FIRST DIVISION

[G.R. No. 203902. July 19, 2017.]

SPOUSES DIONISIO ESTRADA and JOVITA R. ESTRADA , petitioners,

vs. PHILIPPINE RABBIT BUS LINES, INC. and EDUARDO R. SAYLAN ,
respondents.

DECISION

DEL CASTILLO , J : p

The Court restates in this petition two principles on the grant of damages. First,
moral damages, as a general rule, are not recoverable in an action for damages
predicated on breach of contract. 1 Second, temperate damages in lieu of actual
damages for loss of earning capacity may be awarded where earning capacity is plainly
established but no evidence was presented to support the allegation of the injured
party's actual income. 2 HTcADC

This Petition for Review on Certiorari assails the May 16, 2012 Decision 3 and
October 1, 2012 Resolution 4 of the Court of Appeals (CA) in CA-G.R. CV No. 95520,
which partially granted the appeal led therewith by respondent Philippine Rabbit Bus
Lines, Inc. (Philippine Rabbit) and denied petitioners spouses Dionisio C. Estrada
(Dionisio) and Jovita R. Estrada's motion for reconsideration thereto.
Factual Antecedents

On April 13, 2004, petitioners led with the Regional Trial Court (RTC) of
Urdaneta City, Pangasinan, a Complaint 5 for Damages against Philippine Rabbit and
respondent Eduardo R. Saylan (Eduardo).
The facts as succinctly summarized by the RTC are as follows:
[A] mishap occurred on April 9, 2002 along the national highway in
Barangay Alipangpang, Pozorrubio, Pangasinan, between the passenger bus
with plate number CVK-964 and body number 3101, driven by [respondent]
Eduardo Saylan and owned by [respondent] Philippine Rabbit Bus, Lines, Inc.,
and the Isuzu truck with plate number UPB-974 driven by Willy U. Urez and
registered in the name of Rogelio Cuyton, Jr. At the time of the incident, the
Philippine Rabbit Bus was going towards the north direction, while the Isuzu
truck was travelling towards the south direction. The collision happened at the
left lane or the lane properly belonging to the Isuzu truck. The right front portion
of the Isuzu Truck appears to have collided with the right side portion of the
body of the Philippine Rabbit bus. x x x Before the collision, the bus was
following closely a jeepney. When the jeepney stopped, the bus suddenly
swerved to the left encroaching upon the rightful lane of the Isuzu truck, which
resulted in the collision of the two (2) vehicles. x x x The [petitioner] Dionisio
Estrada, who was among the passengers of the Philippine Rabbit bus, as
evidenced by the ticket issued to him, was injured on the [right] arm as a
consequence of the accident. His injured right arm was amputated at the
Villa or Medical Doctor's Hospital in Dagupan City x x x. For the treatment of
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 his injury, he incurred expenses as evidenced by x x x various receipts. 6
Dionisio argued that pursuant to the contract of carriage between him and
Philippine Rabbit, respondents were duty-bound to carry him safely as far as human
care and foresight can provide, with utmost diligence of a very cautious person, and
with due regard for all the circumstances from the point of his origin in Urdaneta City to
his destination in Pugo, La Union. However, through the fault and negligence of
Philippine Rabbit's driver, Eduardo, and without human care, foresight, and due regard
for all circumstances, respondents failed to transport him safely by reason of the
aforementioned collision which resulted in the amputation of Dionisio's right arm. And
since demands for Philippine Rabbit 7 to pay him damages for the injury he sustained
remained unheeded, Dionisio led the said complaint wherein he prayed for the
following awards: moral damages of P500,000.00, actual damages of P60,000.00, and
attorney's fees of P25,000.00.
Petitioners' claim for moral damages, in particular, was based on the following
allegations:
9. [The] amount of P500,000.00 as moral damages for the
amputation of [Dionisio's] right arm for life including his moral sufferings for
such [loss] of right arm is reasonable.
Said amount is computed and derived using the formula (2/3 x [80-age
of the complainant when the injury is sustained] = life expectancy) adopted in
the American Expectancy Table of Mortality or the actuarial of Combined
Experience Table of Mortality. From such formula, [Dionisio] is expected to live
for 18 years, which is equivalent [to] about 6570 days. For each day, [Dionisio] is
claiming P80.00 as he is expected to work for 8 hours a day with his amputated
arm or to enjoy the same for at least 8 hours a day (or is claiming P10.00 for
each hour) for 18 years (6570 days). The amount that can be computed thereof
would be P525,600.00 (6570 days x P80.00). [Dionisio] then [rounded] it off to
P500,000.00, the moral damages consisted [of] his moral sufferings due to the
[loss] of his right arm for life; 8
Denying any liability, Philippine Rabbit in its Answer 9 averred that it carried
Dionisio safely as far as human care and foresight could provide with the utmost
diligence of a very cautious person and with due regard for all the circumstances
prevailing. While it did not contest that its bus gured in an accident, Philippine Rabbit
nevertheless argued that the cause thereof was an extraordinary circumstance
independent of its driver's action or a fortuitous event. Hence, it claimed to be exempt
from any liability arising therefrom. In any case, Philippine Rabbit averred that it was the
Isuzu truck coming from the opposite direction which had the last clear chance to avoid
the mishap. Instead of slowing down upon seeing the bus, the said truck continued its
speed such that it bumped into the right side of the bus. The proximate cause of the
accident, therefore, was the wrongful and negligent manner in which the Isuzu truck
was operated by its driver. In view of this, Philippine Rabbit believed that Dionisio has
no cause of action against it.
With respect to Eduardo, he was declared in default after he failed to le an
Answer despite due notice. 1 0 aScITE

