Wilmar Garments, through its sole proprietress Norma Siapno (PR). The contract amounted to Php76,410. From Feb 1979- May 1979, PR sent 13 various deliveries to comply with the Petitioners orders. The delivery receipts are accepted and acknowledged to be in good order condition. Later, Crismina informed PR of the defective pants delivered. PR offered to take delivery of the defective pants, however Crisminas rep said the goods were good and PR just have to send back her check for P76,410. Because PR was actually then unpaid, PR sent a demand letter for the P76,410 and payment within 10 days from receipt of such notice. Crismina countered that PR was liable for the value of the 6,164 damaged pants amounting to P49,925.51. PR filed a collection suit against Crismina. RTC favored PR. CA affirmed RTC order but deleted the Attys fees. ISSUES & ARGUMENTS W/N it is proper to impose interest at the rate of twelve percent (12%) per annum for an obligation that does not involve a loan or forbearance of money in the absence of stipulation of the parties? HOLDING & RATIO DECIDENDI INTEREST RATE for obligation not involving a loan or forbearance of money is 6%. Guidelines for the application of the proper interest rates: I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasidelicts 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

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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 (pa) 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 xxx the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. Because the amount due in this case arose from a contract for a piece of work, not from a loan or forbearance of money, the legal interest of six percent (6%) per annum should be applied. Furthermore, since the amount of the demand could be established with certainty when the Complaint was filed, the six percent (6%) interest should be computed from the filing of the said Complaint. But after the judgment becomes final and executory until the obligation is satisfied, the interest should be reckoned at twelve percent (12%) per year. CA decision modified. 6% interest (pa) from filing of complaint and 12% legal interest (pa) after the judgment has become final and executory until satisified. 377. Manzanares v. Moreta | Torres G.R. No. L12306, October 22, 1918| 38 PHIL 823 FACTS A male child, 8 or 9 years of age, was killed through the negligence of the defendant in driving his [Moreta] automobile. The mother of the dead boy is a widow, a poor washerwoman. She brings action against the defendant to recover damages for her loss in the amount of P5,000. Without there having been tendered any special proof of the amount of damages suffered,

the trial court found the defendant responsible and condemned him to pay to plaintiff the sum of P1,000. The decision of this Court handed down by Justice Torres, affirms the judgment of the Court of First Instance. ISSUES & ARGUMENTS W/N Moreta is liable for Damages? HOLDING & RATIO DECIDENDI YES. MORETA SHOULD PAY DAMAGES AMOUNTING P1000 ACCORDING TO THE TRIAL COURTS DECISION

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If it were true that the Moreta was coming from the southern part of Solana Street, and had to stop his car before crossing Real Street, because he had met vehicles which were going along the latter street or were coming from the opposite direction along Solana street, he should have adjusted the speed of the auto which he was operating until he had fully crossed Real Street and had completely reached a clear way on Solana Street. [Solona and Real streets are perpendicular] But, as the child was run over by the auto precisely at the entrance of Solana Street, this accident could not have occurred, if the auto had been running at a slow speed, aside form the fact that the defendant, at the moment of crossing Real Street and entering Solana Street, in a northward direction, could have seen the child in the act of crossing the latter street from the sidewalk on the right to that on the left Moreta should have slowed down and honked his horn. If these precautions were taken, the boy could have survived. SEPARATE OPINION MALCOLM; Compensation for Human Life: MORETA SHOULD NOT PAY P5000 BUT ONLY P1000 BECAUSE THE PLAINTIFF COULD NOT SHOW ENOUGH EVIDENCE THAT THE DEATH OF HER SON AMOUNTS TO P5000. "Damage" has been defined by Escriche as the detriment, injury, or loss which are occasioned by reason of fault of another in the property or person." Of whatsoever nature the damage be, and from whatsoever cause it may proceed, the person who has done the injury ought to repair it by an indemnity proportionate to his fault and to the loss caused thereby. Damnum (dao or a loss) must be shown to sustain an action for damages. In order to give rise to the obligation imposed by this article of the Civil Code, the coincidence of two distinct requisites is necessary, vis: (1) That there exist an injury or damage not originating in acts or omissions of the prejudiced person demanding indemnification therefore; (2) that said injury or damage be caused by the fault or negligence of a person other than the sufferer. (12 Manresa, Comentarios al Codigo Civil, p. 604.) The customary elements of damages must be shown. But in certain cases, the law presumes a loss because of the impossibility of exact proof and computation in respect to the amount of the loss sustained. In other words, the loss can be proved either by evidence or by presumption.

 The right of action for death and the presumption in favor of compensation begin admitted, the difficulty of estimating in money the worth of a life should not keep a court from judicially compensating the injured party as nearly as may be possible for the wrong. True, man is incapable of measuring exactly in the delicate scales of justice the value of a human life. True, the feelings of a mother on seeing her little son torn and mangled expiring dead could never be assuaged with money. True, all the treasure in nature's vaults could not being to compensate a parent for the loss of a beloved child. Nevertheless, within the bounds of human powers, the negligent should make reparation for the loss. The damages which would give the plaintiff in this case a right to recovery against the defendant are only the loss of support, or contributions thereto, which the son was accustomed to make to his mother from his earnings and of which she may have been deprived by his death. But does the evidence introduced by the plaintiff support her claim to recover such damages? We are of the opinion that it does not, because she has not proven that her son was really earning the amount alleged in the complaint, nor any other sum whatever, no alleged in the complaint, nor any other sum whatever, nor alleged in the complaint, nor any other sum whatever, no how much money he was earning by his work either in Arecibo or in San Juan during the days immediately preceding his death or at any time. And we are of the opinion that this is a necessary requisite, because, as the Civil Code declares that recovery may be had for the damage caused, the damages accruing to the plaintiff must be shown so that the trial judge may have data on which to base his decision. 378. Hugo Borromeo vs. MERALCO. |Avancea G.R. No. L-18345, December 5, 1922|44 Phil. 165 FACTS On the evening of April 10, 1920, electric car No. 203 of Manila Electric was running along M. H. del Pilar Street of the city of Manila, and on arriving at the intersection of that street and Isaac Peral it stopped to receive passengers At that moment, Borromeo approached the car with his two children, 12 and 16 years old, and putting his two children on board the car first, he proceeded to follow, but in attempting to board he fell off and was dragged some distance by the car, one of the rear wheels passing over his left foot As a result of this accident, Borromeos left foot was amputated, making it necessary for him to use an artificial foot in order to be able to walk Borromeo then brought an action to recover from Manila Electric damages for the injury sustained by him by reason of the accident The trial court sentenced Manila Electric to pay the sum of P5,400 with legal interest and did not provide for anything due to the loss of his left foot, which incapacitated him from following his profession On appeal, the appellate court dismissed the same ISSUES & ARGUMENTS W/N the damages for the loss of Borromeos left foot should be awarded?

HOLDING & RATIO DECIDENDI

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YES, IT IS AN ERROR FOR THE TRIAL COURT NOT TO ALLOW ANYTHING FOR THE LOSS OF THE LEFT FOOT, WHICH INCAPACITATED BORROMEO FROM FOLLOWING HIS PROFESSION The Court accepts the finding of the trial court that Manila Electric is liable, and that Borromeos fall was due entirely to the car having been suddenly set in motion at the moment that he was about to board it, but without having gained a sure footing on the running board, and that the subsequent loss of his left foot was due to the carelessness and negligence of Manila Electric's employees in charge of car No. 203 as supported by the evidence The sum of P5,400 awarded by the trial court as damages is made up to the expense incurred for hospital, medicine, and physician's fees on account of this accident. Although Borromeo asks for more on this account, the Court believes, after an examination of the evidence, that this amount is really all that he is entitled to on this account However, the trial court has not allowed Borromeo anything for the loss of his left foot, which has incapacitated him from following his profession and the Court believes that this is an error. The obligation to indemnify for injury caused by negligence under article 1902 of the Civil Code, includes the two kinds of damages specified in article 1106 of the same Code; to wit, damages for the loss actually sustained and for the profit which the injured party may have failed to realized It appears that at the time of the accident, Borromeo was chief engineer of the merchant steamer San Nicolas with a monthly salary of P375, and that having lost his left foot, thereby necessitating the use of an artificial foot in order to be able to walk, he can no longer be employed as a marine engineer on any vessel, and, as a matter of fact, the Collector of Customs has refused to grant him a license to follow his profession as marine engineer. It also appears that he, who is 45 years old, has been engaged in this profession for sixteen years (since 1904), and that he knows no other profession whereby he can earn his living. It is evident that this damage must also be indemnified Borromeos incapacity to continue in the practice of his profession as marine engineer has put an end to one of his activities and has certainly destroyed a source the principal source of his professional earnings in the future. Taking into account the age of Borromeo and the salary he derived from this profession from the exercise of which he has been deprived, the Court fix this future damage at P2,000 Judgment MODIFIED. 379. Villa Rey Transit, Inc v. CA| Concepcion, J. G.R. No. L-25499 February 18, 1970 Death and Permanent Incapacity FACTS An Izuzu First Class passenger bus owned and operated by the defendant, driven by Laureano Casim, left Lingayen, Pangasinan, for Manila. Among its paying passengers was the deceased, Policronio Quintos, Jr.

who sat on the first seat, second row, right side of the bus. At about 4:55 o'clock a.m. when the vehicle was nearing the northern approach of the Sadsaran Bridge, 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. Notwithstanding medical assistance, Policronio Quintos, Jr. died due to traumatic shock due to cerebral injuries. The private respondents are the sisters and only surviving heirs of Quintos Jr., who died single, leaving no descendants nor ascendants. Said respondents herein brought this action against petitioner, for breach of the contract of carriage between said petitioner and the deceased Quintos, to recover the aggregate sum of P63,750.00 as damages, including attorney's fees. Petitioner contended that the mishap was due to a fortuitous event, but this pretense was rejected by the trial court and the Court of Appeals, both of which found that 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 Trial Court based the number of years by which the damages shall be computed on the life expectancy of Quintos, which was placed at 33-1/3 years he being over 29 years of age (or around 30 years for purposes of computation) at the time of his demise by applying the formula (2/3 x [80-301 = life expectancy) adopted in the American Expectancy Table of Mortality or the actuarial of Combined Experience Table of Mortality. Petitioner maintains that the lower courts had erred in adopting said formula and in not acting in accordance with Alcantara v. Surro in which the damages were computed on a four year basis, despite the fact that the victim therein was 39 years old, at the time of his death, and had a life expectancy of 28.90 years. ISSUES & ARGUMENTS W/N damages awarded is proper? HOLDING & RATIO DECIDENDI YES, it is proper. In the case of Alcantara v. Surro, none of the parties had questioned the propriety of the four-year basis adopted by the trial court in making its award of damages. Both parties appealed, but only as regards the amount thereof. The plaintiffs assailed the non-inclusion, in its computation, In fact in that case the Court held that: 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 the amount of

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

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FACTS and circumstances of each case. The life expectancy of the deceased or of the beneficiary, whichever is shorter, is an important factor. 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. Life expectancy is, not only relevant, but, also, an important element in fixing the amount recoverable by private respondents herein. The Court of Appeals has not erred in basing the computation of petitioner's liability upon the life expectancy of Policronio Quintos, Jr. It has been consistently held that earning capacity, as an element of damages to one's estate for his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, "less the necessary expense for his own living. Stated otherwise, the amount recoverable is not loss of the entire earning, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, not gross earning, are to be considered that is, the total of the earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. 380. Salvador vs. People of the Philippines | Nachura G.R. No. 164266, July 23, 2008 | FACTS Spouses Zuniga had three daughters: Marianne, Mary Ann, and Arlene. Mary Ann was married to petitioner Salvador. The Zuniga family lived in one house. One bedroom for the spouses Zuniga, one for Salvador and Mary Ann, and one for Marianne and Arlene. One day, the spouses Zuniga and Marianne went to Bulacan to attend the wake of Ernestos mother. Arlene, Mary Ann, and her baby were left in the house. Meanwhile, petitioner asked permission to attend a birthday party. At 4:30 in the morning, the spouses and Marianne arrived home. They found Arlene dead with 21 stab wounds. Salvador acted strangely he stayed in the sala and cried, and later embraced Mary Ann telling her he was innocent. Among other circumstantial evidence, the court found Salvador guilty of homicide his clothes were stained with Arlenes blood, there was no forcible entry into the house, and he was known to carry a balisong. Hence, he was sentenced to an imprisonment and to indemnify the spouses Zuniga the amount of P50,000.00 for the death of Arlene, and another P50,000.00 for moral damages. The CA affirmed. Hence, the present petition. ISSUES & ARGUMENTS _______________________________________________________ ________ W/N the award of damages if proper in this case. HOLDING & RATIO DECIDENDI

NO ACTUAL DAMAGE. HOWEVER, THE AWARD OF MORAL AND TEMPERATE DAMAGES IS IN ORDER. We affirm the award of P50,000.00 by way of indemnity ex delicto to the Zuniga spouses. When death occurs as a result of a crime, the heirs of the deceased are entitled to such amount as indemnity for death without need of any evidence or proof of damages. The court likewise correctly awarded P50,000.00 as moral damages because of their mental anguish and moral suffering caused by Arlene's death. The trial and appellate courts did not award actual damages, obviously because the victim's heirs failed to present proof of the expenses they incurred. However, it has been repeatedly held by this Court that where the amount of actual damages cannot be determined because of the absence of receipts to prove the same, temperate damages may be fixed at P25,000.00. Decision MODIFIED. CA affirmed. 381. Lopez vs PANAM | Bengzon G.R. No. L-22415, March 30, 1966| 16 SCRA 431 FACTS The Lopez family booked for first class accommodations with Pan American World Ways (PANAM) through Your Travel Guide Agency for a flight from Tokyo to San Francisco. PAN-AMs San Francisco head office confirmed the reservations. Upon arriving in Tokyo, first class accommodations were not granted to them by PAN-AM stating there were no reservations for them and that they have to take the tourist class. Due to urgent business to be attended by the Lopez spouses in the US (Lopez being a senator at that time), they were constrained to take the tourist class under protest. As it turns out, another family (the Rufinos) booked first class accommodations with PAN-AM together with the Lopez party but thereafter the Rufinos cancelled. An agent (Herranz) of Your Travel Guide Agency sent a telex message to PANAMs head office in San Francisco. In said message, however, Herranz mistakenly cancelled all the seats that had been reserved, that is, including those of Senator Lopez and party. Upon realizing the mistake, the said agent telexed the San Francisco office but the latter could no longer reinstate the seats of the Lopezes. Herranz forgot about the matter and was not able to inform the Lopezes of the same. ISSUES & ARGUMENTS W/N the petitioners can recover moral damages from PAN-AM? If so, how to compute for the same? HOLDING & RATIO DECIDENDI PAN-AM liable for moral damages. exemplary and attorneys fees) (also

fraudulent, reckless, oppressive or malevolent manner. Lastly, a written contract for an attorney's services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable.

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As a proximate result of defendant's breach in bad faith of its contracts with plaintiffs, the latter suffered social humiliation, wounded feelings, serious anxiety and mental anguish. For plaintiffs were travelling with first class tickets issued by defendant and yet they were given only the tourist class. At stop-overs, they were expected to be among the first-class passengers by those awaiting to welcome them, only to be found among the tourist passengers. It may not be humiliating to travel as tourist passengers; it is humiliating to be compelled to travel as such, contrary to what is rightfully to be expected from the contractual undertaking. Senator Lopez was then Senate President Pro Tempore. International carriers like defendant know the prestige of such an office. For the Senate is not only the Upper Chamber of the Philippine Congress, but the nation's treaty-ratifying body. Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige and therefore his humiliation. In addition she suffered physical discomfort during the 13-hour trip. Apparently, Mrs. Lopez was severely sick with flu 2 months before the flight and the condition in the tourist class (e.g. seating spaces in the tourist class are quite narrower than in first class, there being six seats to a row in the former as against four to a row in the latter, and that in tourist class there is very little space for reclining in view of the closer distance between rows) caused her much discomfort and anxiety. Added to this, of course, was the painful thought that she was deprived by defendant after having paid for and expected the same of the most suitable, place for her, the first class, where evidently the best of everything would have been given her, the best seat, service, food and treatment. Such difference in comfort between first class and tourist class is too obvious to be recounted, is in fact the reason for the former's existence, and is recognized by the airline in charging a higher fare for it and by the passengers in paying said higher rate Accordingly, considering the totality of her suffering and humiliation, an award to Mrs. Maria J. Lopez of P50,000.00 for moral damages will be reasonable. Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as immediate members of the family of Senator Lopez. They formed part of the Senator's party as shown also by the reservation cards of PAN-AM. As such they likewise shared his prestige and humiliation. Although defendant contends that a few weeks before the flight they had asked their reservations to be charged from first class to tourist class which did not materialize due to alleged full booking in the tourist class the same does not mean they suffered no shared in having to take tourist class during the flight. For by that time they had already been made to pay for first class seats and therefore to expect first class accommodations. As stated, it is one thing to take the tourist class by free choice; a far different thing to be compelled to take it notwithstanding having paid for first class seats. Plaintiffs-appellants now ask P37,500.00 each for the two but we note that in their motion for reconsideration

Moral damages are recoverable in breach of contracts where the defendant acted fraudulently or in bad faith. In addition to moral damages, exemplary or corrective damages may be imposed by way of example or correction for the public good, in breach of contract where the defendant acted in a wanton,

filed in the court a quo, they were satisfied with P25,000.00 each for said persons. (Record on Appeal, p. 102). For their social humiliation, therefore, the award to them of P25,000.00 each is reasonable. 382. Zamboanga Transportaion Company. et al. vs. CA |BARREDO, J.: G.R. No. L-25292 November 29, 1969 FACTS The Spouses Ramon and Josefina Dagamanuel boarded a bus to attend a benefit dance at an elementary School, where Josefina was a public school teacher. After the dance, the couple boarded the same bus. At around 1 o'clock in the early morning, the bus driven by Valeriano Marcos, fell off the road and pinned to death the said spouses and several other passengers. The plaintiff, the only child of the deceased spouses, through his maternal grandmother, as guardian adlitem, instituted this action against the defendants Zamboanga Transportation Co., Inc. and the Zamboanga Rapids Co., Inc. (hereinafter referred to as Zamtranco and Zambraco, respectively) for breach of contract of carriage. The lower court, held Zamtranco, the operator, jointly and severally liable with the registered owner, Zamtranco ISSUES & ARGUMENTS W/N the CA erred, as a matter of law and applicable decisions of the SC, in awarding excessive damages for the death of the parents of respondent; excessive compensatory damages; and excessive moral damages to respondent, without the latter appealing the decision of the TC. HOLDING & RATIO DECIDENDI YES, PARTLY. It may be recalled that the trial court's judgment regarding the matter of damages was as follows:1) P8,000.00 for the death of Ramon Dagamanuel; 2) P8,000.00 for the death of Josefina Punzalan; 3) P4,000.00 as exemplary damages; 4) P2,000.00 as attorney's fees; and 5) Costs. The respondent did not appeal any portion of the decision of the lower Court, thus indicating that he is fully satisfied with the same. On the other hand, the driver of the ill-fated bus failed to perfect his appeal and consequently, as against him, the decision of the lower Court is already final. The lower Court rendered a decision against the driver of the bus and the two petitioners herein for the death of the parents of the respondent in the sum of P16,000.00 together with P4,000.00 exemplary damages. But notwithstanding the automatic exclusion of the driver from the effects of the appealed decision, the Court of Appeals, while reducing the death award to P12,000.00 increased the exemplary damages to P5,000.00 adding thereto P11,520.00 compensatory damages and P5,000.00 moral damages. The Court humbly contends that to award damages when none was allowed by the lower Court, and to increase damages when the successful party did not appeal, is simply improper and amounts to pure abuse

of discretion on the part of the respondent appellate Court,

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True it is, the awards of P8,000 each for the death of the parents of respondent Jose Mario Dagamanuel may not be increased anymore, but We cannot say that they should be reduced. The Court furthermore didnt approve of the award of the CA of moral damages, considering the tender age of the above-named respondent child, and the Court would have upheld the same had private respondent appealed from the decision of the trial court. Indeed, the Court of Appeals properly interpreted the P16,000 awarded by the trial court as including not only damages for the deceased couple but also the other items of recoverable damages, like compensatory or actual, etc. Thus viewed, the amounts awarded by the trial court cannot be considered excessive. 383. Asia Pacific Chartering vs. Farolan | CarpioMorales, J.: G.R. No. 151370, December 4, 2002 | 393 SCRA 454 FACTS Maria Linda Farolan was hired as Sales Manager of Asia Pacific Chartering for its passenger and cargo GSA (general sales agent) operations for Scandinavian Airline System via a letter-offer of employment Upon her acceptance and assumption of her post, she participated in a number of meetings/seminars geared towards improving her marketing and sales skills including: o Customer service seminar in Bangkok, Thailand o Regional Sales Meeting on the technical aspects of airline commercial operations o Course on the highly technical airline computer reservations system (Amadeus) There were several letters indicating the APCs happiness and congratulations for Farolans good performance Farolan moved for the lower fare of seamen to be competititve with other agents, which eventually resulted to a marked decline in SAS sales revenues APC directed Zozobrado, a high ranking officer, to conduct investigation to identify the problems and implement possible solutions o Zozobrado informally took over some of Farolans marketing and sales responsibilities but the latter retained her title and continued to receive her salary as such o The investigation divulge that Farolan did not adopt any sales strategy nor conduct any sales meeting or develop other sources of revenue for SAS In another letter, APC urged Farolan to file her letter of resignation for she failed to meet the formers expectations of a Sales Manager o Farolan refused and APC sent a letter of termination on the ground of loss of confidence Farolan contested her termination and filed a case for illegal dismissal which the court adjudged in her favor, awarding moral and exemplary damages at the same time On appeal to the NLRC, the latter reversed the ruling on the ground of management prerogative but the

same was reversed on appeal to the CA, which reinstated the lower courts ruling Hence, the present petition for review on certiorari ISSUES & ARGUMENTS W/N Farolan was illegally dismissed and entitled to damages HOLDING & RATIO DECIDENDI YES. A valid dismissal of an employee requires that: o The employee must be afforded due process (opportunity to be heard and to defend himself) o Dismissal must be for a valid cause (Art. 282 of the Labor Code) The employer bears the onus of proving that the dismissal is for just cause failing which the dismissal is not justified and the employee is entitled to reinstatement Recent decisions of the Court distinguished the treatment of managerial employees from that of rank and file personnel insofar as the application of the doctrine of loss of trust and confidence is concerned o Rank and file loss of trust and confidence requires proof of involvement in the alleged events in question and that mere uncorroborated assertions and accusations by the employer will not be sufficient o Managerial the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal Things to consider to be deemed as a managerial employee o Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof o They customarily and regularly direct the work of two or more employees therein o They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight Loss of trust and confidence to be a valid ground for an employees dismissal must be based on a willful breach and founded on clearly established FACTS o A breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently To warrant award of moral damages, it must be shown that the dismissal of the employee was attended to by bad faith, or constituted an act opposite to labor, or was done in a manner contrary to morals, good customs, or public policy. o Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer Initial order Final order Moral Damages P1,500,000 P500,000 Exemplary Damages P750,000 P250,000 384. Samson, Jr. vs. BPI | Panganiban G.R. No. 150487, July 10, 2003 | 405 SCRA 607 FACTS Samson, Jr. filed an action for damages against BPI. As a client/depositor of the bank, he deposited a Prudential Bank check into his savings account worth P3,500.00. Later, he asked his daughter to withdraw P2,000, but declined due to insufficient funds. As a

result, he suffered embarrassment as he could not produce the required cash to fulfill an obligation towards a creditor who had waited at his residence. Subsequently, Samson deposited P5,500.00. Here, he discovered that hi balance remained P342.38, and that the earlier deposit of P3,500.00 had not been credited. When Samson asked about the discrepancy, BPI confirmed the deposited check but could not account for the same. Upon investigation, it was found out that their security guard had encashed the check and that, despite knowledge of the irregularity, BPI had not informed Samson. Moreover, manager Cayanga allegedly displayed arrogance, indifference, and discourtesy towards Samson. The trial court rendered a decision in favor of Samson. CA affirmed by reducing the amount of damages from P200,000.00 to P50,000.00. Hence this petition. ISSUES & ARGUMENTS W/N the reduction of moral damages by the trial court was proper. HOLDING & RATIO DECIDENDI PETITION IS PARTLY MERITORIOUS. Moral damages are meant to compensate the claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injuries unjustly caused.

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Although incapable of pecuniary estimation, the amount must somehow be proportional to and in approximation of the suffering inflicted. Moral damages are not punitive in nature and were never intended to enrich the claimant at the expense of the defendant. No hard-and-fast rule in determining moral damages; each case must be governed by its own peculiar FACTS. Trial courts are given discretion in determining the amount, with the limitation that it should not be palpably and scandalously excessive. Moral damages are awarded to achieve a spiritual status quo, i.e. to enable the injured party to obtain means, diversions, amusements that will serve to alleviate the moral suffering undergone. The social standing of the aggrieved party is essential to the determination of the proper amount of the ward. Otherwise, the goal of enabling him restore the spiritual status quo may not be achieved. Award should be increased to P100,000.00 since a) petitioner is a businessman and the highest lay person in the United Methodist Church; b) was regarded with arrogance and a condescending manner, and c) BPI successfully postponed compensating him for more than a decade. His alleged delay in reporting the matter did not at all contribute to his injury. Petition partly granted. Decision modified. Award increased to P100,000.00 385. Erlinda Francisco v. Ricardo Ferrer, Jr., et al. | Pardo G.R. No. 142029, February 28, 2001 | 353 SCRA 261 FACTS Mrs. Rebecca Lo and her daughter Annette Ferrer ordered a 3-layered cake from Fountainhead Bakeshop.

It was agreed that the wedding cake shall be delivered at 5:00 in the afternoon on December 14, 1992 at the Cebu Country Club, Cebu City. Plaintiffs made their full payment. At 7:00 in the evening, the wedding cake has not arrived. Plaintiffs made a follow-up call and were informed that it was probably late because of the traffic. At 8:00, plaintiffs were informed that no wedding cake will be delivered because the order slip got lost. They were then compelled to buy the only available cake at the Cebu Country Club which was a sans rival. At 10:00, a 2-layered wedding cake arrived. Plaintiffs declined to accept it. Defendant Erlinda Francisco sent a letter of apology accompanied with a P5,000.00 check which was declined by plaintiffs. 2 weeks after the wedding, Francisco called Mrs. Lo and apologized. Plaintiffs filed an action for breach of contract with damages. TC decided in favor of plaintiffs, directing defendant to pay the cost of the wedding cake, MORAL DAMAGES, attorneys fees and the cost of litigation. CA modified the award by increasing the MORAL DAMAGES to P250,000.00 and awarding EXEMPLARY DAMAGES of P100,000.00. ISSUES & ARGUMENTS W/N the CA erred in affirming the TCs award of MORAL DAMAGES and increasing the amount from P30,000.00 to P250,000.00. W/N the CA was justified in awarding in addition to moral damages, EXEMPLARY DAMAGES of P100,000.00. PetitionerCA and TC erred in awarding moral damages because moral damages are recoverable in breach of contract cases only where the breach was palpably wanton, reckless, malicious, in bad faith, oppressive or abusive. HOLDING & RATIO DECIDENDI YES. CA erred in awarding MORAL DAMAGES. Article 2219 of the Civil Code provides: To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless, malicious, in bad faith, oppressive or abusive. In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries. Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud. Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence

for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages.

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An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. When awarded, moral damages must not be palpably and scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on the part of the trial court judge or appellate court justices. In this case, we find no such fraud or bad faith. CA also erred in awarding EXEMPLARY DAMAGES. To warrant the award of exemplary damages, [t]he wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. The requirements of an award of exemplary damages are: (1) they may be imposed by way of example in addition to compensatory damages, and only after the claimants right to them has been established; (2) that they can not be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant; (3) the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner. NOMINAL DAMAGES awarded. The FACTS show that when confronted with their failure to deliver on the wedding day, petitioners gave the lame excuse that delivery was probably delayed because of the traffic, when in truth, no cake could be delivered because the order slip got lost. For such prevarication, petitioners must be held liable for nominal damages for insensitivity, inadvertence or inattention to their customers anxiety and need of the hour. Nominal damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown. 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 427 of 528 Nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered. Petition granted. CA reversed. Petitioner order to pay the cost of the wedding cake, nominal damages of P10,000.00, attorneys fees and the costs of litigation.

386. Zalamea vs. Court of Appeals | Nocon G.R. No. 104235, November 18, 1993 | 228 SCRA 23 FACTS Spouses Zalamea, and their daughter, Liana Zalamea, purchased three (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles on June 6, 1984. The tickets of petitionersspouses were purchased at a discount of 75% while that of their daughter was a full fare ticket. All three tickets represented confirmed reservations. While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their reservations for said flight. On the appointed date, however, petitioners checked in at 10:00 a.m., an hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list because the number of passengers who had checked in before them had already taken all the seats available on the flight. Liana Zalamea appeared as the No. 13 on the wait-list while the two other Zalameas were listed as "No. 34, showing a party of two." Out of the 42 names on the wait list, the first 22 names were eventually allowed to board the flight to Los Angeles, including petitioner Cesar Zalamea. The two others, on the other hand, at No. 34, being ranked lower than 22, were not able to fly. As it were, those holding full-fare tickets were given first priority among the wait-listed passengers. Mr. Zalamea, who was holding the full-fare ticket of his daughter, was allowed to board the plane; while his wife and daughter, who presented the discounted tickets were denied boarding. According to Mr. Zalamea, it was only later when he discovered the he was holding his daughter's full-fare ticket. Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated because it was also fully booked. Thus, they were constrained to book in another flight and purchased two tickets from American Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars. Petitioners filed an action for damages based on breach of contract of air carriage before the Regional Trial Court of Makati and ruled in favor of petitioners. On appeal, the respondent Court of Appeals held that moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage only where there is fraud or bad faith. Since it is a matter of record that overbooking of flights is a common and accepted practice of airlines in the United States and is specifically allowed under the Code of Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on respondent TransWorld Airlines. ISSUES & ARGUMENTS W/N TWA is guilty of bad faith? HOLDING & RATIO DECIDENDI YES. Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, where passengers with confirmed bookings were refused carriage on the last minute, this Court held that when an airline issues a ticket to a passenger confirmed on a

particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage. Where an airline had deliberately overbooked, it took the risk of having to deprive some passengers of their seats in case all of them would show up for the check in. For the indignity and inconvenience of being refused a confirmed seat on the last minute, said passenger is entitled to an award of moral damages. A contract to transport passengers is quite different in kind and degree from any other contractual relation. So ruled this Court in Zulueta v. Pan American World Airways, Inc. This is so, for a contract of carriage generates a relation attended with public duty a duty to provide public service and convenience to its passengers which must be paramount to self-interest or enrichment. Thus, it was also held that the switch of planes from Lockheed 1011 to a smaller Boeing 707 because there were only 138 confirmed economy class passengers who could very well be accommodated in the smaller planes, thereby sacrificing the comfort of its first class passengers for the sake of economy, amounts to bad faith. Such inattention and lack of care for the interest of its passengers who are entitled to its utmost consideration entitles the passenger to an award of moral damages. Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its passengers beforehand that it could breach the contract of carriage even if they have confirmed tickets if there was overbooking. Respondent TWA should have incorporated stipulations on overbooking on the tickets issued or to properly inform its passengers about these policies so that the latter would be prepared for such eventuality or would have the choice to ride with another airline. Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to discounted tickets. While the petitioners had checked in at the same time, and held confirmed tickets, yet, only one of them was allowed to board the plane ten minutes before departure time because the full-fare ticket he was holding was given priority over discounted tickets. The other two petitioners were left behind. The purchase of the American Airlines tickets by petitioners Suthira and Liana was the consequence of respondent TWA's unjustifiable breach of its contracts of carriage with petitioners. In accordance with Article 2201, New Civil Code, respondent TWA should, therefore, be responsible for all damages which may be reasonably attributed to the nonperformance of its obligation. In the previously cited case of Alitalia Airways v. Court of Appeals, 15 this Court explicitly held that a passenger is entitled to be reimbursed for the 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 429 of 528 cost of the tickets he had to buy for a flight to another airline. Thus, instead of simply being refunded for the cost of the unused TWA tickets, petitioners should be awarded the actual cost of their flight from New York to Los Angeles. On this score, we differ from the trial court's ruling which ordered not only the reimbursement of the American Airlines tickets but also the refund of the unused TWA tickets. To require both prestations would have enabled petitioners to fly from New York to Los Angeles without any fare being paid. The award to petitioners of

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attorney's fees is also justified under Article 2208(2) of the Civil Code which allows recovery when the defendant's act or omission has compelled plaintiff to litigate or to incur expenses to protect his interest. However, the award for moral damages and exemplary damages by the trial court is excessive in the light of the fact that only Suthira and Liana Zalamea were actually "bumped off." An award of P50,000.00 moral damages and another P50,000.00 exemplary damages would suffice under the circumstances obtaining in the instant case. 387. People vs. Senen Prades| En Banc G.R. No. 127569, July 30, 1998 FACTS Senen Prades, armed with a handgun, entered the dwelling of Emmie Rosales, a seventeen year old girl, and by means of force and intimidation and with lewd design, did then and there willfully, unlawfully and feloniously had sexual intercourse with her against her will. Rosales and the physician who conducted the medical examination testified in court. Prades subsequently continued in absentia. absconded and the trial

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388. Expertravel vs. CA | Vitug G.R. No. 130030 June 25, 2009 | FACTS Expertravel & Tours Inc. issued to private respondent Ricardo Lo four round trip plane tickets to Hong Kong, together with hotel accommodations and transfers, for a total cost of 39, 677.20. Alleging that Lo had failed to pay the amount due, Expertravel caused several demands to be made. Since the demands were ignored by Lo, Expertravel filed a court complaint for recovery of amount due plus damages. In his answer, Lo explained that he had already paid such amount to expertravel. It was remmited to the Chairperson of Expertravel, Ms. De Vega. This was evidenced by Monte de Pieda check with the amount of 50,000 pesos. The trial court, affirmed by the appellate court, ruled that payment to Ms. De Vega is valid and binding to Expertravel and awarded moral damages, attorneys fees and cost of suit in favor of Lo. ISSUES & ARGUMENTS W/N the appellate court was correct in awarding moral damages in favor of Lo. HOLDING & RATIO DECIDENDI The Appellate Court was not correct in awarding moral damages in favor of Lo Moral damages are not punitive in nature but are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feeling, moral shock, social humiliation, and similar injury unjustly caused to a person. Such damages must be the proximate result of a wrongful act or omission the factual basis for which is satisfactorily established by the aggrieved party. An award of moral damages would require certain conditions to be met; to wit 1. there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant. 2. there must be a culpable act or omission factually established 3. the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant 4. the award of damages is predicated on any of the cases stated in article 2219, death of a passenger under breach of carriage, when the defendant is guilty of intentional tort, culpa criminal, analogous cases, or malicious prosecution Although the institution of a clearly unfounded civil suit can at times be a legal justification for award of attorneys fees, such filing is however, has almost been invariably been held not a ground for award of moral damages. The rationale for this rule is that the law could have not meant to impose a penalty on the right to litigate. The anguish suffered by a person for having been a defendant in a civil suit would be no different from the usual worry and anxiety suffered by anyone who is haled to court, a situation that cannot by itself be a cogent reason for

The guilt of the accused was proved beyond reasonable doubt from the testimony that moonlit seeped through the spaces in the sawali door, enabling the victim to identify Prades who was the husband of her grandmothers goddaughter. Prades also sent Rosales two letters asking for forgiveness, and willingness to leave his wife, which the Court interpreted as an admission of guilt. Due to the aggravating circumstance of the crime being committed in the dwelling of the offended party, Prades was sentenced the higher penalty of death. The RTC also awarded P50,000.00 moral damages. ISSUES & ARGUMENTS W/N the grant of moral damages was proper HOLDING & RATIO DECIDENDI No, the lower court erred in classifying the award of P50,000 as moral damages It is well established in jurisprudence that the award authorized by the criminal law as civil indemnity ex delicto for the offended party is itself equivalent to actual or compensatory damages in civil law. The civil indemnity provided by the RPC for the crime of rape is in the nature of restitution, reparation, and indemnification. What the lower court awarded was a mandatory civil indemnity upon the finding of the fact of rape. It is distinct from and should not be denominated as moral damages which are based on different jural foundations and assessed by the court in the exercise of sound discretion. The recent judicial prescription is that the indemnification of the victim shall be in the increased amount of P75,000.00 if the crime of rape is committed or effectively qualified by any of the circumstances under which the death penalty is authorized by the applicable amendatory laws. Held: P50,000 moral damages changed to P75,000 compensatory damages .

award of moral damage if the rule were otherwise, then moral damages must every time be awarded in favor of the prevailing defendant against an unsuccessful plaintiff. 389. Air France, petitioner vs. Carascoso and CA, respondents G.R. No. L-21438 September 28, 1966 FACTS On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff travelled in "first class", but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the "first class" seat that he was occupying because, in the words of the witness Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a "better right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, "many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man" and plaintiff reluctantly gave his "first class" seat in the plane. ISSUES & ARGUMENTS Was Carrascoso entitled to the first class seat he claims and therefore entitles to damages? Held Yes. It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But petitioner asserts that said ticket did not represent the true and complete intent and agreement of the parties; that said respondent knew that he did not have confirmed reservations for first class on any specific flight, although he had tourist class protection; that, accordingly, the issuance of a first class ticket was no guarantee that he would have a first class ride, but that such would depend upon the availability of first class seats. If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What security then can a passenger have? It will always be an easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the passenger had a schedule to fulfill? We have long learned that, as a rule, a written document speaks a uniform language; that spoken word could be notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower courts refused to believe the oral evidence intended to defeat the covenants in the ticket. Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had no seat or, if another had a better right to the seat?

