G.R. No.

114118            August 28, 2001 "J", "I", "G", "F" and "H" (pp. 248-253, Record, id.).
Salvacion and her co-defendants-appellees' 4possession of
HEIRS OF SIMEON BORLADO, namely, ADELAIDA BORLADO, the lot was continuous, peaceful, uninterrupted, adverse
LORETO BORLADO, REYNALDO BORLADO, RICARDO and exclusive until November 4, 1972, when petitioners
BORLADO, FRANCISCO BORLADO and ALADINO forcibly entered and wrested physical possession thereof
DORADO, petitioners,  from them.
vs.
COURT OF APPEALS, and SALVACION VDA. DE BULAN, "On 23 November 1972, respondents filed with the
BIENVENIDO BULAN, JR., NORMA B. CLARITO and THE Municipal Court of Maayon, Capiz a complaint for
PROVINCIAL SHERIFF OF CAPIZ, respondents. ejectment docketed as Civil Case No. A-1, against
petitioners (p. 1, id.). The ejectment case was decided in
PARDO, J.: favor of the respondents whereby the petitioners, their
agents, tenants, privies and members of their families
The case is an appeal via certiorari from a decision 1 of the Court of were ordered to vacate Lot No. 2079 and deliver
Appeals affirming the decision of the trial court, the dispositive possession to the respondents together with all
portion of which reads: improvements and standing crops; to pay said
respondents One Hundred (100) cavans of palay
"WHEREFORE, judgment is rendered dismissing annually from 1972 to the present or in the total amount
plaintiffs' complaint for lack of cause of action and of One Thousand One Hundred (1,100) cavans of palay;
ordering as vacated the restraining order and writ of and to pay the sum of Five Thousand (P5,000.00) Pesos
preliminary injunction issued in this case; and as reimbursement for the amount respondents had paid
their lawyer to protect their rights; and, the costs of suit
"1. Plaintiffs to be jointly and solidarily liable to (Exh. "57", pp. 256-261, id.). Instead of appealing the
defendants the quantity of one hundred (100) cavans of adverse decision to the Court of First Instance (now
palay every year from 1972 until plaintiffs vacate the RTC), on 8 November 1983, petitioners filed the present
premises of the land in question; case with the Regional Trial Court, Branch 18, Roxas
City, docketed as Civil Case No. V-4887. This case was
"2. Declaring defendants as owner of the land and dismissed for lack of cause of action in a decision, the
entitled to possession; decretal portion of which was quoted earlier."5

"3. Ordering plaintiffs to pay defendants the sum of On 24 November 1993, the Court of Appeals promulgated its
P5,000.00 as attorney's fees and the sum of P5,000.00 as decision affirming in toto the appealed decision.6
litigation expenses; and
Hence, this appeal.7
"4. To pay the costs of the suit.
The Issue
"SO ORDERED.
The issue raised is whether the Court of Appeals erred in ruling
"Roxas City, Philippines, March 18, 1988. that respondents were the owners of the lot in question.

The Court's Ruling

"(Sgd.) JONAS A. ABELLAR
"Judge"2
We deny the petition. The issue is factual. In an appeal via
certiorari, we may not review the findings of fact of the Court of
The Facts Appeals.8 When supported by substantial evidence, the findings of
fact of the Court of Appeals are conclusive and binding on the
The facts, as found by the Court of Appeals, are as follows: parties and are not reviewable by this Court, 9 unless the case falls
under any of the exceptions to the rule.10
"The records show that plaintiffs-appellants 3 (petitioners)
are the heirs of Simeon Borlado whose parents were Petitioner failed to prove that the case falls within the
Serapio Borlado and Balbina Bulan. The original owner exceptions.11 The Supreme Court is not a trier of facts. 12 It is not
of the lot in question, Lot No. 2097 of the Pontevedra our function to review, examine and evaluate or weigh the
Cadastre, Maayon, Capiz, was Serapio Borlado, probative value of the evidence presented. 13 A question of fact
grandfather of petitioners. would arise in such event.14 Questions of fact cannot be raised in
an appeal via certiorari before the Supreme Court and are not
"On 15 April 1942, Serapio sold the lot to Francisco proper for its consideration.15
Bacero (Exh. "C", p. 247, MTC Record) for Three Hundred
Pesos (P300.00). After the death of Francisco on 26 Nevertheless, as a matter of law, the trial court and the Court of
February 1948, his widow Amparo Dionisio Vda. de Appeals erred in holding petitioners liable to pay respondents one
Bacero, in her capacity as legal guardian of her minor hundred (100) cavans of palay every year from 1972 until they
children, namely: Nicolas, Valentin and Luzviminda, all vacate the premises of the land in question.
surnamed Bacero and forced heirs of Francisco Bacero
sold it (the lot) to the Spouses Bienvenido Bulan and The one hundred cavans of palay was awarded as a form of
Salvacion Borbon, through a Deed of Absolute Sale dated damages. We cannot sustain the award. "Palay" is not legal tender
27 August 1954 (Exh. 65, pp. 243-245, id.). currency in the Philippines.