Ruling of the Regional Trial Court

Treating petitioners' Complaint for damages as one predicated on breach of

contract of carriage, the RTC rendered its Decision 1 1 on December 1, 2009.
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 In concluding that Eduardo was negligent in driving the Philippine Rabbit bus, the
said court ratiocinated, viz.:
Evidently, prior to the accident, [Eduardo] was tailgating the jeepney
ahead of him. When the jeepney stopped, [Eduardo] suddenly swerved the bus
to the left, encroaching in the process the rightful lane of the oncoming Isuzu
truck, thereby resulting in the collision. The fact that [Eduardo] did not apply the
brakes, but instead swerved to the other lane, fairly suggests that he was not
only unnecessarily close to the jeepney, but that he was operating the bus at a
speed greater than what was reasonably necessary for him to be able to bring
his vehicle to a full stop to avoid hitting the vehicle he was then following.
Clearly, immediately before the collision, [Eduardo] was actually violating
Section 35 of the Land Transportation and Tra c Code, Republic Act No. 4136,
as amended:
Sec. 35. Restriction as to speed. — (a) Any person
driving a motor vehicle on a highway shall drive the same at a
careful and prudent speed, not greater nor less than [what] is
reasonable and proper, having due regard for the tra c, the width
of the highway, and or any other condition then and there existing;
and no person shall drive any motor vehicle upon a highway at
such a speed as to endanger the life, limb and property of any
person, nor at a speed greater than will permit him to bring the
vehicle to a stop within the clear distance ahead.
Too, when [Eduardo] swerved to the left and encroached on the rightful
lane of the Isuzu truck, he was violating Section 41 of the same Traffic Code:
Sec. 41. Restriction on overtaking and passing. — (a)
The driver of a vehicle shall not drive to the left side of the center
line of a highway in overtaking or passing another vehicle,
proceeding in the same direction, unless such left side is clearly
visible, and is free of oncoming tra c for a su cient distance
ahead to permit such overtaking or passing to be made in safety.
The fact that the collision occurred immediately after the bus swerved on
the left lane clearly [indicates] that the other lane was not clear and free of
oncoming vehicle at the time x x x [Eduardo] tried to overtake the jeepney to
avoid hitting it.
It is presumed that a person driving a motor vehicle has been negligent if
at the time of the mishap, he was violating any tra c regulation, unless there is
proof to the contrary (Article 2185 of the Civil Code). [Eduardo] failed to rebut
this legal presumption as he chose not to answer the complaint and to testify in
court. [Philippine Rabbit was also] unsuccessful in overthrowing the said legal
presumption. x x x
[Eduardo's] failure to observe the proper and safe distance from the
vehicle ahead of him and in running the bus at a speed greater than what was
reasonably necessary to control and stop the vehicle when warranted by the
circumstances, clearly were re ective of his lack of precaution, vigilance, and
foresight in operating his vehicle. As an experienced driver, he should have
known about the danger posed by tailgating another vehicle and driving his
vehicle at an unreasonable speed called for by the circumstances. For, the
sudden stopping of a motor vehicle, for whatever [reason], is not an uncommon
and [unforeseeable] occurrence in the highway. If only he had exercised
diligence, vigilance and foresight, he would have refrained from tailgating
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 another vehicle at a dangerously close range. What he should have done
instead was to maintain a reasonable distance from the jeepney and drove his
vehicle at a speed not greater than will permit him to bring the vehicle to a stop
within the assured clear distance ahead. This he failed to do. As a consequence,
when the jeepney stopped, he was unable to control and stop the bus. Instead,
he was forced to swerve the bus to the left lane blocking the path of the
oncoming Isuzu truck. While he averted smashing the jeepney, he however
collided with the Isuzu truck. No doubt, it was [Eduardo's] lack of precaution,
vigilance and foresight that led to the accident. Otherwise stated, it was his
recklessness or negligence that was the proximate cause of the mishap.
[Philippine Rabbit's] imputation of fault to the driver of the Isuzu truck,
claiming that it was the latter [which] had the last clear chance to avoid the
accident, deserves scant consideration. As the evidence would show, the impact
occurred immediately after the bus swerved and while in the process of
encroaching on the left lane. This is evidenced by the fact that the front portion
of the Isuzu truck collided with the right side portion of the bus. The driver of the
Isuzu truck, before the accident, was cruising on the lane properly belonging to
him. He had every right to expect that all the vehicles, including the bus coming
from the opposite direction would stay on their proper lane. He certainly was not
expected to know what prompted the bus driver to suddenly swerve his vehicle
to the left. The abruptness by which the bus swerved without a warning could
not have given him the luxury of time to re ect and anticipate the bus'
encroachment of his lane for him to be able to avoid it. Needless to point out,
there was no last clear chance to speak of on the part of the driver of the Isuzu
truck to avoid the accident. Besides, the 'last clear chance' principle is not
applicable in this case since the instant suit is between the passenger and the
common carrier. x x x 1 2 HEITAD