To authorize an award for moral damages there must be an averment of fraud or bad faith. It is true that there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is there, it may be drawn from the

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FACTS and circumstances set forth therein. The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof to conform to the evidence is not even required. Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. 390. Tiongson v Fernandez | Reyes JBL. G.R. No. L26403, October 20, 1970 | FACTS Defendants were granted water appropriation rights over Taguan River and Noynoyin Creek in Tiaong and Candelaria in Quezon Province In 1918 defendants were granted the said rights by Department of Commerce and Communications. In 1940 they built a dam that impeded the flow of water from Taguan into the Aguirra, this dam was named the Del-Valle Dam. In 1952 defendants increased the height of the dam fully blocking the flow of the river. Plaintiffs are owners of a parcel of land around 20 hectares situated in Candelaria. They claim that since 1955 they have been farming the land and have irrigated it from all the water overflowing the dam situated on Noynoyin creek built by a Nicolas Maralit. Thus they claim that they have acquired by prescription all the water that overflows from the dam to the exclusion of all the others. Defendants and intervenors allege that with the construction of the Del Valle dam there is no more water flowing from the Noynoyin. It is admitted that before the construction that there is an arrangement between defendants and plaintiffs and predecessors in interest that the defendants used to take water from the river that is stopped by the dam Defendants and intervenors ask plaintiffs to pay total of P165,000 in moral damages and P66,000 exemplary damages. Lower court ruled that defendant Hernandez had no right to dig canal connecting Noynoyin to Aguirra and enjoined him from reducing water in the Del Valle dam. LC dismissed claim for damages and charged defendant P500 for costs. ISSUES & ARGUMENTS W/N There is prescription? Award of Damages proper? HOLDING & RATIO DECIDENDI

NO PRESCRIPTION. AWARD OF DAMAGES PROPER. PLAINTIFFS MUST DEMOLISH THE DAM. Court finds no clear evidence of prescription for 20 years or more Del Valle was not content with reducing the water flow to defendants Hernandez and in fact increased height of dam in 1952 blocking it totally. Hernandez et al entitled to Moral damages P2000 each. Entitlement based on Art. 2220 of Civil Code. Equity and Justice dictate that Hernandez et al can recover attorneys fees in amount of P5000 according to Art. 2208 Civil Code. 391. Zalamea vs. Court of Appeals | Nocon G.R. No. 104235, November 18, 1993 | 228 SCRA 23 FACTS Spouses Zalamea, and their daughter, Liana Zalamea, purchased three (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles on June 6, 1984. The tickets of petitioners-spouses were purchased at a discount of 75% while that of their daughter was a full fare ticket. All three tickets represented confirmed reservations. While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their reservations for said flight. On the appointed date, however, petitioners checked in at 10:00 a.m., an hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list because the number of passengers who had checked in before them had already taken all the seats available on the flight. Liana Zalamea appeared as the No. 13 on the wait-list while the two other Zalameas were listed as "No. 34, showing a party of two." Out of the 42 names on the wait list, the first 22 names were eventually allowed to board the flight to Los Angeles, including petitioner Cesar Zalamea. The two others, on the other hand, at No. 34, being ranked lower than 22, were not able to fly. As it were, those holding full-fare tickets were given first priority among the wait-listed passengers. Mr. Zalamea, who was holding the full-fare ticket of his daughter, was allowed to board the plane; while his wife and daughter, who presented the discounted tickets were denied boarding. According to Mr. Zalamea, it was only later when he discovered the he was holding his daughter's full-fare ticket. Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated because it was also fully booked. Thus, they were constrained to book in another flight and purchased two tickets from American Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars. Petitioners filed an action for damages based on breach of contract of air carriage before the Regional Trial Court of Makati and ruled in favor of petitioners. On appeal, the respondent Court of Appeals held that moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage only where there is fraud or bad faith. Since it is a matter of record that overbooking of flights is a common and accepted practice of airlines in the United States and is specifically allowed under the Code of Federal

Regulations by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on respondent TransWorld Airlines. ISSUES & ARGUMENTS W/N TWA is guilty of bad faith? HOLDING & RATIO DECIDENDI

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YES. Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, where passengers with confirmed bookings were refused carriage on the last minute, this Court held that when an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage. Where an airline had deliberately overbooked, it took the risk of having to deprive some passengers of their seats in case all of them would show up for the check in. For the indignity and inconvenience of being refused a confirmed seat on the last minute, said passenger is entitled to an award of moral damages. A contract to transport passengers is quite different in kind and degree from any other contractual relation. So ruled this Court in Zulueta v. Pan American World Airways, Inc. This is so, for a contract of carriage generates a relation attended with public duty a duty to provide public service and convenience to its passengers which must be paramount to self-interest or enrichment. Thus, it was also held that the switch of planes from Lockheed 1011 to a smaller Boeing 707 because there were only 138 confirmed economy class passengers who could very well be accommodated in the smaller planes, thereby sacrificing the comfort of its first class passengers for the sake of economy, amounts to bad faith. Such inattention and lack of care for the interest of its passengers who are entitled to its utmost consideration entitles the passenger to an award of moral damages. Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its passengers beforehand that it could breach the contract of carriage even if they have confirmed tickets if there was overbooking. Respondent TWA should have incorporated stipulations on overbooking on the tickets issued or to properly inform its passengers about these policies so that the latter would be prepared for such eventuality or would have the choice to ride with another airline. Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to discounted tickets. While the petitioners had checked in at the same time, and held confirmed tickets, yet, only one of them was allowed to board the plane ten minutes before departure time because the full-fare ticket he was holding was given priority over discounted tickets. The other two petitioners were left behind. The purchase of the American Airlines tickets by petitioners Suthira and Liana was the consequence of respondent TWA's unjustifiable breach of its contracts of carriage with petitioners. In accordance with Article 2201, New Civil Code, respondent TWA should, therefore, be responsible for all damages which may be reasonably attributed to the nonperformance of its obligation. In the previously cited case of Alitalia

Airways v. Court of Appeals, 15 this Court explicitly held that a passenger is entitled to be reimbursed for the cost of the tickets he had to buy for a flight to another airline. Thus, instead of simply being refunded for the cost of the unused TWA tickets, petitioners should be awarded the actual cost of their flight from New York to Los Angeles. On this score, we differ from the trial court's ruling which ordered not only the reimbursement of the American Airlines tickets but also the refund of the unused TWA tickets. To require both prestations would have enabled petitioners to fly from New York to Los Angeles without any fare being paid. 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 435 of 528 The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil Code which allows recovery when the defendant's act or omission has compelled plaintiff to litigate or to incur expenses to protect his interest. However, the award for moral damages and exemplary damages by the trial court is excessive in the light of the fact that only Suthira and Liana Zalamea were actually "bumped off." An award of P50,000.00 moral damages and another P50,000.00 exemplary damages would suffice under the circumstances obtaining in the instant case. 392. PAL vs. CA and Sps. Miranda (private respondents), 257 SCRA 33 (1996) FACTS Dr. Josefino Miranda and his wife, Luisa, who were residents of Surigao City, went to the United States of America on a regular flight of PAL. On June 19, 1988, after a stay of over a month there, they obtained confirmed bookings from PAL's San Francisco Office for PAL Flight PR 101 from San Francisco to Manila via Honolulu on June 21, 1988; PAL flight PR 851 from Manila to Cebu on June 24, 1988; and PAL Flight PR 905 from Cebu to Surigao also on June 24, 1988. On June 21, 1988, private respondents boarded PAL Flight PR 101 in San Francisco with five (5) pieces of baggage. After a stopover at Honolulu, and upon arrival in Manila on June 23, 1988, they were told by the PAL personnel that their baggage consisting of two balikbayan boxes, two pieces of luggage and one fishing rod case were off-loaded at Honolulu, Hawaii due to weight limitations. Consequently, private respondents missed their connecting flight from Manila to Cebu City, as originally scheduled, since they had to wait for their baggage which arrived the following day, June 24, 1988, after their pre-scheduled connecting flight had left. They consequently also missed their other scheduled connecting flight from Cebu City to Surigao City. On June 25, 1988, they departed for Cebu City and therefrom private respondents had to transfer to PAL Flight 471 for Surigao City. On the way to Surigao City, the pilot announced that they had to return to Mactan Airport due to some mechanical problem. While at Mactan Airport, the passengers were provided by PAL with lunch and were booked for the afternoon flight to Surigao City. However, said flight was also canceled. Since there were no more lights for Surigao City that day, private respondents asked to be billeted at the Cebu Plaza Hotel where they usually stay whenever they happen to be in Cebu City. They were, however, told by the PAL employees that they could not be accommodated at said hotel supposedly because it was fully booked. Contrarily, when Dr. Miranda called the hotel, he was informed that he and his wife could be accommodated there. Although

reluctant at first, PAL eventually agreed to private respondents' overnight stay at said hotel. Oscar Jereza, PAL duty manager, approved the corresponding hotel authority with standard meals. It was only after private respondents' insistence that their meals be ordered a la carte that they were allowed to do so by PAL provided that they sign for their orders. Inasmuch as the shuttle bus had already left by the time private respondents were ready to go to the hotel, PAL offered them P150.00 to include the fare for the return trip to the airport. Dr. Miranda asked for P150.00 more as he and his wife, along with all of their baggage, could not be accommodated in just one taxi, aside from the need for tipping money for hotel boys. Upon refusal of this simple request, Dr. Miranda then declared that he would forego the amenities offered by PAL. Thus, the voucher for P150.00 and the authority for the hotel accommodations prepared by PAL were voided due to private respondents' decision not to avail themselves thereof. To aggravate the muddled situation, when private respondents tried to retrieve their baggage, they were told this time that the same were loaded on another earlier PAL flight to Surigao City. Thus, private respondents proceeded to the hotel sans their baggage and of which they were deprived for the remainder of their trip. Private respondents were finally able to leave on board the first PAL flight to Surigao City only on June 26, 1988. Thereafter, they instituted an action for damages which, after trial as well as on appeal, was decided in their favor. ISSUE & ARGUMENTS Whether or not there was bad faith on the part of PAL so as to entitle the Sps. Miranda to moral damages? HOLDING & RATIO DECIDENDI YES.

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Crucial to the determination of the propriety of the award of damages in this case is the lower court's findings on the matter of bad faith: found that the situation was aggravated by the following incidents: the poor treatment of the Mirandas by the PAL employees during the stopover at Mactan Airport in Cebu; the cavalier and dubious response of petitioner's personnel to the Miranda spouses' request to be billeted at the Cebu Plaza Hotel by denying the same allegedly because it was fully booked, which claim was belied by the fact that Dr. Miranda was easily able to arrange for accommodations thereat; and, the PAL employees' negligent, almost malicious, act of sending off the baggage of private respondents to Surigao City, while they were still in Cebu, without any explanation for this gross oversight. The Court has time and again ruled, and it cannot be over-emphasized, that a contract of air carriage generates a relation attended with a public duty and any discourteous conduct on the part of a carrier's employee toward a passenger gives the latter an action for damages and, more so, where there is bad faith. *It is settled that bad faith must be duly proved and not merely presumed. The existence of bad faith, being a factual question, and the Supreme Court not being a trier of FACTS, the findings thereon of the trial court as well as of the Court of Appeals shall not be disturbed on

appeal and are entitled to great weight and respect. 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 437 of 528 *It is now firmly settled that moral damages are recoverable in suits predicated on breach of a contract of carriage where it is proved that the carrier was guilty of fraud or bad faith. Inattention to and lack of care for the interests of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to an award of moral damages. What the law considers as bad faith which may furnish the ground for an award of moral damages would be bad faith in securing the contract and in the execution thereof, as well as in the enforcement of its terms, or any other kind of deceit. Such unprofessional and proscribed conduct is attributable to petitioner airline in the case at bar and the adverse doctrinal rule is accordingly applicable to it. It must, of course, be borne in mind that moral damages are not awarded to penalize the defendant but to compensate the plaintiff for the injuries he may have suffered in a contractual or quasi-contractual relationship, exemplary damages, on the other hand, may be awarded only if the defendant had acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Attorney's fees in the concept of damages may be awarded where there is a finding of bad faith. The evidence on record amply sustains, and we correspondingly find, that the awards assessed against petitioner on the aforestated items of damages are justified and reasonable. It may also be pointed out that it is PAL's duty to provide assistance to private respondents and, for that matter, any other passenger similarly inconvenienced due to delay in the completion of the transport and the receipt of their baggage. Therefore, its unilateral and voluntary act of providing cash assistance is deemed part of its obligation as an air carrier, and is hardly anything to rave about. Likewise, arrangements for and verification of requested hotel accommodations for private respondents could and should have been done by PAL employees themselves, and not by Dr. Miranda. It was rather patronizing of PAL to make much of the fact that they allowed Dr. Miranda to use its office telephone in order to get a hotel room. While it may be true that there was no direct evidence on record of blatant rudeness on the part of PAL employees towards the Mirandas, the fact that private respondents were practically compelled to haggle for accommodations, a situation unbefitting persons of their stature, is rather demeaning and it partakes of discourtesy magnified by PAL's condescending attitude. Moreover, it cannot be denied that the PAL employees herein concerned were definitely less than candid, to put it mildly, when they withheld information from private respondents that they could actually be accommodated in a hotel of their choice. Indeed, the flamboyant testimony of Oscar Jereza, as PAL's duty manager, merely pays lip-service to, without putting into reality, the avowed company policy of invariably making available and always granting the requests for the kind and standard of accommodations demanded by and appropriate for its passengers.

Certainly, a more efficient service, and not a lackadaisical and disorganized system, is expected of the nation's flag carrier, especially on an international flight.

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393. Antonino vs. Valencia | G.R. No. l26526 May 27, 1974 FACTS Lorenzo Sarmiento of the Liberal Party lost to Vicente Duterte of the Nacionalista Party in the election for governor in Davao. Subsequently, Senator Antonino issued a statement that the loss was caused by the support given by Valencia, the Secretary of Public Works, to the independent LP candidate Maglana which caused a division in LP votes. Antonino was quoted in various newspapers that had Valencia not Sabotaged and double-crossed them, the LP would have won. Antonino then proceeded to file requests to have Valencia investigated by the Senate Blue Ribbon Committee on alleged anomalous acquisitions of public works supplies and equipment. Valencia retaliated by issuing a press release that he will also file charges with the Blue Ribbon Committee regarding anomalous acts of the Senator. This release was published in newspapers Antonino filed this case of damages. Valencia filed a counter-claim. Lower court ruled in favor of Antonino. Valencia appealed. Antonino died and was substituted by Senator Antonino (Wife) ISSUES & ARGUMENTS 1. W/N the Press Release was issued by Valencia 2. W/N the Press Release is libelous HOLDING & RATIO DECIDENDI YES. The fact that Valencia caused the release and publication of the press release is seen in the following FACTS: 1. The newspapers reproduced the specific charges filed by Antonino. 2. On the press release there was marked For release under the date. 3. It was indicated on the press release the answers made by Valencia to the charges of Antonino in the same numerical order. 4. The press release indicated that it came from Valencia 5. The press release quoted Valencia and he admitted making the statement in his office in the presence of the press 6. The first page of the press release consisted of quoted statements by Valencia and reports and information he received about Antonino 7. The press release mentioned specific figures which only Valencia could know given the time constraint 8. Valencia did not make any correction or denial of the published statement. YES. The statements issued were defamatory and libelous in nature as they imputed upon him certain corrupt practices. Also, because the statement was not issued privately or officially, malice is presumed and such presumption was not overcome as Valencia did not prove the truth of his statements or that they were published with good intentions and with a justifiable motive or that they were made in the exercise of the right of fair comment on the character, good faith, ability and sincerity of public officials. The court said that had Valencia not been motivated with malice

he would have filed charges against Antonino with the Senate seeing as Antonino was not a candidate for election and that his term as senator was no yet to expire. Also, Valencia cannot claim that his actions were justified in that Antonino was first in making libelous statements. The anomalous transactions charge was duly filed with the Blue Ribbon. Also, the statement on sabotage and double crossing cannot be considered libelous as contemporary politics shows that no stigma of disgrace or disrepute befalls one who changes political parties. 394. Spouses Eng v. PanAm | Puno G.R 123560 | March 16, 2000 FACTS Plaintiff Yu Eng Cho is the owner of Young Hardware Co. and Achilles Marketing. On July 10, 1976, plaintiffs bought ticket from defendant Claudia Tagunicar who made flight arrangements for Tourist World Services Inc. (TWSI). The destinations are Hong Kong, Tokyo, and San Francisco. The purpose of the trip was to go to NJ, USA to purchase 2 lines of infrared heating systems from which Yu Eng Cho expected to earn P300,000 in profits. As of July 10, the only the Mla.-HK and HK-Tokyo flights were confirmed. Tokyo- San Francisco legs was noted as RQ or on request. A few days after, plaintiffs returned to Tagunicar to confirm to Tokyo-SF flight. After calling up defendant Julieta Canilao of TWSI, Tagunicar told plaintiffs that their flight is now confirmed all the way and attached the confirmation stickers on the plane tickets. A few days before the scheduled flight of plaintiffs, their son, Adrian Yu, called the Pan Am office to verify the status of the flight. According to said Adrian Yu, a personnel of defendant Pan Am told him over the phone that plaintiffs' booking[s] are confirmed. Plaintiffs left for HK and stayed there for 5 days. Upon arrival in Tokyo, they called up the PanAm office to reconfirm their booking. However, they were informed that their names were not in the passengers list. They could not stay in Japan for more than 72 hours, thus they paid tickets for Taipei. Upon reaching Taipei, there were no flights available, thus, they were forced to head back to Manila. In view of the failure to reach NJ, the seller of the infrared heating system cancelled plaintiffs option to buy. Canilao and TWSI denied the confirmation of the Tokyo-SF flight since the flights then were really tight in view of NWAs strike. Tagunicar claims that she only signed the affidavit saying that shes TWSIs agent upon the assurance of plaintiffs lawyer that she will not be involved in the case. PanAm denies that plaintiffs were bumped off their flights since they were not even included in the flight manifest. ISSUES & ARGUMENTS 1. W/N Tagunicar is PanAms agent, making the latter liable for the acts of the former. 2. W/N PanAm is liable for its refusal to admit plaintiffs in its flight. HOLDING & RATIO DECIDENDI 1. No. Affidavits, being taken ex parte, are almost always incomplete and often inaccurate, sometimes from partial suggestion, or for want of suggestion and

inquiries. The circumstances under which said affidavit was prepared put in doubt petitioners' claim that it was executed voluntarily by respondent Tagunicar. Tagunicar categorically denied in open court that she is a duly authorized agent of TWSI, and declared that she is an independent travel agent. 2. No. It is against human experience that petitioners did not insist that they be allowed to board, considering that it was then doubly difficult to get seats because of the ongoing Northwest Airlines strike. It is also perplexing that petitioners readily accepted whatever the Tokyo office had to offer as an alternative. Inexplicably too, no demand letter was sent to respondents TWSI and Canilao. It is not sufficient to prove that Pan Am did not allow petitioners to board to justify petitioners' claim for damages. Mere refusal to accede to the passenger's wishes does not necessarily translate into damages in the absence of bad faith. The settled rule is that the law presumes good faith such that any person who seeks to be awarded damages due to acts of another has the burden of proving that the latter acted in bad faith or with ill motive. In the case at bar, we find the evidence presented by petitioners insufficient to overcome the presumption of good faith. They have failed to show any wanton, malevolent or reckless misconduct imputable to respondent Pan Am in its refusal to accommodate petitioners in its Tokyo-San Francisco flight. Pan Am could not have acted in bad faith because petitioners did not have confirmed tickets and more importantly, they were not in the passenger manifest. They were not confirmed passengers and their names were not listed in the passenger manifest. In other words, this is not a case where Pan Am bound itself to transport petitioners and thereafter reneged on its obligation. The persistent calls made by respondent Tagunicar to Canilao, and those made by petitioners at the Manila, Hongkong and Tokyo offices in Pan Am, are eloquent indications that petitioners knew that their tickets have not been confirmed. For, as correctly observed by Pan Am, why would one continually try to have one's ticket confirmed if it had already been confirmed? 395. Erlinda Francisco v. Ricardo Ferrer, Jr., et al. | Pardo G.R. No. 142029, February 28, 2001 | 353 SCRA 261 FACTS Mrs. Rebecca Lo and her daughter Annette Ferrer ordered a 3-layered cake from Fountainhead Bakeshop. It was agreed that the wedding cake shall be delivered at 5:00 in the afternoon on December 14, 1992 at the Cebu Country Club, Cebu City. Plaintiffs made their full payment. At 7:00 in the evening, the wedding cake has not arrived. Plaintiffs made a follow-up call and were informed that it was probably late because of the traffic. At 8:00, plaintiffs were informed that no wedding cake will be delivered because the order slip got lost. They were then compelled to buy the only available cake at the Cebu Country Club which was a sans rival. At 10:00, a 2-layered wedding cake arrived. Plaintiffs declined to accept it.

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 Defendant Erlinda Francisco sent a letter of apology accompanied with a P5,000.00 check which was declined by plaintiffs. 2 weeks after the wedding, Francisco called Mrs. Lo and apologized. Plaintiffs filed an action for breach of contract with damages. TC decided in favor of plaintiffs, directing defendant to pay the cost of the wedding cake, MORAL DAMAGES, attorneys fees and the cost of litigation. CA modified the award by increasing the MORAL DAMAGES to P250,000.00 and awarding EXEMPLARY DAMAGES of P100,000.00. ISSUES & ARGUMENTS 1. W/N the CA erred in affirming the TCs award of MORAL DAMAGES and increasing the amount from P30,000.00 to P250,000.00. 2. W/N the CA was justified in awarding in addition to moral damages, EXEMPLARY DAMAGES of P100,000.00. PetitionerCA and TC erred in awarding moral damages because moral damages are recoverable in breach of contract cases only where the breach was palpably wanton, reckless, malicious, in bad faith, oppressive or abusive. HOLDING & RATIO DECIDENDI YES. CA ERRED IN AWARDING MORAL DAMAGES. Article 2219 of the Civil Code provides: To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless, malicious, in bad faith, oppressive or abusive. In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries. Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud. Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

When awarded, moral damages must not be palpably and scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on the part of the trial court judge or appellate court justices.

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In this case, we find no such fraud or bad faith. CA ALSO ERRED IN AWARDING EXEMPLARY DAMAGES. To warrant the award of exemplary damages, [t]he wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. The requirements of an award of exemplary damages are: (1) they may be imposed by way of example in addition to compensatory damages, and only after the claimants right to them has been established; (2) that they can not be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant; (3) the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner. NOMINAL DAMAGES awarded. The FACTS show that when confronted with their failure to deliver on the wedding day, petitioners gave the lame excuse that delivery was probably delayed because of the traffic, when in truth, no cake could be delivered because the order slip got lost. For such prevarication, petitioners must be held liable for nominal damages for insensitivity, inadvertence or inattention to their customers anxiety and need of the hour. Nominal damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown. 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 441 of 528 Nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered. Petition granted. CA reversed. Petitioner order to pay the cost of the wedding cake, nominal damages of P10,000.00, attorneys fees and the costs of litigation.

396. Prudential Bank v. CA | Quisumbing G.R. No. 125536, March 16, 2000| 328 SCRA 264 FACTS Leticia Tupasi-Valenzuela had a current account with Prudential Bank, the balance of which on 21 June 1988 was about P36K. She issued a post-dated check (20 June 1997) for P11,500, drawn upon her account in Prudential Bank, in favor of Legaspi for payment of jewelry.

 The check was indorsed to Philip Lhuiller. Lhullier subsequently deposited the check but it was dishonored for having insufficient funds. Leticia went to Prudential Bank to clarify the matter because it was her belief that she had the sufficient funds to cover the amount of the check since she deposited into her account a check for P35K on 1 June 1988. She presented her passbook to the bank officer as evidence, but the same was set aside because according to the officer the best evidence of sufficiency of funds was the ledger furnished by the bank which did, in fact, show an insufficiency. Leticia found out that the check she deposited on 1 June had been cleared only on 24 June, 23 days after the deposit. The P11,500.00 check was redeposited by Lhuillier on June 24, 1988, and properly cleared on June 27, 1988. ISSUES & ARGUMENTS 1. W/N Leticia is entitled to Moral Damages amounting to P`100,000. o Petitioners Argument: Bank acted in good faith and that is was an honest mistake, therefore moral damages cannot be asked of them. o Respondents Argument: while it may be true that the bank's negligence in dishonoring the properly funded check of Leticia might not have been attended with malice and bad faith, it is the result of lack of due care and caution expected of an employee of a firm engaged in so sensitive and accurately demanding task as banking 2. W/N Leticia is entitled to Exemplary Damages amounting to P 50,000. o Petitioners Argument: Bank acted with due diligence. o Respondents Argument: The Bank did not practice due diligence and the public relies on the banks' sworn profession of diligence and meticulousness in giving irreproachable service. HOLDING & RATIO DECIDENDI LETICIA IS ENTITLED TO P100,000 as MORAL DAMAGES The bank's negligence was the result of lack of due care and caution required of managers and employees of a firm engaged in so sensitive and demanding business as banking. Accordingly, the award of moral damages by the respondent Court of Appeals could not be said to be in error nor in grave abuse of its discretion LETICIA IS ONLY ENTITLED TO P20,000 (NOT P50,000) The law allows the grant of exemplary damages by way of example for the public good. The level of meticulousness must be maintained at all times by the banking sector. Hence, the Court of Appeals did not err in awarding exemplary damages. In our view, however, the reduced amount of P20,000.00 is more appropriate. 397 Cathay Pacific Airways v. Spouses Vasquez| Davide G.R. No. 150843 March 14, 2003 FACTS The Spouses Vasquez went to HongKong via Cathay Pacific Airlines. Included in the trip was their maid who rode in the tourist class, and 2 friends who rode with them in the business class cabin.

On the way back to Manila, the spouses presented their boarding passes to the attendant. The attendant informed them that their seats have been upgraded to first class because they were Marco Polo Club Members (frequent flyer club) and they had such the privilege of a free upgrade in seating accommodations when such is available.

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The spouses did not want to change their seats because they felt that they should be seated with their friends with whom they had traveled and Dr. Vasquez had business matters he wanted to discuss with them. The attendant, however, insisted that they take the seats because the flight has been overbooked and the only way for them to get in this flight was to take the first class upgrade. They took in reluctantly for want to be with their friends. When they returned back to Manila, they demanded from Cathay Pacific damages of up to P1M, including Moral Damages. ISSUES & ARGUMENTS W/N Spouses Vasquez are entitled to MORAL DAMAGES, if not should they be indemnified in another manner. HOLDING & RATIO DECIDENDI NO. SPOUSES ARE NOT ENTITLED TO MORAL DAMAGES AS THERE WAS NO BAD FAITH ON THE PART OF CATHAY PACIFIC OR ITS ATTENDANTS. The spouses knew that they were members of the Marco Polo Club and that they had such privileged. But privileges, as known to us, can be waived. The flight attendant whould have consulted the spouses if they wanted to avail of that privilege before their business class seats were given to someone else and not surprise them, as like what happened in this case. The spouses clearly waived such privilege, therefore Cathay Pacific breached the contract of carriage. It is essential, however, that there exists bad faith or malice when in breach of the contract of carriage. The attendants changed the seat accommodations without such malice. Bad faith imports a dishonest purpose or some moral obliquity which was not present in this case. SPOUSES MAY ENTITLED ONLY TO NOMINAL DAMAGES The court did not award them even nominal damages, they just made mention that Nominal Damages is the most the spouses may claim: According to article 2221: o Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. 398. Lao vs. CA | Grino-Aquino G.R. No. 82808, July 11, 1991 | 199 SCRA 58 FACTS Dennis Lao was an employee of New St. Joseph Lumber owned by Chan Tong St. Joseph filed a collection suit and an Estafa case against Benjamin Espiritu, a customer for unpaid purchases of construction supplies

 Lao was ordered by Tong to sign an affidavit prepared by Atty. Querubin Espiritu filed a case of malicious persecution against Lao and St. Joseph The trial court rendered judgment against Lao and St. Joseph who were ordered to pay Espiritu jointly and severally P100,00 as moral damages, P5,000 as Attorney s fees and costs Espiritu levied on petitioners car because no more assets could be seized ISSUES & ARGUMENTS W/N Lao can be held liable for damages and such sums may be satisfied by execution against employees property because St. Joseph is closed HOLDING & RATIO DECIDENDI NO. LAO SHOULD NOT BE HELD LIABLE AS HE HAD A VALID DEFENSE. HIS EMPLOYER FORCED HIM TO SIGN THE COMPLAINT. Elements to maintain action for damages based on malicious prosecution: The fact of prosecution and the further fact that plaintiff himself was the prosecutor and the action was finally terminated with an acquittal That in bringing the action, the prosecutor acted without probable cause The prosecutor was actuated or impelled by legal malice Lao was only witness and not prosecutor in the Estafa case.Lao made the affidavit as an employee who had personal knowledge of the transaction. The prosecution for Estafa did not prosper but the unsuccessful prosecution may be labeled as libelous. Hence, the judgment against Lao is a nullity and should be set aside. 399. Rosario Lao and George Felipe Jr., vs. CA, and Frank Duena |Kapunan FACTS Antonio was bumped by a speeding jeep while he and his family were walking on a sidewalk. This jeep was driven by Felipe. The latter got out of the jeep and threatened Antonio, then ran towards his house located near the area of the accident. Unable to walk as his legs were hit by the jeep, Antonio then sought the help of the barangay councilman Deuna. Deuna then brought policemen ot the scene of the incident. The policemen then seized the jeep since Felipe was nowhere to be found, and then informed Felipe's about it. Felipe and Lao then filed a complaint against the Anti-carnapping Task Force, alleging that Antonio and Frank together with their companions forcibly took the jeep from Felipe's house. This was dismissed by the DOJ for lack of evidence to establish probably cause. Thereafter, Antonio and Deuna filed an action for malicious prosecution against Felipe and Lao. ISSUES & ARGUMENTS Whether or not Felipe and Lao are liable for malicious prosecution? HOLDING & RATIO DECIDENDI

Yes, petitioners are liable.

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Indeed, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution, for the law could not have meant to impose a penalty on the right to litigate. To constitute malicious prosecution and hold defendant liable, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person and that the prosecution was initiated with the deliberate knowledge that the charge was false and baseless. The elements of malice and absence of probable cause are present in the instant case. Lao knew that private respondent, with policemen, had taken the vehicle to the Sangandaan police station after the traffic incident. As pointed out by respondent appellate court, Rosario cannot validly claim that, prior to the filing of the complaint-affidavit for carnapping, she did not know the whereabouts of the vehicle. As to the absence of probable cause, it was established that there was clearly no intent to gain on the part of respondents and the police, which is essential for the crime of carnapping. The vehicle was turned over to the police station because it was in connection with the charge of frustrated homicide against Felipe. 400. Lehner V. Martires v. Ricardo Cokieng | Chico-Nazario G.R. No. 10192, Feb. 17, 2005 | FACTS Petitioner Lehner V. Martiresand respondent Ricardo C. Cokieng were contemporaries in Xavier School and in the De La Salle University. Both later built their own respective business pursuits; petitioner with his Durabuilt Company and Ricardo Cokieng with his Phil-Air Conditioning Center, which he jointly owned with his brother and corespondent Regino Cokieng. Phil-Air Conditioning Center was engaged in the distribution and sale of Carrier air-conditioners and refrigeration units. Sometime in 1992, petitioner joined Phil-Air Conditioning Center as its agent. For his services, petitioner would receive commission and a fixed monthly salary. This arrangement was done informally, with no written contract governing them. In September 1994, as a result of a verbal tussle between the former classmates, the ties between the duo ended in antipathy, with petitioner resigning from Phil-Air. Regino Cokieng Filed an Estafa Case against Lehner, the latter was invited for investigation by PNP criminal investigation. The PNPCI recommended to file the action before the proper court. However, Regino did not proceed with the case. Ricardo on the other hand filed an unjust vexation case against Lehner because the latter took the checking account of the former without authority. Lehner also failed to render the accounting of the business when he was asked by Ricardo. Lehner was acquitted for the the crime of unjust vexation. He filed a case for damagaes on the ground of malicious prosecution against the Cokiengs. CA dismissed the case. ISSUES & ARGUMENTS Whether the court of appeals erred in ruling that Lehner failed to shoe cause of action for damages based on malicious prosecution HOLDING & RATIO DECIDENDI

There is malicious prosecution when a person directly insinuates or imputes to an innocent person the commission of a crime and the accused is compelled to defend himself in court. While generally associated with unfounded criminal actions, the term has been expanded to include unfounded civil suits instituted just to vex and humiliate the defendant despite the absence of a cause of action or probable cause.[25] To merit the award of damages in a case of malicious prosecution, the aggrieved party must prove: (1) that he has been denounced or charged falsely of an offense by the defendant, (2) that the latter knows that the charge was false or lacks probable case, (3) that the said defendant acted with malice, and, of course, (4) the damages he has suffered.[26] The elements of want of probable cause and malice must simultaneously exist; otherwise, the presence of probable cause signifies, as a legal consequence, the absence of malice.[27] On these, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately knowing that the charge was false and baseless to entitle the victim to damages. To the mind of this Court, the twin elements of probable cause and malice are lacking in the case at bar to entitle petitioner to damages he now seeks out. For one, it is an elementary rule in this jurisdiction that good faith is presumed and that the burden of proving bad faith rests upon a party alleging the same.[28] In the case at bar, petitioner has failed to prove bad faith on the part of respondents. For another, there are no factual allegations in the complaint that can support a finding that malice and bad faith motivated the respondents in filing the two informations against petitioner. Allegations of bad faith, malice, and other related words without ultimate FACTS to support the same are mere conclusions of law. [29] From our reading of the complaint for damages arising from malicious prosecution and from the records of the case, we find no ultimate FACTS to buttress these conclusions of law. CA affirmed. Petition dismissed.

was surveyed and separate titles were issued by the Register of Deeds of Sta. Cruz, Laguna in the names of Aurea (TCT No. 73252) and Jovencio (TCT No. 73251).

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22 years later, in August 1993, Aurea filed an estafa complaint against brothers Jovencio and Rodencio de Ramos on the ground that she was deceived by them when she asked for their assistance in 1971 concerning her mortgaged property. In her complaint, Aurea alleged that Rodencio asked her to sign a blank paper on the pretext that it would be used in the redemption of the mortgaged property. Aurea signed the blank paper without further inquiry because she trusted her nephew, Rodencio. Thereafter, they heard nothing from Rodencio and this prompted Nimpha Yasoa Bondoc to confront Rodencio but she was told that the title was still with the Register of Deeds. However, when Nimpha inquired from the Register of Deeds, she was shocked to find out that the lot had been divided into two, pursuant to a deed of sale apparently executed by Aurea in favor of Jovencio. Aurea averred that she never sold any portion of her property to Jovencio and never executed a deed of sale. Aurea was thus forced to seek the advice of Judge Enrique Almario, another relative, who suggested filing a complaint for estafa. On February 21, 1994, the prosecutor dismissed the criminal complaint for estafa for lack of evidence. On account of this dismissal, Jovencio and Rodencio filed a complaint for damages on the ground of malicious prosecution with the RTC. They alleged that the filing of the estafa complaint against them was done with malice and it caused irreparable injury to their reputation, as Aurea knew fully well that she had already sold half of the property to Jovencio. The RTC decided in against petitioner Yasoa, who then filed certiorari under Rule 65 ISSUES & ARGUMENTS W/N petitioner should be held liable for damages for malicious prosecution HOLDING & RATIO DECIDENDI YES, petitioner must be held liable for malicious prosecution. In this jurisdiction, the term "malicious prosecution" has been defined as "an action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein." To constitute "malicious prosecution," there must be proof that the prosecution was prompted by a sinister design to vex or humiliate a person, and that it was initiated deliberately by the defendant knowing that his charges were false and groundless.5 Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. In this case, however, there is reason to believe that a malicious intent was behind the filing of the complaint for estafa against respondents. The records show that the sale of the property was evidenced by a deed of sale duly notarized and registered with the

401. Yasoa Vs. De Ramos| Corona G.R. No. 156339 October 6, 2004| GR 156339 FACTS In November 1971, Aurea Yasoa and her son, Saturnino, went to the house of Jovencio de Ramos to ask for financial assistance in paying their loans to PNB, otherwise their residential house and lot would be foreclosed. Inasmuch as Aurea was his aunt, Jovencio acceded to the request. They agreed that, upon payment by Jovencio of the loan to PNB, half of Yasoas subject property would be sold to him. On December 29, 1971, Jovencio paid Aureas bank loan. As agreed upon, Aurea executed a deed of absolute sale in favor of Jovencio over half of the lot consisting of 123 square meters. Thereafter, the lot

local Register of Deeds. After the execution of the deed of sale, the property was surveyed and divided into two portions. Separate titles were then issued in the names of Aurea Yasoa (TCT No. 73252) and Jovencio de Ramos (TCT No. 73251). Since 1973, Jovencio had been paying the realty taxes of the portion registered in his name. In 1974, Aurea even requested Jovencio to use his portion as bond for the temporary release of her son who was charged with malicious mischief. Also, when Aurea borrowed money from the Rural Bank of Lumban in 1973 and the PNB in 1979, only her portion covered by TCT No. 73252 was mortgaged. All these pieces of evidence indicate that Aurea had long acknowledged Jovencios ownership of half of the property. Furthermore, it was only in 1993 when petitioners decided to file the estafa complaint against respondents. If petitioners had honestly believed that they still owned the entire property, it would not have taken them 22 years to question Jovencios ownership of half of the property. The only conclusion that can be drawn from the circumstances is that Aurea knew all along that she was no longer the owner of Jovencios portion after having sold it to him way back in 1971. Likewise, other than petitioners bare allegations, no other evidence was presented by them to substantiate their claim. Malicious prosecution, both in criminal and civil cases, requires the elements of (1) malice and (2) absence of probable cause. These two elements are present in the present controversy. Petitioners were completely aware that Jovencio was the rightful owner of the lot covered by TCT No. 73251, clearly signifying that they were impelled by malice and avarice in bringing the unfounded action. That there was no probable cause at all for the filing of the estafa case against respondents led to the dismissal of the charges filed by petitioners with the Provincial Prosecutors Office in Siniloan, Laguna. 402. Audion Electric Co., Inc. v NLRC | GonzagaReyes G.R. No. 106648 June 17, 1999 | FACTS Nicolas Madolid was employed by Audion Electric Company on June 30, 1976 as a fabricator and continuously rendered services assigned in different offices or projects as helper electrician, stockman and timekeeper. He has rendered thirteen (13) years of continuous, loyal and dedicated service with a clean record. On August 3, Madolid was surprised to receive a letter informing him that he will be considered terminated after the turnover of materials, including respondents tools and equipments not later than August 15, 1989. Madolid claims that he was dismissed without justifiable cause and due process and that his dismissal was done in bad faith which renders the dismissal illegal. He prays for reinstatement with full backwages as well as moral and exemplary damages. LA Iniego ruled in favor of Madolid. Upon appeal to NLRC, the latter dismissed the same. Hence this appeal.