"Upon the execution of the Deed of Sale and even prior El Fallo del Tribunal
thereto, actual possession of Lot No. 2057 was with the
vendees-spouses Bulans in view of a loan obtained by WHEREFORE, the Court DENIES the petition and AFFIRMS the
Francisco Bacero from them in December 1947 (Exh. decision of the Court of Appeals in CA-G.R. CV No. 18980 with
"65", supra). Exercising their right of ownership under modification that petitioners' liability to pay respondents one
the Deed of Sale, Salvacion Borbon Vda. de Bulan hundred (100) cavans of palay every year from 1972 until
declared the lot in her name in 1900 for taxation petitioners vacate the land in question is deleted, for lack of basis.
purposes under Tax Declaration No. 2232 (Exh. "F", p.
254, Record [MTC]). She paid the corresponding taxes as No costs.
evidenced by the Tax Receipts marked as Exhibits "K",
G.R. No. 116100             February 9, 1996 there was an incident when her daughter was dragged by
a bicycle pedalled by a son of one of the tenants in said
SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES apartment along the first passageway. She also
LITO and MARIA CRISTINA SANTOS,petitioners,  mentioned some other inconveniences of having (at) the
vs. front of her house a pathway such as when some of the
COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and tenants were drunk and would bang their doors and
REGIONAL TRIAL COURT OF PASIG, METRO MANILA, windows. Some of their footwear were even lost. . . .
3 
BRANCH 181, respondents. (Emphasis in original text; corrections in parentheses
supplied)
DECISION
On February 27, 1990, a decision was rendered by the trial court,
REGALADO, J.: with this dispositive part:

This petition for review on certiorari assails the decision of Accordingly, judgment is hereby rendered as follows:
respondent Court of Appeals in CA-G.R. CV No. 29115,
promulgated on November 10, 1993, which affirmed with 1) Ordering defendants Custodios and Santoses to give
modification the decision of the trial court, as well as its resolution plaintiff permanent access ingress and egress, to the
dated July 8, 1994 denying petitioner's motion for public street;
reconsideration.1
2) Ordering the plaintiff to pay defendants Custodios and
On August 26, 1982, Civil Case No. 47466 for the grant of an Santoses the sum of Eight Thousand Pesos (P8,000) as
easement of right of way was filed by Pacifico Mabasa against indemnity for the permanent use of the passageway.
Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito
Santos and Maria Cristina C. Santos before the Regional Trial The parties to shoulder their respective litigation
Court of Pasig and assigned to Branch 22 thereof. 2 expenses.4

The generative facts of the case, as synthesized by the trial court Not satisfied therewith, therein plaintiff represented by his heirs,
and adopted by the Court of Appeals, are as follows: herein private respondents, went to the Court of Appeals raising
the sole issue of whether or not the lower court erred in not
Perusing the record, this Court finds that the original awarding damages in their favor. On November 10, 1993, as
plaintiff Pacifico Mabasa died during the pendency of this earlier stated, the Court of Appeals rendered its decision affirming
case and was substituted by Ofelia Mabasa, his surviving the judgment of the trial court with modification, the decretal
spouse [and children]. portion of which disposes as follows:

The plaintiff owns a parcel of land with a two-door WHEREFORE, the appealed decision of the lower court is
apartment erected thereon situated at Interior P. Burgos hereby AFFIRMED WITH MODIFICATION only insofar as
St., Palingon, Tipas, Tagig, Metro Manila. The plaintiff the herein grant of damages to plaintiffs-appellants. The
was able to acquire said property through a contract of Court hereby orders defendants-appellees to pay
sale with spouses Mamerto Rayos and Teodora Quintero plaintiffs-appellants the sum of Sixty Five Thousand
as vendors last September 1981. Said property may be (P65,000) Pesos as Actual Damages, Thirty Thousand
described to be surrounded by other immovables (P30,000) Pesos as Moral Damages, and Ten Thousand
pertaining to defendants herein. Taking P. Burgos Street (P10,000) Pesos as Exemplary Damages. The rest of the
as the point of reference, on the left side, going to appealed decision is affirmed to all respects. 5
plaintiff's property, the row of houses will be as follows:
That of defendants Cristino and Brigido Custodio, then On July 8, 1994, the Court of Appeals denied petitioner's motion
that of Lito and Maria Cristina Santos and then that of for reconsideration.6 Petitioners then took the present recourse to
Ofelia Mabasa. On the right side (is) that of defendant us, raising two issues, namely, whether or not the grant of right of
Rosalina Morato and then a Septic Tank (Exhibit "D"). As way to herein private respondents is proper, and whether or not
an access to P. Burgos Street from plaintiff's property, the award of damages is in order.
there are two possible passageways. The first passageway
is approximately one meter wide and is about 20 meters With respect to the first issue, herein petitioners are already
distan(t) from Mabasa's residence to P. Burgos Street. barred from raising the same. Petitioners did not appeal from the
Such path is passing in between the previously decision of the court a quo granting private respondents the right
mentioned row of houses. The second passageway is of way, hence they are presumed to be satisfied with the
about 3 meters in width and length from plaintiff adjudication therein. With the finality of the judgment of the trial
Mabasa's residence to P. Burgos Street; it is about 26 court as to petitioners, the issue of propriety of the grant of right
meters. In passing thru said passageway, a less than a of way has already been laid to rest.
meter wide path through the septic tank and with 5-6
meters in length, has to be traversed. For failure to appeal the decision of the trial court to the Court of
Appeals, petitioners cannot obtain any affirmative relief other than
When said property was purchased by Mabasa, there those granted in the decision of the trial court. That decision of
were tenants occupying the remises and who were the court below has become final as against them and can no
acknowledged by plaintiff Mabasa as tenants. However, longer be reviewed, much less reversed, by this Court. The rule in
sometime in February, 1982, one of said tenants vacated this jurisdiction is that whenever an appeal is taken in a civil case,
the apartment and when plaintiff Mabasa went to see the an appellee who has not himself appealed may not obtain from the
premises, he saw that there had been built an adobe appellate court any affirmative relief other than what was granted
fence in the first passageway making it narrower in width. in the decision of the lower court. The appellee can only advance
Said adobe fence was first constructed by defendants any argument that he may deem necessary to defeat the
Santoses along their property which is also along the first appellant's claim or to uphold the decision that is being disputed,
passageway. Defendant Morato constructed her adobe and he can assign errors in his brief if such is required to
fence and even extended said fence in such a way that strengthen the views expressed by the court a quo. These assigned
the entire passageway was enclosed. (Exhibit "1-Santoses errors, in turn, may be considered by the appellate court solely to
and Custodios, Exh. "D" for plaintiff, Exhs. "1-C", "1-D" maintain the appealed decision on other grounds, but not for the
and "1-E") And it was then that the remaining tenants of purpose of reversing or modifying the judgment in the appellee's
said apartment vacated the area. Defendant Ma. Cristina favor and giving him other affirmative reliefs. 7
Santos testified that she constructed said fence because
However, with respect to the second issue, we agree with of private respondents, either by law or by contract. The fact that
petitioners that the Court of Appeals erred in awarding damages private respondents had no existing right over the said
in favor of private respondents. The award of damages has no passageway is confirmed by the very decision of the trial court
substantial legal basis. A reading of the decision of the Court of granting a compulsory right of way in their favor after payment of
Appeals will show that the award of damages was based solely on just compensation. It was only that decision which gave private
the fact that the original plaintiff, Pacifico Mabasa, incurred losses respondents the right to use the said passageway after payment of
in the form of unrealized rentals when the tenants vacated the the compensation and imposed a corresponding duty on
leased premises by reason of the closure of the passageway. petitioners not to interfere in the exercise of said right.