The RTC then proceeded to determine whether Philippine Rabbit, as it claimed,

exercised the diligence of a good father of a family in the selection and supervision of
its drivers as to negate any liability for damages. The said court, however, was
unconvinced after it found that (1) Philippine Rabbit failed to show that it had taken all
the necessary and actual steps to thoroughly examine the quali cations of Eduardo as
a driver worthy of employment; and (2) no proof relative to the existence of company
rules and regulations, instructions, and policies affecting its drivers, as well as to their
actual implementation and observance, were presented. Hence, Philippine Rabbit was
held jointly and severally liable with Eduardo for the awards made in favor of Dionisio as
follows:
The emotional anguish and suffering of x x x Dionisio Estrada as a
consequence of the injury and amputation of his right arm due to the reckless
driving of x x x Eduardo, which resulted in the accident, cannot be
overemphasized. The loss of the use of his right arm and the humiliation of
being tagged in the public [eye] as a person with only one arm would certainly
be borne by him for the rest of his life. The amount of moral damages he is
praying appears to be reasonable under the circumstances.
Too, the award of attorney's fees is proper considering that x x x
[Dionisio] was forced to litigate after x x x [Philippine Rabbit] refused to heed his
demand for the payment of damages as a consequence of the accident.
WHEREFORE, judgment is hereby rendered ordering x x x Philippine
Rabbit Bus Lines, Inc. and Eduardo Saylan to pay jointly and severally x x x
Dionisio Estrada the following amounts:

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 1. Five Hundred Thousand Pesos (P500,000.00) as moral damages;
2. Fifty Seven Thousand Seven Hundred Sixty Six Pesos and Twenty
Five Centavos (P57,766.25), as actual damages; and
3. Twenty Five Thousand Pesos (P25,000.00), as attorney's fees; and
the costs of suit.
SO ORDERED. 1 3
Philippine Rabbit led a Motion for Reconsideration 1 4 but the same was denied
for lack of merit in an Order 1 5 dated May 31, 2010.
Ruling of the Court of Appeals

On appeal, Philippine Rabbit imputed error upon the RTC in not nding that it
exercised the diligence of a good father of a family in the selection and supervision of
its drivers. In any case, it argued that moral damages are not recoverable in an action
for damages predicated on breach of contract except when death results or when the
carrier is guilty of fraud or bad faith. Since none of the two aforementioned
circumstances are present in this case, Philippine Rabbit contended that it is Eduardo
alone who should be held civilly liable.
In a Decision 1 6 dated May 16, 2012, the CA partially granted the appeal on the
following ratiocination:
Based from [sic] the aforecited allegations in the complaint, it was rightly
regarded by the trial court as an action to recover damages arising from breach
of contract of carriage. There was in fact, an admission that [Dionisio] was a
passenger of a bus owned by [Philippine Rabbit]. In an action for breach of
contract of carriage, all that is required is to prove the existence of such contract
and its non-performance by the carrier through the latter's failure to carry the
passenger safely to his destination. In the present case, it was duly established
that there was a collision and as a result of which, [Dionisio] sustained an injury.
[Philippine Rabbit] was therefore properly found liable for breach of
contract of carriage. A common carrier is bound to carry its passengers safely
as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with due regard to all the circumstances. In a contract of
carriage, it is presumed that the common carrier was at fault or was negligent
when a passenger dies or is injured. Unless the presumption is rebutted, the
court need not even make an express nding of fault or negligence on the part
of the common carrier. This presumption may only be overcome by evidence
that the carrier exercised extraordinary diligence, and this presumption remained
unrebutted in this case. The trial court found that the accident which led to the
amputation of [Dionisio's] arm was due to the reckless driving and negligence of
[Philippine Rabbit's] driver and stated that: ATICcS

No doubt, it was x x x [Eduardo's] lack of precaution,

vigilance and foresight that led to the accident. Otherwise stated, it
was his recklessness or negligence that was the proximate cause
of the mishap.
Such negligence and recklessness is binding against [Philippine Rabbit]
pursuant to Article 1759 of the Civil Code which provides:
Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the former's
employees, although such employees may have acted beyond the
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 scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon
proof that they exercised all the diligence of a good father of a
family in the selection and supervision of their employees.
Thus, [Philippine Rabbit's] defense that it acted with the diligence of a
good father of a family in its selection of its driver, Eduardo R. Saylan, is
unavailing. [Philippine Rabbit] however is correct in its contention that moral
damages are not recoverable in actions for damages predicated on a breach of
contract, unless death of a passenger results, or it is proved that the carrier was
guilty of fraud or bad faith, even if death does not result.
There was no evidence on record indicative of fraud or bad faith on
[Philippine Rabbit's] part. Bad faith should be established by clear and
convincing evidence. The settled rule is that the law always presumes good
faith such that any person who seeks to be awarded damages due to the acts of
another has the burden of proving that the latter acted in bad faith or with ill
motive. The award for attorney's fees must likewise be deleted considering that
moral damages cannot be granted and none of the instances enumerated in
Article 2208 of the Civil Code is present in the instant case. However, the actual
damages awarded by the trial court are adequately substantiated by o cial
receipts. Therefore, the same shall be sustained.
The driver on the other hand, may not be held liable under the contract of
carriage, not being a party to the same. The basis of a cause of action of a
passenger against the driver is either culpa criminal or culpa aquiliana. A
passenger may le a criminal case based on culpa criminal punishable under
the Revised Penal Code or a civil case based on culpa aquiliana under Articles
2176 and 2177 of the Civil Code.
A cause of action based on culpa contractual is also separate and
distinct from a cause of action based on culpa aquiliana. x x x
xxx xxx xxx
The trial court therefore erred in ruling that [Philippine Rabbit] bus
company and [respondent] driver are jointly and severally liable. The driver
cannot be held jointly and severally liable with the carrier in case of breach of
the contract of carriage. The contract of carriage is between the carrier and the
passenger, and in the event of contractual liability, the carrier is exclusively
responsible [therefor] to the passenger, even if such breach be due to the
negligence of his driver. The carrier can neither shift his liability on the contract
to his driver nor share it with him for his driver's negligence is his. 1 7
Accordingly, the CA modi ed the RTC Decision in that it declared Philippine
Rabbit as solely and exclusively liable to Dionisio for actual damages in the amount of
P57,766.25 and deleted the award of moral damages and attorney's fees.
Petitioners led a Motion for Reconsideration 1 8 but the same was denied by the
CA for lack of merit in a Resolution 1 9 dated October 1, 2012.
Hence, this Petition for Review on Certiorari raising the following issues:
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
DECLARING THAT THERE WAS NO EVIDENCE ON RECORD INDICATIVE OF
FRAUD OR BAD FAITH ON [PHILIPPINE RABBIT'S] PART.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT
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 [CONSIDERING] X X X THE [COST OF THE] REPLACEMENT OF PETITIONER
[DIONISIO'S AMPUTATED RIGHT ARM] WITH [AN] ARTIFICIAL ONE AS ACTUAL
DAMAGES. 2 0 TIADCc