ISSUES & ARGUMENTS W/N the award of moral and exemplary damages in this case was proper? HOLDING & RATIO DECIDENDI NO. Such award must be deleted for being devoid of legal basis. Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or were done in a manner contrary to morals, good customs or public policy. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party, which is the basis made by Madolid for claiming moral and exemplary damages in this case. There was also an issue of whether or not Madolid should be considered a regular or a project employee. The Court held that Madolids employment status was established by the Certificate of Employment dated April 10, 1989 issued by Audion Electric which certified that Madolida is a bonfide employee of the former from June 30, 1976 up to the time the certification was issued on April 10, 1989. The same certificate of employment showed that private respondents exposure was regularly and continuously employed by Audion in various job assignments from 1976 to 1989, for a total of 13 years. The Court reminded the parties of its ruling that where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees. Further the failure of Audion to submit reports of termination supports the claim of Madolid that he was indeed a regular employee.

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403. NEECO I vs NLRC| Quisumbing GR No. 116066 January 24, 2000| FACTS Petitioners Reynaldo Fajardo, Ernesto Marin, Ever Guevarra, Petronilo Baguisa, Victorino Carillo, and Erdie Javate were permanent employees of respondent Nueva Ecija I Electric Cooperative (NEECO I). They were members of petitioner NEECO I Employees Association, a labor organization established for the mutual aid and protection of its members. Petitioner Rodolfo Jimenez was the president of the association. The management of NEECO I is vested on the Board of Directors. Respondent Patricio dela Pea was NEECO's general manager on detail from NEA. On February 7, 1987, the Board of Directors adopted Policy No. 3-33, which set the guidelines for NEECO I's retirement benefits. On October 28, 1987, all regular employees were ordered by NEECO I to accomplish Form 87, which were applications for either retirement, resignation, or separation from service.

 On October 5, 1991 and February 28, 1992, the applications of Petronilo Baguisa and Ever Guevarra, respectively, were approved. They were paid the appropriate separation pay. These successive events, followed by the promotion of certain union officers to supervisory rank, caused apprehension in the labor association. They were considered as harassment threatening the union members, and circumventing the employees' security of tenure. On February 29, 1992, to strengthen and neutralize management's arbitrary moves, the union held a "snap election" of officers. On March 3, 1992, petitioner labor association passed a resolution withdrawing the applications for retirement of all its members. On March 4, March 17, and April 7, 1992, petitioners Ernesto Marin, Reynaldo Fajardo and Victorino Carillo were compulsorily retired by management. They received their separation pay under protest on March 16, March 18, and April 15, 1992, respectively. On August 21, 1991, Erdie Javate was terminated from employment allegedly due to misappropriation of funds and dishonesty. He was not paid separation or retirement benefits. On March 29, 1992, petitioners and Erdie Javate instituted a complaint for illegal dismissal and damages with the NLRC Regional Arbitration Branch in San Fernando. They alleged they were purposely singled out for retirement from a listing of employees who were made to submit retirement forms, even if they were not on top of the list because they were union officers, past officers or active members of the association. The labor Arbiter ruled in favor of the employees but the NLRC eliminated the award of Moral and Exemplary Damages. ISSUES & ARGUMENTS Whether the NLRCs decision not to award Moral and Exemplary damages was proper? HOLDING & RATIO DECIDENDI No. To warrant an award of moral damages, it must be shown that the dismissal of the employee was attended to by bad faith, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. Clearly, therefore, complainants have established the fact that they were illegally dismissed by the respondents and their illegal dismissal was even tainted with unfair labor practice act. Unfair labor practices violate the constitutional rights of workers and employees to selforganization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. 404. Rutaquio vs. NLRC FACTS Jose Rutaquio and Erlinda Villareal were Savings Bookkeeper and Cashier of Rural Bank of Baler, respectively. Upon auditing and inspection of MY

Mateo and Co. (CPA of the bank) of the records, it found out that certain accounts exceeded the entries of journals and ledgers of the bank and that some transactions were not timely recorded. This prompted them to recommend disciplinary action against the two which the bank heeded through its President (Flordeliza Carpio) by approving a Resolution pursuant thereto. They then sought formal resignation of the two, which the latter questioned through a letter expressing that they would only accede to the discipline if it will be dispensed with in the proper venue. The bank then ratiocinated that the employees acts were prejudicial to the bank which subjected it to penalties from the Central Bank. The refusal of the two subsequently led to their dismissal. They then sued the bank for illegal dismissal and prayed for reinstatement and certain back pays. NLRC ruled in their favor but instead did not compel reinstatement due to strained relations and awarded moral damages and attorneys fees. CA deleted the latter awards upon appeal of the bank. ISSUES & ARGUMENTS Whether CA was correct in deleting award for moral damages and attorneys fees. HOLDING & RATIO DECIDENDI Yes but not the Attorneys fees. In this case the employees failed to state the

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FACTS and substantiate the same, which served as basis for the award of moral damages. In the absence of bad faith on the part of the employer in dismissing them, an award for moral damages is not proper. Citing the case of Lopez v. Javier Moral damages in labor cases are recoverable only when the dismissal is attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. As to the attorneys fees: it is settled that in actions for recovery of wages or where an employee was forced and constrained to litigate and incur expenses in order to protect his rights or interests, the ward of attorneys fees is morally and legally justified. 405. Paguio vs. PLDT| Mendoza G.R. No. 154072, December 3, 2002| FACTS Petitioner Alfredo S. Paguio was appointed Head of PLDTs Garnet Exchange. He reported to the Head of the Greater Metro Manila (GMM) East Center, Rodolfo R. Santos, one of the respondents herein. Paguio sent Santos memoranda criticizing the performance ranking of the GMM exchanges and requested reconsideration of the implementation of the East Center OPSIM Manpower Rebalancing as such was unfair to the Garnet Exchange. Subsequently, respondent Santos issued a memorandum reassigning petitioner to a position in the Office of the GMM East Center Head for Special Assignments. Protesting the said transfer, petitioner asked Ferido for a formal hearing but the transfer was affirmed based on the conclusion that [petitioner is] not a team player and cannot accept decisions of management already arrived at, short of insubordination." This was again affirmed by respondent Enrique Perez, Senior EVP and COO of PLDT explaining that the action was

not disciplinary and did not require compliance with the process of investigation, confrontation, and evaluation before implementation. As a result, petitioner filed a complaint for illegal demotion and damages against respondents. The Labor Arbiter dismissed the complaint on the ground that petitioners transfer was an exercise of a management prerogative and there was no showing that the same amounted to a demotion in rank and privileges. Petitioner then appealed to the NLRC, which reversed the decision of the Labor Arbiter stating that there was a diminution of his salary, benefits, and other privileges as he was assigned a functionless position and deprived of the opportunity to get a performance-based promotion or a wage increase. The award included a reinstatement and a wage increase. The CA and SC affirmed but disagreed as to the award of salary increases. ISSUES & ARGUMENTS W/N petitioner Paguio is entitled to damages? HOLDING & RATIO DECIDENDI Y ES, PETITIONER IS ENTITLED TO DAMAGES Under Article 21 of the Civil Code, any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. The illegal transfer of petitioner to a functionless office was clearly an abuse by respondent PLDT of its right to control the structure of its organization. The right to transfer or reassign an employee is decidedly an employers exclusive right and prerogative. In several cases, however, we have ruled that such managerial prerogative must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner by which such right is to be exercised. As found by both the NLRC and the Court of Appeals, there is no clear justification for the transfer of petitioner except that it was done as a result of petitioners disagreement with his superiors with regard to company policies. Petitioner is entitled to an award of moral and exemplary damages. The Court has held that in determining entitlement to moral damages, it suffices to prove that the claimant has suffered anxiety, sleepless nights, besmirched reputation and social humiliation by reason of the act complained of. Exemplary damages, on the other hand, are granted in addition to moral damages "by way of example or correction for the public good." Furthermore, as petitioner was compelled to litigate and incur expenses to enforce and protect his rights, he is entitled to an award of attorneys fees. The amount of damages recoverable is, in turn, determined by the business, social and financial position of the offended parties and the business and financial position of the offender. 406. Globe Telecom, Inc. vs. Florendo-Flores| Bellosillo GR. No.- 150092, September 27, 2002 | 390 SCRA 200 FACTS Private Respondent was the Senior Account Manager for Northern Luzon of Globe Telecom. She filed a complaint with the NLRC for constructive dismissal

against Globe and some of its officials. According to her affidavit, Cacholo Santos, her immediate superior (1) never accomplished and submitted her performance evaluation report thereby depriving her of salary increases, bonuses, and other incentives which other employees of the same rank had been receiving; (2) reduced her to a house-to-house selling agent of company products (handyphones) despite her rank as supervisor of company dealers and agents; (3) never supported her in the sales programs and recommendations she presented; and (4) withheld all her other benefits, i.e. gasoline allowance, per diems, representation allowance and car maintenance, to her extreme pain and humiliation. Petitioners averred that before the filing of the complaint, private respondent went AWOL without signifying whether she was resigning. That notwithstanding, there was no official act which called for her termination and diminution in rank, seniority and benefits. Labor Arbiter adjudged illegal dismissal and ordered reinstatement and payment of full backwages. Respondent was also awarded exemplary damages on account of the companys negligence in monitoring all its key personnel, and attorneys fees. On appeal, the NLRC held that although private respondent abandoned her employment she was nonetheless entitled to backwages as an act of grace of Globe. CA then affirmed. ISSUES & ARGUMENTS _______________________________________________________ _________ 1. W/N respondent was constructively dismissed. 2. W/N the payment of backwages and damages was in order. HOLDING & RATIO DECIDENDI

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YES. ALTHOUGH RESPONDENT CONTINUED TO HAVE THE RANK OF A SUPERVISOR, HER FUNCTIONS WERE REDUCED TO A MERE HOUSETO-HOUSE SALES AGENT OR DIRECT SALES AGENT. THIS WAS TANTAMOUNT TO A DEMOTION. Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. In this case, private respondent might not have suffered any diminution in her basic salary but petitioners did not dispute her allegation that she was deprived of all benefits due to another of her rank and position, benefits which she apparently used to receive. ENTITLED TO BAKWAGES BUT NOT TO ACTUAL, MORAL AND EXEMPLARY DAMAGES. It should be noted that the award of backwages is justified upon the finding of illegal dismissal, and not under the principle of act of grace for past services rendered. There are occasions when the Court exercises liberality in granting financial awards to employees, but even then they contemplate only the award of separation pay and/or financial assistance, and only as a measure of social justice when the circumstances of the case so warrant, such as instances of valid dismissal for causes other than serious misconduct or those reflecting on the

employees moral character. Proper regard for the welfare of the labor sector should not dissuade us from protecting the rights of management such that an award of back wages should be forthcoming only when valid grounds exist to support it. An award of actual or moral damages is not proper as the dismissal is not shown to be attended by bad faith, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy. Exemplary damages are likewise not proper as these are imposed only if moral, temperate, liquidated or compensatory damages are awarded. 407. UST vs. CA | Corona G.R. No. 124250, October 18, 2004 | FACTS UST owns and operates the hospital known as the Santo Tomas University Hospital (STUH). UST entered into a lease agreement with Dr. Librado Canicosa whereby the latter a room in the hospital. Annexed to the lease agreement the following restriction . No physician accepted as lessee shall maintain or offer in the leased premises any ancillary services which is being offered by the STUH (such as nuclear and other laboratory services, physiotherapy, x-ray, pharmacy, etc.). Canicosa acquired two diagnostic machines - a scintillation gamma camera and an up take machine. Because STUH had a similar diagnostic instrument, it sent a letter to Dr. Canicosa requesting the latter to remove his up take machine pursuant to the limitation attached to the agreement Canicosa rejected petitioners request, claiming that his machine was not in the hospital premises but in the room he was leasing from the hospital. Due to the refusal of respondent to remove his up take machine from Room 203 of STUH, UST filed an ejectment complaint against Canicosa on the ground of violation of the terms of the lease agreement In his answer, Canicosa insisted that the up take machine was essential to his medical practice as an internist specializing in thyroidology. He also filed a counterclaim seeking actual, moral and exemplary damages for the following causes of action He was also dismissed as a personnel health officer as a result of the squabble. He thus filed a case for illegal dismissal at the National Labor Relations Commission (NLRC) and demanded his reinstatement and payment of backwages. Canicosa claimed that his dismissal was a product of ill-will, revenge and harassment as he earlier opposed the application for Filipino citizenship of the hospital administrator, Fr. Antonio Cabezon, O.P. On February 28, 1978, the labor arbiter entered a decision branding his dismissal as illegal and ordering his reinstatement to his former position with full backwages. Petitioner appealed to the NLRC which affirmed the decision Petitioner elevated the case to the SC which affirmed the decisions of both the labor arbiter and the NLRC In the ejectment case, the RTC awarded Canicosa with damages arising from illegal dismissal

ISSUES & ARGUMENTS W/N the Dr. Canicosa is entitled to damages due to illegal dismissal HOLDING & RATIO DECIDENDI

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THE TC IS BEREFT OF JURISDICTION TO AWARD DR. CANICOSA WITH DAMAGES. UST argues that Canicosas first cause of action under his counterclaim was the claim for damages for his alleged illegal dismissal as personnel health officer of the hospital. As such, it was the NLRC and not the trial court which had jurisdiction to hear the claim for damages, pursuant to PD 1691 which took effect on May 1, 1980. The complaint for ejectment was filed by petitioner on May 17, 1979 while respondents answer with counterclaim was filed on June 27, 1979. At that time, PD 1367 was still the prevailing law. Petitioner alleges that, although the case was filed during the effectivity of PD 1367 which vested the regular courts with jurisdiction over claims for damages arising from an employer-employee relationship, that jurisdiction was removed from the courts when PD 1691 amended PD 1367 during the pendency of the case. PD 1691 restored to the labor arbiters and the NLRC their jurisdiction over all money claims of workers and all other claims arising from employer-employee relations, including moral and exemplary damages. On the other hand, respondent maintains that once a court has assumed jurisdiction over a case, its jurisdiction continues until the case is terminated. However, on May 1, 1980, during the pendency of this case, PD 1691 was promulgated, amending Section 1 of PD 1367: ART. 217. Jurisdiction of the Labor Arbiter and the Commission. -- a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide the following cases involving all workers whether agricultural or nonagricultural:[ 3) All money claims of workers, -xxx- 5) All other claims arising from employer-employee relation, ] We now ask: did PD 1691 apply retroactively in this case so as to transfer jurisdiction over respondents claims for damages from the courts to the labor arbiter/NLRC? Yes. In Atlas Fertilizer Corporation vs. Navarro the Court had the occasion to rule on conflicts of jurisdiction between the courts and the labor agencies arising from the amendments to PD 1367 by PD 1691. The later law, PD 1691, is a curative statute which corrected the lack of jurisdiction of the labor arbiters at the start of the proceedings and therefore should be given retroactive application vis-a-vis pending proceedings. It was intended to correct a situation where two different tribunals had jurisdiction over separate issues arising from the same labor conflict. This principle was reiterated in Victorias Milling Co., Inc. vs. Intermediate Appellate Court where PD 1691 was given retroactive application as the amendment to the law was crafted precisely to settle once and for all the conflict of jurisdiction between regular courts and labor agencies. We rule therefore that the award of damages by the trial court on the first cause of action of

respondents counterclaim cannot be sustained as the court a quo was bereft of jurisdiction to grant the same. 408. Hemedes vs. CA| Gonzaga-Reyes G.R. No. 107132 October 8, 1999 |SCRA FACTS An unregistered parcel of land was originally owned by the late Jose Hemedes, father of Maxima Hemedes and Enrique D. Hemedes. Jose Hemedes executed a document entitled "Donation Inter Vivos With Resolutory Conditions" whereby he conveyed ownership over the subject land, together with all its improvements, in favor of his third wife, Justa Kausapin, subject to following resolution condition (among two): (a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to any of the children, or their heirs, of the DONOR expressly designated by the DONEE in a public document conveying the property to the latter. o Pursuant to the condition above mentioned, Justa Kausapin executed a "Deed of Conveyance of Unregistered Real Property by Reversion" conveying to Maxima Hemedes the subject property. Original Certificate of Title (OCT) No. (0-941) 0-198 5 was issued in the name of Maxima Hemedes married to Raul Rodriguez by the Registry of Deeds of Laguna on June 8, 1962, with the annotation that "Justa Kausapin shall have the usufructuary rights over the parcel of land herein described during her lifetime or widowhood." o It is claimed by R & B Insurance that Maxima Hemedes and her husband Raul Rodriguez constituted a real estate mortgage over the subject property in its favor to serve as security for a loan which they obtained. On February 22, 1968, R & B Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes failed to pay the loan even after it became due. The land was sold at a public auction with R & B Insurance as the highest bidder and a certificate of sale was issued by the sheriff in its favor. On May 21, 1975, The Register of Deeds of Laguna cancelled OCT No. (0-941) 0-198 and issued Transfer Certificate of Title (TCT) No. 41985 in the name of R & B Insurance. The annotation of usufruct in favor of Justa Kausapin was maintained in the new title. Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa Kausapin executed a "Kasunduan" on May 27, 1971 whereby she transferred the same land to her stepson Enrique D. Hemedes. o On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and Construction Corporation (Dominium). o On April 10, 1981, Justa Kausapin executed an affidavit affirming the conveyance of the subject property in favor of Enrique D. Hemedes as embodied in the "Kasunduan" dated May 27, 1971, and at the same time denying the conveyance made to Maxima Hemedes. o May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia Brewery) who, even before signing the contract of lease, constructed two warehouses. R & B Insurance sent a letter to Asia Brewery informing the former of its ownership of the property as evidenced by TCT No. 41985 issued in its favor and

of its right to appropriate the constructions since Asia Brewery is a builder in bad faith.

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Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein she asserted that she is the rightful owner of the subject property by virtue of OCT No. (0-941) 0-198 and that, as such, she has the right to appropriate Asia Brewery's constructions, to demand its demolition, or to compel Asia Brewery to purchase the land. In another letter, Maxima Hemedes denied the execution of any real estate mortgage in favor of R&B Insurance. Dominium and Enrique D. Hemedes filed a complaint with the CFI of Laguna for the annulment of TCT issued in favor of R & B Insurance and/or the reconveyance to Dominium of the subject property. o Dominium was the absolute owner of the subject property by virtue of the February 28, 1979 deed of sale executed by Enrique D. Hemedes, who in turn obtained ownership of the land from Justa Kausapin, as evidenced by the "Kasunduan" dated May 27, 1971. o Justa Kausapin never transferred the land to Maxima Hemedes and that Enrique D. Hemedes had no knowledge of the registration proceedings initiated by Maxima Hemedes. TC rendered judgment in favor of Dominium and Enrique Hemedes. CA affirmed. ISSUES & ARGUMENTS 1. Which of the two conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the second in favor of Enrique D. Hemedes, effectively transferred ownership over the subject land. 2. W/N R & B Insurance should be considered an innocent purchaser of the land in question (or a mortgagee in good faith), and if so, W/N R & B Insurance is entitled to moral damages. HOLDING & RATIO DECIDENDI 1.) The conveyance made by Justa Kausapin in favor of Maxima Hemedes transferred ownership over the subject land. The SC held that Dominium and Enrique Hemedes have failed to produce clear, strong, and convincing evidence to overcome the positive value of the "Deed Conveyance of Unregistered Real Property by Reversion" a notarized document. In upholding the deed of conveyance in favor of Maxima Hemedes, the SC ruled that Enrique D. Hemedes 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 455 of 528 and his transferee, Dominium, did not acquire any rights over the subject property. o Public respondent's finding that the "Deed of Conveyance of Unregistered Real Property By Reversion" executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not supported by the factual findings in this case. It is grounded upon the mere denial of the same by Justa Kausapin. o The failure of Dominium and Enrique Hemedes to refute the due execution of the deed of conveyance by making a comparison with Justa Kausapin's thumbmark necessarily leads one to conclude that she did in fact affix her thumbmark upon the deed of donation in favor of her stepdaughter. o Public respondent's reliance upon Justa Kausapin's repudiation of the deed of conveyance is misplaced for there are strong indications that she is a biased

witness. The trial court found that Justa Kausapin was dependent upon Enrique D. Hemedes for financial assistance. o Clearly, article 1332 assumes that the consent of the contracting party imputing the mistake or fraud was given, although vitiated, and does not cover a situation where there is a complete absence of consent. In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of Unregistered Real Property by Reversion" in favor of Maxima Hemedes. In fact, she asserts that it was only during the hearing conducted on December 7, 1981 before the trial court that she first caught a glimpse of the deed of conveyance and thus, she could not have possibly affixed her thumbmark thereto. Thus, the donation in favor of Enrique D. Hemedes is null and void for the purported object thereof did not exist at the time of the transfer, having already been transferred to his sister. Similarly, the sale of the subject property by Enrique D. Hemedes to Dominium is also a nullity for the latter cannot acquire more rights than its predecessor-in-interest and is not an innocent purchaser for value since Enrique D. Hemedes did not present any certificate of title upon which it relied. 2.) Yes. R & B Insurance should be considered as an innocent purchaser of the land in question (or a mortgagee in good faith), but R & B Insurance is not entitled to moral damages. o The TC and CA court found that Maxima Hemedes did in fact execute a mortgage over the subject property in favor of R & B Insurance. This finding shall not be disturbed o The owner of a parcel of land may still sell the same even though such land is subject to a usufruct; the buyer's title over the property will simply be restricted by the rights of the usufructuary. Thus, R & B Insurance accepted the mortgage subject to the usufructuary rights of Justa Kausapin. The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes' OCT does not impose upon R & B Insurance the obligation to investigate the validity of its mortgagor's title. o Furthermore, even assuming that R & B Insurance was legally obliged to go beyond the title and search for any hidden defect or inchoate right which could defeat its right thereto, it would not have discovered anything since the mortgage was entered into in 1964, while the "Kasunduan" conveying the land to Enrique D. Hemedes was only entered into in 1971 and the affidavit repudiating the deed of conveyance in favor of Maxima Hemedes was executed by Justa Kausapin in 1981. o It is a wellsettled principle that where innocent third persons rely upon the correctness of a certificate of title and acquire rights over the property, the court cannot just disregard such rights. Otherwise, public confidence in the certificate of title, and ultimately, the Torrens system, would be impaired for everyone dealing with registered property would still have to inquire at every instance whether the title has been regularly or irregularly issued. Being an innocent mortgagee for value, R & B Insurance validly acquired ownership over the property, subject only to the usufructuary rights of Justa Kausapin thereto, as this encumbrance was properly annotated upon its certificate of title o Despite this ruling, R & B Insurance is not entitled to moral damages as it

has not alleged nor proven the factual basis for the same. 409. Development Bank of the Philippines vs. Court of Appeals FACTS Emerald Resort Hotel Corporation obtained a loan from DBP for 3.5 millions pesos Thus ERHC mortgaged its property to DBP

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Since ERHC defaulted on the payment of its loan, DBP filed with the RTC sheriff of Iriga an application for extrajudicial foreclosure sale of the said mortgaged properties. It was alleged that sheriffs and other armed men entered the premises of said Hotel when the foreclosure was executed ISSUES & ARGUMENTS moral damages? No As a general rule, Corporations could not be awarded moral damages because being an artificial person; a corporation has no feelings, no emotions, and no senses. It cannot experience actual sufferings and mental anguish which is only experienced by a person having a nervous system. The statement in PP vs Manero is only an obiter dictum, stating that the good reputation of the company is debased, resulting in social humiliation, thus could recover moral damages. Assuming that they can, still the company did not present enough proof to warrant moral damages. 410. PAL vs. CA | GRIO-AQUINO, J G.R. No. 55470, May 8, 1990 | 185 SCRA 110 FACTS On November 23, 1960 at 5:30 pm., Starlight Flight #26 of the Philippine Airlines took off from Manduriao Airport in Iloilo on its way to Manila with 33 persons on board. The plane did not reach its destination but crashed on Mt. Baco in Mindoro, one hour and fifteen minutes after take-off. The plane was identified as PI-C133, a DC-3 type aircraft manufactured in 1942 and acquired by PAL in 1948.The same has been certifies as airworthy by the Civil Aeronautics Administration. Among the fatalities was Nicanor Padilla who was a passenger on the star crossed flight. His mother, Natividad Vda de Padilla filed a complaint against PAL demanding payment of P600,000 as actual and compensatory damages plus exemplary damages and P60,000 as attorneys fees PAL denied that the accident was caused by its negligence or that of any of the planes flight crew. It was established that Nicanor Padilla, prior to his death was 29 years old, single, in good health, President and General Manager of Padilla Shipping Could ERHC demand

HOLDING & RATIO DECIDENDI

Company at Iloilo City, and a legal assistant of the Padilla Law Office. Lower court rendered a decision ordering PAL to pay plaintiff Natividad Padilla the sum of P477,000 as award for the expected income of the deceased Nicanor. P10,000 as moral damages and P10,000 as attorneys fees. CA affirmed. ISSUES & ARGUMENTS W/N respondent court erred in computing the awarded indemnity on the basis of the life expectancy of the late Nicanor Padilla rather on the life expectancy of private respondent HOLDING & RATIO DECIDENDI No, however there is error as to the computation of the proper indemnity to be awarded. Petitioner PAL relied on foreign law which states that the controlling element in determining loss of earnings arising from death is the life expectancy of the deceased or of the beneficiary, whichever is shorter. However resort to foreign law even in the absence of local statute is only persuasive. As per Philippine law, under Aretciles 1764 and 2206 of the Civil Code, the award of damages for death is computed on the basis of life the life expectancy of the deceased and not of his beneficiary. In the case of Davila vs PAL, the SC in that case determined not only PALs liability for negligence but also the manner of computing the damages. Indemnity in that case was also determined based on the life expectancy of the deceased and not of his beneficiaries. Following the procedure used by the SC in the case of Davila vs. PAL, the trial court determined the victims gross annual income to be P23,100 based on the yearly salaries of P18,000 from Padilla Shipping Company and P5,100 from the Allied Overseas Trading Corporation. Considering that he was single, the court deducted P9,200 as yearly living expenses resulting in a net income of P13,900 and not P15,900 as determined by the trial court. Since Nicanor was only 29 years old and in good health, the trial court allowed him a life expectancy of 30 years. Then multiplying his annual net income by his life expectancy of 30 years, the product is P417,000 and not P477,000. This is the amount of death indemnity that is due to her Nicanors mother. Further, although as a general rule, an appellee who has not appealed is not entitled to such affirmative relief other than the ones granted in the decision of the lower court. Nevertheless, there is merit in PRs plea for relief. Due to the 16-year delay in the disposition of this case, PR herself has joined her son in the Great Beyond without being able to receive the indemnity that she deserves. Thus in the interest of justice, petitioner should pay legal interest on the indemnity due her. The failure of the trial court to award such interest amounts to a PLAIN ERROR which the SC may rectify on appeal although it was not specified in the appellees brief. 411. Better Buildings , Inc. vs. NLRC | Romero, J. G.R. No. 109714, December 15, 1997 | 283 SCRA 242 FACTS Private respondent Halim Ysmael (Ysmael) was hired as a Sales Manager by petitioner Better Building, Inc.

(BBI) on March 16, 1985. In addition to his monthly salary, he was given the free use of the company car, free gasoline and commission from sales. Private respondent Eliseo Feliciano (Feliciano), on the other hand, was employed as Chief Supervisor by the petitioner since January 1966. On May 3, 1988, petitioner, through its Assistant General Manager, Leda A. Beverford, showed to private respondents a memorandum regarding their termination from employment effective the same day

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Unable to accept petitioner's drastic action, on May 6, 1988, private respondents filed a complaint against BBI for illegal dismissal. 3 On March 3, 1989, Labor Arbiter Daisy G. CautonBarcelona rendered a decision declaring the dismissal illegal. Except for the reduction of the damages awarded by the Labor Arbiter, the said decision was affirmed by the NLRC, Petitioner, not satisfied with the decision, has filed the instant petition for certiorari alleging that the NLRC gravely abused its discretion amounting to lack or excess of jurisdiction when it rendered the decision of March 3, 1989 and the resolution of December 11, 1992. On September 4, 1996, this Court resolved to dismiss the case against private respondent Ysmael by virtue of the compromise agreement entered into between him and the petitioner. 6 Hence, the resolution of this case will only affect private respondent Feliciano. ISSUES & ARGUMENTS W/N respondent NLRC gravely abused its discretion amounting to lack or excess of jurisdiction? HOLDING & RATIO DECIDENDI In termination of employment cases, we have consistently held that two requisites must concur to constitute a valid dismissal: (a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code, and (b) the employee must be accorded due process, the elements of which are the opportunity to be heard and defend himself. 7 Deeply entrenched in our jurisprudence is the doctrine that an employer can terminate the services of an employee only for valid and just causes which must be supported by clear and convincing evidence. 10 The employer has the burden of proving that the dismissal was indeed for a valid and just cause. 11 In the case at bar, petitioner has clearly established private respondent's culpability by convincing evidence. First, it was never disputed that private respondent established another corporation, Reachout General Services, engaged in the maintenance/janitorial service, the same line of business as that of petitioner. In this regard, private respondent failed to adduce substantial evidence to disprove this allegation. While we find that private respondent was dismissed for cause, the same was, however, effected without the requirements of due process. In this jurisdiction, we have consistently ruled that in terminating an employee, it is essential that the twin

requirements of notice and hearing must be observed. 12 The written notice apprises the employee of the particular acts or omissions for which his dismissal is sought and at the same informs the employee concerned of the employer's decision to dismiss him. In the case at bar, the record is bereft of any showing that private respondent was given notice of the charge against him. Nor was he ever given the opportunity under the circumstances to answer the charge; his termination was quick, swift and sudden. Evidently, the decision to dismiss respondent was merely based on the fact that petitioner was already convinced at the time that the private respondents were engaged in disloyal acts. As regards the procedural aspect, the failure to observe the twin requirements of notice and hearing taints the dismissal with illegality. In fine, we find that there was basis for petitioner's loss of trust and confidence in private respondent. For an employer cannot be compelled to retain in his service an employee who is guilty of acts inimical to its interest. 14 A company has the right to dismiss its employees as a measure of protection. 15 Corollarily, proof beyond reasonable doubt of an employee's misconduct is not required in dismissing an employee on the ground of loss of trust and confidence. 16 The quantum of proof required, being only substantial evidence, 17 we are convinced that there was an actual breach of trust committed by private respondent which was ample basis for petitioner's loss of trust and confidence in him. We, therefore, hold that private respondent's dismissal was for a just and valid cause. However, the manner of terminating his employment was done in complete disregard of the necessary procedural safeguards. A man's job being a property right duly protected by our laws, for depriving private respondent the right to defend himself, petitioner is liable for damages consistent with Article 32 of the Civil Code, which provides: o Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: xxx xxx xxx o (6) The right against deprivation of property without due process of law; xxx xxx xxx In this regard, the damages shall be in the form of nominal damages 18 for the award is not for the purpose of penalizing the petitioner but to vindicate or recognize private respondent's rights to procedural due process which was violated by the petitioner. 412. Japan Airlines vs. Court of Appeals | Romero, J. G.R. No. 118664, August 7, 1998 | 294 SCRA 19 FACTS On June 13, 1991, private respondent Jose Miranda boarded JAL flight No. JL 001 in San Francisco, California bound for Manila. Likewise, on the same day

private respondents Enrique Agana, Maria Angela Nina Agana and Adelia Francisco left Los Angeles, California for Manila via JAL flight No. JL 061. As an incentive for travelling on the said airline, both flights were to make an overnight stopover at Narita, Japan, at the airlines' expense, thereafter proceeding to Manila the following day. Upon arrival at Narita, Japan on June 14, 1991, private respondents were billeted at Hotel Nikko Narita for the night. The next day, private respondents, on the final leg of their journey, went to the airport to take their flight to Manila. However, due to the Mt. Pinatubo eruption, unrelenting ashfall blanketed Ninoy Aquino International Airport (NAIA), rendering it inaccessible to airline traffic. Hence, private respondents' trip to Manila was cancelled indefinitely. To accommodate the needs of its stranded passengers, JAL rebooked all the Manilabound passengers on flight No. 741 due to depart on June 16, 1991 and also paid for the hotel expenses for their unexpected overnight stay. On June 16, 1991, much to the dismay of the private respondents, their long anticipated flight to Manila was again cancelled due to NAIA's indefinite closure. At this point, JAL informed the private respondents that it would no longer defray their hotel and accommodation expense during their stay in Narita. Since NAIA was only reopened to airline traffic on June 22, 1991, private respondents were forced to pay for their accommodations and meal expenses from their personal funds from June 16 to June 21, 1991. Their unexpected stay in Narita ended on June 22, 1991 when they arrived in Manila on board JL flight No. 741. Obviously, still reeling from the experience, private respondents, on July 25, 1991, commenced an action for damages against JAL before the Regional Trial Court of Quezon City, Branch 104. 2 To support their claim, private respondents asserted that JAL failed to live up to its duty to provide care and comfort to its stranded passengers when it refused to pay for their hotel and accommodation expenses from June 16 to 21, 1991 at Narita, Japan. In other words, they insisted that JAL was obligated to shoulder their expenses as long as they were still stranded in Narita. On the other hand, JAL denied this allegation and averred that airline passengers have no vested right to these amenities in case a flight is cancelled due to "force majeure." On June 18, 1992, the trial court rendered its judgment in favor of private respondents holding JAL liable for damages Undaunted, JAL appealed the decision before the Court of Appeals, which, however, with the exception of lowering the damages awarded affirmed the trial court's finding, 3 thus: JAL filed a motion for reconsideration which proved futile and unavailing. 4 Failing in its bid to reconsider the decision, JAL has now filed this instant petition. ISSUES & ARGUMENTS W/N the JAL, as a common carrier has the obligation to shoulder the hotel and meal expenses of its stranded passengers until they have reached their final destination,

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even if the majeure"?

delay

were

caused

by

"force

HOLDING & RATIO DECIDENDI We are not unmindful of the fact that in a plethora of cases we have consistently ruled that a contract to transport passengers is quite different in kind, and degree from any other contractual relation. It is safe to conclude that it is a relationship imbued with public interest. Failure on the part of the common carrier to live up to the exacting standards of care and diligence renders it liable for any damages that may be sustained by its passengers. However, this is not to say that common carriers are absolutely responsible for all injuries or damages even if the same were caused by a fortuitous event. To rule otherwise would render the defense of "force majeure," as an exception from any liability, illusory and ineffective. Accordingly, there is no question that when a party is unable to fulfill his obligation because of "force majeure," the general rule is that he cannot be held liable for damages for non-performance. 6 Corollarily, when JAL was prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo eruption, whatever losses or damages in the form of hotel and meal expenses the stranded passengers incurred, cannot be charged to JAL. Yet it is undeniable that JAL assumed the hotel expenses of respondents for their unexpected overnight stay on June 15, 1991. Admittedly, to be stranded for almost a week in a foreign land was an exasperating experience for the private respondents. To be sure, they underwent distress and anxiety during their unanticipated stay in Narita, but their predicament was not due to the fault or negligence of JAL but the closure of NAIA to international flights. Indeed, to hold JAL, in the absence of bad faith or negligence, liable for the amenities of its stranded passengers by reason of a fortuitous event is too much of a burden to assume. Furthermore, it has been held that airline passengers must take such risks incident to the mode of travel. 7 In this regard, adverse weather conditions or extreme climatic changes are some of the perils involved in air travel, the consequences of which the passenger must assume or expect. After all, common carriers are not the insurer of all risks. 8 The reliance is misplaced. The factual background of the PAL case is different from the instant petition. In that case there was indeed a fortuitous event resulting in the diversion of the PAL flight. However, the unforeseen diversion was worsened when "private respondents (passenger) was left at the airport and could not even hitch a ride in a Ford Fiera loaded with PAL personnel," 10 not to mention the apparent apathy of the PAL station manager as to the predicament of the stranded passengers. 11 In light of these circumstances, we held that if the fortuitous event was accompanied by neglect and malfeasance by the carrier's employees, an action 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 460 of 528 for damages against the carrier is permissible. Unfortunately, for private respondents, none of these conditions are present in the instant petition. We are not prepared, however, to completely absolve petitioner JAL from any liability. It must be noted that private respondents

bought tickets from the United States with Manila as their final destination. While JAL was no longer required to defray private respondents' living expenses during their stay in Narita on account of the fortuitous event, JAL had the duty to make the necessary arrangements to transport private respondents on the first available connecting flight to Manila. Petitioner JAL reneged on its obligation to look after the comfort and convenience of its passengers when it declassified private respondents from "transit passengers" to "new passengers" as a result of which private respondents were obliged to make the necessary arrangements themselves for the next flight to Manila. Private respondents were placed on the waiting list from June 20 to June 24. To assure themselves of a seat on an available flight, they were compelled to stay in the airport the whole day of June 22, 1991 and it was only at 8:00 p.m. of the aforesaid date that they were advised that they could be accommodated in said flight which flew at about 9:00 a.m. the next day.