The Parties' Arguments

Petitioners dispute the ndings of lack of fraud or bad faith on the part of
Philippine Rabbit as to make it liable for moral damages. According to them, the
assertions of Philippine Rabbit in its Answer, i.e., that it carried Dionisio safely; that it
was not an insurer of all risks; that the accident was caused by a fortuitous event; that
in any event, it was the negligent manner by which the Isuzu truck was operated which
was the proximate cause of the accident; and that Dionisio has no cause of action
against Philippine Rabbit, were made with the intention to evade liability. Petitioners
claim that the said assertions are clear indication of fraud or bad faith.
In justifying their claim for moral damages, petitioners aver that in their
Complaint, they did not seek for moral damages in terms of physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury per se, but for moral damages based purely on the
fact that Dionisio lost his right arm. They argue that while in a strict sense, Dionisio
incurred actual damages through the amputation of his right arm, such loss may rightly
be considered as falling under moral damages. This is because a right arm is beyond
the commerce of man and loss thereof necessarily brings physical suffering, mental
anguish, besmirched reputation, social humiliation and similar injury to a person. At any
rate, should this Court award the amount of P500,000.00 as actual damages due to the
loss of Dionisio's right arm, petitioners also nd the same proper and appropriate
under the circumstances.
Now jointly represented by one counsel, respondents, on the other hand, reiterate
the rule that moral damages are not recoverable in an action for damages predicated
on a breach of contract, as in this case, since breach of contract is not one of the items
enumerated in Article 2219 of the Civil Code. Only as an exception, moral damages may
be recovered in an action for breach of contract of carriage when the mishap results in
death or if the carrier acted fraudulently or in bad faith. Since Dionisio did not die in the
mishap nor was Philippine Rabbit found guilty of fraud or bad faith, respondents argue
that an award for moral damages is improper for having no basis in fact and in law.
Our Ruling
The Court modifies the CA ruling.
Moral damages; Instances when
moral damages can be awarded in an
action for breach of contract.

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. 2 1
Under Article 2219 of the Civil Code, moral damages are recoverable in the
following and analogous cases: (1) a criminal offense resulting in physical injuries; (2)
quasi-delicts causing physical injuries; (3) seduction, abduction, rape or other lascivious
acts; (4) adultery or concubinage; (5) illegal or arbitrary detention or arrest; (6) illegal
search; (7) libel, slander, or any other form of defamation; (8) malicious prosecution; (9)
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 acts mentioned in Article 309; 2 2 and (1) acts and actions referred to in Articles 21, 2 3
26, 2 4 27, 2 5 28, 2 6 29, 2 7 30, 2 8 32, 2 9 34, 3 0 and 35. 3 1
x x x [C]ase law establishes the following requisites for the award of
moral damages: (1) there must be an injury clearly sustained by the claimant,
whether physical, mental or psychological; (2) there must be a culpable act or
omission factually established; (3) the wrongful act or omission of the
defendant is the proximate cause of the injury sustained by the claimant; and
(4) the award for damages is predicated on any of the cases stated in Article
2219 of the Civil Code. 3 2
Since breach of contract is not one of the items enumerated under Article 2219,
moral damages, as a general rule, are not recoverable in actions for damages
predicated on breach of contract. 3 3 AIDSTE

x x x As an exception, such damages are recoverable [in an action for

breach of contract:] (1) in cases in which the mishap results in the death of a
passenger, as provided in Article 1764, 3 4 in relation to Article 2206(3) 3 5 of the
Civil Code; and (2) in x x x cases in which the carrier is guilty of fraud or bad
faith, as provided in Article 2220. 3 6 3 7

Moral damages are not recoverable

in this case.

It is obvious that this case does not come under the rst of the above-mentioned
exceptions since Dionisio did not die in the mishap but merely suffered an injury.
Nevertheless, petitioners contend that it falls under the second category since they aver
that Philippine Rabbit is guilty of fraud or bad faith.
It has been held, however, that "allegations of bad faith and fraud must be proved
by clear and convincing evidence." 3 8 They are never presumed considering that they
are serious accusations that can be so conveniently and casually invoked. 3 9 And unless
convincingly substantiated by whoever is alleging them, they amount to mere slogans
or mudslinging. 4 0
In this case, the fraud or bad faith that must be convincingly proved by
petitioners should be one which was committed by Philippine Rabbit in breaching its
contract of carriage with Dionisio. Unfortunately for petitioners, the Court nds no
persuasive proof of such fraud or bad faith.
Fraud has been de ned to include an inducement through insidious
machination. Insidious machination refers to a deceitful scheme or plot with an
evil or devious purpose. Deceit exists where the party, with intent to deceive,
conceals or omits to state material facts and, by reason of such omission or
concealment, the other party was induced to give consent that would not
otherwise have been given. 4 1
Bad faith, on the other hand, "does not simply connote bad judgment or
negligence; it imports a dishonest purpose or some moral obliquity and conscious
doing of a wrong, a breach of a known duty through some motive or interest or ill will
that partakes of the nature of fraud." 4 2
There is no showing here that Philippine Rabbit induced Dionisio to enter into a
contract of carriage with the former through insidious machination. Neither is there any
indication or even an allegation of deceit or concealment or omission of material facts
by reason of which Dionisio boarded the bus owned by Philippine Rabbit. Likewise, it
was not shown that Philippine Rabbit's breach of its known duty, which was to
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 transport Dionisio from Urdaneta to La Union, 4 3 was attended by some motive,
interest, or ill will. From these, no fraud or bad faith can be attributed to Philippine
Rabbit.
Still, petitioners insist that since the defenses it pleaded in its Answer were
designed to evade liability, Philippine Rabbit is guilty of fraud or bad faith. Su ce it to
state, however, that the allegations which made up Philippine Rabbit's defenses are
hardly the kind of fraud or bad faith contemplated by law. Again, it bears to mention
that the fraud or bad faith must be one which attended the contractual breach or one
which induced Dionisio to enter into contract in the first place.
Clearly, moral damages are not recoverable in this case. The CA, therefore, did
not err in deleting the award for moral damages.
Actual damages for loss/impairment
of earning capacity are also not
recoverable. In lieu thereof, the
Court awards temperate damages.

In an attempt to recover the P500,000.00 awarded by the RTC as moral damages

but deleted by the CA, petitioners would instead want this Court to grant them the
same amount as just and proper compensation for the loss of Dionisio's right arm.
It can be recalled that in the Complaint, petitioners justi ed their claim for moral
damages as follows: AaCTcI

9. [The] amount of P500,000.00 as moral damages for the

amputation of [Dionisio's] right arm for life including his moral sufferings for
such [loss] of right arm is reasonable.
Said amount is computed and derived using the formula (2/3 x [80-age
of the complainant when the injury is sustained] = life expectancy) adopted in
the American Expectancy Table of Mortality or the actuarial of Combined
Experience Table of Mortality. From such formula, [Dionisio] is expected to live
for 18 years, which is equivalent [to] about 6570 days. For each day, [Dionisio] is
claiming P80.00 as he is expected to work for 8 hours a day with his amputated
arm or to enjoy the same for at least 8 hours a day (or is claiming P10.00 for
each hour) for 18 years (6570 days). The amount that can be computed thereof
would be P525,600.00 (6570 days x P80.00). [Dionisio] then [rounded] it off to
P500,000.00, the moral damages consisted [of] his moral sufferings due to the
[loss] of his right arm for life; 4 4
It thus appears that while petitioners denominated their claim for P500,000.00
as moral damages, their computation was actually based on the supposed
loss/impairment of Dionisio's earning capacity.
Loss or impairment of earning capacity nds support under Article 2205 (1) of
the Civil Code, to wit:
Art. 2205. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases of temporary
or permanent personal injury;
xxx xxx xxx
It is, however, settled that "damages for loss [or impairment] of earning capacity
is in the nature of actual damages x x x." 4 5

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 Actual or compensatory damages are those awarded in order to
compensate a party for an injury or loss he suffered. They arise out of a sense
of natural justice, aimed at repairing the wrong done. To be recoverable, they
must be duly proved with a reasonable degree of certainty. A court cannot rely
on speculation, conjecture, or guesswork as to the fact and amount of damages,
but must depend upon competent proof that they have suffered, and on
evidence of the actual amount thereof. 4 6
Thus, as a rule, documentary evidence should be presented to
substantiate the claim for damages for loss of earning capacity. By way of
exception, damages for loss [or impairment] of earning capacity may be
awarded despite the absence of documentary evidence when (1) the
deceased [or the injured] was self-employed and earning less than the
minimum wage under current labor laws, in which case, judicial notice
may be taken of the fact that in the deceased's line of work no
documentary evidence is available; or (2) the deceased was employed
as a daily worker earning less than the minimum wage under current
labor laws. 4 7
Here, it is unlikely that petitioners presented evidence to prove a claim for actual
damages based on loss/impairment of earning capacity since what they were claiming
at the outset was an award for moral damages. The Court has nonetheless gone over
the records to nd out if they have su ciently shown during trial that they are entitled
to such compensatory damages that they are now claiming. Unfortunately, no
documentary evidence supporting Dionisio's actual income is extant on the records.
What it bears is the mere testimony of Dionisio on the matter, viz.:
COURT:
Q: By the way, why did you submit the original copy of your exhibits to the
GSIS?
A: I am claiming my GSIS compensation because I am a government
employee.
ATTY. SEVILLEJA:
Q: What particular government [agency do] you belong? EcTCAD