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We are not oblivious to the fact that the cancellation of JAL flights to Manila from June 15 to June 21, 1991 caused considerable disruption in passenger booking and reservation. In fact, it would be unreasonable to expect, considering NAIA's closure, that JAL flight operations would be normal on the days affected. Nevertheless, this does not excuse JAL from its obligation to make the necessary arrangements to transport private respondents on its first available flight to Manila. After all, it had a contract to transport private respondents from the United States to Manila as their final destination. Consequently, the award of nominal damages is in order. Nominal damages are adjudicated in order that a right of a plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized and not for the purpose of indemnifying any loss suffered by him. 12 The court may award nominal damages in every obligation arising from any source enumerated in article 1157, or in every case where any property right has been invaded. 13 413. Cojuangco vs. CA | Panganiban G.R. No. 119398, July 2, 1999 | 309 SCRA 602 FACTS Petitioner Eduardo Cojuangco is a known businessman-sportsman owning several racehorses which he entered in the sweepstakes races. Several of his horses won. Petitioner sent letters of demand to private respondents PCSO and PCSO Chairman Fernando Carrascoso, Jr. for the collection of the prizes due him. However, the respondent said that the demanded prizes are being withheld on advice of Commissioner Ramon Diaz of the PCGG after private respondent Carrascoso sought the latter a clarification of the extent and coverage of the sequestration order issued against the properties of petitioner. The sequestration order was in pursuance of EO 2, issued by President Aquino, freezing all assets and properties in the Philippines of the Marcoses, their friends, subordinates, and business associates. A case was filed before the RTC, which ruled in favor of petitioner. Upon appeal to the CA, it was reversed.

ISSUES & ARGUMENTS W/N the award for nominal damages against respondent Carrascoso, Jr. is warranted by evidence and law? HOLDING & RATIO DECIDENDI YES. PETITIONERS RIGHT TO THE USE OF HIS PROPERTY WAS UNDULY IMPEDED. Private respondent Carrascoso may still e held liable under Art. 32 of the Civil Code, which provides: o Art. 32. Any public officer, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: The right against deprivation of property without due process of law; While private respondent Carrascoso may have relied upon the PCGGs instructions, he could have further sought the specific legal basis therefor. A little exercise of prudence would have disclosed that there was no writ issued specifically for the sequestration of the racehorse winnings of petitioner. The issuance of a sequestration order requires the showing of a prima facie case and due regard for the requirements of due process. The withholding of the prize winnings of petitioner without a properly issued sequestration order clearly spoke of a violation of his property rights without due process of law. Art. 2221 of the Civil Code authorizes the award of nominal damages to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered. The court may also award nominal damages in every case where a property right has been invaded. 414. BPI Investment Corporation v. Court of Appeals | Quisumbing G.R. No. 133632 February 15, 2002| 377 SCRA 117 FACTS Frank Roa loaned from petitioner and secured the loan with his house. Later on, Roa sold the house to private respondents and the latter assumed Roas mortgage. However, since petitioner was not willing to extend the same loan terms to respondent, and they agreed on a new loan which also covered Roas debt. On Mar 1981, they executed a mortgage deed containing the new terms with the provision that payment of the monthly amortization would commence on May 1981. On Aug 1982, respondents updated Roas arrearages which reduced Roas balance, which in turn was liquidated when petitioner applied thereto the proceeds of respondents loan of P500,000. On Sep 1982, petitioner then released to respondents P7,146.87, purporting to be what was left of their loan after full payment of Roas loan. In June 1984, petitioner instituted foreclosure proceedings against respondents on the ground that they failed to pay their indebtedness from May 19981 up to June 1984 which amounted to P475,585.31. A notice of sheriffs sale was published on Aug 1984.

Respondents then filed a civil case against petitioner, alleging that they were not in arrears but in fact made an overpayment. RTC found for respondents, and ordered petitioner to pay moral and exemplary damages and attorneys fees. CA affirmed in toto. ISSUES & ARGUMENTS 1. Issue 1: (not important, regarding the loan itself) 2. Issue 2: W/N the award of moral and exemplary damages and attorneys fees proper? o Respondents: Petitioner is guilty of bad faith as evidenced by its insistence on the payment of amortization on the loan even before it was released. HOLDING & RATIO DECIDENDI

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ISSUE 2: MORAL AND EXEMPLARY DAMAGES DELETED, AWARDED NOMINAL DAMAGES INSTEAD. ATTORNEYS FEES PROPER. As admitted by private respondents themselves, they were irregular in their payment of monthly amortization. Conformably with previous SC rulings, petitioner cannot be properly declared in bad faith. Consequently, the award of moral and exemplary damages must be ruled out. However, in the SCs view, petitioner was negligent in relying merely on the entries found in the deed of mortgage, without checking and correspondingly adjusting its records on the amoun actually released to private respondents and the date when it was released. Sich negligence resulted in damage to private respondents, for which an award of nominal damages worth P25,000 should be given in recognition of respondents rights which were violated by petitioner. The award of attorneys fees is sustained because respondents were compelled to litigate. 415. Almeda vs. Carino| Mendoza G.R. No. 152143. January 13, 2003| FACTS April 30, 1980, Ponciano L. Almeda and Avelino G. Cario, predecessors-in-interest of petitioners and respondents, entered into 2 agreements to sell, one covering 8 titled properties at P1,743,800.00, 20% upon the signing and execution of the agreement, balance four equal semi-annual installments, beginning six months from the signing thereof, with 12% interest per annum. Another 3 untitled properties, at P1,208,580.00, 15% upon the signing and execution of the agreement, and the balance, bearing a 12% annual interest from the signing thereof, to be paid as follows: 15% of the purchase price plus interest to be paid upon the issuance of titles to the lots, and the balance plus interests to be paid in semi-annual installments starting from the date of issuance of the respective certificates of title to the lots involved, which must be not later than March 30, 1982. The parties amended their agreement by extending the deadline of producing the titles to the lands, P300K payment for the titled lands, Carino tor ender acctg of the sugar cane crops and Carino to pay 10K a month in case of failure to produce the title of the documents.

 Almeda asked Carino for the Deed of Absolute Sale over the 8 titled properties despite non-payment of the full price. Carino granted the request and Almeda executed an undertaking to pay the balance but failed despite repeated demands of Carino. .Carino filed a case against Almeda. RTC ruled in favor of Carino. Almeda appealed, questioning the award of nominal damages of the trial court. Court of Appeals affirmed the decision of the lower court. It held that the award of nominal damages was justified by the unjust refusal of Almeda and Almeda, Inc. to settle and pay the balance of the purchase price in violation of the rights of Cario ISSUES & ARGUMENTS W/N NOMINAL damages was proper? HOLDING & RATIO DECIDENDI YES. Almedas refusal to pay the purchase price despite repeated demands and after they sold the properties to third parties constitutes a violation of Carinos right to the amount in their agreement. Nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of indemnification for a loss but for the recognition and vindication of a right. Indeed, nominal damages are damages in name only and not in fact. When granted by the courts, they are not treated as an equivalent of a wrong inflicted but simply a recognition of the existence of a technical injury. A violation of the plaintiffs right, even if only technical, is sufficient to support an award of nominal damages. Conversely, so long as there is a showing of a violation of the right of the plaintiff, an award of nominal damages is proper. 416. Northwest Airlines V. Cuenca G.R. L-22425 August 31, 1965 FACTS When his contract of carriage was violated by the petitioner, respondent held the office of Commissioner of Public Highways of the Republic of the Philippines. Having boarded petitioner's plane in Manila with a first class ticket to Tokyo, he was, upon arrival at Okinawa, transferred to the tourist class compartment. Although he revealed that he was traveling in his official capacity as official delegate of the Republic to a conference in Tokyo, an agent of petitioner rudely compelled him in the presence of other passengers to move, over his objection, to the tourist class, under threat of otherwise leaving him in Okinawa. In order to reach the conference on time, respondent had no choice but to obey. This is an action for damages for alleged breach of contract. After appropriate proceedings the Court of First Instance of Manila, in which the case was originally filed, rendered judgment sentencing defendant Northwest Airlines, Inc. hereinafter the award of

referred to as petitioner to pay to plaintiff Cuenca hereinafter referred to as respondent the sum of P20,000 as moral damages, together with the sum of P5,000 as exemplary damages, with legal interest thereon from the date of the filing of complaint," December 12, 1959, "until fully paid, plus the further sum of P2,000 as attorney's fees and expenses of litigation." On appeal taken by petitioner, said decision was affirmed by the Court of Appeals, except as to the P5,000.00 exemplary damages, which was eliminated, and the P20,000.00 award for moral damages, which was converted into nominal damages. ISSUES & ARGUMENTS Whether or not the court erred in awarding nominal damage? HOLDING & RATIO DECIDENDI

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No. Nominal damages cannot co-exist with compensatory damages." In the case at bar, the Court of Appeals has adjudicated no such compensatory, moral and exemplary damages to respondent herein. There are special reasons why the P20,000.00 award in favor of respondent herein is justified, even if said award were characterized as nominal damages. It is true that said ticket was marked "W/L," but respondent's attention was not called thereto. Much less was he advised that "W/L" meant "wait listed." Upon the other hand, having paid the first class fare in full and having been given first class accommodation as he took petitioner's plane in Manila, respondent was entitled to believe that this was a confirmation of his first class reservation and that he would keep the same until his ultimate destination, Tokyo. Then, too, petitioner has not tried to explain or even alleged that the person to whom respondent's first class seat was given had a better right thereto. In other words, since the offense had been committed with full knowledge of the fact that respondent was an official representative of the Republic of the Philippines, the sum of P20,000 awarded as damages may well be considered as merely nominal. At any rate, considering that petitioner's agent had acted in a wanton, reckless and oppressive manner, said award may also be considered as one for exemplary damages. WHEREFORE, the decision appealed from is hereby affirmed, with costs against the petitioner. It is so ordered. 417. Armovit v Court of Appeals G.R. No. 88561 April 20, 1990 FACTS Dr. Armovit, a Filipino physician and his family residing in the United States came to the Philippines on a Christmas visit. They were bumped off at the Manila International Airport on their return flight to the United States because of an erroneous entry in their plane ticket relating to their time of departure. In October 1981, they decided to spend their Christmas holidays with relatives and friends in the Philippines so they purchased from Northwest three roundtrip Airline tickets from the United States to Manila and back, plus three tickets for the rest of the children, though not involved in the suit. Each ticket of the petitioners which was in the handwriting of Northwests tickets sales agent contains the following entry on the Manila to Tokyo portion of

the return flight 'Manila to Tokyo, NW flight 002 dated 17 January, time 10:30 a.m. Status OK." On their return trip from Manila to the U.S. scheduled on January 17,1982, Armovit arrived at the check in counter of Northwest at the Manila International Airport at 9:15 in the morning, a good one (1) hour and Fifteen (15) minutes ahead of the 10:30 a.m. scheduled flight time recited in their ticket. They were rudely informed that they cannot be accommodated inasmuch as flight 002 scheduled at 9:15 a.m. was already taking off and the 10:30 a.m. flight entered in their plane ticket was erroneous. Previous to the said date of departure the petitioners re-confirmed their reservations through their representatives who personally presented the three (3) tickets at the Northwest office. The departure time in the three (3) tickets of the petitioners was not changed when re-confirmed. The names of petitioners appeared in the passenger manifest and confirmed. Petitioner Dr. Armovit protested that because of the bumped-off he will not be able to keep his appointment with his patients in the United States. Petitioners suffered anguish, wounded feelings, and serious anxiety day and night of January 17th until the morning of January 18th when they were finally informed that seats will be available for them on the flight of that day. The trial court rendered judgment against the airline as follows: P1,300.00 actual damages; P500,000.00 moral damages; P500,000.00 exemplary damages; and P100,000.00 nominal damages in favor of Dr. Armovit; also moral damages of P300,000.00; exemplary damages of P300,000.00; nominal damages of P50,000.00 each in favor of Mrs. Armovit and Miss Jacqueline Arrnovit. The Court of Appeals modified the trial courts judgment as follows: The P900,000.00 moral damages and P100,000.00 nominal damages awarded to petitioners were eliminated; exemplary damages were reduced from P500,000.00 to P50,000.00 in favor of Mrs. Armovit and from P300,000.00 to P20,000.00 in favor of Miss Jacqueline Armovit. ISSUES & ARGUMENTS W/N the Armovits are entitled to Nominal Damages HOLDING & RATIO DECIDENDI NO. NOMINAL DAMAGES CANNOT CO-EXIST WITH ACTUAL OR COMPENSATORY DAMAGES. The Supreme Court further modified the Court of Appeals judgment as follows: Actual damages in favor of Dr. Armovit, P1,300.00 with legal interest from January 17, 1982; moral damages at P100,000.00, and exemplary damages at P100,000.00 in favor of Dr. Armovit; Moral damages at P100,000.00 and exemplary damages at P50,000.00 in favor of Mrs. Armovit; Moral damages at P100,000.00 and exemplary damages of P20,000.00 in favor of Mrs. Jacqueline Armovit; and attorneys fees at 5% of the total awards under above paragraphs, plus costs of suit, and o 1. The gross negligence committed by Northwest in the issuance of the tickets with entries as to the time of the flight; the failure to correct such erroneous entries and the manner by which petitioners were rudely informed that they were bumped off` are clear indicia of such malice and bad faith and establish

that respondent has committed a breach of contract which entitle petitioners to moral damages. o 2. Considering the circumstances of this case whereby Northwest attended to the flight of the petitioners, taking care of their accommodation while waiting and boarding them in the flight back to the United States the following dag;. the Court finds that petitioners are entitled to moral damages in the amount of P100,000.00 each. o 3. By the same token to provide an example for the public good, an award of exemplary damages is also proper, the award of the appellate court is adequate. o 4. The deletion of nominal damages by the appellate court is well-taken since there is an award of actual damages. Nominal damages cannot coexist with actual and compensatory damages.

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418 Cathay Pacific Airways v. Spouses Vasquez| Davide G.R. No. 150843 March 14, 2003 FACTS The Spouses Vasquez went to HongKong via Cathay Pacific Airlines. Included in the trip was their maid who rode in the tourist class, and 2 friends who rode with them in the business class cabin. On the way back to Manila, the spouses presented their boarding passes to the attendant. The attendant informed them that their seats have been upgraded to first class because they were Marco Polo Club Members (frequent flyer club) and they had such the privilege of a free upgrade in seating accommodations when such is available. The spouses did not want to change their seats because they felt that they should be seated with their friends with whom they had traveled and Dr. Vasquez had business matters he wanted to discuss with them. The attendant, however, insisted that they take the seats because the flight has been overbooked and the only way for them to get in this flight was to take the first class upgrade. They took in reluctantly for want to be with their friends. When they returned back to Manila, they demanded from Cathay Pacific damages of up to P1M, including Moral Damages. ISSUES & ARGUMENTS W/N Spouses Vasquez are entitled to MORAL DAMAGES, if not should they be indemnified in another manner. HOLDING & RATIO DECIDENDI NO. SPOUSES ARE NOT ENTITLED TO MORAL DAMAGES AS THERE WAS NO BAD FAITH ON THE PART OF CATHAY PACIFIC OR ITS ATTENDANTS. The spouses knew that they were members of the Marco Polo Club and that they had such privileged. But privileges, as known to us, can be waived. The flight attendant whould have consulted the spouses if they wanted to avail of that privilege before their business class seats were given to someone else and not surprise them, as like what happened in this case. The spouses clearly waived such privilege, therefore Cathay Pacific breached the contract of carriage.

 It is essential, however, that there exists bad faith or malice when in breach of the contract of carriage. The attendants changed the seat accommodations without such malice. Bad faith imports a dishonest purpose or some moral obliquity which was not present in this case. SPOUSES MAY ENTITLED ONLY TO NOMINAL DAMAGES The court did not award them even nominal damages, they just made mention that Nominal Damages is the most the spouses may claim: According to article 2221: o Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. 419. Precillano Necesito, Etc. Vs. Natividad Paras, Et Al.|JBL Reyes G.R. No. L-10605 June 30, 1958| 104 SCRA 75 FACTS Severina Garces, with her 1y.o. son, Precillano Necesito, rode a Phil Rabbit Bus from Agno to Manila, driven by Franciso Bandonell. Due to fracture of the right steering knuckle, which had a defective core at it was not compact but "bubbled and cellulous" (a condition that could not be known or ascertained by the carrier despite the fact that regular thirty-day inspections were made of the steering knuckle), the front wheel swerved to the right; then, the driver lost control and the bus fell into a creek. As a result, Severina died and the Precillano had a broken femur and abrasions; they also lost cargo of vegetables, a wristwatch and money. They filed 2 suits for damages against Phil. Rabbit. CFI: dismissed on the grounds that injury occurred due to a fortuitous events since the bus was traveling slow due to a bad road condition and that the proximate cause was the reduced strength of the steering knuckle. (NB: this case both had the original SC decision and the MR. MR slightly diverted by saying that moral damages are due to the heirs of Severina due to the fact of her death, but JBL Reyes concluded that the MR was denied and affirmed what was held in the original decision.) ISSUES & ARGUMENTS 1. W/N the carrier is liable for the manufacturing defect of the steering knuckle, and whether the evidence discloses that in regard thereto the carrier exercised the diligence required by law (under Art. 1755) 2. On DAMAGES: W/N the carrier is liable for MODERATE DAMAGES? (Temperate damages rin yun; note that JBL Reyes didnt brand it as temperate damages.) MORAL DAMAGES? ATTYs FEES? HOLDING & RATIO DECIDENDI UNDER THE ORGINAL DECISION: YES, the carrier is liable While the carrier is not insurer of the safety of the passenger, it should nevertheless be held to answer for the flaws in its equipment if the flaws were at all discoverable. In this connection, the manufacturer of the defective appliance is considered in law as the

agent of the carrier and the good repute of the manufacturer will not relieve the carrier from liability.

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The rationale of the carriers liability is the fact that the passenger has no privity with the manufacturer if the defective equipment; hence, he has no remedy against him while the carrier usually has. NOT LIABLE FOR MORAL DAMAGES but LIABLE FOR MODERATE (TEMPERATE) DAMAGES No allowance may be made for moral damages, since under Article 2220 of the new Civil Code, in case of suits for breach of contract, moral damages are recoverable only where the defendant acted fraudulently or in bad faith, and there is none in this case. As to exemplary damages, the carrier has not acted in a "wanton, fraudulent, reckless, oppressive or malevolent manner" to warrant their award. For the minor Precillano, an indemnity of P5,000 would be adequate for the abrasions and fracture of the femur, including medical and hospitalization expenses, there being no evidence that there would be any permanent impairment of his faculties or bodily functions, beyond the lack of anatomical symmetry. As for the death of Severina, who was 33 years old, with 7 minor children when she died, her heirs are obviously entitled to indemnity not only for the incidental loses of property (cash, wrist watch and merchandise) worth P394 that she carried at the time of the accident and for the burial expenses of P490, but also for the loss of her earnings (shown to average P120 a month) and for the deprivation of her protection, guidance and company. In our judgment, an award of P15,000 would be adequate LIABLE FOR ATTORNEYS FEES: Low income of the plaintiffs-appellants makes an award for attorney's fees just and equitable (Civil Code, Art. 2208, par. 11). Considering that the two cases filed were tried jointly, a fee of P3,500 would be reasonable. CFI decision reversed. MR DECISION: Award of moral damages was granted under Art 176426. Under the new Civil Code, in case of accident due to a carrier's negligence, the heirs of a deceased passenger may recover moral damages, while, a passenger who is injured, but manages to survive, is not entitled to them. Art 1764, being a special rule limited to cases of fatal injuries, this article prevails over the general rule of Art. 2220. DIANE LIPANA 26 ART. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. ART. 2206. . . . (3) The spouse, legitimate and eligimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. 420. Pleno vs. Court of Appeals| Gutierrez, Jr. G.R. No. L-56505, June 16, 1992 | 161 SCRA 208 FACTS Florante de Luna was driving a delivery truck owned by Philippine Paper Products Inc. at great speed along South Super Highway in Taguig when he bumped the van which was being driven by Maximo Pleno.

 The bump caused Plenos van to swerve to the right and crash into a parked truck. As a result, Pleno was hospitalized and his van was wrecked. Pleno sued and was awarded actual, temperate, moral, exemplary damages and attorneys fees by the trial court. However, the CA reduced the amount of temperate and moral damages given because they were too high. ISSUES & ARGUMENTS W/N the CA erred in reducing the amount of temperate damages awarded? HOLDING & RATIO DECIDENDI The CA erred in reducing the award of temperate damages. Temperate damages are included within the context of compensatory damages. In arriving at a reasonable level of temperate damages to be awarded, trial courts are guided by our ruling that there are cases where from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is convinced that there has been such loss. For instance, injury to one's commercial credit or to the goodwill of a business firm is often hard to show certainty in terms of money. Should damages be denied for that reason? The judge should be empowered to calculate moderate damages in such cases, rather than that the plaintiff should suffer, without redress from the defendant's wrongful act. As to the loss or impairment of earning capacity, there is no doubt that Pleno is an entrepreneur and the founder of his own corporation, the Mayon Ceramics Corporation. It appears also that he is an industrious and resourceful person with several projects in line and were it not for the incident, might have pushed them through. His actual income however has not been sufficiently established so that this Court cannot award actual damages, but, an award of temperate or moderate damages may still be made on loss or impairment of earning capacity. That Pleno sustained a permanent deformity due to a shortened left leg and that he also suffers from double vision in his left eye is also established. Because of this, he suffers from some inferiority complex and is no longer active in business as well as in social life. 421. Consolidated Plywood Industried and Henry Wee vs. CA, Willie and Alfred Kho |Medialdea G.R. No. 101706, September 23, 1992 | 214 SCRA 209 FACTS Sometime in February 1978, Consolidated Plywood, through its president Wee, entered into a verbal hauling agreement with the father and son, Willie and Alfred Kho (the Khos), for its logging and manufacturing timber products at its logging concession As a pre-condition, the Khos will be provided a financial assistance to defray the cost of needed repairs and re-conditioning of the trucks and other expenses necessary for the hauling operations It was understood that the financial assistance was in the nature of cash advance to be obtained by the Khos from Equitable Bank on the guaranty of Wee, and that

the hauling services shall continue unless and until this loan remain unpaid

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After hauling logs for a year, the Khos without giving notice to Consolidated and Wee, suddenly and surreptitiously at nighttime, withdrew all its truck haulers from the jobsite and returned it to its base in violation of the agreement Because of this, several logs have been left unhauled from the area which spawned serious and varied consequences to the great damage and prejudice to Consolidated o The Aquarius Trading charged it with a reimbursement representing the cancellation fee of a chartered vessel and other charges due to its unfulfilled commitment o During the interim period, it could have produced 5,000 cu. m. of logs, to fill other commitments After 2 demand letters from Consolidated that remained unheeded, it then filed an action for damages against the Khos for breach of their agreement The CFI (now the RTC) rendered judgment in favor of Consolidated ordering the Khos to pay damages On appeal, the CA modified the award by deleting all other damages awarded except that of unpaid overdraft cash vales, reimbursement, and the unrealized profit in the Aquarius transaction ISSUES & ARGUMENTS W/N the deletion of the damages for unfulfilled import of logs, moral damages and attorneys fees were proper HOLDING & RATIO DECIDENDI THE DELETION OF ACTUAL DAMAGES IS PROPER BUT THE MORAL DAMAGES AND ATTORNEYS FEES ARE NOT JUSTIFIED The trial court correctly held that there was no evidence to support such claim of actual damages. This claim apparently refers to an alleged commitment to a certain Ching Kee Trading of Taiwan scheduled in June 1979 as distinguished from the claim for actual damages incurred in connection with its Aquarius Trading transaction, which was sufficiently substantiated Consolidateds contention that the damages for the unfulfilled shipments should have been awarded as a form of temperate or moderate damages, as provided under Art. 2224, is not well taken The grant thereof is proper under the provision of Art. 2205, which provides that damages may be recovered. In this case, there was no showing nor proof that Consolidated was entitled to an award of this kind of damages in addition to the actual damages it suffered as a direct consequence of the Khos act. The nature of the contract between the parties is such that damages which the innocent party may have incurred can be substantiated by evidence Decision MODIFIED. 422. Metrobank vs. CA | Romero G.R. No. 112756 October 26, 1994 | 237 SCRA 761 FACTS Katigbak is the president and director of RBPG, which maintain an account in Metrobank (MBTC)

 MBTC received from the Central Bank a credit memo for 304k, to be credited to RBPGs account Due to the negligence of the banks messenger, such was not credited promptly Katigbak issued checks in the amount of 300k payable to Dr. Felipe Roque and Mrs. Eliza Roque for 25k Checks bounced as funds were insufficient to cover checks Was berated by Roques for issuing bum checks so Katigbak had to cut short her HK vacation to settle matters with MBTC RBPG and Isabel Katigbak filed a civil case against the MBTC for damages ISSUES & ARGUMENTS Whether or not private respondents RBPG and Isabel Rodriguez are legally entitled to moral damages and attorney's fees Assuming that they are so entitled, whether or not the amounts awarded are excessive and unconscionable HOLDING & RATIO DECIDENDI THERE IS NO MERIT IN MBTCS ARGUMENT THAT IT SHOULD NOT BE CONSIDERED NEGLIGENT, MUCH LESS BE HELD LIABLE FOR DAMAGES ON ACCOUNT OF THE INADVERTENCE OF ITS BANK EMPLOYEE AS ARTICLE 1173 OF THE CIVIL CODE ONLY REQUIRES IT TO EXERCISE THE DILIGENCE OF A GOOD PATER FAMILIAS The dishonoring of the RBPG checks committed through negligence by the petitioner bank and was rectified only nine days after receipt of the credit memo. Clearly, petitioner bank was remiss in its duty and obligation to treat private respondent's account with the highest degree of care, considering the fiduciary nature of their relationship. The bank is under obligation to treat the accounts of its depositors with meticulous care, whether such account consists only of a few hundred pesos or of millions. Responsibility arising from negligence in the performance of every kind of obligation is demandable While the bank's negligence may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and humiliation to private respondents for which they are entitled to recover reasonable moral damages. The damage to private respondents' reputation and social standing entitles them to moral damages. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Temperate or moderate damages which are more than nominal but less than compensatory damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.

The carelessness of petitioner bank, aggravated by the lack of promptness in repairing the error and the arrogant attitude of the bank officer handling the matter, justifies the grant of moral damages, which are clearly not excessive and unconscionable 423. People v. Lopez| Mendoza, J. G.R. No. 119380 August 19, 1999 FACTS Mario Seldera, 11, his father Rogelio Seldera, and his cousin Rodolfo Padapat worked in the riceland of a certain Lagula in Umingan, Pangasinan. It was harvest time and the three were hired to bundle the palays stalks which had been cut. As it was a moonlit night, the three worked in the field until around 9:00 pm, and then walked for home taking a trail alongside the Banila river. The trail is about two feet wide only, and so the three walked along the trail single file with Rogelio, being the oldest, leading the way, followed by his son Mario and by Rodolfo who was last. As they reached a sloping portion in the trail, accusedappellant Federico Lopez appeared armed with a shotgun. Accused-appellant had a companion, a dark man. He was unarmed. Without uttering a word, accused-appellant fired at the three, who slumped forward, face down. Accused-appellant's companion went near the bodies of the victims and rolled them over with his foot. Satisfied that the victims were dead, accused-appellant and his companion left. However, Mario, the youngest in the group, was not killed, although he had been wounded in the back. The latter testified during trial,and after the accused appellant was convicted of Double Murder and Frustrated Murder. The accused-appellant was ordered to pay compensatory, actual and moral. For the injuries sustained by Mario Seldera, the court a quo awarded P10,000.00 moral damages, P20,000.00 exemplary damages and P300.00 actual damages for medical expenses. ISSUES & ARGUMENTS W/N the amount of actual damages awarded is proper HOLDING & RATIO DECIDENDI

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IT IS IMPROPER BECAUSE THE PROSECUTION FAILED TO PRESENT ANY DOCUMENTARY PROOF. However, Article 2224 of the New Civil Code provides that temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. In lieu of Actual Damages, absent proof, the amount of P200.00 as temperate damages may be made in its place. 424. BPI vs ALS Management | Panganiban G.R. No. 151821, April 14, 2004 | FACTS Petitioner BPI and Respondent ALS Management executed a Deed of Sale for 1 unfurnished unit of the Twin Towers Condominium. The Condominium Certificate was issued after BPI advanced the expenses in causing issuance and registration. The Deed of Sale stated that ALS, as vendee, should pay the expenses for the preparation and registration of the CCT.

However, despite repeated demands, ALS refused to pay BPI the advances it had made. In its Answer, ALS alleged that it has just and valid reasons for refusing to pay, i.e. that BPI had jacked up/increased the amount of its alleged advances by including charges which should not be collected from buyers of the condominium units. Moreover, contrary to representations made by BPI, the condominium had a lot of defects and deficiencies. The trial court ordered ALS to pay BPI, and ordered BPI to deliver, replace or correct the deficiencies/defects in the condominium unit. The CA affirmed. ISSUES & ARGUMENTS W/N damages by the CA is proper. HOLDING & RATIO DECIDENDI BPI ORDERED TO PAY P51,000 AS TEMPERATE DAMAGES FOR THE TERMINATION OF THE LEASE CONTRACT DUE TO DEFECTS IN THE CONDOMINIUM UNIT. The trial court ordered petitioner to pay damages of P136,608.75 representing unearned income for the period that respondent had to suspend a lease contract. We find a dearth of evidence to support such award. Respondent was able to establish through its witness testimony that the condominium unit suffered from defects. This testimony was confirmed by an inspection report. To recover actual damages, the amount of loss must not only be capable of proof, but also be proven with a reasonable degree of certainty. We agree with petitioner. While respondent may have suffered pecuniary losses for completion work done, it failed to establish with reasonable certainty the actual amount spent. The award of actual damages cannot be based on the allegation of a witness without any tangible document, such as receipts or other documentary proofs to support such claim. In determining actual damages, courts cannot rely on mere assertions, speculations, conjectures or guesswork, but must depend on competent proof and on the best obtainable evidence of the actual amount of loss. Despite the defects of the condominium unit, a lessee stayed there for almost three years. The damages claimed by respondent is based on the rent that it might have earned, had Advanced Micro Device chosen to stay and renew the lease. Such claim is highly speculative, considering that respondent failed to adduce evidence that the unit had been offered for lease to others, but that there were no takers because of the defects therein We recognize, however, that respondent suffered damages when its lessee vacated the condominium unit on May 1, 1985, because of the defects therein. Respondents are thus entitled to temperate damages. Under the circumstances, the amount equivalent to three monthly rentals of P17,000 -- or a total of P51,000 -- would be reasonable. Petition PARTLY GRANTED. Decision MODIFIED. 425. NPC vs Court of Appeals | Carpio G.R. No. 106804, August 12, 2004| the award of

FACTS

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Private respondent Pobre is the owner of a 68,969 square-meter land ("Property") located in Albay. Pobre began developing the Property as a resort-subdivision, which he named as "Tiwi Hot Springs Resort Subdivision." The Commission on Volcanology certified that thermal mineral water and steam were present beneath the Property and found the thermal mineral water and steam suitable for domestic use and potentially for commercial or industrial use. NPC then became involved with Pobre's Property in three instances. First was when Pobre leased to NPC for one year eleven lots from the approved subdivision plan. Second was sometime in 1977, the first time that NPC filed its expropriation case against Pobre to acquire an 8,311.60 square-meter portion of the Property. The trial court ordered the expropriation of the lots upon NPC's payment of P25 per square meter or a total amount of P207,790. NPC began drilling operations and construction of steam wells. While this first expropriation case was pending, NPC dumped waste materials beyond the site agreed upon by NPC with Pobre. The dumping of waste materials altered the topography of some portions of the Property. NPC did not act on Pobre's complaints and NPC continued with its dumping. Third was in 1979 when NPC filed its second expropriation case against Pobre to acquire an additional 5,554 square meters of the Property. NPC needed the lot for the construction and maintenance of Naglagbong Well Site. Pobre filed a motion to dismiss the second complaint for expropriation. Pobre claimed that NPC damaged his Property. Pobre prayed for just compensation of all the lots affected by NPC's actions and for the payment of damages. NPC filed a motion to dismiss the second expropriation case on the ground that NPC had found an alternative site and that NPC had already abandoned in 1981 the project within the Property due to Pobre's opposition. The trial court granted NPC's motion to dismiss but the trial court allowed Pobre to adduce evidence on his claim for damages. The trial court admitted Pobre's exhibits on the damages because NPC failed to object ISSUES & ARGUMENTS W/N NPC is liable to respondent to pay damages? HOLDING & RATIO DECIDENDI NPC liable to pay temperate and exemplary damages. NPC's abuse of its eminent domain authority is appalling. However, we cannot award moral damages because Pobre did not assert his right to it. We also cannot award attorney's fees in Pobre's favor since he did not appeal from the decision of the Court of Appeals denying recovery of attorney's fees. Nonetheless, we find it proper to award P50,000 in temperate damages to Pobre. The court may award temperate or moderate damages, which are more than nominal but less than compensatory damages, if the court finds that a party has suffered some pecuniary loss but its amount cannot be proved with certainty from the nature of the case. As the trial and appellate courts noted, Pobre's resortsubdivision was no longer

just a dream because Pobre had already established the resort-subdivision and the prospect for it was initially encouraging. That is, until NPC permanently damaged Pobre's Property. NPC did not just destroy the property. NPC dashed Pobre's hope of seeing his Property achieve its full potential as a resortsubdivision. The lesson in this case must not be lost on entities with eminent domain authority. Such entities cannot trifle with a citizen's property rights. The power of eminent domain is an extraordinary power they must wield with circumspection and utmost regard for procedural requirements. Thus, we hold NPC liable for exemplary damages of P100,000. Exemplary damages or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Petition denied for lack of Merit. Decision of the Court of Appeals Affirmed. 426 Jison v CA | CORTES, J.: G.R. No. L-45349 August 15, 1988 FACTS Spouses Newton and Salvacion Jison, entered into a Contract to Sell with private respondent, Robert O. Phillips & Sons, Inc., whereby the latter agreed to sell to the former a lot in Rizal. Petitioners failed to pay several installments thus respondent informed petitioners that the contract was canceled. This was affirmed by both RTC and CA ISSUES & ARGUMENTS W/N the CA erred in not holding that the private respondent's act of forfeiting all previous payments made by petitioners is contrary to law, highly iniquitous and unconscionable HOLDING & RATIO DECIDENDI Yes. While the resolution of the contract and the forfeiture of the amounts already paid are valid and binding upon petitioners, the Court is convinced that the forfeiture of the amount of P5.00 although it includes the accumulated fines for petitioners' failure to construct a house as required by the contract, is clearly iniquitous considering that the contract price is only P6,173.15 The forfeiture of fifty percent (50%) of the amount already paid, or P3,283.75 appears to be a fair settlement. In arriving at this amount the Court gives weight to the fact that although petitioners have been delinquent in paying their amortizations several times to the prejudice of private respondent, with the cancellation of the contract the possession of the lot review.... to private respondent who is free to resell it to another party. The Court's decision to reduce the amount forfeited finds support in the Civil Code. As stated in paragraph 3 of the contract, in case the contract is cancelled, the amounts already paid shall be forfeited in favor of the vendor as liquidated damages. The Code provides that liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable [Art. 2227.] Further, in obligations with a penal clause, the judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor [Art. 1229]

427. Country Bankers Insurance Association vs. CA | Medialdea, J.: G.R. No. 85161, September 9, 1991 | 201 SCRA 458 FACTS

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Oscar Ventanilla Enterprises Corporation (OVEC), as lessor, and the petitioner Enrique F. Sy, as lessee, entered into a (6 years) lease agreement over the Avenue, Broadway and Capitol Theaters and the land on which they are situated in Cabanatuan City, including their air-conditioning systems, projectors and accessories needed for showing the films or motion pictures. After more than two (2) years of operation of the Avenue, Broadway and Capitol Theaters, the lessor OVEC made demands for the repossession of the said leased properties in view of the Sy's arrears in monthly rentals and non-payment of amusement taxes. By reason of Sy's request for reconsideration of OVECs demand for repossession of the three (3) theaters, the former was allowed to continue operating the leased premises upon his conformity to certain conditions imposed by the latter in a supplemental agreement dated August 13, 1979. In pursuance of their latter agreement, Sy's arrears in rental in the amount of P125,455.76 (as of July 31, 1979) was reduced to P71,028.91 as of December 31, 1979. o However, the accrued amusement tax liability of the three (3) theaters to the City Government of Cabanatuan City had accumulated to P84,000.00 despite the fact that Sy had been deducting the amount of P4,000.00 from his monthly rental with the obligation to remit the said deductions to the city government. o Hence, letters of demand dated January 7, 1980 and February 3, 1980 were sent to Sy demanding payment of the arrears in rentals and amusement tax delinquency. o But notwithstanding the said demands and warnings SY failed to pay the abovementioned amounts in full Consequently, OVEC padlocked the gates of the three theaters under lease and took possession thereof in the morning of February 11, 1980 by posting its men around the premises of the oId movie houses and preventing the lessee's employees from entering the same. Sy, through his counsel, filed the present action for reformation of the lease agreement, damages and injunction and by virtue of a restraining order dated February 12, 1980 followed by an order directing the issuance of a writ of preliminary injunction issued in said case, Sy regained possession and operation of the Avenue, Broadway and Capital theaters. The trial court arrived at the conclusions that Sy is not entitled to the reformation of the lease agreement; that the repossession of the leased premises by OVEC after the cancellation and termination of the lease was in accordance with the stipulation of the parties in the said agreement and the law applicable thereto and that the consequent forfeiture of Sy's cash deposit in favor of OVEC was clearly agreed upon by them in the lease agreement. The trial court further concluded that Sy was not entitled to the writ of preliminary injunction issued in his favor after the commencement of the action and that the injunction bond filed by Sy is liable for whatever damages OVEC may have suffered by reason of the injunction.