A: DECS.
Q: You are a teacher?
A: Yes sir.
Q: You are still continuing your profession as a teacher until now?
A: Yes sir.
Q: By the way Mr. witness, you are claiming x x x moral damages of
P500,000.00? How did you compute that P500,000.00?
A: I based that from [sic] my income which is about P80.00 a day or P10.00
per hour.
Q: Is that x x x gross or not?
A: Net sir.
Q: What are your other sideline?
A: I know [how] to drive a tricycle.
Q: Because of [the] amputation of your right arm, you mean to say you
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 [cannot] drive anymore a tricycle?
A: Yes sir.
Q: By the way Mr. witness, how old are you when you met [the] accident?
A: More than 53 years old sir, less than 54.
Q: If you are claiming for x x x moral damages of P80.00 a day, how come
you are asking for P500,000.00?
A: If you compute that it is P2,400.00 monthly. If I still [live by] about 20-30
years [more], I can still [earn] that amount. 4 8
It must be emphasized, though, that documentary proof of Dionisio's actual
income cannot be dispensed with since based on the above testimony, Dionisio does
not fall under any of the two exceptions aforementioned. Thus, as it stands, there is no
competent proof substantiating his actual income and because of this, an award for
actual damages for loss/impairment of earning capacity cannot be made.
Nonetheless, since it was established that Dionisio lost his right arm, temperate
damages in lieu of actual damages for loss/impairment of earning capacity may be
awarded in his favor. Under Article 2224, "[t]emperate or moderate damages, which are
more than nominal but less than compensatory damages, may be recovered when the
court nds that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be proved with certainty."
The case of Tan v. OMC Carriers, Inc. 4 9 enumerates several instances wherein
the Court awarded temperate damages in lieu of actual damages for loss of earning
capacity, viz.:
In the past, we awarded temperate damages in lieu of actual damages
for loss of earning capacity where earning capacity is plainly established but no
evidence was presented to support the allegation of the injured party's actual
income.
I n Pleno v. Court of Appeals , we sustained the award of temperate
damages in the amount of P200,000.00 instead of actual damages for loss of
earning capacity because the plaintiff's income was not sufficiently proven.
We did the same in People v. Singh , and People v. Almedilla , granting
temperate damages in place of actual damages for the failure of the
prosecution to present sufficient evidence of the deceased's income.
Similarly, in Victory Liner, Inc. v. Gammad, we deleted the award of
damages for loss of earning capacity for lack of evidentiary basis of the actual
extent of the loss. Nevertheless, because the income-earning capacity lost was
clearly established, we awarded the heirs P500,000.00 as temperate damages.
50

Accordingly, the Court in Tan awarded to the heirs of the therein deceased victim,
who was working as a tailor at the time of his death, temperate damages in the amount
of P300,000.00 in lieu of compensatory damages. 5 1 HSAcaE

In the subsequent case of Orix Metro Leasing and Finance Corporation v.

Mangalinao, 5 2 the Court likewise awarded temperate damages as follows:
While the net income had not been su ciently established, the Court
recognizes the fact that the Mangalinao heirs had suffered loss deserving of
compensation. What the CA awarded is in actuality a form of temperate
damages. Such form of damages under Article 2224 of the Civil Code is given in
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 the absence of competent proof on the actual damages suffered. In the past, we
awarded temperate damages in lieu of actual damages for loss of earning
capacity where earning capacity is plainly established but no evidence was
presented to support the allegation of the injured party's actual income. In this
case, Roberto Mangalinao, the breadwinner of the family, was a businessman
engaged in buying and selling palay and agricultural supplies that required high
capital in its operations and was only 37 at the time of his death. Moreover, the
Path nder which the Mangalinaos own, became a total wreck. Under the
circumstances, we nd the award of P500,000.00 as temperate damages as
reasonable. 5 3
And in the more recent case of People v. Salahuddin , 5 4 the lower courts' award
of P4,398,000.00 as compensation for loss of earning capacity of a murdered lawyer
was disallowed due to insu ciency of evidence. Again in lieu thereof, temperate
damages of P1,000,000.00 was awarded. 5 5
In view of the above rulings and under the circumstances of this case, the Court
nds reasonable to award Dionisio temperate damages of P500,000.00 in lieu of actual
damages for the loss/impairment of his earning capacity.
Actual damages by way of medical
expenses must be supported by
official receipts.

Anent petitioners' assertion that actual damages should be awarded to them for
the cost of replacement of Dionisio's amputated right arm, su ce it to state that
petitioners failed to show during trial that the said amputated right arm was actually
replaced by an arti cial one. All that petitioners submitted was a quotation of
P160,000.00 for a unit of elbow prosthesis 5 6 and nothing more. It has been held that
actual proof of expenses incurred for medicines and other medical supplies necessary
for treatment and rehabilitation must be presented by the claimant, in the form of
o cial receipts, to show the exact cost of his medication and to prove that he indeed
went through medication and rehabilitation. In the absence of the same, such claim
must be negated. 5 7
At any rate, the RTC already granted petitioners actual damages by way of
medical expenses based on the o cial hospital receipts submitted. 5 8 There is,
however, a need to correct the amount, that is, the same should be P57,658.25 as
borne by the receipts and not P57,766.25.
Legal interest is imposed on the
amounts awarded.

In addition, the amounts of damages awarded are declared subject to legal

interest of 6% per annum from the finality of this Decision until full satisfaction. 5 9
WHEREFORE , the Petition for Review on Certiorari is DENIED . The assailed May
16, 2012 Decision and October 1, 2012 Resolution of the Court of Appeals in CA-G.R.
CV No. 95520 are AFFIRMED with MODIFICATIONS as follows: (1) petitioners are
declared entitled to temperate damages of P500,000.00; (2) the award of actual
damages is set at the amount of P57,658.25; and (3) all damages awarded are subject
to legal interest of 6% per annum from the finality of this Decision until full satisfaction.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro and Perlas-Bernabe, JJ., concur.
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 Caguioa, J., see separate opinion.
Separate Opinions
CAGUIOA , J., concurring :

I concur with the result. However, I am compelled to clarify certain basic legal
principles on moral and actual damages.
While there is legal basis to deny the claim for moral damages based on breach
of contract of carriage, its award could, however, be justi ed under quasi-delict. The
injury suffered by Dionisio resulted from both breach of contract of carriage and quasi-
delict. Evidently, the facts establish the commission of a quasi-delict by the driver of
Philippine Rabbit which resulted to the physical injury suffered by Dionisio — this
scenario falls under Article 2219 (2) of the Civil Code. 1HESIcT

While the trial court treated Dionisio's complaint for damages as one predicated
on breach of contract of carriage, it nonetheless found that Philippine Rabbit failed to
exercise the diligence of a good father of a family in the selection and supervision of its
negligent driver, rendering it solidarily liable for damages. This standard (diligence of a
good father of a family in the selection and supervision of an employee) is applicable in
cases of quasi-delict, not breach of contract of carriage, as the latter carries a different
standard (exercise of extraordinary diligence in the performance of its contractual
obligation). 2 Moreover, in cases of breach of contract of carriage (culpa contractual)
the liability of the common carrier or employer is direct and immediate, not merely
subsidiary or secondary, 3 while in cases of quasi-delict (culpa aquiliana), the liability of
the common carrier (employer) and the negligent driver (employee) is direct, primary,
and solidary. 4 Thus, in a case of breach of contract of carriage, the common carrier is
the person liable and not the driver, while in a case of quasi-delict, both the common
carrier and the driver are liable. 5
On the issue of actual damages, I believe that they could have been granted
based on the testimony of Dionisio. Testimonial evidence may be su cient to establish
the award of actual damages for loss of compensation, in cases where the victim is: (1)
self-employed and earning less than the minimum wage under current labor laws, in
which case, judicial notice may be taken of the fact that in the deceased's line of work,
no documentary evidence is available; or (2) was employed as a daily wage worker
earning less than the minimum wage under current labor laws. 6
While Dionisio was employed as a public-school teacher at the time of the
accident, he also worked part-time as a tricycle driver. Dionisio testi ed that P80.00 is
his average daily earnings in his sideline as a tricycle driver. The amount could not
possibly pertain to his loss of income as a public-school teacher because he continued
practicing his profession despite the amputation of his right arm. Rather, the loss of his
right arm has a direct bearing on his ability to drive a tricycle. That Dionisio has to drive
a tricycle to augment his salary as a public-school teacher is both lamentable and
condemnable. If a tricycle passenger pays P20.00 for a special trip, which is a
conservative estimate, then P80.00 covers only four (4) trips. Thus, as a self-employed
part-time tricycle driver, who was earning less than the minimum wage under current
labor laws and judicial notice is taken that no documentary evidence is available to
prove the minimum wage in that line of work, Dionisio's testimony is su cient to
support the award of P500,000.00 for loss of earning capacity as computed by him.
Since there could be basis for the award of actual damages for loss of
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 compensation, the award made by the ponencia of temperate damages could have
been dispensed with.
Footnotes

1. Japan Airlines v. Simangan, 575 Phil. 359, 375 (2008).

2. Tan v. OMC Carriers, Inc., 654 Phil. 443, 457 (2011).

3. CA rollo, pp. 68-75; penned by Associate Justice Florito S. Macalino and concurred in by
Associate Justices Remedios A. Salazar-Fernando and Ramon M. Bato, Jr.
4. Id. at 91-92.

5. Records, pp. 2-5.

6. Id. at 351-352.

7. Id. at 8-9.

8. Id. at 3-4.
9. Id. at 54-57.

10. Id. at 43.

11. Id. at 351-370; penned by Acting Judge Teodorico Alfonso P. Bauzon of RTC-Branch 48,
Urdaneta City, Pangasinan.

12. Id. at 358-361.

13. Id. at 369-370.

14. Id. at 373-376.

15. Id. at 380-383.

16. CA rollo, pp. 68-75.

17. Id. at 72-74.

18. Id. at 78-84.

19. Id. at 91-92.

20. Rollo, p. 9.
21. CIVIL CODE, Article 2217.

22. CIVIL CODE, Article 309. Any person who shows disrespect to the dead, or wrongfully
interferes with a funeral shall be liable to the family of the deceased for damages,
material or moral.
23. CIVIL CODE, Article 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.

24. CIVIL CODE, Article 26. Every person shall respect the dignity, personality, privacy and peace
of mind of his neighbors and other persons. The following and similar acts, though they
may not constitute a criminal offense, shall produce a cause of action for damages,
prevention and other relief:
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  (1) Prying into the privacy of another's residence;

 (2) Meddling with or disturbing the private life or family relations of another;

 (3) Intriguing to cause another to be alienated from his friends;

 (4) Vexing or humiliating another on account of his religious beliefs, lowly station in life,
place of birth, physical defect, or other personal condition.

25. CIVIL CODE, Article 27. Any person suffering material or moral loss because a public
servant or employee refuses or neglects, without just cause, to perform his o cial duty
may le an action for damages and other relief against the latter, without prejudice to
any disciplinary administrative action that may be taken.

2 6 . CIVIL CODE, Article 28. Unfair competition in agricultural, commercial or industrial

enterprises or in labor through the use of force, intimidation, deceit, machination or any
other unjust, oppressive or highhanded method shall give rise to a right of action by the
person who thereby suffers damage.

27. CIVIL CODE, Article 29. When the accused in a criminal prosecution is acquitted on the
ground that his guilt has not been proved beyond reasonable doubt, a civil action for
damages for the same act or omission may be instituted. Such action requires only a
preponderance of evidence. Upon motion of the defendant, the court may require the
plaintiff to le a bond to answer for damages in case the complaint should be found to
be malicious.