 From this decision of the trial court, Sy and (CBISCO) appealed the decision in toto while OVEC appealed insofar as the decision failed to hold the injunction bond liable for an damages awarded by the trial court. The respondent Court of Appeals found no ambiguity in the provisions of the lease agreement. It held that the provisions are fair and reasonable and therefore, should be respected and enforced as the law between the parties. It held that the cancellation or termination of the agreement prior to its expiration period is justified as it was brought about by Sy's own default in his compliance with the terms of the agreement and not "motivated by fraud or greed." It also affirmed the award to OVEC of the amount of P100,000.00 chargeable against the injunction bond posted by CBISCO which was soundly and amply justified by the trial court. The respondent Court likewise found no merit in OVECS appeal and held that the trial court did not err in not charging and holding the injunction bond posted by Sy liable for all the awards as the undertaking of CBISCO under the bond referred only to damages, which OVEC may suffer as a result of the injunction. Hence, the present petition ISSUES & ARGUMENTS W/N the Court of Appeals erred in holding CBISCOs bond liable HOLDING & RATIO DECIDENDI NO. A provision which calls for the forfeiture of the remaining deposit still in the possession of the lessor, without prejudice to any other obligation still owing, in the event of the termination or cancellation of the agreement by reason of the lessee's violation of any of the terms and conditions of the agreement is a penal clause that may be validly entered into. A penal clause is an accessory obligation, which the parties attach to a principal obligation for the purpose of insuring the performance thereof by imposing on the debtor a special presentation (generally consisting in the payment of a sum of money) in case the obligation is not fulfilled or is irregularly or inadequately fulfilled As a general rule, in obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance. In such case, proof of actual damages suffered by the creditor is not necessary in order that the penalty may be demanded (Article 1228, New Civil Code). However, there are exceptions to the rule that the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance with the principal obligation. They are first, when there is a stipulation to the contrary; second, when the obligor is sued for refusal to pay the agreed penalty; and third, when the obligor is guilty of fraud (Article 1226, par. 1, New Civil Code). 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 476 of 528 It is evident that in all said cases, the purpose of the penalty is to punish the obligor. Therefore, the obligee can recover from the obligor not only the penalty but

also the damages resulting from the non-fulfillment or defective performance of the principal obligation.

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In the case at bar, inasmuch as the forfeiture clause provides that the deposit shall be deemed forfeited, without prejudice to any other obligation still owing by the lessee to the lessor, the penalty cannot substitute for the P100,000.00 supposed damage resulting from the issuance of the injunction against the P290,000.00 remaining cash deposit. This supposed damage suffered by OVEC was the alleged P10,000.00 a month increase in rental from P50,000.00 to P60,000,00), which OVEC failed to realize for ten months from February to November, 1980 in the total sum of P100,000.00. This opportunity cost which was duly proven before the trial court, was correctly made chargeable by the said court against the injunction bond posted by CBISCO. There is likewise no merit to the claim of petitioners that respondent Court committed serious error of law and grave abuse of discretion in not dismissing private respondent's counterclaim for failure to pay the necessary docket fee, which is an issue raised for the first time in this petition. Petitioners rely on the rule in Manchester Development Corporation v. Court of Appeals, G.R. No. 75919, May 7, 1987, 149 SCRA 562 to the effect that all the proceedings held in connection with a case where the correct docket fees are not paid should be peremptorily be considered null and void because, for all legal purposes, the trial court never acquired jurisdiction over the case. It should be remembered however, that in Davao Light and Power Co., Inc. v. Dinopol, G.R. 75195, August 19, 1988, 164 SCRA 748, this Court took note of the fact that the assailed order of the trial court was issued prior to the resolution in the Manchester case and held that its strict application to the case at bar would therefore be unduly harsh. Thus, We allowed the amendment of the complaint by specifying the amount of damages within a nonextendible period of five (5) days from notice and the reassessment of the filing fees. Then, in Sun Insurance Office, Ltd. v. Asuncion, G.R. 79937-38, February 3, 1989, 170 SCRA 274, We held that where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. Nevertheless, OVEC's counterclaims are compulsory so no docket fees are required as the following circumstances are present: (a) they arise out of or are necessarily connected with the transaction or occurrence that is subject matter of the opposing party's claim; (b) they do not require for their adjudication the presence of third parties of whom the court cannot acquire jurisdiction; and (c) the court has jurisdiction to entertain the claim (see Javier v. Intermediate Appellate Court, G.R. 75379, March 31, 1989, 171 SCRA 605). Whether the respective claims asserted by the parties arise out of the same contract or transaction

within the limitation on counterclaims imposed by the statutes depends on a consideration of all the FACTS brought forth by the parties and on a determination of whether there is some legal or equitable relationship between the ground of recovery alleged in the counterclaim and the matters alleged as the cause of action by the plaintiff (80 C.J.S. 48). As the counterclaims of OVEC arise from or are necessarily connected with the FACTS alleged in the complaint for reformation of instrument of Sy, it is clear that said counterclaims are compulsory. ACCORDINGLY, finding no merit in the grounds relied upon by petitioners in their petition, the same is hereby DENIED and the decision dated June 15, 1988 and the resolution dated September 21, 1988, both of the respondent Court of Appeals are AFFIRMED. 428 Pacific Mills v. CA | Feliciano G.R. No. 87182, February 17, 1992 |206 SCRA 317 FACTS Pacific Mills purchased on credit varying quantites of cottonlint from Phillippine Cotton (Philcotton). The parties agreed to the follwing: o That Pacific Mills would issue a promissory note for the cotton if they are unable to pay within 60 days from delivery of the goods Pacific Mills failed to pay for the goods so they issued that 4 promissory notes to cover the varying quantities of cotton they bought. The promissory notes together ith a joint manifestation stated the follwing: o That there would be a 21% per annum interest rate o Additional interest and penalty charge of 8% o That Pacific Mills chall advance the insurance, taxes, and other out of pocket expenses at 2% [for one time service fee] and 8% [for penalty charge from due payment of advances on such premiums and taxes] o That PhilCotton reserves the right to increase with notice to the borrower the rate of interest on the account and advance Pacific Mills again falied to make good their obligation so Philcotton filed a case for collection of sum of money in the total anount of P16M excluding interest and charges. The court awarded to them P13M plus 21% regular interest per annum as stated in joint manifestation and 14% additional interest of the principal obligation as penalty charges and 10% attorneys fees. (an additional 21% was removed, and the penalty charge rate of 8% was increased to 14%, and the attorneys fees were reduced from 25% to 10% from the trial courts judgement) It is to be noted that Pacific Mills made a partial payment of the obligation in order to lift the writ of execution upon ther possessions. ISSUES & ARGUMENTS W/N the penalty clause was iniquitous and imconscionable. o Petitioner: Pacific Milss insists that the additional charges must be reduced because the amount which the have to pay is already ridiculously high if you take into account all the rates and charges that PhilCotton stipulated in their joint manifestiaion o Respondent: Philcotton conteds that Pcaific Mills was already granted a reduction by

the CA, ant a further reduction cannot merit serious consideration. HOLDING & RATIO DECIDENDI NO. THE PENALTY CLAUSE IS VALID.

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In determining wheter a penalty clause is iniquitous or unconscionable, a court may take into consideration the actual damages sustained by a creditot who has been compelled to sue the defaulting creditor, which actual damges would include the interest and penalties which the creditor may have had to pay on its own loan from its funding source. In this case, the funds which Philcotton loaned to Pacific Mills came from DBP and that PhilCotton wanted to recover from Pacific Mills so that it may, in turn, pay back that amount to DBP. Therefore the interests and charges were only as high and as that rate because Philcotton had to pay DBP their principal obligation and interest because Philcotton could not promptly collect from Pacific Mills 429. RCBC vs. Court of Appeals |Kapuna G.R. No. 133107 March 25, 1999 | FACTS Private respondent Atty. Felipe Lustre purchased a Toyota Corolla from Toyota Shaw, Inc. for which he made a down payment of P164,620.00, the balance of the purchase price to be paid in 24 equal monthly installments. Private respondent thus issued 24 postdated checks for the amount of P14,976.00 each. The first was dated April 10, 1991; subsequent checks were dated every 10th day of each succeeding month. To secure the balance, private respondent executed a promissory note and a contract of chattel mortgage 2 over the vehicle in favor of Toyota Shaw, Inc. The contract of chattel mortgage, in paragraph 11 thereof, provided for an acceleration clause stating that should the mortgagor default in the payment of any installment, the whole amount remaining unpaid shall become due. In addition, the mortgagor shall be liable for 25% of the principal due as liquidated damages. On March 14, 1991, Toyota Shaw, Inc. assigned all its rights and interests in the chattel mortgage to petitioner Rizal Commercial Banking Corporation (RCBC). All the checks dated April 10, 1991 to January 10, 1993 were thereafter encashed and debited by RCBC from private respondent's account, except for RCBC Check No. 279805 representing the payment for August 10, 1991, which was unsigned. Previously, the amount represented by RCBC Check No. 279805 was debited from private respondent's account but was later recalled and re-credited, to him. Because of the recall, the last two checks, dated February 10, 1993 and March 10, 1993, were no longer presented for payment. This was purportedly in conformity with petitioner bank's procedure that once a client's account was forwarded to its account representative, all remaining checks outstanding as of the date the account was forwarded were no longer presented for patent. On the theory that respondent defaulted in his payments, the check representing the payment for August 10, 1991 being unsigned, petitioner, in a letter

dated January 21, 1993, demanded from private respondent the payment of the balance of the debt, including liquidated damages. The latter refused, prompting petitioner to file an action for replevin and damages before the Pasay City Regional Trial Court (RTC). Private respondent, in his Answer, interposed a counterclaim for damages. RTC dismissed the case while the CA affirmed the decision Hence this petition ISSUES & ARGUMENTS W/N the chattel mortgage is void for being ambiguous? HOLDING & RATIO DECIDENDI NO. It bears stressing that a contract of adhesion is just as binding as ordinary contracts. It is true that we have, on occasion, struck down such contracts as void when the weaker party is imposed upon in dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it, completely deprived of the opportunity to bargain on equal footing. Nevertheless, contracts of adhesion are not invalid per se; 7 they are not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. While ambiguities in a contract of adhesion are to be construed against the party that prepared the same, this rule applies only if the stipulations in such contract are obscure or ambiguous. If the terms thereof are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control. In the latter case, there would be no need for construction. The Agreement27 leaves no room for construction. All that is required is the application thereof. Petitioner's conduct, in the light of the circumstances of this case, can only be described as mercenary. Petitioner had already debited the value of the unsigned check from private respondent's account only to re-credit it much later to him. Thereafter, petitioner encashed checks subsequently dated, then abruptly refused to encash the last two. More than a year after the date of the unsigned check, petitioner, claiming delay and invoking paragraph 11, demanded from private respondent payment of the value of said check and that of the last two checks, including liquidated damages. As pointed out by the trial court, this whole controversy could have been avoided if only petitioner bothered to call up private respondent and ask him to sign the check. Good faith not only in compliance with its contractual obligations, but also in observance of the standard in human relations, for every person "to act with justice, give everyone his due, and observe honesty and good faith." behooved the bank to do so. Failing thus, petitioner is liable for damages caused to private respondent. These include moral damages for the mental anguish, serious anxiety, besmirched reputation, wounded feelings and social humiliation suffered by the latter. JAVIN OCAMPO 27 11. In case the MORTGAGOR fails to pay any of the installments, or to pay the interest that may be due as provided in the said promissory note, the whole amount remaining unpaid therein shall immediately become due and payable and the mortgage on the property (ies) hereinabove described may be foreclosed by the MORTGAGEE, or the MORTGAGEE may take any other

legal action to enforce collection of the obligation hereby secured, and in either case the MORTGAGOR further agrees to pay the MORTGAGEE an additional sum of 25% of the principal due and unpaid, as liquidated damages, which said sum shall become part thereof. The MORTGAGOR hereby waives reimbursement of the amount heretofore paid by him/it to the MORTGAGEE. 430. Ligutan vs. CA | Vitug G.R. No. 138677, February 12, 2002 FACTS

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Ligutan and dela Llana obtained a P120,000 loan from Security Bank. The promissory note contains the provisions for an interest of 15.189% per annum upon maturity and a penalty of 5% every month on the outstanding principal and interest in case of default. In addition, petitioners agreed to pay 10% of the total amount due by way of attorneys fees if the matter were indorsed to a lawyer for collection or if a suit were instituted to enforce payment. The obligation became due, and despite repeated demands by the bank, the petitioners remained in default. The bank then filed a suit for recovery with the RTC of Makati. After the bank had presented its evidence in court, instead of presenting their own, petitioners had the hearing reset on two consecutive occasions. On the third hearing date and both counsel and petitioners were absent, the bank moved and trial court resolved to consider the case submitted for resolution. Only after two years did the petitioners filed an MR of the order of the trial court declaring them to have waived their right to present evidence. The court denied such and eventually promulgated a decision in favor of Security Bank. Upon appeal to the CA, it modified the judgment appealed from by lowering the penalty to 3% per month instead of the stipulated. Petitioners then filed an MR to admit newly discovered evidence. Spouses Ligutan executed an R.E.M. and it should have novated the contract with the bank. Moreover, such was already foreclosed but was allegedly not credited to their account. The CA denied the MR hence this petition. Petitioners also submitted that the 15.189% annual interest and the 3% monthly penalty were unconscionable. ISSUES & ARGUMENTS W/N the bank is entitled to the 3% monthly penalty HOLDING & RATIO DECIDENDI YES, the penalty clause is the liquidated damages for the breach of an obligation A penalty clause is expressly recognized by law. It is an accessory obligation for the obligor to assume a greater responsibility upon breach of an obligation. It functions to strengthen the coercive force of the obligation and to provide for what could be the liquated damages for the breach of the obligation. The obligor would then be bound to pay the stipulated indemnity without the necessity of proof on the existence and on the measure of damages caused by the breach.

 Although a court may equitably reduce the unconscionable or iniquitous, it is based on the discretion of the Court depending on the surrounding circumstances. The CA had already reduced the penalty from 5% to 3%. Given the circumstances, not to mention the repeated acts of breach by petitioners of their contractual obligation, the Court sees no cogent ground to modify the ruling of the appellate court. Moreover, the stipulate interest of 15.189%, for the first time, the petitioners raised this issue in the SC. This contention is a fresh issue that has not been raised and ventilated before the courts below. In any event, the interest stipulation, on its face, does not appear as being that excessive. What may justify a court in not allowing the creditor to impose full surcharges and penalties, despite an express stipulation therefor in a valid agreement, may not equally justify the non-payment or reduction of interest. Indeed, the interest prescribed in loan financing arrangements is a fundamental part of the banking business and the core of a bank's existence. 431 Arwood Industries, Inc vs. D.M. Consunji, Inc | No. L-27523. February 25, 1975| FACTS Petitioner and respondent, as owner and contractor, respectively, entered into a Civil, Structural and Architectural Works Agreement (Agreement) dated February 6, 1989 for the construction of petitioner's Westwood Condominium at No. 23 Eisenhower St., Greenhills, San Juan, Metro Manila. The contract price for the condominium project aggregated P20,800,000.00. Despite the completion of the condominium project, the amount of P962,434.78 remained unpaid by petitioner. Repeated demands by respondent for petitioner to pay went unheeded. Thus, on August 13, 1993, respondent, as plaintiff in Civil Case No. 63489 filed its complaint for the recovery of the balance of the contract price and for damages against petitioner. Respondent specifically prayed for the payment of the (a) amount of P962,434.78 with interest of 2% per month or a fraction thereof, from November 1990 up to the time of payment; (b) the amount of P250,000 as attorney's fees and litigation expenses; (c) amount of P150,000 as exemplary damages and (d) costs of suit. ISSUES & ARGUMENTS W/N the court of appeals was correct in imposing 2% per month or the fraction thereof in days of the amount due for payment by the owner HOLDING & RATIO DECIDENDI Delay in the performance of an obligation is looked upon with disfavor because, when a party to a contract incurs delay, the other party who performs his part of the contract suffers damages thereby. Obviously, respondent suffered damages brought about by the failure of petitioner to comply with its obligation on time. Damages take the form of interest. Accordingly, the appropriate measure of damages in this case is the payment of interest at the rate agreed upon, which is

2% interest for every month of delay. It must be noted that the Agreement provided the contractor, respondent in this case, two options in case of delay in monthly payments, to wit: a) suspend work on the project until payment is remitted by the owner or b) continue the work but the owner shall be required to pay interest at a rate of two percent (2%) per month or a fraction thereof. Evidently, respondent chose the latter option, as the condominium project was in fact already completed. The payment of the 2% monthly interest, therefore, cannot be jettisoned overboard. Since the Agreement stands as the law between the parties, this Court cannot ignore the existence of such provision providing for a penalty for every months delay. From the moment petitioner gave its consent, it was bound not only to fulfill what was expressly stipulated in the Agreement but also all the consequences which, according to their nature, may be in keeping with good faith, usage and law. Petitioners attempt to mitigate its liability to respondent should thus fail. Moreover, even assuming that there was a default of stipulation or agreement on interest, respondent may still recover on the basis of the general provision of law, which is Article 2209 of the Civil Code, thus: Art. 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 percent per annum. Article 2209 of the Civil Code, as abovementioned, specifies the appropriate measure of damages where the obligation breached consisted of the payment of sum of money. Article 2209 was, in extent, explicated by the Court in State Investment House, Inc. vs. Court of Appeals, which provides: The appropriate measure for damages in case of delay in discharging an obligation consisting of the payment of a sum of money, is the payment of penalty interest at the rate agreed upon; and in the absence of a stipulation of a particular rate of penalty interest, then the payment of additional interest at a rate equal to the regular monetary interest; and if no regular interest had been agreed upon, then payment of legal interest or six percent (6%) per annum. Hence, even in the absence of a stipulation on interest, under Article 2209 of the Civil Code, respondent would still be entitled to recover the balance of the contract price with interest. Respondent court, therefore, correctly interpreted the terms of the agreement which provides that the OWNER shall be required to pay the interest at a rate of two percent (2%) per month or the fraction thereof in days of the amount due for payment by the OWNER. 432. State Investment House Inc. v Court of Appeals | Kapunan. G.R. No. 112590, July 12, 2001 | FACTS

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Private Respondents Malonjaos executed a real estate mortgage to secure payment of receivables sold to plaintiff. Plaintiff has discretion to impose 3% penalty per month for non-payment. Lomuyon Timber (one of the private respondents) sold to plaintiff for 2.558M several receivables consisting of checks as per their agreement

 TCBTC (The Consolidated Bank and Trust Co.) Checks drawn by Malonjao in favor of Lomuyon were indorsed to petitioner. MBTC checks were drawn by another Malonjao in favor of Lomuyon and indorsed by the latter to petitioner. Petitioner presented checks for payment which then subsequently bounced. Petitioner made several demands on private respondent for payment, respondents failed to pay thus petitioner foreclosed on mortgaged property Petitioner through sheriff extrajudicially foreclosed on property and sold at public auction for 4.223M. Petitioner alleges that after deducting cost of property sold there is still an outstanding balance of 2.601M which as of May 31 1983 amounted to 2.876M. Petitioner alleges it is entitled to recover on value of checks plus exemplary damages, attorneys fees and litigation expenses. TC ruled against plaintiff dismissing complaint. CA affirmed decision disallowing petitioner to deficiency stating that penalty charge and interest is too high (3% a month) ISSUES & ARGUMENTS 1. W/N CA erred in its decision in finding SIHI not entitled 2. CA erred in reducing penalty charge as liquidated damages HOLDING & RATIO DECIDENDI CA did not err in both. CA not entitled to excess neither to penalty charge as damages clause 3% p.m. or 36%pa is unconscionable and iniquitous. Art. 2227 allows for reduction of liquidated damages as penalty or indemnity if iniquitous and unconscionable. Computation of difference by petitioner is erroneous, difference is only .575M and already these amounts were under the 36% p.a. charge Court allowed to temper interest rates Art. 1229 allows judge to reduce interest if obligation partly or irregularly complied with or if no performance if iniquitous or unconscionable 433. NAWASA vs. Judge Catolico, 19 SCRA 980 (1967) FACTS A civil case was instituted by the Province of Misamis Occidental recover from the NAWASA the possession, administration, operation and control of the Misamis Waterworks System and the Orquieta Waterworks System, which had been taken over by the NAWASA since 1956, acting in pursuance of Republic Act No. 1383. In the said case, the Trial Court, presided by Judge Catolico, rendered judgment ordering that: 1) the Province is the absolute owner of said Systems and ordering the NAWASA to return the same to the Province, to refund thereto the sum of P13,855.44 which the Province had delivered to the NAWASA when it took over the Systems, 2) to render within thirty (30) days from notice of said decision an accounting of the income realized by the Systems since April 1956, 3) or, in defect of such accounting, to pay to the Province the sum of P7,823.76 monthly, the average monthly income of the two (2) Systems; from April, 1956, to the date of the return thereof to the Province 4) to pay thereto P50,000, as temperate,

punitive and exemplary damages, and P5,000 by way of attorney's fees, in addition to the costs. Thereafter, Judge Catolico issued 2 writs of execution over NAWASAs opposition and its petition to post a supersedeas bond to stay execution. NAWASA then filed a petition for certiorari with the Supreme Court assailing the writs of execution issued by the respondent Judge. ISSUE & ARGUMENTS Was Judge Catolico correct in awarding temperate, punitive, and exemplary damages and attorneys fees in favor of the Province of Misamis? HOLDING & RATIO DECIDENDI NO. The lower court was not justified, however, in awarding P50,000 as exemplary and temperate damages, and P5,000, as attorney's fees, for the NAWASA took over the Systems in compliance with said Republic Act No. 1383, which it was entitled to assume to be constitutional. In other words, it had acted in good faith. The fact that RA 1383 was subsequently declared unconstitutional is of no moment since at the time NAWASA acted in pursuance of it, it acted so in good faith on the assumption that the law was constitutional. 434. Octot vs. Ybanez| Teehankee G.R. No. l48643, January 18, 1982 | 111 SCRA 79 FACTS Octot was a Government Employee who held the position of Security Guard. Pursuant to PD 6, he was dismissed from the service as he had a pending libel case against him. Later on he was acquitted from the criminal case. Alfredo Imbong then filed a request for Octots reinstatement. The request was favorably acted upon by all levels. The papers were sent to Octot stating that his request for reinstatement may be given due course pursuant to LOI 647. Octot failed to appear and so he was personally furnished with the necessary papers to be filed to support his appointment. Octot sent a letter again asking for reinstatement. The regional health director then instructed Octot to appear to furnish the necessary documents. Octot did not appear but filed a case for mandamus for his reinstatement. As his reinstatement was never disputed, he was reinstated.

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ISSUES & ARGUMENTS 1. W/N Octot can claim backwages 2. W/N Octot can claim moral damages 3. W/N Octot can claim exemplary damages HOLDING & RATIO DECIDENDI No In the absence of bad faith or abuse of discretion, Octot cannot claim backwages and damages. There was no bad faith in this case as the dismissal was due to law, PD 6. Also, LOI647 does not provide for payment of back wages No The delay in the reinstatement of Octot was due to his own fault. Also seeing as there was no Bad Faith involved and that it doesnt involve the situations under 2219 and 2220, moral damages cannot be claimed No

 Exemplary damages are not usually recoverable in a mandamus case unless the defendant patently acted with vindictiveness and wantonness. It is granted by way of example or correction for the public good. Requisites o They may be imposed by way of example or correction only in addition, among others, to compensatory damages, and cannot be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant. o The claimant must first establish his right to moral, temperate, liquidated or compensatory damages. o The wrongful act must be accompanied by bad faith, and the award would be allowed only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. 435. Patricio v. Leviste|Padilla G.R. L-51832, April 26, 1989 FACTS Petitioner was a Catholic priest appointed Director General of 1976 Religious and Municipal Town Fiesta of Pilar, Capiz. On 16 May 1976 at about 10:00 o'clock in the evening, while a benefit dance was on-going in connection with the celebration of the town fiesta, petitioner together with two (2) policemen were posted near the gate of the public auditorium. Private respondent Bienvenido Bacalocos, President of the Association of Barangay Captains of Pilar, Capiz and a member of the Sangguniang Bayan, who was in a state of drunkenness, struck a bottle of beer on the table causing an injury on his hand which started to bleed. He approached petitioner in a hostile manner and asked the latter if he had seen his wounded hand, and before petitioner could respond, private respondent, without provocation, hit petitioner's face with his bloodied hand. As a consequence, a commotion ensued. A criminal complaint for "Slander by Deed was flied by petitioner but was dismissed. Subsequently, a complaint for damages was filed by petitioner with the court a quo. The court awarded moral and exemplary damages in favor of petitioner as well as attorneys fees. Petitioner moved for execution of judgment but this was denied owing to the pendency of a motion for reconsideration. Subsequently, the court dismissed the complaint, prompting the filing of the subject petition on 2 grounds: (1) lack of service of copy of MR, and (2) admission of private respondent of slapping petitioner entitles petitioner to award of damages. ISSUES & ARGUMENTS W/N petitioner is entitled to damages originally awarded by TC. HOLDING & RATIO DECIDENDI Yes. Moral and exemplary damages should be given. Petitioner is also entitled to attorneys fees. There is no question that moral damages may be recovered in cases where a defendant's wrongful act or omission has caused the complainant physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,

social humiliation and similar injury. o Private respondent's contention that there was no bad faith on his part in slapping petitioner on the face and that the incident was merely accidental is not tenable. It was established before the court a quo that there was an existing feud between the families of both petitioner and private respondent and that private respondent slapped the petitioner without provocation in the presence of several persons. o The act of private respondent in hitting petitioner on the face is contrary to morals and good customs and caused the petitioner mental anguish, moral shock, wounded feelings and social humiliation. Private respondent has to take full responsibility for his act and his claim that he was unaware of what he had done to petitioner because of drunkenness is definitely no excuse and does not relieve him of his liability to the latter. o The fact that no actual or compensatory damage was proven before the trial court, does not adversely affect petitioner's right to recover moral damages. Moral damages may be awarded in appropriate cases referred to in the chapter on human relations of the Civil Code (Articles 19 to 36), without need of proof that the wrongful act complained of had caused any physical injury upon the complainant Exemplary or corrective damages may be imposed upon herein private respondent by way of example or correction for the public good. Exemplary damages are required by public policy to suppress the wanton acts of the offender. They are an antidote so that the poison of wickedness may not run through the body politic. The amount of exemplary damages need not be proved where it is shown that plaintiff is entitled to either moral, temperate or compensatory damages, as the case may be, although such award cannot be recovered as a matter of right. In cases where exemplary damages are awarded to the injured party, attorney's fees are also recoverable. 436 Philippine Airlines v. CA| Regalado G.R. No. 120262 July 17, 1997 | 275 SCRA 621 FACTS Leo Pantejo was bound for Surigao City from Cebu City via Philippine Airlines. His flight was postponed due to the typhoon Osang. Since he was stranded with the other passengers, he asked the Philippine Airlines officer for hotel accommodations while waiting for the next scheduled flight which was on the following day. Philippine Airlines refused to give him hotel accommodations, which was unfortunate because he did not have any cash at that time. A kind copassenger, Engr. Dumlao offered Pantejo to share his room, Pantejo promised to pay him when they get back to Surigao. Upon reaching Surigao, he learned that the hotel expenses of the passengers were reimbursed. At this point, Pantejo informed Oscar Jereza, PAL's Manager for Departure Services at Mactan Airport and who was in charge of cancelled flights, that he was going to sue the airline for discriminating against him. It was only then that Jereza offered to pay respondent Pantejo P300.00 which, due to the ordeal and anguish he had undergone, the latter decline.

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ISSUES & ARGUMENTS W/N Pantejo is entitled to MORAL and EXEMPLARY DAMAGES for refusing to provide hotel accommodations to Pantejo HOLDING & RATIO DECIDENDI YES. PANTJO IS ENTITLED TO MORAL AND EXEMPLARY DAMAGES AS THERE WAS BAD FAITH ON THE PART OF PHILIPPPINE AIRLINES ATTENDANTS. To begin with, it must be emphasized that a contract to transport passengers is quite different in kind and degree from any other contractual relation, and this is because of the relation which an air carrier sustain with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees naturally could give ground for an action for damages Assuming arguendo that the airline passengers have no vested right to these amenities in case a flight is cancelled due to force majeure, what makes petitioner liable for damages in this particular case and under the FACTS obtaining herein is its blatant refusal to accord the so-called amenities equally to all its stranded passengers who were bound for Surigao City. No compelling or justifying reason was advanced for such discriminatory and prejudicial conduct. More importantly, it has been sufficiently established that it is PALS standard company policy, whenever a flight has been cancelled, to extend to its hapless passengers cash assistance or to provide them accommodations in hotels with which it has existing tie-ups. In fact, PALs Mactan Airport Manager for departure services, Oscar Jereza, admitted that PAL has an existing arrangement with hotels to accommodate stranded passengers, 437. Industrial Insurance vs. Bondad | Panganiban G.R. No. 136722, April 12, 2000 | FACTS The present Petition finds its roots in an incident which involved three vehicles: a Galant Sigma car driven by Grace Ladaw Morales, a packed passenger jeepney originally driven by Ligorio Bondad, and a DM Transit Bus driven by Eduardo Mendoza. Investigation disclosed that shortly before the accident took place, V-3 (D.M. Transit Bus) was traveling along South Expressway coming from Alabang towards the general direction of Makati. When upon reaching a place at KM Post 14 [in front] of Merville Subd., said V-3 hit and bumped the rear left side portion of V-1 [Bondads' jeepney] which was then at [stop] position due to flat tire[;] due to the severe impact cause by V-3 it swerved to the left and collided with the right side portion of V-2 [Morales' car] which was travelling [in] the same direction taking the innermost lane V-2 was dragged to its left side and hit the concrete wall. All vehicles incurred damages and sustaining injuries to the occupant of V-1 and the passengers of V-3. Victims were brought to the hospital for treatment

Before the Regional Trial Court of Makati on April 12, 1985, Petitioner Industrial Insurance Company, Inc. and Grace Ladaw Morales filed a Complaint for damages 7 against DM Transit Corporation, Eduardo Diaz, Pablo Bondad and Ligorio Bondad. Petitioner contended that it had paid Morales P29,800 for the damages to her insured car. It also asserted that the December 17, 1984 accident had been caused "solely and proximately" by the "joint gross and wanton negligence, carelessness and imprudence of both defendant drivers Eduardo Diaz y Mendoza and Ligorio Bondad y Hernandez, who failed to exercise and observe the diligence required by law in the management and operation of their respective vehicles and by their defendant employers; D.M. Transit Corporation and Pablo Bondad, respectively, for their failure to exercise the diligence required of them by law in the selection and supervision of their employees including their aforementioned involved drivers

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In its October 14, 1991 Decision, the trial court exculpated the Bondads and ordered petitioner to pay them actual, moral and exemplary damages, as well as attorney's fees.Petitioner appealed to the Court of Appeals, which affirmed the ruling of the trial court with modification.Hence, this Petition for Review. ISSUES & ARGUMENTS damages was proper W/N The award for

HOLDING & RATIO DECIDENDI Yes. In justifying the award of attorney's fees and other litigation expenses, the appellate court held that respondents were compelled to litigate an unfounded suit because of petitioner's negligence and lack of prudence in not verifying the FACTS before filing this action. In affirming the award of moral damages, it accepted the trial court's justification that respondents had "been recklessly and without basis . . . impleaded by the plaintiff in spite of the clear language in the Traffic Investigation Report . . . submitted by Pfc. Agapito Domingo." Attorney's fees may be awarded by a court if one who claims it is compelled to litigate with third persons or to incur expenses to protect one's interests by reason of an unjustified act or omission on the part of the party from whom it is sought. In this case, the records show that petitioner's suit against respondents was manifestly unjustified. In the first place, the contact between the vehicles of respondents and of Morales was completely due to the impact of the onrushing bus. This fact is manifest in the police investigation report and, significantly, in the findings of FACTS of both lower courts.Moreover, even a cursory examination of the events would show that respondents were not even remotely the cause of the accident. Their vehicle was on the shoulder of the road because of a flat tire. In view of their emergency situation, they could not have done anything to avoid getting hit by the bus. Verily, an ordinary person has no reason to think that respondents could have caused the accident. It is difficult to imagine how petitioner could have thought so.More significantly, petitioner knew that respondents were not the cause of the accident. This is evident from its failure to even make a

prior formal demand on them before initiating the suit. Indeed, the cause of the accident was the negligence of the DM Transit bus driver. In the same vein, we affirm the award of moral damages. To sustain this award, it must be shown that (1) the claimant suffered injury, and (2) such injury sprung from any of the cases listed in Articles 2219 and 2220 of the Civil Code. It is not enough that the claimant alleges mental anguish, serious anxiety, wounded feelings, social humiliation, and the like as a result of the acts of the other party. It is necessary that such acts be shown to have been tainted with bad faith or ill motive. In the case at bar, it has been shown that the petitioner acted in bad faith in compelling respondents to litigate an unfounded claim. As a result, Respondent Ligorio Bondad "could no longer concentrate on his job." Moreover, Pablo Bondad became sick and even suffered a mild stroke. Indeed, respondents' anxiety is not difficult to understand. They were innocently attending to a flat tire on the shoulder of the road; the next thing they knew, they were already being blamed for an accident. Worse, they were forced to commute all the way from Laguna to Makati in order to attend the hearings. Under the circumstances of this case, the award of moral damages is justified. Likewise, we affirm the award of exemplary damages because petitioner's conduct needlessly dragged innocent bystanders into an unfounded litigation. Indeed, exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. 438. People of the Philippines, vs. Albior |G.R. No. 115079 | February 19, 2001 | QUISUMBING, J.: FACTS The RTC found Francisco Albior guilty of rape, and sentenced him to suffer the penalty of reclusion perpetua. The victim, Lorena Tolentino was also awarded moral damages in the amount of P50,000. ISSUE Whether or not the award of damages are sufficient? HOLDING & RATIO DECIDENDI The Court affirmed the ruling of trial court, finding that the accused Albior was indeed guilty of rape. However, the court modified the award of civil damages. The lower court failed to grant the necessary civil indeminity which is mandated by jurisprudence to be awarded to rape victims. An additional P50,000 was granted by the court, and this was held to be separate and distinct from that of the award of moral damages. (Note: this is the only related pronouncement with regard to damages in this case). 439. Traders Royal Bank v. Radio Philippines Network, Inc. | Corona G.R. No. 138510, October 10, 2002| FACTS On April 15, 1985, the Bureau of Internal Revenue (BIR) assessed plaintiffs Radio Philippines Network (RPN), Intercontinental Broadcasting Corporation (IBC), and Banahaw Broadcasting

Corporation (BBC) of their tax obligations for the taxable years 1978 to 1983. On March 25, 1987, Mrs. Lourdes C. Vera, plaintiffs comptroller, sent a letter to the BIR requesting settlement of plaintiffs tax obligations. The BIR granted the request and accordingly, on June 26, 1986, plaintiffs purchased from defendant Traders Royal Bank (TRB) three (3) managers checks to be used as payment for their tax liabilities Defendant TRB, through Aida Nuez, TRB Branch Manager at Broadcast City Branch, turned over the checks to Mrs. Vera who was supposed to deliver the same to the BIR in payment of plaintiffs taxes. Sometime in September, 1988, the BIR again assessed plaintiffs for their tax liabilities for the years 1979-82. It was then they discovered that the three (3) managers checks (Nos. 30652, 30650 and 30796) intended as payment for their taxes were never delivered nor paid to the BIR by Mrs. Vera. Instead, the checks were presented for payment by unknown persons to defendant Security Bank and Trust Company (SBTC), Taytay Branch as shown by the banks routing symbol transit number (BRSTN 01140027) or clearing code stamped on the reverse sides of the checks. Meanwhile, for failure of the plaintiffs to settle their obligations, the BIR issued warrants of levy, distraint and garnishment against them. Thus, they were constrained to enter into a compromise and paid BIR P18,962,225.25 in settlement of their unpaid deficiency taxes. Thereafter, plaintiffs sent letters to both defendants, demanding that the amounts covered by the checks be reimbursed or credited to their account. The defendants refused, hence, the instant suit

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ISSUES & ARGUMENTS Whether TRB should be held solely liable when it paid the amount of the checks in question to a person other than the payee indicated on the face of the check, the Bureau of Internal Revenue? HOLDING & RATIO DECIDENDI Petitioner ought to have known that, where a check is drawn payable to the order of one person and is presented for payment by another and purports upon its face to have been duly indorsed by the payee of the check, it is the primary duty of petitioner to know that the check was duly indorsed by the original payee and, where it pays the amount of the check to a third person who has forged the signature of the payee, the loss falls upon petitioner who cashed the check. Its only remedy is against the person to whom it paid the money. It should be noted further that one of the subject checks was crossed. The crossing of one of the subject checks should have put petitioner on guard; it was duty-bound to ascertain the indorsers title to the check or the nature of his possession. Petitioner should have known the effects of a crossed check: (a) the check may not be encashed but only deposited in the bank; (b) the check may be negotiated only once to one who has an account with a bank and (c) the act of crossing the check serves as a warning to the holder that the check has been issued for a definite purpose so that he must inquire if he has received the check pursuant to that purpose, otherwise, he is not a holder in due course. By encashing in favor of unknown persons checks which were on their face payable to the BIR, a government agency which can only act only through its agents, petitioner did so at its peril and must suffer the consequences of the unauthorized or

wrongful endorsement.In this light, petitioner TRB cannot exculpate itself from liability by claiming that respondent networks were themselves negligent. A bank is engaged in a business impressed with public interest and it is its duty to protect its many clients and depositors who transact business with it. It is under the obligation to treat the accounts of the depositors and clients with meticulous care, whether such accounts consist only of a few hundreds or millions of pesos. Since TRB did not pay the rightful holder or other person or entity entitled to receive payment, it has no right to reimbursement. Petitioner TRB was remiss in its duty and obligation, and must therefore suffer the consequences of its own negligence and disregard of established banking rules and procedures. We agree with petitioner, however, that it should not be made to pay exemplary damages to RPN, IBC and BBC because its wrongful act was not done in bad faith, and it did not act in a wanton, fraudulent, reckless or malevolent manner. 440 Singapore Airlines Ltd. Vs. Fernandez| Callejo G.R. No. 142305. December 10, 2003| FACTS Andion Fernandez is an acclaimed soprano here in the Philippines and abroad. At the time of the incident, she was availing an educational grant from the Federal Republic of Germany, pursuing a Masters Degree in Music majoring in Voice. She was invited to sing before the King and Queen of Malaysia on February 3 and 4, 1991. For this singing engagement, an airline passage ticket was purchased from petitioner Singapore Airlines which would transport her to Manila from Frankfurt, Germany on January 28, 1991. From Manila, she would proceed to Malaysia on the next day. It was necessary for the respondent to pass by Manila in order to gather her wardrobe; and to rehearse and coordinate with her pianist her repertoire for the aforesaid performance. The petitioner issued the respondent a Singapore Airlines ticket for Flight No. SQ 27, leaving Frankfurt, Germany on January 27, 1991 bound for Singapore with onward connections from Singapore to Manila. Flight No. SQ 27 was scheduled to leave Frankfurt at 1:45 in the afternoon of January 27, 1991, arriving at Singapore at 8:50 in the morning of January 28, 1991. The connecting flight from Singapore to Manila, Flight No. SQ 72, was leaving Singapore at 11:00 in the morning of January 28, 1991, arriving in Manila at 2:20 in the afternoon of the same day. On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours late or at about 11:00 in the morning of January 28, 1991. By then, the aircraft bound for Manila had left as scheduled, leaving the respondent and about 25 other passengers stranded in the Changi Airport in Singapore. Upon disembarkation at Singapore, the respondent approached the transit counter who referred her to the nightstop counter and told the lady employee thereat that it was important for her to reach Manila on that day, January 28, 1991. The lady employee told her that there were no more flights to Manila for that day and that respondent had no choice but to stay in Singapore. Upon respondents persistence, she was told that she can actually fly to Hong Kong going to

Manila but since her ticket was non-transferable, she would have to pay for the ticket. The respondent could not accept the offer because she had no money to pay for it. Her pleas for the respondent to make arrangements to transport her to Manila were unheeded.