 If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court
shall so declare. In the absence of any declaration to that effect, it may be inferred from
the text of the decision whether or not the acquittal is due to that ground.
28. CIVIL CODE, Article 30. When a separate civil action is brought to demand civil liability
arising from a criminal offense, and no criminal proceedings are instituted during the
pendency of the civil case, a preponderance of evidence shall likewise be su cient to
prove the act complained of.
29. CIVIL CODE, Article 32. Any public o cer 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:

 (1) Freedom of religion;

 (2) Freedom of speech;

 (3) Freedom to writ for the press or to maintain a periodical publication; (4) Freedom from
arbitrary or illegal detention;
 (5) Freedom of suffrage;

 (6) The right against deprivation of property without due process of law;

 (7) The right to a just compensation when private property is taken for public use;
 (8) The right to the equal protection of the laws;

 (9) The right to be secured in one's person, house, papers, and effects against
unreasonable searches and seizures;
 (10) The liberty of abode and of changing the same;

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  (11) The privacy of communication and correspondence;
 (12) The right to become a member of associations or societies for purposes not contrary
to law;

 (13) The right to take part in a peaceable assembly to petition the Government for redress
of grievances;
 (14) The right to be free from involuntary servitude in any form;

 (15) The right of the accused against excessive bail;

 (16) The right of the accused to be heard by himself and counsel, to be informed of the
nature and cause of the accusation against him, to have a speedy and public trial, to
meet the witnesses face to face, and to have compulsory process to secure the
attendance of witness in his behalf;

  (17) Freedom from being compelled to be a witness against one's self, or from being
forced to confess guilt, or from being induced by a promise of immunity or reward to
make such confession, except when the person confessing becomes a State witness;

 (18) Freedom from excessive nes, or cruel and unusual punishment, unless the same is
imposed or in icted in accordance with a statute which has not been judicially declared
unconstitutional; and
 (19) Freedom of access to the courts.

  In any of the cases referred to in this article, whether or not the defendant's act or
omission constitutes a criminal offense, the aggrieved party has a right to commence an
entirely separate and distinct civil action for damages, and for other relief. Such civil
action shall proceed independently of any criminal prosecution (if the latter be instituted)
and may be proved by a preponderance of evidence.

  The indemnity shall include moral damages. Exemplary damages may also be
adjudicated.

  The responsibility herein set forth is not demandable from a judge unless his act or
omission constitutes a violation of the Penal Code or other penal statute.

30. CIVIL CODE, Article 34. When a member of a city or municipal police force refuses or fails to
render aid or protection to any person in case of danger to life or property, such peace
o cer shall be primarily liable for damages, and the city or municipality shall be
subsidiarily responsible therefor. The civil action herein recognized shall be independent
of any criminal proceedings, and a preponderance of evidence shall su ce to support
such action.

31. CIVIL CODE, Article 35. When a person, claiming to be injured by a criminal offense, charges
another with the same, for which no independent civil action is granted in this Code or
any special law, but the justice of the peace nds no reasonable grounds to believe that
a crime has been committed, or the prosecuting attorney refuses or fails to institute
criminal proceedings, the complainant may bring a civil action for damages against the
alleged offender. Such civil action may be supported by a preponderance of evidence.
Upon the defendant's motion, the court may require the plaintiff to le a bond to
indemnify the defendant in case the complaint should be found to be malicious.

  If during the pendency of the civil action, an information should be presented by the
prosecuting attorney, the civil action shall be suspended until the termination of the
criminal proceedings.
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 32. Cathay Pacific Airways, Ltd. v. Spouses Vazquez, 447 Phil. 306, 323-324 (2003).

33. Japan Airlines v. Simangan, supra note 1.

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

35. CIVIL CODE, Article 2206. The amount of damages for death caused by a crime or quasi-
delict shall be at least Three thousand pesos, even though there may have been
mitigating circumstances. In addition:

xxx xxx xxx

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

36. CIVIL CODE, Article 2220. Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.
37. Japan Airlines v. Simangan, supra note 1 at 375-376.

38. Spouses Palada v. Solidbank Corporation, 668 Phil. 172, 174 (2011).
39. Cathay Pacific Airways, Ltd. v. Sps. Vazquez, supra note 32 at 321.

40. Id.

41. Id.
42. Id. at 321-322.

43. See China Airlines v. Chiok, 455 Phil. 169, 187 (2003).
44. Records, pp. 3-4.

45. Serra v. Mumar, 684 Phil. 363, 374 (2012).

46. Philippine National Railways v. Brunty , 537 Phil. 161, 177-178 (2006).
47. Enriquez v. Isarog Line Transport, Inc. , G.R. No. 212008, November 16, 2016; emphasis
supplied.

48. TSN dated February 23, 2006, pp. 6-7.

49. Supra note 2.

50. Id. at 457-458.

51. Id.
52. 680 Phil. 89 (2012).

53. Id. at 108-109.

54. G.R. No. 206291, January 18, 2016, 781 SCRA 154.

55. Id. at 185.

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 56. Records, p. 254.
57. Wuerth Philippines, Inc. v. Ynson, 682 Phil. 143, 161 (2012).

58. Records, pp. 239-245.

59. Nacar v. Gallery Frames, 716 Phil. 267, 281-283 (2013).

CAGUIOA, J., concurring:

1. Republic Act No. 386, entitled "AN ACT TO ORDAIN AND INSTITUTE THE CIVIL CODE OF THE
PHILIPPINES" otherwise known as the "CIVIL CODE OF THE PHILIPPINES" (1950).

2. CIVIL CODE, art. 2180; Torres-Madrid Brokerage, Inc. v. FEB Mitsui Marine Insurance Co., Inc. ,
G.R. No. 194121, July 11, 2016.

3. Vda. de Medina v. Cresencia, 99 Phil. 506, 510 (1956).

4. National Power Corporation v. Court of Appeals, 355 Phil. 642 (1998).

5. TIMOTEO B. AQUINO, REVIEWER ON CIVIL LAW 763-764 (1st ed. 2014).

6. Enriquez v. Isarog Line Transport, Inc., G.R. No. 212008, November 16, 2016, pp. 3-4.

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