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The respondent then requested the lady employee to use their phone to make a call to Manila. Over the employees reluctance, the respondent called her mother to inform the her that she missed the connecting flight. The respondent contacted a family friend who picked her up from the airport for her overnight stay in Singapore. The next day, after being brought back to the airport, the respondent proceeded to petitioners counter which says: Immediate Attention To Passengers with Immediate Booking. There were four or five passengers in line. The respondent approached petitioners male employee at the counter to make arrangements for immediate booking only to be told: Cant you see I am doing something. She explained her predicament but the male employee uncaringly retorted: Its your problem, not ours. The respondent never made it to Manila and was forced to take a direct flight from Singapore to Malaysia on January 29, 1991, through the efforts of her mother and travel agency in Manila. Her mother also had to travel to Malaysia bringing with her respondents wardrobe and personal things needed for the performance that caused them to incur an expense of about P50,000. As a result of this incident, the respondents performance before the Royal Family of Malaysia was below par. Because of the rude and unkind treatment she received from the petitioners personnel in Singapore, the respondent was engulfed with fear, anxiety, humiliation and embarrassment causing her to suffer mental fatigue and skin rashes. She was thereby compelled to seek immediate medical attention upon her return to Manila for acute urticaria. RTC held: (P100,000.00) PESOS as exemplary damages; petitioner appealed, CA affirmed in toto. Petitioner further appealed, hence this case. ISSUES & ARGUMENTS W/N petitioner should exemplary damages YES, petitioner should exemplary damages be held liable for

HOLDING & RATIO DECIDENDI be held liable for

When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger then has every right to expect that he be transported on that flight and on that date. If he does not, then the carrier opens itself to a suit for a breach of contract of carriage. Article 2232 of the Civil Code provides that in a contractual or quasi-contractual relationship, exemplary damages may be awarded only if the defendant had acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. In this case, petitioners employees acted in a wanton,

oppressive or malevolent manner. The award of exemplary damages is, therefore, warranted in this case. Bad faith was imputed by the trial court when it found that the petitioners employees at the Singapore airport did not accord the respondent the attention and treatment allegedly warranted under the circumstances. The lady employee at the counter was unkind and of no help to her. The respondent further alleged that without her threats of suing the company, she was not allowed to use the companys phone to make long distance calls to her mother in Manila. The male employee at the counter where it says: Immediate Attention to Passengers with Immediate Booking was rude to her when he curtly retorted that he was busy attending to other passengers in line. The trial court concluded that this inattentiveness and rudeness of petitioners personnel to respondents plight was gross enough amounting to bad faith. This is a finding that is generally binding upon the Court which we find no reason to disturb. 441. NPC vs Court of Appeals | Carpio G.R. No. 106804, August 12, 2004| FACTS Private respondent Pobre is the owner of a 68,969 square-meter land ("Property") located in Albay. Pobre began developing the Property as a resort-subdivision, which he named as "Tiwi Hot Springs Resort Subdivision." The Commission on Volcanology certified that thermal mineral water and steam were present beneath the Property and found the thermal mineral water and steam suitable for domestic use and potentially for commercial or industrial use. NPC then became involved with Pobre's Property in three instances. First was when Pobre leased to NPC for one year eleven lots from the approved subdivision plan. Second was sometime in 1977, the first time that NPC filed its expropriation case against Pobre to acquire an 8,311.60 square-meter portion of the Property. The trial court ordered the expropriation of the lots upon NPC's payment of P25 per square meter or a total amount of P207,790. NPC began drilling operations and construction of steam wells. While this first expropriation case was pending, NPC dumped waste materials beyond the site agreed upon by NPC with Pobre. The dumping of waste materials altered the topography of some portions of the Property. NPC did not act on Pobre's complaints and NPC continued with its dumping. Third was in 1979 when NPC filed its second expropriation case against Pobre to acquire an additional 5,554 square meters of the Property. NPC needed the lot for the construction and maintenance of Naglagbong Well Site. Pobre filed a motion to dismiss the second complaint for expropriation. Pobre claimed that NPC damaged his Property. Pobre prayed for just compensation of all the lots affected by NPC's actions and for the payment of damages. NPC filed a motion to dismiss the second expropriation case on the ground that NPC had found an alternative site and that NPC had already abandoned in 1981 the project within the Property due to Pobre's opposition. The trial court granted NPC's motion to dismiss but the trial court allowed Pobre to

adduce evidence on his claim for damages. The trial court admitted Pobre's exhibits on the damages because NPC failed to object ISSUES & ARGUMENTS W/N NPC is liable to respondent to pay damages? HOLDING & RATIO DECIDENDI NPC liable to pay temperate and exemplary damages.

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NPC's abuse of its eminent domain authority is appalling. However, we cannot award moral damages because Pobre did not assert his right to it. We also cannot award attorney's fees in Pobre's favor since he did not appeal from the decision of the Court of Appeals denying recovery of attorney's fees. Nonetheless, we find it proper to award P50,000 in temperate damages to Pobre. The court may award temperate or moderate damages, which are more than nominal but less than compensatory damages, if the court finds that a party has suffered some pecuniary loss but its amount cannot be proved with certainty from the nature of the case. As the trial and appellate courts noted, Pobre's resortsubdivision was no longer just a dream because Pobre had already established the resort-subdivision and the prospect for it was initially encouraging. That is, until NPC permanently damaged Pobre's Property. NPC did not just destroy the property. NPC dashed Pobre's hope of seeing his Property achieve its full potential as a resortsubdivision. The lesson in this case must not be lost on entities with eminent domain authority. Such entities cannot trifle with a citizen's property rights. The power of eminent domain is an extraordinary power they must wield with circumspection and utmost regard for procedural requirements. Thus, we hold NPC liable for exemplary damages of P100,000. Exemplary damages or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Petition denied for lack of Merit. Decision of the Court of Appeals Affirmed. 442. De Leon v CA | Paras G.R. No. L-31931 August 31, 1988 | FACTS Sps. Briones (Juan Briones and Magdalena Bernardo) were former registered owners of the fishpond situated at San Roque, Paombong, Bulacan. Said property was mortgaged twice to secure a loan obtained from, initially Hermogenes Tantoco but was later on assigned to, Dr. Cornelio Tantoco, Hermogenes father, in the amounts of P20,000 and P68,824 (the later having a 10% interest per annum). Both mortgages were duly registered in the Office of the Register of Deeds of Bulacan and duly annotated at the back of the TCT. While these two mortgages were still subsisting the Sps. Briones sold the fishpond, which is the subject matter of said two mortgages, to plaintiff Sps. De Leon (Fortunato de Leon and Juana F. Gonzales de Leon) in the amount of P120,000.00. Of the amount of P120,000.00, the Sps. Briones actually received only the amount of P31,000.00 on June 2, 1959, as the amount of P89,000.00 was withheld by the Fortunato

de Leon who assumed to answer the mortgage indebtedness of the Briones to the Tantocos. After the sale Sps. De Leon satisfied the mortgage loan of P20,000.00 including 10% interest per annum to Hermogenes Tantoco who then accordingly executed a deed of discharge of mortgage, but the mortgage in favor of Cornelio S. Tantoco in the amount of P68,824 was not satisfied. On February 5, 1962 plaintiffs made payment of P29,382.50 to the Dr. Cornelio. Trying to set the record straight, Dr. Cornelio made the clarification that the principal obligation of the Briones as of May 25, 1959 was P68,824.00 and on January 26, 1962 when a letter of demand was sent to them their total obligation including the agreed interest amounted to P88,888.98. Hence the above mentioned PNB check will be held in abeyance pending remittance of the total obligation after which the necessary document will be executed. On May 8, 1962 the Sps. De Leon filed a complaint with the Court of First Instance of Bulacan against defendant Cornelio S. Tantoco for discharge of mortgage. On May 31, 1962 Dr. Cornelio filed his answer with counterclaim and third party complaint against the Sps. Briones with petition for leave to file third party complaint. He alleged by way of special and affirmative defenses, among others, that the true and real amount of obligation of the Sps. Briones is the sum of P68,824.00, Philippine currency, with 10% interest secured by a second mortgage in favor of defendant, executed and signed by the Briones spouses on May 26,1959, which deed of second mortgage was duly registered in the Office of the Register of Deeds of Malolos, Bulacan on May 27, 1959 and properly annotated at the back of Transfer Certificate of Title No. 28296 issued in the names of Juan Briones and Magdalena Bernardo; that the amount of P29,382.50 sent by Sps. DeLeon as alleged counsel of the spouses Juan Briones and Magdalena Bernardo was accepted by Dr. Cornelio as part payment or partial extinguishment of the mortgage loan of P68,824.00 with 10% interest thereon per annum from May 22, 1959, and Sps. De Leon have been informed of the tenor of said acceptance and application and, that the latter did not accede to the demand of the former to have the mortgage lien on the property in question cancelled or discharged because the full amount of the mortgage debt of P68,824.00 plus the 10% interest thereon from May 22, 1959 has not yet been fully paid either by the plaintiffs or by the spouses Juan Briones and Magdalena Bernardo. RTC dismissed the complaint and ordered for Sps. De Leon to pay Dr. Cornelio the sum of P64,921.60 with interest thereon at 10% per annum from February 5, 1962 until fully paid; payment of the sum of P100,000 as moral and exemplary damages, and further sum of P10,000 as attorneys fees On appeal, CA affirmed the judgment of trial court with modification respecting the award of moral and exemplary damages as well as attorneys fees. ISSUES & ARGUMENTS W/N the award of P60,000 in the concept of moral and exemplary damages is proper? HOLDING & RATIO DECIDENDI

YES. Respondent Court found malice in De Leon's refusal to satisfy Dr. Tantocos lawful claim and in their subsequent filing of the present case against the latter, and took into consideration the worries and mental anxiety of latter as a result thereof. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission. On the other hand, jurisprudence sets certain conditions when exemplary damages may be awarded, to wit: (1) They may be imposed by way of example or correction only in addition, among others, to compensatory damages and cannot be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant; (2) the claimant must first establish his right to moral, temperate, liquidated or compensatory damages; and (3) the wrongful act must be accompanied by bad faith, and the award would be allowed only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolant manner.

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As a lawyer in the practice of law since his admission to the Bar in 1929, who has held several important positions in the government petitioner Fortunato de Leon could not have missed the import of the annotation at the back of TCT regarding the second mortgage for the sum of sixty eight thousand eight hundred twenty-four pesos (P68,824.00) of the property he was buying, in favor of respondent Cornelio Tantoco. The same annotation was transferred to the new TCT issued in the name of De Leon after the sale of the property was effected and entered in the registry of 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 492 of 528 deeds of Bulacan on June 3, 1959. Furthermore, Sps. De Leon cannot deny having assumed the mortgage debts of the Sps. Briones amounting to P89,000.00 in favor of the Tantocos. The "Patunay" executed by the Sps. Briones on June 3, 1959 gives the information that their property, and fishpond, was sold by them to the spouses Fortunato de Leon and Juana F. Gonzales for the amount of one hundred twenty thousand pesos (Pl20,000.00), payment made to them, as follows: Pinanagutan na aming pagkakautang kay G. Hermogenes Tantoco hanggang Mayo 1959 P 89,000.00 Cash na tinanggap namin PBC Check No. 57040 11,000.00 Pagare No. 1 Junio 1, 1959 10,000.00 Pagare No. 2 Junio 1, 1959 10,000.00 Kabuuan P 120,000.00 At the bottom of the "Patunay" in the handwriting of petitioner Fortunato de Leon is a statement signed by him signifying that he was assuming the spouses'debt of P89,000.00 to respondent Tantoco, in the following words: Ang pagkautang na P89,000.00 sa mga Tantoco ay aking inaasumihan. The entitlement to moral damages having been established the award of exemplary damages is proper. And while the award of moral and exemplary damages in an aggregate amount may not be the usual way of awarding said damages there is no question of Dr. Tantoco's entitlement to moral and

exemplary damage. The amount should be reduced, however, for being excessive compared to the actual losses sustained by the aggrieved party. Moral damages though incapable of pecuniary estimations, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty of the wrongdoer. In the case of Miranda Ribaya v. Bautista, this Court considered 25% of the principal amount as reasonable. In the case at bar, the Court of Appeals found on February 21, 1970 that the outstanding balance of the disputed loan was P64,921.69. Twenty five percent thereof is P16,230.00 but considering the depreciation of the Philippine peso today, it is believed that the award of moral and exemplary damages in the amount of P25,000.00 is reasonable. 443. People v. Cristrobal| Quisumbing GR No. 116279 January 29, 1996| FACTS The pain rape causes becomes more excruciating when the victim carries the life of an unborn within her womb. That tender and innocent life, born of love and its parents participation in the mystery of life, is thereby placed in undue danger. Such was the case of Cherry Tamayo, a married woman. She was twentyeight years old, with one child and another on the way, when tragedy struck. She was sexually assaulted on 31 March 1986. Fortunately, the life in her womb survived. She accused Rogelio Cristobal of rape in a sworn complaint Having found sufficient ground to engender a wellfounded belief that the crime charged has been committed and the accused was probably guilty thereof, the court ruled that the accused should be held for trial. Accordingly, it issued a warrant for his arrest and fixed his bail bond at P17,000.00. The accused was arrested but was later released on bail. Thereafter, the court increased the amount of bail to P30,000.00 and, consequently, ordered the rearrest of the accused. Unfortunately, by this time, he was nowhere to be found. The trial court found the accused guilty beyond reasonable doubt of the crime of rape and sentenced him to suffer the penalty of reclusion perpetua and to indemnify the complainant, Cherry Tamayo, in the amount of P30,000.00. The trial court found clear and convincing the categorical testimony of Cherry Tamayo of having been accosted from behind, knocked to the ground, boxed, submerged in water, taken three meters from the creek, and raped. The Appellee disagrees with him and prays that the assailed decision be affirmed with modification of the award for moral damages, which should be increased from P30,000.00 to P50,000.00. ISSUES & ARGUMENTS Whether it is proper to increase the moral damages and exemplary damages? HOLDING & RATIO DECIDENDI Yes. For sexually assaulting a pregnant married woman, the accused has shown moral corruption,

perversity, and wickedness. He has grievously wronged the institution of marriage. The imposition then of exemplary damages by way of example to deter others from committing similar acts or for correction for the public good is warranted. We hereby fix it at P25,000.00. Pursuant to the current policy of this Court, the moral damages awarded by the trial court should be increased from P30,000.00 to P40,000.00. The award of moral damages is increased from P30,000.00 to P40,000.00, and the accused is further ordered to pay exemplary damages in the amount of P25,000.00. 444. PNB vs. Utility Assurance

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FACTS The Kangyo Bank Ltd., Tokyo, Japan, issued Letter of Credit in the amount of US$ 28,150.00 in favor of the Pedro Bartolome Enterprises of Manila to cover an export shipment of logs to Japan. The beneficiary of the Letter of Credit assigned its rights to Lanuza Lumber. On 29 March 1960, Procopio Caderao, doing business under the trade name "Lanuza Lumber," obtained a loan of P 25,000.00 from plaintiffappellee Philippine National Bank (PNB) as evidenced by a promissory note on the security, among other things, of the proceeds of the Letter of Credit. The PNB in addition required Lanuza Lumber to submit a surety bond. Defendant- Appellant Utility Assurance & Surety Co., Inc. ("Utassco"), accordingly, executed Surety Bond in favor of PNB. In addition to the agreement was an endorsement saying: that if the bounden principal and surety shall, in all respects, duly and fully observe and perform all and singular terms and conditions in the aforementioned Letter of Credit, then this obligation shall be and become null and of no further force nor effect; in the contrary case, the same shall continue in full effect and be enforceable, as a joint and several obligation of the parties hereto in the manner provided by law so long as the account remains unpaid and outstanding in the books of the Bank either thru non-collection, extension, renewals or plans of payment with or without consent of the surety. It is a special condition of the bond that the liability of the surety thereon shall, at all times, be enforceable simultaneously with that of the principal without the necessity of having the assets of the principal resorted to, or exhausted by, the creditor; Provided, however, that the liability of the surety shall he limited to the sum of TWENTY-FIVE THOUSAND PESOS (P 25,000), Philippine Currency. The promissory note executed by Lanuza Lumber became due and payable. Neither Lanuza Lumber nor Utassco paid the loan despite repeated demands by PNB for payment. Accordingly, PNB filed in the then Court of First Instance of Manila an action to recover the amount of the promissory note with interest as provided thereon plus attorney's fees. On 14 January 1971, upon motion of PNB, the trial court rendered judgment on the pleadings. The dispositive part of the judgment reads as follows: WHEREFORE, in the light of the foregoing considerations, judgment is hereby rendered ordering the defendant to pay the plaintiff the sum of P 25,000.00 plus 6 % interest per annum counted from May 19, 1962, the date of the filing of the original complaint until fully paid, plus attorney's fees equivalent to 10 % of the principal obligation and the costs of the suit. On appeal, UTTASCO assailed lower courts award of interest and attorney's fees in favor of

plaintiff-appellee PNB. (Utassco: that the trial court should not have granted interest and attorney's fees in favor of PNB, considering the clause in the endorsement limiting the liability of Utassco to P 25,000.00.) Moreover: ART. 1956. No interest shall be due unless it has been expressly stipulated in writing.ART. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (. . . ) ISSUES & ARGUMENTS contention is correct. Whether UTTASCOs

HOLDING & RATIO DECIDENDI No. The SC DISMISSED the appeal by defendantappellant Utility Assurance & Surety Co., Inc. for lack of merit, and AFFIRMED the judgment of the trial court. The objection has to be overruled, because as far back as the year 1922 SC held in Tagawa vs. Aldanese, 43 Phil. 852, that creditors suing on a suretyship bond may recover from the surety as part of their damages, interest at the legal rate even if the surety would thereby become liable to pay more than the total amount stipulated in the bond. 'The theory is that interest is allowed only by way of damages for delay upon the part of the sureties in making payment after they should have done. In some states, the interest has been charged from the date of the judgment of the appellate court. In this jurisdiction, we rather prefer to follow the general practice which is to order that interest begin to run from the date when the complaint was filed in court, . . . . ' Such theory aligned with Sec. 510 of the Code of Civil Procedure which was subsequently recognized in the Rules of Court (Rule 53, Section 6) and with Article 11- 08 of the Civil Code (now Art. 2209 of the New Civil Code). In other words the surety is made to pay interest, not by reason of the contract, but by reason of its failure to pay when demanded and for having compelled the plaintiff to resort to the courts to obtain payment. It should be observed that interest does not run from the time the obligation became due, but from the filing of the complaint. As to attorney's fees: Before the enactment of the New Civil Code, successful litigants could not recover attorney's fees as part of the damages they suffered by reason of the litigation. Even if the party paid thousands of pesos to his lawyers, he could not charge the amount to his opponent. However, the New Civil Code permits recovery of attorney's fees in eleven cases enumerated in Article 2208, among them 'where the court deem it just and equitable that attorney's fees and expenses of litigation should be recovered' or 'when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim.' This gives the courts discretion in apportioning attorney's fees. Now, considering, in this case, that the principal debtor had openly and expressly admitted his liability under the bond, and the surety knew it (p.123 R.A.) we can not say there was abuse of lower court's discretion in the way of awarding fees, specially when the indemnity agreement . . . afforded the surety adequate protection. (100 Phil. 681-682. (Emphasis supplied). 445. Del Rosario vs. CA| Vitug G.R. No. 98149, September 26, 1994| FACTS

Petitioner suffered physical injuries, requiring two major operations, when he fell from, and then was dragged along the asphalted road by, a passenger bus operated by private respondent De Dios Marikina Transportation Co., Inc. The incident occurred when the bus driver bolted forward at high speed while petitioner was still clinging on the bus door's handle bar that caused the latter to lose his grip and balance. The refusal of private respondent to settle petitioner's claim for damages constrained petitioner to file, on 26 June 1985, a complaint for damages against private respondent. The trial court ruled in favor of petitioner and on appeal to it, the Court of Appeals affirmed in toto the findings of fact of the trial court, as well as the grant to petitioner of damages, but it reduced the award for attorney's fees from P33,641.50 to P5,000.00.

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ISSUES & ARGUMENTS W/N THE CA ERRED IN THE REDUCTION OF ATTORNEYS FEES? HOLDING & RATIO DECIDENDI Y ES, THE CA ERRED IN THE REDUCTION OF ATTORNEYS FEES There is no question that a court may, whenever it deems it just and equitable, allow the recovery by the prevailing party of attorneys fees. In determining the reasonableness of such fees, this Court in a number of cases has provided various criteria which, for convenient guidance, we might collate thusly: o a) the quantity and character of the services rendered; o b) the labor, time and trouble involved; o c) the nature and importance of the litigation; o d) the amount of money or the value of the property affected by the controversy; o e) the novelty and difficulty of questions involved; o f) the responsibility imposed on counsel; o g) the skill and experience called for in the performance of the service; o h) the professional character and social standing of the lawyer; o i) the customary charges of the bar for similar services; o j) the character of employment, whether casual or for establishment client; o k) whether the fee is absolute or contingent (it being the rule that an attorney may properly charge a higher fee when it is contingent than when it is absolute); and o l) the results secured. Given the nature of the case, the amount of damages involved, and the evident effort exerted by petitioner's counsel, the trial court's award of attorney's fees for P33,641.50 would appear to us to be just and reasonable. 446. Bodiongan vs. Court of Appeals and Simeon| Puno GR. No.- 114418, September 21, 1995| 248 SCRA 496 FACTS Lea Simeon obtained from petitioner Estanislao Bodiongan and his wife a loan of P219,117.39 secured by a mortgage on 3 parcels of land with a 4-storey hotel building and personal properties. Upon the formers failure to pay loan, petitioner instituted a civil case for collection of sum of money or foreclosure of mortgage.

 Trial court ordered payment of the loan with legal interest as well as P5000 reimbursement of plaintiffs attorneys fees and in case of non-payment, to foreclose the mortgage on the properties. CA affirmed. Simeon again failed to pay the judgment debt so the mortgaged properties were foreclosed and sold on execution to petitioner (who was the sole bidder). Petitioner then took possession of the properties after filing a guaranty bond of P350,000. Simeon offered to redeem her properties and tendered to the provincial sheriff a check in the amount of P337,580 (based on sheriffs computation). Petitioner then filed a motion to correct the computation, which was denied. Subsequently, petitioner instituted a civil case for annulment of redemption and confirmation of the foreclosure sale on the ground of insufficiency of the redemption price. The trial court dismissed the complaint but reduced the 12% interest rate on the purchase price to 6% and thus, on counterclaim, ordered petitioner to refund Simeon the excess 6% plus P10,000 and P5,000 for moral damages and attorneys fees. CA affirmed except for the refund of the 6% interest. ISSUES & ARGUMENTS What is the correct redemption price? Petitioner: The redemption price should be P351,080.00. Since private respondent actually tendered P337,580.00 which is short by P13,500.00, this price was inadequate thereby rendering redemption ineffectual. HOLDING & RATIO DECIDENDI DEDUCT P5,000 FROM THE P351,080.00 BEING CLAIMED BY PETITIONER BECAUSE ATTORNEYS FEES IS EXCLUDED FROM REDEMPTION PRICE. According to Section 6 of Art 3135, the redemption price of properties at an extrajudicial foreclosure sale is fixed by Sec 30 of Rule 39 of the Revised Rules of Court. Said Rule provides that in order to effect a redemption, the judgment debtor must pay the purchaser the redemption price composed of the following: (1) the price which the purchaser paid for the property; (2) interest of 1% per month; (3) the amount of any assessments or taxes which the purchaser may have paid on the property after the purchase; and (4) interest of 1% per month on such assessments and taxes. If the tender is for less than the entire amount, the purchaser may justly refuse acceptance thereof. In the case at bar redemption price covers the purchase price of P309,000 plus 1% interest thereon per month for 12 months at P37,080.00. Petitioner does not claim any taxes or assessments he may have paid on the property after his purchase. He, however, adds P5,000.00 to the price to cover the attorneys fees awarded him by the trial court. In the redemption of property sold at an extrajudicial foreclosure sale, the amount payable is no longer the judgment debt but the purchase price at the auction sale. In other words, the attorneys fees awarded by the trial court should not have been added to the redemption price because the amount payable is no longer the judgment debt, but that which is stated in Section 30 of Rule 39. The redemption price for the

mortgaged properties P346,080.00.

in

this

case

is

therefore

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Simeons tender is still short by P8,500.00. Inasmuch as tender of the redemption price was timely made and in good faith, and the deficiency in price is not substantial, Simeon is given the opportunity to complete the redemption of her properties within 15 days from the time decision becomes final. Petition DENIED. Court of Appeals decision AFFIRMED. 447. Pimentel vs. CA | Gonzaga-Reyes G.R. No. 117422, May 12, 1999 | FACTS Pimentel through her lawyer, Atty. Laurel, filed an application for the payment of benefits with the US Department of Labor, in connection with the death of her husband, Pedro Petilla, Jr., who was a former employee in Wake Island, USA under the employ of Facilities Management Corporation, USA. After the filing of the said application for payment and during its pendency, Atty. Laurel died and for failure of petitioner to respond to a pre-hearing statement requested by the US Department of Labor, the case was considered closed. Pimentel requested private respondent Namit, husband of her first cousin, to help her in reviving and pursuing her claim for death benefits before the US Department of Labor. Namit accepted petitioners request and initially wrote a letter addressed to the US Department of Labor regarding petitioners application for death benefits, and as a result, the case was reopened Trial ensued conducted by the US Embassy. The US Department of Labor rendered a decision granting petitioner benefits in the amount of US$53,347.80. Pimentel received the lump sum award as embodied in the decision and the subsequent monthly benefits in checks. Pimentel then paid private respondent the sum of US$2,500.00 as attorneys fees for the services he had rendered Dissatisfied, private respondent demanded payment of the alleged balance of his attorneys fees but petitioner did not heed respondents demands On November 16, 1988, private respondent filed with the Regional Trial Court of Pasay City a complaint for sum of money against petitioner to recover from the latter the alleged balance of his attorneys fees (according to Namit, the agreed fees were 25%) RTC awarded $2.5k more to Namit plus 10k Pesos as attorneys fees. CA affirmed. ISSUES & ARGUMENTS W/N the Namit is entitled to more attorneys fees HOLDING & RATIO DECIDENDI AS TO THE $2.5K IT CAN BE AWARDED. AS TO THE P10K, SUCH HAS NO BASIS IN THE DISPOSITIVE PORTION Pimentel contends that absent any agreement on attorneys fees, the determination of the compensation for the lawyers services will have to be based on quantum meruit, such as but not

limited to the extent and character of the services rendered, the labor, time and trouble involved, the skill and experience called for in performing the services, the professional and social standing of the lawyer, and the results secured. Pimentel further contends that Namit failed to demonstrate the circumstances showing the extent of services rendered and that there were no specific findings of fact in the courts decision that would justify the award of an additional US$2,500.00 as attorney fees to private respondent The issue of the reasonableness of attorneys fees based on quantum meruit is a question of fact, and well-settled is the rule that conclusions and findings of fact by the lower courts are entitled to great weight on appeal and will not be disturbed except for strong and cogent reasons The respondent courts ratiocination in affirming the reasonableness of the additional compensation of US$2,500.00 awarded by the trial court properly took into account the character and extent of the services rendered, the results secured which amounted to an award of $53,347.80, and the critical nature of counsels intervention to pursue the claims after the death of the former counsel, in justifying the award. With respect to Pimentels contention that the respondent court erred in affirming the trial courts decision awarding P10,000.00 attorneys fees to private respondent, we rule in favor of petitioner. The text of the trial courts decision does not mention the reason for the award of attorneys fees and the award was simply contained in the dispositive portion of the trial courts decision. It is now settled that the reasons or grounds for an award must be set forth in the decision of the court Since the trial courts decision failed to state the justification for the award of attorneys fees, it was a reversible error to affirm the same

On December 13, 1978, the Provincial Sheriff issued a Certificate of Sale which was registered on October 16, 1979. The certificate stated that the redemption period expires two (2) years from the registration of the sale. No notice of the extrajudicial foreclosure was given to the Spouses Tarnate.

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On September 23, 1981, the Spouses Tarnate offered to redeem the foreclosed lots and tendered the redemption amount of P77,737.45. However, Ibaan Rural Bank refused the redemption on the ground that it had consolidated its titles over the lots. The Provincial Sheriff also denied the redemption on the ground that the Spouses Tarnate did not appear on the title to be the owners of the lots. Spouses Tarnate filed a complaint to compel the bank to allow their redemption of the foreclosed lots. o The extra-judicial foreclosure was null and void for lack of valid notice and demand upon them. o They were entitled to redeem the foreclosed lots because they offered to redeem and tendered the redemption price before October 16, 1981, the deadline of the 2-year redemption period. Ibaan Rural Bank opposed the redemption. o There was no need of personal notice to them because under Section 3 of Act 3135, only the posting of notice of sale at three public places of the municipality where the properties are located was required. o At the time they offered to redeem on September 23, 1981, the right to redeem had prescribed, as more than one year had elapsed from the registration of the Certificate of Sale on October 16, 1979. TC ruled in favor of the Spouses Tarnate awarding moral damages and attorneys fees. CA affirmed with modification deleting the award for moral damages and reducing the award for attorneys fees. ISSUES & ARGUMENTS W/N the Spouses Tarnate could still redeem the land as they tendered the redemption within two years. 1. W/N the CA may award attorneys fees solely on the basis of the refusal of the bank to allow redemption. HOLDING & RATIO DECIDENDI Y es. The Spouses Tarnate could still redeem the land as they tendered the redemption within two years. o Although there was no voluntary agreement between the parties and the sheriff unilaterally and arbitrarily extended the period of redemption to two years, the bank may not oppose the redemption as for two years, it did not object to the two-year redemption period provided in the certificate. Thus, it could be said that Ibaan Rural Bank consented to the two-year redemption period specially since it had time to object and did not. When circumstances imply a duty to speak on the part of the person for whom an obligation is proposed, his silence can be construed as consent. By its silence and inaction, Ibaan Rural Bank misled the Spouses Tarnate to believe that they had two years within which to redeem the mortgage. After the lapse of two years, Ibaan Rural Bank is estopped from asserting that the period for redemption was only one year and that the period had already lapsed. o Moreover, the rule on redemption is liberally interpreted in favor of the original owner of a property. No. The CA may not award attorneys fees solely on the basis of the refusal of the bank to allow redemption. o

448. Ibaan Rural Bank vs. CA| Quisimbing G.R. No. 123817 December 17, 1999 |SCRA FACTS Spouses Cesar and Leonila Reyes were the owners of three (3) titled lots. The spouses mortgaged these lots to Ibaan Rural Bank, Inc. With the knowledge and consent of Ibaan Rural Bank, the spouses as sellers, and Mr. and Mrs. Ramon Tarnate, as buyers, entered into a Deed of Absolute Sale with Assumption of Mortgage of the lots in question. The Spouses Tarnate failed to pay the loan and the bank extra-judicially foreclosed on the mortgaged lots. The Provincial Sheriff conducted a public auction of the lots and awarded the lots to the bank, the sole bidder.

The award of attorney's fees must be disallowed for lack of legal basis. o Attorney's fees cannot be recovered as part of damages because of the public policy that no premium should be placed on the right to litigate. o The award of attorney's fees must be deleted where the award of moral and exemplary damages are eliminated. 449 Compania Maritima Inc. vs. CA FACTS Petitioner engaged the services of Atty. Consulta for 3 cases against Genstar Container Corporation (the 2nd case technically is not a case against the said company for it was against the sheriff of the RTC). Atty. Consulta billed them P100,000, P50,000, and P3M respectively for the said cases. Petitioner only paid P10,000, P30,000, and none respectively though. Said Atty. Consulta filed for the recovery of said balance, plus damages, and Attys. Fees. Petitioner alleged that the Attorneys fees was unlawful. ISSUES & ARGUMENTS W/N the said fees were unlawful? HOLDING & RATIO DECIDENDI No There are two concepts of Attys fees in the jurisdiction. What is involved here is the Attys fees in the ordinary sense. It is the reasonable compensation given to a lawyer for the legal services he has rendered. Generally, the said fees are based on stipulation, but in its absence the amount is fixed on Quantum Meruit meaning the reasonable worth of his service. In the said case, the amount awarded was reasonable even though the cases were dismissed or based on compromise. We should take into account the value of the property involved which amounted to around P51M. Not only this, the court found that the pleadings were well researched given the complexity of the cases, and to this, a compromise took effect whereas both parties agreed to dismiss the said case. JOFEE CUENCA 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 500 of 528 Almeda vs. Carino | MENDOZA, J G.R. No. 152143, January 13, 2003| 395 SCRA 144 FACTS Ponciano L. Almeda and Avelino G. Cario, predecessors-in-interest of petitioners and respondents, entered into two agreements to sell, one covering eight titled propertiesand another three untitled properties all of which are located in Bian, Laguna. The agreed price of the eight titled properties was P1,743,800.00, 20% of which was to be paid upon signing of the agreement and the balance to be paid in four equal semiannual installments, beginning six months from the signing thereof, with the balance earning 12% interest per annum.

On April 3, 1982, Cario and Almeda executed an amendment to their agreements to sell extending the deadline for the production of the titles to the untitled properties from March 31, 1982 to June 30, 1982

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Before the end of April 1982, Almeda asked Cario for the execution of a Deed of Absolute Sale over the eight titled properties although they had not been fully paid. Cario granted the request and executed on May 3, 1982 the deed of sale over the eight titled lots in favor of Almeda, Inc. On April 30, 1982, Almeda executed an undertaking to pay Cario the balance of the purchase price. Cario made demands for the full and final payment of the balance due him but since these were unheeded, a complaint was filed against Almeda and Almeda, Inc., in whose name the titles to the properties had been transferred. Almeda and Almeda, Inc. contended that the purchase price, including interest charges, of the eight titled properties had been fully paid as of April 3, 1982. With respect to the three untitled lots, they contended that the purchase price been fully paid except for the 3rd lot which had a remaining balance of P167,522.70. RTC of Bian, Laguna found the claim of Cario to be well founded and gave judgment in his favor Without questioning the amount of judgment debt for which they were held liable, Ponciano Almeda and Almeda, Inc. appealed to the Court of Appeals for a modification of judgment, contending that the lower court erred in awarding nominal damages and attorneys fees in favor of Cario and imposing a 12% annual interest on the judgment debt from the time of demand on March 9, 1983 until it was fully paid. They maintained that they were not guilty of any unfair treatment or reckless and malevolent actions so as to justify an award of nominal damages. They claimed that they refused to pay the remaining balance because the proceeds of certain harvests from the lands in question and liquidated damages were also due them. As for the award of attorneys fees, they contended that there was no finding that they acted in gross and evident bad faith in refusing to satisfy Carios demand so as to justify its award under Art. 2208 (5) of the Civil Code, because they had acted on the basis of what they honestly believed to be correct as their residual obligations. During the pendency of the case, Almeda died and he was substituted by his heirs. The Court of Appeals affirmed the decision of the lower court. It held that the award of nominal damages was justified by the unjust refusal of Almeda and Almeda, Inc. to settle and pay the balance of the purchase price in violation of the rights of Cario. The award of attorneys fees was also affirmed, it being shown that Cario was forced to litigate to protect his interests. Petitioners do not dispute the amount of the outstanding balance on the purchase price of the lots. Petitioners only seek a modification of the decision of the appeals court insofar as it upheld the trial courts

award of nominal damages, attorneys fees, and 12% interest. ISSUES & ARGUMENTS W/N the CA erred when it awarded nominal damages and attys fees HOLDING & RATIO DECIDENDI NO. Indeed, nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of indemnification for a loss but for the recognition and vindication of a right Petitioners have an unpaid balance on the purchase price of lots sold to them by respondents. Their refusal to pay the remaining balance of the purchase price despite repeated demands, even after they had sold the properties to third parties, undoubtedly constitutes a violation of respondents right Nor is there any basis for petitioners claim that the appellate court erred in awarding attorneys fees in favor of respondents. Under the Civil Code, attorneys fees and litigation expenses can be recovered in cases where the court deems it just and equitable. Thus, there is no reason to set aside the order of the trial court, as affirmed by the appeals court, granting to respondents attorneys fees in the amount of P15,000.00. Further, the case has dragged on for more than a decade. While the records reveal that respondents engaged the services of two lawyers, petitioners had a total of sixteen counsels starting from January 24, 1984 up to December 22, 1997. Of the sixteen, one lawyer served for more than 2 years, another for 8 days only, and still another entered his appearance and withdrew it only to reenter his appearance after some time. The records show that most of the lawyers who entered their appearances either filed only motions to cancel hearings or motions for postponements, claiming to have misplaced the calendar of court hearings or to be staying abroad. These unduly delayed the disposition of the case in violation of the right of respondents to claim what is rightfully due them. This fact further justifies the award of nominal damages and supports the grant of attorneys fees. 451. Concept Placement Resources, Inc. vs. Funk | Sandoval-Gutierrez, J. G.R. No. 137680, February 6, 2004 | 422 SCRA 317 FACTS On June 25, 1994, Concept Placement Resources, Inc., petitioner, engaged the legal services of Atty. Richard V. Funk, respondent. On July 1, 1994, the parties executed a retainer contract wherein they agreed that respondent will be paid regular retainer fee for various legal services, except litigation, quasi-judicial and administrative proceedings and similar actions. In these services, there will be separate billings. Meanwhile, one Isidro A. Felosopo filed with the Philippine Overseas Employment Administration (POEA) a complaint for illegal dismissal against petitioner, docketed as POEA Case No. 94-08-2370. Petitioner referred this labor case to respondent for legal action.

Immediately, respondent, as counsel for petitioner, filed with the POEA its answer with counterclaim for P30,000.00 as damages and P60,000.00 as attorneys fees. On March 1, 1995, while the labor case was still pending, petitioner terminated its retainer agreement with respondent. Nevertheless, respondent continued handling the case. On October 30, 1995, the POEA rendered a Decision dismissing Felosopos complaint with prejudice. The POEA, however, failed to rule on petitioners counterclaim for damages and attorneys fees. Thereafter, the Decision became final and executory. On December 8, 1995, respondent advised petitioner of the POEAs favorable Decision and requested payment of his attorneys fees. In reply, petitioner rejected respondents request for the following reasons: (1) the retainer agreement was terminated as early as March 1995; (2) there is no separate agreement for the handling of the labor case; and (3) the POEA did not rule on petitioners counterclaim for attorneys fees. This prompted respondent to file with the Metropolitan Trial Court (MTC), Branch 67, Makati City a complaint for sum of money (attorneys fees) and damages against petitioner, docketed as Civil Case No. 51552. During the pre-trial on September 3, 1996, the MTC, upon respondents motion, declared petitioner as in default. Its motion for reconsideration was denied in an Order dated September 13, 1996. Forthwith, respondent was allowed to present his evidence exparte. On October 27, 1996, the MTC rendered a Decision2 ordering petitioner to pay respondent P50,000.00 as attorneys fees. On appeal, the Regional Trial Court (RTC), Branch 137, Makati City, reversed the MTC Decision, holding inter alia that since the MTC, in the same Decision, did not resolve petitioners counterclaim for attorneys fees, which constitutes res judicata, respondent is not entitled thereto. Respondent filed a motion for reconsideration but was denied by the RTC in an Order3 dated December 29, 1997. Thus, respondent filed with the Court of Appeals a petition for review ascribing to the RTC the following errors: (1) in reversing the MTC Decision on the ground of res judicata; and (2) in disregarding the compulsory counterclaim as basis for respondents action for attorneys fees. In due course, the Court of Appeals promulgated its Decision4 dated February 18, 1999 reversing the assailed RTC Decision and affirming the MTC Decision, thereby sustaining the award to respondent of his attorneys fees in the amount of P50,000.00. ISSUES & ARGUMENTS W/N respondent is entitled to attorneys fees for assisting petitioner as counsel in the labor case. HOLDING & RATIO DECIDENDI While it is true that the retainer contract between the parties expired during the pendency of the said labor

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case, it does not follow that petitioner has no more obligation to pay respondent his attorneys fees. The Court of Appeals found that petitioner engaged the legal services of respondent and agreed to pay him accordingly, thus: "Anent the first issue, the Petitioner resolutely avers that he and the Private Respondent had agreed on the latter paying him the amount of P60,000.00 by way of attorneys fees for his professional services as its counsel in POEA Case No. 94-08-2370 the Petitioner relying on his Retainer Agreement in tandem with the Compulsory Counterclaim of the Private Respondent to the complaint of Isidro Felosopo. "We agree with the Petitioners pose. It bears stressing that the Retainer Agreement of the Petitioner and the Private Respondent (Exhibit A) envisaged two (2) species of professional services of the Petitioner, namely, those professional services covered by the regular retainer fee and those covered by separate billings. Petitioners services not covered by the regular retainer fee and, hence, subject to separate billing include: x x x 5. Services not covered by the regular retainer fee and therefore, subject to separate billing: a) litigation, quasi-judicial proceedings, administrative investigation, and similar proceedings legal in nature; x x x "x x x While admittedly, the Petitioner and the Private Respondent did not execute a written agreement on Petitioners fees in said case apart from the Retainer Agreement, however, the Private Respondent did categorically and unequivocally admit in its Compulsory Counterclaim embodied in its Answer to the Complaint, in POEA Case No. 94-082370, that it engaged the services of the Petitioner as its counsel For a fee in the amount of P60,000.00, Etc.: COMPULSORY COUNTERCLAIM 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 502 of 528 1. Respondent reproduces herein by reference all the material allegations in the foregoing Answer. 2. As shown by the allegation in the Answer the complaint is factually and legally unfounded. To defend itself against this baseless suit, respondent suffered and continues to suffer actual damage in the amount of P30,000.00 and was compelled to hire the services of counsel for a fee in the amount of P60,000.00 plus P1,500.00 honorarium per appearance and litigation expenses in the amount of not less than P10,000.00 plus cost of 3. suit." (Exhibit B-1: underscoring supplied) Significantly, in German Marine Agencies, Inc. vs. NLRC,8 we held that there must always be a factual basis for the award of attorneys fees. Here, since petitioner agreed to be represented by respondent as counsel in the labor case and to pay him his attorneys fees, it must abide with its agreement which has the force of law between them.9 We observe, however, that respondent did not encounter difficulty in representing petitioner. The complaint against it was dismissed with prejudice. All that respondent did was to prepare the answer with counterclaim and possibly petitioners position paper. Considering respondents limited legal services and the case involved is not complicated, the award of P50,000.00 as attorneys fees is a bit excessive. In First Metro Investment Corporation vs. Este del Sol Mountain Reserve, Inc.,10 we ruled that courts are empowered to reduce the amount of attorneys fees if the same is iniquitous or unconscionable. Under the

circumstances obtaining in this case, we consider the amount of P20,000.00 reasonable.

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452. Cortes vs. Court of Appeals | Austria-Martinez G.R. No. 121772, January 13, 2003, 395 SCRA 33 FACTS F.S. Management and Development Corporation (FSMDC) filed a case for specific performance against spouses Edmundo and Elnora Cortes involving the sale of the parcel of land owned by the said spouses. Spouses Cortes retained the professional services of Atty. Felix Moya for the purpose of representing them in said case. However, they did not agree on the amount of compensation for the services to be rendered by Atty. Moya. Before a full-blown trial could be had, defendant spouses Cortes and plaintiff FSMDC decided to enter into a compromise agreement. Petitioner spouses Cortes received from FSMDC, three checks totaling P2,754,340 which represents the remaining balance of the purchase price of the subject land. Atty. Moya filed an Urgent Motion to Fix Attorneys Fees praying that he be paid a sum equivalent to 35% of the amount received by the defendants, which the latter opposed for being excessive. The Cortes spouses and Atty. Moya settled their differences by agreeing in open court that the former will pay the latter the amount of P100,000 as his attorneys fees. The trial court issued an order that the parties agreed that the Cortes spouses would pay P100,000 out of any check paid by FSMDC to them. Cortes spouses terminated the services of Atty. Moya and retained the services of another lawyer. Atty. Moya filed a Motion for Early Resolution of Pending Incidents and to Order Defendants to Pay Their Previous Counsel. The trial court issued an order directing the petitioners to pay Atty. Moya P100,000 as attorneys fees. ISSUES & ARGUMENTS W/N the amount of P100,000 awarded to Atty. Moya as attorneys fees is reasonable? HOLDING & RATIO DECIDENDI NO. THE REASONABLENESS OF THE AMOUNT OF ATTORNEYS FEES SHOULD BE GAUGED ON THE BASIS OF THE LONG-STANDING RULE OF QUANTUM MERUIT. Quantum meruit means as much as he deserves. Where a lawyer is employed without agreement as to the amount to be paid for his services, the courts shall fix the amount on quantum meruit basis. In such case, he would be entitled to receive what he merits of his services. Sec. 24, Rule 138 of the Rules of Court provides: o Sec 24. Compensation of attorneys An attorney shall be entitled to have and recover from his client no more

than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. xxx Rule 20.1, Canon 20 of the Code of Professional Responsibility serves as a guideline in fixing a reasonable compensation for services rendered by a lawyer on the basis of quantum meruit: o Time spent and extent of services rendered; o Novelty and difficulty of the questions involved; o Importance of subject matter; o Skill demanded; o Probability of losing other employment as a result of acceptance of the proffered case; o Customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs; o Amount involved in the controversy and the benefits resulting to the client from the services; o Contingency or certainty of compensation; o Character of employment, whether occasional or established; o Professional standing of lawyer. Aside from invoking his professional standing, Atty. Moya claims that he was the one responsible in forging the initial compromise agreement with FSMDC. The fact remains, however, that such agreement was not consummated because the checks given by FSMDC were all dishonored. Hence, it was not him who was responsible in bringing into fruition the subsequent compromise agreement between petitioners and FSMDC. Nonetheless, it is undisputed that Atty. Moya has rendered services as counsel for the petitioners. He prepared petitioners Answer and Pre-trial brief, appeared at the Pre-trial conference, attended a hearing, cross-examined a witness, and was present in the conference between the parties. All of which were rendered during 1990- 1991, where the value of the peso was higher. Thus, the sum of P100,000 as attorneys fees is disproportionate to the services rendered by him. The amount of P50,000 is just and reasonable. Imposition of legal interest on amount payable is unwarranted because contracts for attorneys services are different from contracts for the payment of compensation for any other services. 453. Smith Kline Beckman v. Court of Appeals | Carpio-Morales G.R. No. 126627 August 14, 2003| FACTS In 1976, Petitioner Smith Kline applied for a patent over an invention entitled Methods and Compositions for Producing Biphasic Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate and such patent was granted. The invented medicine is used in fighting infections caused by gastrointestinal parasites and lungworms in animals such as swine, sheep, cattle, goats, horses, and even pet animals. Private Respondent Tryco Pharma is a domestic corporation that manufactures, distributes and sells veterinary products including Impregon, a drug that has Albendazole for its active ingredient and is claimed to be effective against gastrointestinal roundworms, lungworms, tapeworms and fluke infestation in carabaos, cattle and goats.

Petitioner then sued respondent for unfair competition saying that Impregon infringes on their patent. As a result, an injunction was issued against respondent for it to stop selling Impregon to stop its acts of patent infringement and unfair competition. Respondent filed a counterclaim for actual damages and attorneys fees. RTC ruled in favor of respondent, awarding damages and attorneys fees to respondent. CA affirmed. ISSUES & ARGUMENTS Issue 1: discussion. IP-related, not important in our

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Issue 2: W/N the award of actual damages and attorneys fees are proper. HOLDING & RATIO DECIDENDI NO, THE AWARD FOR BOTH ACTUAL DAMAGES AND ATTORNEYS FEES ARE NOT PROPER. The claimed actual damages of P330,000.00 representing lost profits or revenues incurred by respondent as a result of the issuance of the injunction against it, computed at the rate of 30% of its alleged P100,000.00 monthly gross sales for eleven months, were supported by the testimonies of respondents President and Executive Vice-President that the average monthly sale of Impregon was P100,000.00 and that sales plummeted to zero after the issuance of the injunction. While indemnification for actual or compensatory damages covers not only the loss suffered (damnum emergens) but also profits which the obligee failed to obtain (lucrum cessans or ganacias frustradas), it is necessary to prove the actual amount of damages with a reasonable degree of certainty based on competent proof and on the best evidence obtainable by the injured party. The testimonies of respondents officers are not the competent proof or best evidence obtainable to establish its right to actual or compensatory damages for such damages also require presentation of documentary evidence to substantiate a claim therefor. In the same vein, the SC did not sustain the grant by the appellate court of attorneys fees to private respondent anchored on Article 2208 (2) of the Civil Code, respondent having been allegedly forced to litigate as a result of petitioners suit. Even if a claimant is compelled to litigate with third persons or to incur expenses to protect its rights, still attorneys fees may not be awarded where no sufficient showing of bad faith could be reflected in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause. There exists no evidence on record indicating that petitioner was moved by malice in suing respondent. This Court, however, grants private respondent temperate or moderate damages in the amount of P20,000.00 which it finds reasonable under the circumstances, it having suffered some pecuniary loss the amount of which cannot, from the nature of the case, be established with certainty. 454. Reyes vs. CA| Ynares - Santiago G.R. No. 154448. August 15, 2003| 409 SCRA 267 FACTS

 In 1989, Leong Hup Poultry Farms of Malaysia thru its director Francis Lau, appointed Pedrito Reyes (reyes) as Technical/Sales Manager w/ a net salary of $4,500. In 1992, the company formed Phil Malay Poultry Breeders (PhilMalay) and appointed Reyes as General Manager w/ monthly salary of $5,500. In 1996-97, the company experienced losses and retrenched some of its employees. Reyes gave a verbal notice then a letter expressing his intention to resign and requesting that he be granted the same benefits as the retrenched employees. In 1998, PhilMalay retrenched Reyes and promised to pay him separation benefits pursuant to the Labor Code. But he was offered separation pay equivalent only to 4 months which he refused. Reyes filed the NLRC a complaint for non-payment of benefits. The Labor Arbiter ruled in his favour and granted him: unpaid salary, underpayment of salary, 13th month pay, unused vacation and sick leaves, separation pay, brand new car, office rentals, life insurance policy, services of a lawfirm, moral damages, exemplary damages, and attorneys fees. The NLRC modified the decision by deleting the unpaid salary, vacation and sick leaves, separation pay, moral damages, exemplary damages, and attorneys fees. CA dismissed the petition due to failure to attach documents to the petition. ISSUES & ARGUMENTS W/N NLRC properly deleted the monetary awards? HOLDING & RATIO DECIDENDI YES, with respect to: Unpaid Salary no proof Reyes worked during those times. Moral/Exemplary Damages no basis, respondents not shown to have acted in bad faith. Car and life insurance only granted during the employment of the employee. Rental contractual obligation, not based of EER therefore not within the jurisdiction of the Labor Arbiter. Regular courts have jurisdiction. Reimbursement for the services of a law firm no proof that the services of a law firm was needed and that he spent 200K as a consequence. NO, with respect to vacation / sick leave and Attorneys Fees. 2 concepts of Attys Fees: o Ordinary reasonable compensation paid to a lawyer by his client for the legal services. The basis is the fact of his employment. o Extraordinary indemnity for damages ordered by the court to be paid by the losing party in a litigation. The instances where these may be awarded are enumerated in par 7 of Art 2208 of the Civil Code which pertains to actions for recovery of wages, NOT payable to the lawyer but to the client. Although an express finding of

FACTS and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly, as in this case. Petitioner is entitled to attorneys fees equivalent to 10% of his total monetary award. 455. Malaysian Airline System Bernand V. CA G.R. 78015 December 11, 1987 FACTS The petitioner recruited the private respondent from Philippine Airlines for his training and experience and contracted his services as pilot for two years, beginning 1979. On April 12, 1981, when the plane he was driving landed at Bintulo Airport, all the tires burst, causing alarm among the passengers but, fortunately, no injuries. An investigation was conducted pending which he was preventively suspended. On May 5, 1981, he was offered and accepted an extension of his contract for another year, subject to the expressed condition that he would submit to the jurisdiction of Malaysian courts in an matters relating to the contract. Ultimately, however, he was found negligent by the investigating board and dismissed by the petitioner, effective July 30, 1981. The private respondent sought relief from the Malaysian courts but to no avail. He then brought suit in the regional trial court of Manila where the petitioner moved to dismiss for lack of jurisdiction and improper venue. The order of the trial court denying its motion was affirmed by the Court of Appeals and later by this Court. The case then proceeded to trial on the merits. After hearing, it was held that the private respondent was not guilty of negligence and that the accident was due not to his violation of the MAS manual of instructions but to a defect in the rigging of the brake control valve and the failure of the ground crew to properly maintain the aircraft. The court also found that the petitioner had acted in bad faith in inveigling the private respondent into signing the renewal of the contract submitting himself to the jurisdiction of the Malaysian courts and that his dismissal was prompted by a letter-complaint signed by Filipino and Indonesian pilots, including himself, protesting their discrimination in pay and benefits by MAS. The trial court required the petitioner to pay as follows: 1. The amount of $300,000 Malaysian dollars representing plaintiffs' salary and flight type and P100,000.00 for uprooting his family to Manila plus the further sum of P200,000.00 representing renewal of his license; 2. The amount of P3,000,000.00 as moral damages; 3. The amount of Pl,000,000.00 as exemplary damages; 4. The amount equivalent to 25% of the amount due and collectible as attorney's fees, and cost of suit. ISSUES & ARGUMENTS Whether or not the amounts of damages awarded were excessive? HOLDING & RATIO DECIDENDI Yes. We affirm the factual findings of the respondent court and the lower court, there being no sufficient showing that the said courts committed reversible error in reaching such conclusions. We cannot agree, however, with the award of damages, which seems to have gotten out of hand. The inordinate amount granted to the private respondent cans for the

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moderating hand of the Court, that justice may be tempered with reason instead of being tainted with what appears here to be a ruthless vindictiveness. The complaint prayed for payment of unpaid salaries from July 1981 to July 1982 which corresponds to the periods of the renewed contract. 15 On the basis of his monthly salary of Malaysian $4,025.00, 16 or P33,568.50 (at the current Central Bank conversion rate of P8.34 for every Malaysian $1.00), Ms total unearned salaries will be P402,822.00. To this should be added the amount of P123,098.40 as allowance for the same period of one year at the rate of $1,230.00 per month 17 plus P80,000.00, representing his expenses in transferring his family to the Philippines, 18 amounting to an aggregate sum of P605,920.40 in actual damages. The moral and exemplary damages, while concededly due, are reduced to P500,000.00 and the attorney's fees to the fixed sum of P25,000.00. All the other awards are disauthorized. It is important to reiterate the following observations we made in Baranda v. Baranda: We deal with one final matter that should be cause for serious concern as it has a direct relevance to the faith of our people in the administration of justice in this country. It is noted with disapproval that the respondent court awarded the total indemnity of P120,000.00, including attorney's fees and litigation expenses that were double the amounts claimed and exemplary damages which were not even prayed for by the private respondents. Such improvident generosity is likely to raise eyebrows, if not outright challenge to the motives of some of our courts, and should therefore be scrupulously avoided at all times, in the interest of maintaining popular confidence in the judiciary. We therefore caution against a similar recklessness in the future and call on an members of the bench to take proper heed of this admonition. The respondent court affirmed the original award of damages in the staggering amount of more than P8,000,000.00. It is only fair that it be lowered to a realistic and judicious level that will, in our view, be just to both the petitioner and the private respondent. WHEREFORE, the petition is DENIED and the challenged decision, as above modified, is affirmed. It is so ordered. 456 Far East Bank and Trust Co. v. CA | Vitug G.R. No. 108164 February 23, 1995 | 241 SCRA 671 FACTS In October 1986 Luis Luna applied for a FAREASTCARD with Fart East Bank. A supplemental card was also issued to his wife, Clarita On August 1988, Clarita lost her card and promptly informed the bank of its loss for which she submitted an Affidavit of Loss. The bank recorded this loss and gave the credit card account a status of Hot Card and/or Cancelled Card. Such record holds also for the principal card holder until such time that the lost card was replaced. On October 1988, Luis Luna used his card to purchase a despidida lunch for hi friend in the Bahia Rooftop Restaurant. His card was dishonored in the restaurant and he was forced to pay in cash, amounting to almost P600.00. He felt embarrassed by this incident.

He then complained to Far East Bank and he found out that his account has been cancelled without informing him. Bank security policy is to tag the card as hostile when it is reported lost, however, the bank failed to inform him and an overzealous employee failed to consider that it was the cardholder himself presenting the credit card.

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The bank sent an apology letter to Mr. Luna and to the Manager of the Bahia Rooftop Restaurant to assure that Mr Luna was a very valuable client. Spouses Luna still felt aggrieved and thus filed this case for damages against Far East Bank. Far East Bank was adjudged to pay the following: (a) P300,000.00 moral damages; (b) P50,000.00 exemplary damages; and (c) P20,000.00 attorney's fees. ISSUES & ARGUMENTS W/N Far East Bank is liable for damages to the Spouses Luna amounting the above-mentioned figures? o Petitioner-Appellant: Far East contends that the amounts to be paid to the spouses are excessive. They argue that they should not be paying moral damages because there was no bad faith on their part in breaching their contract. o RespondentAppellee: Mr. Luna contends that he was embarrassed by the situation which was caused by the banks failure to inform him of the cancellation of his card. thus, he is entitled to damages. HOLDING & RATIO DECIDENDI SPOUSES LUNA ARE ENTITLED ONLY TO NOMINAL DAMAGES BUT NOT MORAL AND EXEMPLARY DAMAGES. Moral damages are awarded if the defendant is to be shown to have acted in bad faith. Article 2219 states that, Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasidelicts causing physical injuries; It is true that the bank was remiss in indeed neglecting to personally inform Luis of his own card's cancellation. Nothing however, can sufficiently indicate any deliberate intent on the part of the Bank to cause harm to private respondents. Neither could the banks negligence in failing to give personal notice to Luis be considered so gross as to amount to malice or bad faith. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively operating with furtive design or ill will. Nominal damages were awarded because of the simple fact that the bank failed to notify Mr. Luna, thus entitle him to recover a measure of damages sanctioned under Article 2221 of the Civil Code providing thusly: o Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.

457. Bricktown Development Corp et al vs. Amor Tierra Devt Corporation |Vitug G.R. No. 112182 December 12, 1994| 239 SCRA 126 FACTS Bricktown, through its President, Mariano Velarde, entered into a CONTRACT TO SELL residential lots at Multinational Village, Paraaque (covering 82, 888 sq.m., amounting to P21, 639,875.00) to Amor Tierra . PAYMENT SCHEME: o Mar 31 1981: DP of P2.2 M o June 30: P3,209,968.75 o December 31: P4,729,906.25 o Balance of 11.5 M by paying mortgage to PSBank or pay it in cash. Subsequently, the parties executed a Supplemental Agreement: where Amor Tierra will pay 21% interest on the balance of the DP and pay P390, 369.37 for the interest paid by Bricktown to update bank loan with PS Bank for the period of Feb- Mar 1981. Amor Tierra was only able to pay 1.334M, however the parties continued to negotiate despite suspension of further payments by Amor Tierra. Later, Bricktown sent a Notice of Cancellation for failure to pay the June 30 installment by Amor; Bricktown advised the latter that non-payment 30D from receipt id the notice will result to the actual cancellation of K to Sell. Months later, instead of paying, Amor demanded a refund of the total payments of 2.455M + interest or an assignment of unencumbered residential lots corresponding to the amount already paid. Unheeded, Amore filed suit against Bricktown. RTC: K to Sell and Supplemental Agreement are rescinded; return payments of Amor with 12% from judicial demand/the time complaint was filed; attys fees of 25K to Amor. CA: affirmed RTC. ISSUES & ARGUMENTS 1. W/N the contracts to sell were validly rescinded or cancelled by Bricktown (TORTS RELATED) W/N the amounts already remitted by Amor Tierra under said contracts were rightly forfeited by Bricktown HOLDING & RATIO DECIDENDI VALIDLY RESCINDED K to SELL The cancellation of the contracts to sell by Bricktown accords with the contractual covenants of the parties, and such cancellation must be respected. It may be noteworthy to add that in a contract to sell, the nonpayment of the purchase price (which is normally the condition for the final sale) can prevent the obligation to convey title from acquiring any obligatory force. NO. FORFEITURE BY BRICKTOWN IS UNCONSCIONABLE however, interest payment must be counted from finality of judgment (not from judicial demand) While we must conclude that Bricktown still acted within its legal right to declare the contracts to sell rescinded, considering, nevertheless, the peculiar circumstances: of the parties continued negotiation despite Amors suspension of payments, it would be unconscionable to sanction the

forfeiture by petitioner corporation of payments made to it by private respondent.

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The relationship between parties in any contract must always be characterized and punctuated by good faith and fair dealing. Judging from what the courts below have said, Bricktown did fall well behind that standard. We do not find it equitable, however, to adjudge any interest payment by Bricktown on the amount to be refunded, to be computed from judicial demand. o BECAUSE: Amor Tierra should not be allowed to totally free itself from its own breach. Simply put: The SC held that forfeiture was unconscionable because the Bricktown lead Amor Tierra to believe that there will be a new arrangement as a result of their continued negotiation. On the other hand, since Amor Tierra even barely covered to pay the complete DP, thus committing a breach of the K to Sell, the interest on the refund was mitigated/reduced by its imposition ONLY from the finality of the judgment of rescission of K to Sell, and not from the time of judicial demand of the refund. WHEREFORE, the appealed decision is AFFIRMED insofar as it declares valid the cancellation of the contracts in question but MODIFIED by ordering the refund by petitioner corporation of P1,334,443.21 with 12% interest per annum to commence only, however, from the date of finality of this decision until such refund is effected.

458. International School v. CA | Gonzaga-Reyes G.R. No. 131109 June 29, 1999| 309 SCRA 474 FACTS The son of Spouses Torralba died in the custody of International School Manila (ISM). The courts awarded the following amount in damages to the spouses: 1) Moral Damages P4M; 2) Exemplary Damages P1M; 3) Actual Damages P2M, and 4) Attorneys fees P300K. ISM appealed to the Court of Appeals. During the pendency of the appeal, the spouses Torralba filed a motion for execution pending appeal before the lower court on the grounds that the appeal is merely dilatory and that the filing of a bond is another good reason for the execution of a judgment pending appeal. The lower court granted the execution pending upon the posting of a bond in the amount of Five Million Pesos (P5,000,000.00) by the spouses Torralba. The court then issued a Notice of Garnishment to Citibank (which was Citibank). Citibank complied and held that P5.5M. The court then ordered the release of this amount in favor of the spouses Torralba. ISM then filed a motion for reconsideration or approval of supersedeas bond so that the amount cannot be turned over to the spouses. ISSUES & ARGUMENTS W/N the grant of the writ of execution was valid. o Petitioner: IS claims that there is no good reason to grant the writ of executing, citing Ong v. CA, saying that the reason given is that the appeal is frivolous and dilatory is not a reason to justify the approval of an execution pending appeal. o

Respondent: The spouses argue that ISM virtually admitted that the appeal appears to be dilatory and that it adopted the project Code Red: consisting of safety and emergency measure only after the death of their son, and that the delay has already affected them financially. HOLDING & RATIO DECIDENDI THE WRIT OF EXECUTION IS NOT VALID. THE MERE FILING OF A BONG BY THE DEFENDANT IS NOT A GOOD REASON FOR ORDERING EXECUTION PENDING APPEAL. A combination of circumstances is the dominant consideration which impels the grant of immediate execution, the requirement of a bond is imposed merely as an additional factor, no doubt for the protection of the defendant's creditor. Since we have already ruled that the reason that an appeal is dilatory does not justify execution pending appeal, neither does the filing of a bond, without anything more, justify the same. Moreover, ISM could not be faulted for its withdrawal of its supersedeas bond inasmuch as the lower court granted the execution pending appeal and rejected its offer of supersedeas bond. Radio Communications of the Philippines, Inc. (RCPI) vs. Lantin, et al.; The execution of any award for moral and exemplary damages is dependent on the outcome of the main case. Unlike the actual damages for which the petitioners may clearly be held liable if they breach a specific contract and the amounts of which are fixed and certain, liabilities with respect to moral and exemplary damages as well as the exact amounts remain uncertain and indefinite pending resolution by the Intermediate Appellate Court and eventually the Supreme Court. The existence of the factual bases of these types of damages and their causal relation to the petitioners' act will have to be determined in the light of errors on appeal. It is possible that the petitioners, after all, while liable for actual damages may not be liable for moral and exemplary damages. Or as in some cases elevated to the Supreme Court, the awards may be reduced. 459. Teodoro Banas et. al., vs. Asia Pacific Finance |Bellosillo G.R. No. 128703, October 18, 2000 | 343 SCRA 527 FACTS Sometime in August 1980, Baas executed a Promissory Note in favor of C. G. Dizon Construction whereby for value received he promised to pay to the order of C. G. Dizon Construction the sum of P390,000.00 in installments of "P32,500.00 every 25th day of the month starting from September 25, 1980 up to August 25, 1981" Later, C. G. Dizon Construction endorsed with recourse the Promissory Note to Asia Pacific Finance Corporation (Asia Pacific), and to secure its payment, it, through its corporate officers, Dizon, President, executed a Deed of Chattel Mortgage covering three (3) heavy equipment units of Caterpillar Bulldozer Crawler Tractors in favor of Asia Pacific. Dizon also executed a Continuing Undertaking wherein he bound himself to pay the obligation jointly and severally with C. G. Dizon Construction In compliance with the provisions of the Promissory Note, C. G. Dizon Construction made the installment

payments to Asia Pacific totaling P130,000, but thereafter defaulted in the payment of the remaining installments, prompting Asia Pacific to send a Statement of Account to Dizon for the unpaid balance. As the demand was unheeded, Asia Pacific sued Baas, C. G. Dizon Construction and Dizon

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While they admitted the genuineness and due execution of the Promissory Note, the Deed of Chattel Mortgage and the Continuing Undertaking, they nevertheless maintained that these documents were never intended by the parties to be legal, valid and binding but a mere subterfuge to conceal the loan with usurious interests and claimed that since Asia Pacific could not directly engage in banking business, it proposed to them a scheme wherein it could extend a loan to them without violating banking laws The RTC issued writ of replevin against C. G. Dizon Construction for the surrender of the bulldozer crawler tractors subject of the Deed of Chattel Mortgage, which of the 3, only 2 were actually turned over and were subsequently foreclosed by Asia Pacific to satisfy the obligation The RTC ruled in favor of Asia Pacific holding them to pay jointly and severally the unpaid balance On appeal, the CA affirmed in toto the decision ISSUES & ARGUMENTS W/N they can be held liable under the said documents HOLDING & RATIO DECIDENDI THEY CAN BE HELD LIABLE UNDER THE SAID DOCUMENTS BUT THE COURT MITIGATED THE AMOUNT OF DAMAGES AS IT WAS SHOWN THAT THERE WAS A PARTIAL COMPLIANCE ON THEIR PART Indubitably, what is prohibited by law is for investment companies to lend funds obtained from the public through receipts of deposit, which is a function of banking institutions. But here, the funds supposedly "lent" to petitioners have not been shown to have been obtained from the public by way of deposits, hence, the inapplicability of banking laws On their submission that the true intention of the parties was to enter into a contract of loan, the Court examined the Promissory Note and failed to discern anything therein that would support such theory. On the contrary, the terms and conditions of the instrument clear, free from any ambiguity, and expressive of the real intent and agreement of the parties. Likewise, the Deed of Chattel Mortgage and Continuing Undertaking were duly acknowledged before a notary public and, as such, have in their favor the presumption of regularity. To contradict them there must be clear, convincing and more than merely preponderant evidence. In the instant case, the records do not show even a preponderance of evidence in their favor that the Deed of Chattel Mortgage and Continuing Undertaking were never intended by the parties to be legal, valid and binding With regard to the computation of their liability, the records show that they actually paid a total sum of P130,000.00 in addition to the P180,000.00 proceeds realized from the sale of the bulldozer crawler tractors at public auction. Deducting these amounts from the

principal obligation of P390,000.00 leaves a balance of P80,000.00, to which must be added P7,637.50 accrued interests and charges, or a total unpaid balance of P87,637.50 for which they are jointly and severally liable. Furthermore, the unpaid balance should earn 14% interest per annum as stipulated in the Promissory Note, computed from 20 March 1981 until fully paid On the amount of attorney's fees which under the Promissory Note is equivalent to 25% of the principal obligation and interests due, it is not, strictly speaking, the attorney's fees recoverable as between the attorney and his client regulated by the Rules of Court. Rather, the attorney's fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a penal clause. It has been said that so long as such stipulation does not contravene the law, morals and public order, it is strictly binding upon the obligor Nevertheless, it appears that their failure to fully comply with their part of the bargain was not motivated by ill will or malice, but due to financial distress occasioned by legitimate business reverses. They in fact paid a total of P130,000.00 in 3 installments, and even went to the extent of voluntarily turning over to Asia Pacific their heavy equipment consisting of 2 bulldozer crawler tractors, all in a bona fide effort to settle their indebtedness in full. Article 1229 of the New Civil Code specifically empowers the judge to equitably reduce the civil penalty when the principal obligation has been partly or irregularly complied with. Upon the foregoing premise, the Court held that the reduction of the attorney's fees from 25% to 15% of the unpaid principal plus interests is in order 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 511 of 528 Finally, while the Court empathizes with them, it cannot close its eyes to the overriding considerations of the law on obligations and contracts which must be upheld and honored at all times. They have undoubtedly benefited from the transaction; they cannot now be allowed to impugn its validity and legality to escape the fulfillment of a valid and binding obligation Judgment AFFIRMED. 460. Development Bank of the Philippines v. CA| Mendoza, J. G.R. No. 137557. October 30, 2000 Mitigation of Damages FACTS Petitioner DBP is the owner of a parcel of land in Bulacan which it sold to spouses Dela Pena under a Deed of Conditional Sale for 207,000. The spouses constructed a house on the said lot and began living there. They also introduced other improvements by planting fruit trees and building a small garage. After making several payments amounting to P289, 600, they went to petitioner DBP and asked for the execution of a Deed of Absolute Sale and for the issuance of the title to the property However, respondent spouses De La Pea were informed by DBP through a letter that there was still a balance of P221,86.85. The parties failed to reach an agreement, respondent spouses filed a complaint against petitioner on January 30, 1990 for specific performance and damages with injunction before the Regional Trial Court, Valenzuela.

The trial court ruled in favor of Petitioner DBP and ordered the private respondents to pay the remaining balance under the deed, plus interest, penalty, dditional interest and interest on advances. The amount to be paid amounted to P233,361.50, which is more than the principla obligation of P207,000. ISSUES & ARGUMENTS W/N the interest charges are excessive HOLDING & RATIO DECIDENDI

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The interests are excessive. It is noteworthy that the interests paid by private respondents, which amounted to P233,361.50,including therein the regular interest, additional interest, penalty charges, and interest on advances, is more than the principal obligation in the amount of P207,000.00, which private respondents owed. Moreover, the additional interest of 18% alone amounted to P106,853.45, which is almost half of what was already paid by private respondents. Article 1229 of the Civil Code states that Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable. In Barons Marketing Corp. v. Court of Appeals, the Court reduced the 25% penalty charge to cover the attorneys fees and collection fees, which was in addition to the 12% annual interest, to 10% for being manifestly exorbitant. Likewise, in Palmares v. Court of Appeals, Court eliminated altogether the payment of the penalty charge of 3% per month for being excessive and unwarranted under the circumstances. In the instant case, private respondents made regular payments to petitioner DBP in compliance with their principal obligation. They failed only to pay on the dates stipulated in the contract. This indicates the absence of bad faith on the part of private respondents and their willingness to comply with the terms of the contract. Moreover, of their principal obligation in the amount of P207,000.00, private respondents have already paid P289,600.00 in favor of petitioner. These circumstances taken together leads to the necessity to equitably reduce the interest due to petitioner and we do so by reducing to 10% the additional interest of 18% per annum computed on total amortizations past due. The penalty charge of 8% per annum is sufficient to cover whatever else damages petitioner may have incurred due to private respondents delay in paying the amortizations, such as attorneys fees and litigation expenses. 461. CBTC vs. CA| September 11, 2003 | FACTS L.C. Diaz & Company, CPAs, a private accounting firm, through its cashier Macaraya, filled up 2 savings deposit slips and asked Calapre to deposit the same in Solidbank. Calapre was also given the passbook. Teller No. 6 acknowledged the deposit slips by returning to Calapre the duplicate copies. However, since Calapre had to make another deposit with Allied Bank, he left the passbook with Solidbank. Upon returning to retrieve the passbook, Teller No. 6 informed him that somebody had gotten it but she could not remember to whom she gave the passbook, only saying that it was someone shorter than Calapre. Carpio G.R. No. 138569,

 The following day, L.C. Diaz called up Solidbank requesting to stop any transaction using the same passbook until L.C. Diaz could open a new account. It also formally wrote Solidbank with the same request. On that same day, however, it also discovered the unauthorized withdrawal the day before of P300,000 from its savings account. The withdrawal slip bore the signatures of its authorized signatories, Diaz and Murillo, but the two denied having signed the same. A certain Noel Tamayo was said to have received the money. L.C. Diaz then filed a complaint for recovery of a sum of money against Solidbank with the RTC, which dismissed the complaint. The CA reversed, and, upon motion for reconsideration, modified its decision by deleting the award for exemplary damages and attorneys fees. Hence, this petition. ISSUES & ARGUMENTS W/N the CA erred in not mitigating the damages awarded under Article 2197 of the Civil Code, notwithstanding its finding that the banks negligence was only contributory. HOLDING & RATIO DECIDENDI AWARD OF ACTUAL DAMAGES MITIGATED. SOLIDBANK LIABLE FOR 60%, L.C. DIAZ LIABLE FOR 40%. The trial court believed that L.C. Diazs negligence in not securing its passbook under lock and key was the proximate cause that allowed the impostor to withdraw the P300,000. For the appellate court, the proximate cause was the tellers negligence in processing the withdrawal without first verifying with L.C. Diaz. We do not agree with either court. L.C. Diaz was not at fault that the passbook landed in the hands of the impostor. Solidbank was in possession of the passbook while it was processing the deposit. After completion of the transaction, Solidbank had the contractual obligation to return the passbook only to Calapre, the authorized representative of L.C. Diaz. Solidbanks failure to return the passbook to Calapre made possible the withdrawal of the P300,000 by the impostor who took possession of the passbook. Thus, under the doctrines of proximate cause and last clear chance, Solidbank should be held liable for the unauthorized withdrawal. Nevertheless, the mitigation of damages is proper in this case. Under Article 1172, liability (for culpa contractual) may be regulated by the courts, according to the circumstances. This means that if the defendant exercised the proper diligence in the selection and supervision of its employee, or if the plaintiff was guilty of contributory negligence, then the courts may reduce the award of damages. In this case, L.C. Diaz was guilty of contributory negligence in allowing a withdrawal slip signed by its authorized signatories to fall into the hands of an impostor. Thus, the liability of Solidbank should be reduced. CA AFFIRMED WITH MODIFICIATION. 462. Manchester Development vs Court of Appeals | Gancayco G.R. No. 75919, May 7, 1987149 SCRA 562|

FACTS

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The present case is an action for torts and damages and specific performance with prayer for temporary restraining order, etc. The prayer is for the issuance of a writ of preliminary prohibitory injunction during the pendency of the action against the defendants' announced forfeiture of the sum of P3 Million paid by the plaintiffs for the property in question, to attach such property of defendants that maybe sufficient to satisfy any judgment that maybe rendered, and after hearing, to order defendants to execute a contract of purchase and sale of the subject property and annul defendants' illegal forfeiture of the money of plaintiff, ordering defendants jointly and severally to pay plaintiff actual, compensatory and exemplary damages as well as 25% of said amounts as maybe proved during the trial as attorney's fees and declaring the tender of payment of the purchase price of plaintiff valid and producing the effect of payment and to make the injunction permanent. The amount of damages sought is not specified in the prayer although the body of the complaint alleges the total amount of over P78 Million as damages suffered by plaintiff. The docket fee paid upon filing of complaint in the amount only of P410.00 by considering the action to be merely one for specific performance where the amount involved is not capable of pecuniary estimation is obviously erroneous. Although the total amount of damages sought is not stated in the prayer of the complaint yet it is spelled out in the body of the complaint totalling in the amount of P78,750,000.00 which should be the basis of assessment of the filing fee. When this under-re assessment of the filing fee in this case was brought to the attention of this Court together with similar other cases an investigation was immediately ordered by the Court. Meanwhile plaintiff through another counsel with leave of court filed an amended complaint for the inclusion of Philips Wire and Cable Corporation as co-plaintiff and by emanating any mention of the amount of damages in the body of the complaint. The prayer in the original complaint was maintained. After this Court issued an order on October 15, 1985 ordering the reassessment of the docket fee in the present case and other cases that were investigated, on November 12, 1985 the trial court directed plaintiffs to rectify the amended complaint by stating the amounts which they are asking for. It was only then that plaintiffs specified the amount of damages in the body of the complaint in the reduced amount of P10,000,000.00. Still no amount of damages were specified in the prayer. Said amended complaint was admitted. ISSUES & ARGUMENTS W/N the filing fee should be based on the amount of damages although the same is not found in the prayer of the complaint? HOLDING & RATIO DECIDENDI ALTHOUGH THERE WAS NO SPECIFIC STATEMENT AS TO THE AMOUNT OF DAMAGES IN THE PRAYER OF THE COMPLAINT, THE DOCKET FEE SHOULD BE BASED ON THE ALLEGED TOTAL AMOUNT OF DAMAGES FOUND IN THE BODY OF THE COMPLAINT.

 The docketing fee should be assessed by considering the amount of damages as alleged in the original complaint. The Court of Appeals therefore, aptly ruled in the present case that the basis of assessment of the docket fee should be the amount of damages sought in the original complaint and not in the amended complaint. The Court cannot close this case without making the observation that it frowns at the practice of counsel who filed the original complaint in this case of omitting any specification of the amount of damages in the prayer although the amount of over P78 million is alleged in the body of the complaint. This is clearly intended for no other purpose than to evade the payment of the correct filing fees if not to mislead the docket clerk in the assessment of the filing fee. This fraudulent practice was compounded when, even as this Court had taken cognizance of the anomaly and ordered an investigation, petitioner through another counsel filed an amended complaint, deleting all mention of the amount of damages being asked for in the body of the complaint. It was only when in obedience to the order of this Court of October 18, 1985, the trial court directed that the amount of damages be specified in the amended complaint, that petitioners' counsel wrote the damages sought in the much reduced amount of P10,000,000.00 in the body of the complaint but not in the prayer thereof. The design to avoid payment of the required docket fee is obvious. The Court serves warning that it will take drastic action upon a repetition of this unethical practice. To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar pleadings should specify the amount of damages being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be considered in the assessment of the filing fees in any case. Any pleading that fails to comply with this requirement shall not bib accepted nor admitted, or shall otherwise be expunged from the record. Petition denied for lack of Merit. Decision of the Court of Appeals Affirmed. 463 Davao Light v. Dinopol| Fernan GR. No. 75195 August 29, 1988 FACTS On July 31, 1984, rivate respondent Abundio T. Merced doing business under the name and style of southern Engineering Works, filed an action in the trial court for damages with preliminary mandatory injunction against petitioner Davao Light and Power Co., Inc., for abruptly disconnecting his electric meter as a result of which he suffered moral damages, loss of business and credit standing, and loss of profits. On Dec. 11, 1985 and Jan. 27, 1986, petitioner filed a motion and supplemental motion, respectively, to require private respondent to pay additional docket fees on his qualified claims for damages. On Feb. 14, 1986, respondent Judge Dinopol denied two motions to require private respondent to pay additional docket fees. Upon motion for reconsideration, four months had elapsed without respondent judge resolving the same. Hence, this petition ISSUES & ARGUMENTS

(1) WON the respondent judge committed grave abuse of discretion. (2) WON Abundio Merced should be awarded damages. HOLDING & RATIO DECIDENDI Yes. When respondent judge refused to order the reassessment, he committed grave abuse of discretion. He acted in contravention of Rule 11 of the Interim Rules of court which was laready in effect when the complaint for damages was brought before his sala. Such actuation calls for the corrective writ of certiorari. No. Merced should specify the amount of damages being sought, not only in the body of the pleading but also in the prayer, or his action will be dismissed.

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464. Sun Insurance vs. Asuncion | Gancayco, J.: G.R. No. 79937, February 13, 1999 | 170 SCRA 274 FACTS Sun Insurance filed a complaint with the RTC for the consignation of a premium refund on a fire insurance policy with a prayer for the judicial declaration of its nullity against respondent Manuel Tiong. Respondent, on the other hand, filed a complaint in the RTC fro refund of premiums, writ of preliminary attachment & sought the payment of actual, compensatory, moral, exemplary & liquidated damages, attorneys fees, expenses of litigation & costs of suit against petitioner In the body of the original complaint, the total amount of damages sought amounted to about P50M In the prayer, the amount of damages asked for was not stated The action was for the refund of the premium and the issuance of a writ of preliminary attachment with damages The amount of only P210 was paid for the docket fee Respondent filed an amended complaint wherein in the prayer, it is asked that he be awarded no less than P10M as actual & exemplary damages but in the body of the complaint the amount of his pecuniary claim is approximately P44.6M. Such amended complaint was admitted & the respondent was re-assessed the additional docket fee of P39,786 based on his prayer of not less than P10M in damages, which he paid Subsequently, respondent filed a supplemental complaint alleging an additional claim of P20M in damages, making a total claim of P64.6M He then paid an additional docket fee of P80K The lower court ordered respondent to be reassessed for additional docket fee & during the pendency of this case and after promulgation of the Manchester decision, respondent field an addition docket fee of P62K Though he appears to have paid a total amount of P182K for the docket fee, considering the total amount

of his claim in the amended and supplemental complaint (amounting to about P64.6M), petitioner insists that respondent must pay a docket fee of P257.8K ISSUES & ARGUMENTS W/N a court acquires jurisdiction over a case when the correct and proper docket fee has not been paid HOLDING & RATIO DECIDENDI The pattern and the intent to defraud the govt of the docket fee due it is obvious not only in the filing of the original complaint but also in the filing of the 2nd amended complaint However, in this case, a more liberal interpretation of the rules is called for because unlike in Manchester, respondent demonstrated his willingness to abide by the rules by paying the additional docket fees as required Nevertheless, petitioner contends that the docket fee that was paid is still insufficient considering the total amount of the claim This is a matter which the clerk of court of the lower court and/or his duly authorized docket clerk or clerk in charge should determine and if any amount is thereafter found to be due, he must require the respondent to pay such amount Thus the SC rules as follows: It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a TC with jurisdiction over the subject matter/nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in not case beyond the applicable prescriptive or reglementary period The same rule applies to permissive counterclaims, third-party claims, and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefore is paid. o The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive/reglementary period Where the TC acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee, but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefore shall constitute a lien on the judgment. o It shall be the responsibility of the clerk of court or his duly authorized deputy to enforce aid lien and assess and collect the additional fee Petition is dismissed for lack of merit 465. Ng Soon v. Hon. Alday, Billie Gan, China Banking Corporation | Melencio- Herrera G.R. No.85879 September 29, 1989 | 178 SCRA 221 FACTS During his lifetime, Mr. Gan Bun Yaw opened a Savings Account in China Banking Corporation (CBC) wherein he deposited P900,000 more or less.

Before his death, he lapsed into a coma until he finally died. His passbook still showed a deposit of P900,000 more or less.

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Petitioner Ng Soon claims to be the widow of Yaw. She looked for the deposit passbook to no avail. She discovered that CBC closed the savings account and that defendant Billie Gan connived and colluded with the officers of CBC to withdraw all the savings account of Yaw by forging his signature. Petitioners complaint alleges that she suffered actual damages in the form of missing money in the savings account and expenses of litigation, moral damages and exemplary damages, the amount of which she leaves to the discretion of the court, and attorneys fees equivalent to 20%. For the filing of the complaint, petitioner paid P3,600 as docket fees. Respondent moved to expunge the complaint from the record for the alleged non-payment of the required docket fees. TC issued an order granting the motion to expunge complaint. ISSUES & ARGUMENTS W/N TC incorrectly applied the doctrine in the case of Manchester v. CA. W/N TC acted with grave abuse of discretion in ordering the complaint expunged from the record although petitioner had paid the necessary filing fees. HOLDING & RATIO DECIDENDI YES. Complaint reinstated. Manchester laid down the rule that all complaints should specify the amount of damages prayed for not only in the body of the complaint but also in the prayer; that said damages shall be considered in the assessment of the filing fees; and that any pleading that fails to comply with such requirement shall not be accepted nor admitted, or shall, otherwise, be expunged from the record. While the body of the complaint was silent as to the exact amount of moral and exemplary damages and attorneys fees, the prayer did specify the amount of not less than P50,000 as moral and exemplary damages, and not less than P50,000 as attorneys fees. These amounts are definite enough and enabled the clerk of court to compute the docket fees payable. Also, the principal amount sought to be recovered as missing money was fixed at P900,000. The failure to state the rate of interest demanded was not fatal not only because it is the courts which ultimately fix the same, but also because Rule 141, Section 5(a) of the Rules of Court speaks of the sum claimed, exclusive of interest. This clearly implies that the specification of the interest rate is not that indispensable. Furthermore, the amounts claimed need not be initially stated with mathematical precision. The same rule allows an appraisal more or less. In other words, a final determination is still to be made by the court, and the fees ultimately found to be payable will either be additionally paid or refunded to the party concerned. The pattern in Manchester to defraud the government of the docket fees due is patently absent in this case. Petitioner demonstrated her willingness to abide by the Rules by paying the assessed docket fees of P3,600. She also asked the court to inform her of the deficiency, if any.

 Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive period. Petition granted. Lower Court orders are set aside. Civil case reinstated for determination and proper disposition of the respective claims and rights of the parties.

Ayala Corp, in turn, moved to dismiss the case on the basis of failure to pay prescribed docket fees and failure to specify amount exemplary damages claimed. RTC denied both motion and MR, hence this petition. ISSUES & ARGUMENTS W/N the lower court should dismiss the case HOLDING & RATIO DECIDENDI

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466. Tacay vs RTC of Tagum| GR Nos. 88075-77| December 20, 1989 FACTS These were 2 separate cases originally filed by Godofredo Pineda at the RTC of Tagum for recovery of possession (acciones publiciana) against 3 defendants, namely: Antonia Noel, Ponciano Panes, and Maximo Tacay. Pineda was the owner of 790 sqm land evidenced by TCT No. T-46560. The previous owner of such land has allowed the 3 defendants to use or occupy the same by mere tolerance. Pineda, having himself the need to used the property, has demanded the defendants to vacate the property and pay reasonable rentals therefore, but such were refused. The complaint was challenged in the Motions to Dismiss filed by each defendant alleging that it did not specify the amounts of actual, nominal, and exemplary damages, nor the assessed value of the property, that being bars the determination of the RTCs jurisdiction in deciding the case. The Motions to Dismiss were denied but the claims for damages in the complaint were expunged for failure to specify the amounts. Thus, the defendants filed a Joint Petition for certiorari, mandamus, prohibition, and temporary restraining order against the RTC. ISSUES & ARGUMENTS Whether or not the amount of damages claimed and the assessed value of the property are relevant in the determination of the courts jurisdiction in a case for recovery of possession of property? HOLDING &RATIO DECIDENDI Determinative of the courts jurisdiction in a recovery of possession of property is the nature of the action (one of accion publicaina) and not the value of the property, it may be commenced and prosecuted without an accompanying claim for actual, nominal or exemplary damages and such action would fall within the exclusive original jurisdiction of the RTC. The court acquired jurisdiction upon the filing of the complaint and payment of the prescribed docket fees. 467. Ayala Corporations vs. Honorable Madayag | Gancayco G.R. No. 88421, January 30, 1990 | 181 SCRA 687 FACTS Private respondents filed against petitioner an action for specific performance with damages in the RTC of Makati

THE COURT SHOULD EITHER EXPUNGE THE CLAIM FOR EXEMPLARY DAMES OR GIVE TIME FOR RESPONDENTS TO AMEND THE COMPLAINT. Docket fees should be computed on the amount of damages stated in the complaint. According to Sun Insurance vs. Judge Asuncion, where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but not beyond prescriptive or reglementary period. Or if the claim is not specified in the pleading or is to be determined by the court then the filing fee would constitute as a lien of the judgment. However, in the case of Tacay vs. RTC of Tagum, the Court said that the phrase "awards of claims not specified in the pleading" refers only to "damages arising after the filing of the complaint or similar pleading. Thus, in the case at bar, there was a need to specify the amount of the exemplary damages claimed. As ruled in Tacay the trial court may either order said claim to be expunged from the record as it did not acquire jurisdiction over the same or on motion, it may allow, within a reasonable time, the amendment of the amended and supplemental complaint so as to state the precise amount of the exemplary damages sought and require the payment of the requisite fees therefore within the relevant prescriptive period. 468 General v. Claravall | Narvasa, J. G.R. No. 96724 March 21, 1991 | FACTS Benneth Thelmo filed with the Office of the Public Prosecutor of Rizal a sworn complaint accusing Honesto General and another person of libel, and alleged that by reason of the offense he (Thelmo) had suffered actual, moral and exemplary damages in the total sum of P100 million. The information for libel subsequently filed with the RTC at Pasig, after preliminary investigation, did not however contain any allegation respecting the damages due the offended party. At the trial, the defense raised the issue of nonpayment of the docket fees corresponding to the claim of damages contained in Thelmo's sworn complaint before the fiscal, as a bar to Thelmo's pursuing his civil action therefor. The trial Court overruled the objection, by Order dated March 28, 1990. It also denied the defendants' motion for reconsideration and motion for suspension of proceedings, by another Order dated May 17, 1990. General and his co-accused are now before this Court applying for a writ of certiorari to annul the aforesaid Orders of the Trial Court on the theory that they had been rendered with grave abuse of discretion.

ISSUES & ARGUMENTS W/N the filing fees should first be paid so that the civil liability arising from the offense will be deemed to have been impliedly instituted with the criminal action HOLDING & RATIO DECIDENDI The were no errors on the challenged order. Manchester laid down the doctrine the specific amounts of claims of damages must be alleged both in the body and the prayer of the complaint, and the filing fees corresponding thereto paid at the time of the filing of the complaint; that if these requisites were not fulfilled, jurisdiction could not be acquired by the trial court; and that amendment of the complaint could not "thereby vest jurisdiction upon the Court." Sun Insurance and Tacay affirmed the validity of the basic principle but reduced its stringency somewhat by providing that only those claims as to which the amounts were not specified would be refused acceptance or expunged and that, in any case, the defect was not necessarily fatal of irremediable as the plaintiff could on motion be granted a reasonable time within which to amend his complaint and pay the requisite filing fees, unless in the meantime the period of limitation of the right of action was completed. The 1985 Rules on Criminal Procedure incorporated a new provision in light of this Court's Resolution of September 13, 1984 in Adm. Matter No. 83-6-389-0 requiring increased court filing fees effective October 1, 1984, which required the filing fees on all kinds of damages, first be paid to the clerk of court where the criminal action is filed The purpose of the Resolution, according to the late Chief Justice Claudio Teehankee, was to discourage the "gimmick of libel complainants of using the fiscal's office to include in the criminal information their claim for astronomical damages in multiple millions of pesos without paying any filing fees. This was the same consideration that underlay the Manchester ruling: the fraudulent practice, manifested by counsel in omitting the amount of damages in the prayer. It was clearly intended for no other purpose than to evade the payment of the correct filing fees if not to mislead the docket clerk in the assessment of the filing fee. The Court adopted further amendments to the 1985 Rules on Criminal Procedure, with effect on October 1, 1988. Among the provisions revised was Section 1, Rule 111 which stated that: XXX When the offended party seeks to enforce civil liability against the accused by way of moral, nominal, temperate or exemplary damages, the filing fees for such civil action as provided in these Rules shall constitute a first lien on the judgment except in an award for actual damages. In cases wherein the amount of damages, other than actual, is alleged in the complaint or information, the corresponding filing fees shall be paid by the offended party upon the filing thereof in court for trial. In any event, the Court now makes that intent plainer, and in the interests of clarity and certainty, categorically declares for the guidance of all concerned that when a civil action is deemed impliedly instituted with the criminal in accordance with Section 1, Rule 111 of the Rules of Courtbecause the offended party has NOT waived the civil action, or reserved the right to institute it separately, or instituted the civil action prior to the criminal actionthe rule is as follows: 1) when "the

amount of damages, other than actual, is alleged in the complaint or information" filed in court, then "the corresponding filing fees shall be paid by the offended party upon the filing thereof in court for trial;" 2) in any other case, howeveri.e., when the amount of damages is not so alleged in the complaint or information filed in court, the corresponding filing fees need not be paid and shall simply "constitute a first lien on the judgment, except in an award for actual damages.

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469. Original Development and Construction v. CA | Paras. G.R. No. 94677, October 15, 1991 | FACTS Original Development (ODECOR) filed a case against Home Insurance Guaranty Corp (HIGC) National Home Mortgage Finance Corp (NHMFC) Caloocan City Public School Teachers Association (CCPSTA) for breach of contract and damages ODECOR built a housing project for CCPSTA under sponsorship of HIGC, there was delay of payment by HIGC and refused to allow ODECOR to build smaller lots requiring it to go through NHMFC for clearance. ODECORs project was financed by its president personally in order to save it from collapse as HIGC refused to pay. Despite damands NHMFC paid only 5.366M to ODECOR in 5 years causing unnecessary expenses to ODECOR. ODECOR has been unpaid by HIGC NHMFC of 2.272M which represents loan take out proceeds ODECOR asked RTC to make defendants pay, ODECOR paid filing fees in amount of 4,344.00 4,344.00 and 86.00 based on loan take out proceeds of 2.272M which is allegedly in possession of defendants, the rest prays for unspecified amount of damages(actual, consequential, exemplary and moral).HIGC filed motion to dismiss for non-payment, RTC denied ordering ODECOR to pay reassessed amount and in case unspecified claims are awarded in judgment filing fees constitute lien on judgment .ODECOR was heard by Clerk but deficiency could not be included because prayer for attorneys fees was not reiterated in prayer. Docket fees paid did not include amount of attorneys fees. COC moved to amend complaint, HIGC moved for reconsideration to dismiss or amend complaint. ODECOR amended complaint including all allegations plus attorneys fees of 25% of total monthly liability and expenses. HIGC filed petition for certiorari in CA after answer, joining of issues and pre-trial conference date set, questioning jurisdiction of RTC for failure to pay docket fees. CA ruled that RTC failed to acquire jurisdiction ISSUES & ARGUMENTS W/N Court acquires jurisdiction over case even if complaint does not specify amount of damages H OLDING & RATIO DECIDENDI ODECOR failed to allege with specificity denying RTC of jurisdiction ODECOR prayed for unspecified amounts of damages and 25% of attorneys fees which will be proved at trial there is not enough to support a proper assessment of docket fees. Plaintiff must ascertain sums he wants even if not exact amount.

 Rule is TC now allowed to allow payment of fee within a reasonable time and within prescriptive or reglamentary period. Petitioner did not manifest willingness to pay docket fees as seen in Sun Insurance case As to awards of claims not specified in the pleadings this Court had already clarified that they refer only to damages arising after the filing of the complaint or similar pleading, to which the additional filing fee shall constitute a lien on the judgment. The amount of any claim for damages, therefore, arising on or before the filing of the complaint or any pleading, should be specified. The exception contemplated as to claims not specified or to claims although specified are left for the determination of the court is limited only to any damages that may arise after the filing of the complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amount thereof 470. Phil. Pryce Assurance Corp. vs. CA and Gegroco, Inc., February 21, 1994 FACTS Petitioner, Interworld Assurance Corporation (now the Philippine Pryce Assurance Corporation), was the butt of the complaint for collection of sum of money, filed by respondent Gegroco, Inc. The complaint alleged that petitioner issued two surety bonds in behalf of its principal Sagum General Merchandise. Petitioner then filed a "Motion with Leave to Admit Third-Party Complaint" with the Third-Party Complaint attached. The trial court admitted the Third Party Complaint and ordered service of summons on third party defendants. The case was set for pre-trial conference several times but Pryce was absent each time. Thus, Pryce was declared in default. Gegroco, Inc. then presented evidence ex parte and the trial court ruled that Pryce was liable to Gegroco, Inc. This ruling was affirmed by the Court of Appeals. Pryce, meanwhile, claims that the case should not have been set for pre-trial because there was a 3rd-party complaint. ISSUE Whether or not the 3rd party complaint is a mere scrap of paper for failure to pay docket fees? RULING YES The court of Appeals properly considered the third-party complaint as a mere scrap of paper due to petitioner's failure to pay the requisite docket fees. Note that: A third-party complaint is one of the pleadings for which Clerks of court of Regional Trial Courts are mandated to collect docket fees pursuant to Section 5, Rule 141 of the Rules of Court. The record is bereft of any showing that the appellant paid the corresponding docket fees on its third-party complaint. Unless and until the corresponding docket fees are paid, the trial court would not acquire jurisdiction over the third-party complaint (Manchester Development Corporation vs. Court of Appeals, 149 SCRA 562). The third-party complaint was thus reduced to a mere scrap of paper not worthy of the trial court's attention. Hence, the trial court can and correctly set the case for pre-trial on the basis of the complaint, the answer and the answer to the counterclaim. In Sun Insurance vs. Asuncion, the following rules were laid down: 1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing

of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time, but in no case beyond the applicable prescriptive or reglamentary period. 2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a prescriptive or reglementary period. 3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee, but subsequently, the judgment awards a claim nor specified in the pleading, or if specified the same has not been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the clerk of court or his duly authorized deputy to enforce said lien and assess and collect the additional fee. It should be remembered that both in Manchester and Sun Insurance plaintiffs therein paid docket fees upon filing of their respective pleadings, although the amount tendered were found to be insufficient considering the amounts of the reliefs sought in their complaints. In the present case, petitioner did not and never attempted to pay the requisite docket fee. Neither is there any showing that petitioner even manifested to be given time to pay the requisite docket fee, as in fact it was not present during the scheduled pre-trial on December 1, 1988 and then again on February 1, 1989. Perforce, it is as if the third-party complaint was never filed. 471. Kaw vs. Anunciacion| Medoza ADM MTJ-93811, March 1, 1996 | 242 SCRA 1 FACTS Pending before the Sala of Judge Anunciacion was an ejectment case filed by Italy Marketing Corporation (IMC) against George Kaw. IMC was the new owner of the building where Kaw was renting a space for his store. The Summons with a copy of the complaint was served on Kaw on May 9, 1990 requiring him to file his answer within a non-extendible period of 10 days. Kaw asked for a 15 day extension on May 18 as he still had not engaged counsel and another 10 day extension on June 1 to file the answer. The judge did not act on the motions and ordered Kaw to vacate the premises and to pay monthly rental of P1500 until he vacates. The Kaws received the decision on June 7 and were served a writ of execution the following day. ISSUES & ARGUMENTS 1. W/N Judge was ignorant of the law by fixing monthly rental at P1500 2. W/N Judge was ignorant of the law by not acting on motions for extension 3. W/N Judge was ignorant of the law in ordering the execution 4. W/N Judge was ignorant of the law is designating a special deputy sheriff 5. W/N Sheriff was ignorant of the law in enforcing writ of execution HOLDING & RATIO DECIDENDI No

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 IMC had no way of determining how much rent to charge Kaw as they had no preexisting lease contract and so they left it to the determination of the Judge. Also, it cannot be claimed that such was the amount set to evade payment of docket fees as the fee is a straight fee of P100 No Kaw was served the complaint with a warning the the 10 day period is nonextendible. Yes The fact that the MeTCs decision in ejectment cases is immediately executory does not dispense with the requirement for notice of the motion for execution. Yes The regular deputy sheriff was not shown to have been absent or on leave. The special deputy sheriff who was the deputy sheriff of the clerk or court could not be appointed special deputy sheriff unless the regular deputy sheriff is absent or on leave. Yes The sheriff failed to comply with the requisite 3 to 5 day notice to vacate the premises. Also he levied on tools and implements used in the bakery which are exempt from execution. 472. Manuel vs. Alfeche, Jr.| Panganiban G.R. No. 115683, July 26, 1996 | 259 SCRA 475 FACTS The City Prosecutor of Roxas City filed with the RTC and Information for libel against Celino (writer/author), Fajardo (editor-in-chief), Fernandez (associate editor), and Tia (assistant editor) of the regional newspaper Panay News for allegedly publishing an article entitled Local Shabu Peddler Now a Millionaire. According to the Information, the said article stated that Delia Manuel was the Shabu Queen of Western Visayas, and has been raking in millions since she started peddling prohibited drugs, thereby (unjustly) besmirching her reputation, good name, and character as a private person and as a businesswoman. Thus, as a direct consequence of the publication, it was also alleged that Manuel suffered actual, moral, and exemplary damages in the amount of TEN MILLION PESOS. The respondent judge finding three of the accused guilty and acquitting the fourth. However, he dismissed the civil indemnity (by way of moral damages) for lack of jurisdiction, on the ground that Manuel did not pay the filing fees therefor. Hence this petition. ISSUES & ARGUMENTS W/N Manuel is entitled to recover damages through an independent civil action, and despite non-payment of filing fees. o Petitioner: Under the New RoC, it is only when the amount of damages other than actual has been specified in the information that the filing fees is required to be paid upon filing, and that since in this case the amount of damages stated in the information partakes firstly of actual damages and is not entirely other than actual, there is no need to pay such fees upon filing. o Respondents: The present petition is premature because there is a pending appeal of the conviction for libel before the CA, filed by respondents. HOLDING & RATIO DECIDENDI MANUEL NOT ENTITLED TO RECOVER DAMAGES UNDER AN INDEPENDENT CIVIL ACTION.

The award of moral and exemplary damages by the trial court is inextricably linked and necessarily dependent upon the factual finding of basis therefore, i.e. the existence of the crime of libel. Since such fact is pending determination before the CA, this court cannot entertain the petition of Manuel, in order to avoid an absurd situation wherein the CA reverses the decision of the RTC but this court awards damages in favor of Manuel. Hence, Manuel should have brought the petition before the CA first. Petitioners contention that Article 33 of the NCC allows an independent civil action for damages in cases of defamation, fraud, and physical injuries is misplaced. Here, the civil action had been actually instituted with the criminal prosecution, given that Manuel took an active part in the proceedings by presenting evidence and even filing a Petitioners Memorandum. Hence, there can be no longer any independent civil action to speak of.

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Petitioner also cites the case of General vs. Claraval28l to prove that there is no need to pay filing fees for moral and exemplary damages if the amounts for such claims are not specified in the Information. However, it must be noted that this ruling was intended to apply to a situation wherein either: c) the judgment awards a claim not specified in the pleading, or d) the complainant expressly claims moral, exemplary, temperate, and/or nomial damages but has not specified ANY amount at all, leaving it entirely to the trial courts discretion. In the present case, since Manuel claimed an amount of TEN MILLION PESOS as damages, the doctrine under General has been rendered inapplicable to her petition. Petition DISMISSED. CHRISSIE MORAL 28 The Manchester doctrine requiring payment of filing fees at the time of commencement of the action is applicable to impliedly instituted civil actions under Section 1, Rule 111 only when the amount of damages, other than actual, is alleged in the complaint or information. 473. Alday v. FGU Insurance Corp. |Gonzaga-Reyes G.R. 138822, Jan. 23, 2001 FACTS FGU filed a complaint against Evangeline Alday alleging that the latter owed it P114,650.76 representing unliquidated cash advances, unremitted costs of premiums and other charges incurred by petitioner in the course of her work as an insurance agent for respondent. Petitioner answered and by way of counterclaim, asserted her right for the payment of P104,893.45, representing direct commissions, profit commissions and contingent bonuses earned. FGU filed a motion to dismiss Aldays counterclaim contending that the trial court never acquired jurisdiction over the same because of the non-payment of docket fees by petitioner. Petitioner asked the trial court to declare her counterclaim as exempt from payment of docket fees since it is compulsory and that respondent be declared in default for having failed to answer such counterclaim. The trial court grated FGUs motion. Petitioners motion for reconsideration was subsequently denied. On appeal, the CA affirmed the RTC ruling.

ISSUES & ARGUMENTS W/N petitioners counterclaim is only permissive and requiring the payment of docket fees. HOLDING & RATIO DECIDENDI Yes. A compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of or is connected with the transaction or occurrence constituting the subject matter of the opposing partys claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. Tests that may be used in determining whether a counterclaim is compulsory or permissive, summarized as follows: o 1. Are the issues of fact and law raised by the claim and counterclaim largely the same? o 2. Would res judicata bar a subsequent suit on defendants claim absent the compulsory counterclaim rule? o 3. Will substantially the same evidence support or refute plaintiffs claim as well as defendants counterclaim? o 4. Is there any logical relation between the claim and the counterclaim? Another test is the compelling test of compulsoriness which requires a logical relationship between the claim and counterclaim, that is, where conducting separate trials of the respective claims of the parties would entail a substantial duplication of effort and time by the parties and the court. Petitioners counterclaim for commissions, bonuses, and accumulated premium reserves is merely permissive. The evidence required to prove petitioners claims differs from that needed to establish respondents demands for the recovery of cash accountabilities from petitioner, such as cash advances and costs of premiums. The recovery of respondents claims is not contingent or dependent upon establishing petitioners counterclaim, such that conducting separate trials will not result in the substantial duplication of the time and effort of the court and the parties. This conclusion is further reinforced by petitioners own admissions since she declared in her answer that respondents cause of action, unlike her own, was not based upon the Special Agents Contract. However, petitioners claims for damages, allegedly suffered as a result of the filing by respondent of its complaint, are compulsory. There is no need for petitioner to pay docket fees for her compulsory counterclaim. On the other hand, in order for the trial court to acquire jurisdiction over her permissive counterclaim, petitioner is bound to pay the prescribed docket fees Although the payment of the prescribed docket fees is a jurisdictional requirement, its non-payment does not result in the automatic dismissal of the case provided the docket fees are paid within the applicable prescriptive or reglementary period. Absent allegation and showing that petitioner has attempted to evade the payment of the proper docket fees for her permissive counterclaim, the trial court should have instead given petitioner a reasonable time, but in no case beyond the applicable prescriptive or reglementary period, to pay.

474 Go v. Tong| Panganiban G.R. No. 151942. November 27, 2003 FACTS Juana Tan Go purchased a cashiers check from the Far East Bank and Trust Company (FEBTC) Lavezares, Binondo Branch in the amount of P500,000.00, payable to Johnson Y. Tong.

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The check bore the words Final Payment/Quitclaim after the name of payee to insure that Tong would honor his commitment that he would no longer ask for further payments for his interest in the informal business partnership which he and she had earlier dissolved. Tong deposited it with the words Final Payment/Quitclaim already erased, hence, it was not honored. Tongs counsel wrote the manager of FEBTC Lavezares Branch informing that the words Final Payment/Quitclaim on the check had been inadvertently erased without being initialed by your bank or the purchaser thereof and thus requesting that the check be replaced with another payable to Johnson Tong-Final Settlement/Quitclaim with the same amount, FEBTC did not grant the request, hence, Tong filed a complaint against FEBTC and Juana and her husband Gregorio Go at the Manila RTC, for sum of money, damages, and attorneys fees, subject of the case at bar. The son of the spouses Go filed a criminal case against Tong for falsification of the check but the same was dismissed by the Prosecutor. Tong filed a supplemental complaint [to be included in his original complaint for collection of sum of money] to increase his claim for damages from 2.5 million to 55 million alleging that the spouses Go used their son to file a criminal case against him, causing him damage. Tong, however, had not been able to pay filing fees. The court allowed him to pay in a staggered basis. To first deposit P25,000.00 on or before December 15, 1999 and P20,000.00 every month thereafter until the full amount of docket fees is paid, and only then shall the deposits be considered as payment of docket fees ISSUES & ARGUMENTS W/N the court was correct in allowing Tong to pay his filing fees in a staggered basis, therefore, allowing the case to push through even without full payment of these docket fees. HOLDING & RATIO DECIDENDI YES. NON-PAYMENT OF DOCKET FEES DOES NO AUTOMATICALLY CAUSE THE DISMISSAL OF THE CASE. Generally, where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court cannot be vested with jurisdiction over the case. The court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. Since the cause of action of Tong was supposed to prescribe in four (4) years he was allowed to pay; and

he in fact paid the docket fee in a years time. This period can be deemed unreasonable. Moreover, on his part there is no showing of any pattern or intent to defraud the government of the required docket fee. 475. Planters Products vs. Fertiphil Corp. | FACTS Pres. Ferdinand Marcos issued Letter of Instruction No.1465. Pursuant to this, Fertiphil paid P10 per bag of fertilizer sold to the Fertilized and Pesticide Authority which in turn, remitted said amount to Planters Products Incorporated for its rehabilitation. A series of events triggered the Edsa Revolution which ultimately led to the ouster of President Marcos. Subsequently,Fertiphil filed an action against PPI to collect the amounts it was paid and for damages. RTC rendered the judgment in favor of Fertiphil and declared LOI 1465 unconstitutional PPI elevated the case to the CA on appeal (with Notice of Appeal filed before RTC) Fertiphil moved to dismiss the appeal alleging the PPI did not pay appellate docket fee within the period prescribed for taking an appeal in accordance with the 1997 Rules on Civil Procedure even if PPI filed its appeal in 1992 The CA ruled that 1997 Rules on Civil Procedure should still be followed because it is intended to be applied to actions pending and undetermined at the time of its passage ISSUES & ARGUMENTS 1. Should the 1997 Rules on Civil Procedure be applied retrospectively? 2. Should PPIs appeal be dismissed due to non payment of appellate docket fees HOLDING & RATIO DECIDENDI No to both. General Rule: Rules of Procedure apply to actions pending and undetermined at the time of their passage but this retrospective application only applies if no vested rights are impaired. The rules retrospective application will impair PPIs right to appeal because at the time they filed their appeal all that was necessary to perfect an appeal was to file a notice of appeal with the court that rendered the judgment 15 days from notice thereof. Failure to pay proper appelate docket fees will not automatically result in dismissal of an appeal. The dismissal would depend on the discretion of the court. DEANNE REYES 3D 2009-2010 DIGESTS TORTS & DAMAGES Page 528 of 528 476. La Sallette College Represented by Its President, vs. Victor Pilotin [G.R. No. 149227. December 11, 2003] PANGANIBAN FACTS Respondent herein, Pilotin is a student of the La Sallette College. When he tried to enrol for the second semester of 1993, he was denied re-enrolment, since the period for enrolment was already over. Pilotin then filed a complaint asking for the issuance of a writ of preliminary mandatory injunction to compel La Sallete to re-admit him. The trial court ruled for Pilotin. La Sallete received the decision on November

26,1998. It filed on the same date a Notice of Appeal. However, Pilotin moved for a reconsideration of such on the ground that La Sallete failed to pay the docket fees within the reglementary period. The trial court denied the motion for reconsideration. The CA then dismissed the appeal of La Salette for failure to pay the required docketing fee. ISSUES & ARGUMENTS Whether or not appeal was seasonably filed by La Sallete? HOLDING & RATIO DECIDENDI No. The appeal was filed out of time.

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the

In order to perfect an appeal from a decision rendered by the RTC in the exercise of its original jurisdiction, the following requirements must be complied with. o First, within 15 days, a notice of appeal must be filed with the court that rendered the judgment or final order sought to be appealed; o Second, such notice must be served on the adverse party; o Third, within the same 15-day period, the full amount of appellate court docket and other legal fees must be paid to the clerk of the court that rendered the judgment or final order. The payment of docket fees is necessary to defray court expenses in the handling of cases. For this reason, and to secure a just and speedy disposition of every action and proceeding, the Rules on Civil Procedure mandates the payment of docket and other lawful fees within the prescribed period. Otherwise, the jurisdiction of the proper court to handle a case is adversely affected. In the present case, it was proven that the petitioners indeed did not fail the docket fees, and they have not shown any satisfactory reason to warrant the relaxation of the Rules.