However, the mere fact that the plaintiff suffered losses does not Hence, prior to said decision, petitioners had an absolute right
give rise to a right to recover damages. To warrant the recovery of over their property and their act of fencing and enclosing the same
damages, there must be both a right of action for a legal wrong was an act which they may lawfully perform in the employment
inflicted by the defendant, and damage resulting to the plaintiff and exercise of said right. To repeat, whatever injury or damage
therefrom. Wrong without damage, or damage without wrong, does may have been sustained by private respondents by reason of the
not constitute a cause of action, since damages are merely part of rightful use of the said land by petitioners is damnum absque
the remedy allowed for the injury caused by a breach or wrong. 8 injuria.17

There is a material distinction between damages and injury. Injury A person has a right to the natural use and enjoyment of his own
is the illegal invasion of a legal right; damage is the loss, hurt, or property, according to his pleasure, for all the purposes to which
harm which results from the injury; and damages are the such property is usually applied. As a general rule, therefore,
recompense or compensation awarded for the damage suffered. there is no cause of action for acts done by one person upon his
Thus, there can be damage without injury in those instances in own property in a lawful and proper manner, although such acts
which the loss or harm was not the result of a violation of a legal incidentally cause damage or an unavoidable loss to another, as
duty. These situations are often called damnum absque injuria.9 such damage or loss is damnum absque injuria. 18 When the owner
of property makes use thereof in the general and ordinary manner
In order that a plaintiff may maintain an action for the injuries of in which the property is used, such as fencing or enclosing the
which he complains, he must establish that such injuries resulted same as in this case, nobody can complain of having been injured,
from a breach of duty which the defendant owed to the plaintiff a because the incovenience arising from said use can be considered
concurrence of injury to the plaintiff and legal responsibility by as a mere consequence of community life. 19
the person causing it.10 The underlying basis for the award of tort
damages is the premise that an individual was injured in The proper exercise of a lawful right cannot constitute a legal
contemplation of law. Thus, there must first be the breach of some wrong for which an action will lie, 20 although the act may result in
duty and the imposition of liability for that breach before damages damage to another, for no legal right has been invaded. 21 One may
may be awarded; it is not sufficient to state that there should be use any lawful means to accomplish a lawful purpose and though
tort liability merely because the plaintiff suffered some pain and the means adopted may cause damage to another, no cause of
suffering.11 action arises in the latter's favor. An injury or damage occasioned
thereby is damnum absque injuria. The courts can give no redress
Many accidents occur and many injuries are inflicted by acts or for hardship to an individual resulting from action reasonably
omissions which cause damage or loss to another but which calculated to achieve a lawful means. 22
violate no legal duty to such other person, and consequently
create no cause of action in his favor. In such cases, the WHEREFORE, under the compulsion of the foregoing premises,
consequences must be borne by the injured person alone. The law the appealed decision of respondent Court of Appeals is hereby
affords no remedy for damages resulting from an act which does REVERSED and SET ASIDE and the judgment of the trial court is
not amount to a legal injury or wrong.12 correspondingly REINSTATED.

In other words, in order that the law will give redress for an act
causing damage, that act must be not only hurtful, but wrongful.
There must be damnum et injuria.13 If, as may happen in many
cases, a person sustains actual damage, that is, harm or loss to
his person or property, without sustaining any legal injury, that
is, an act or omission which the law does not deem an injury, the
damage is regarded as damnum absque injuria.14

In the case at bar, although there was damage, there was no legal
injury. Contrary to the claim of private respondents, petitioners
could not be said to have violated the principle of abuse of right.
In order that the principle of abuse of right provided in Article 21
of the Civil Code can be applied, it is essential that the following
requisites concur: (1) The defendant should have acted in a
manner that is contrary to morals, good customs or public policy;
(2) The acts should be willful; and (3) There was damage or injury
to the plaintiff.15

The act of petitioners in constructing a fence within their lot is a

valid exercise of their right as owners, hence not contrary to
morals, good customs or public policy. The law recognizes in the
owner the right to enjoy and dispose of a thing, without other
limitations than those established by law.16 It is within the right of
petitioners, as owners, to enclose and fence their property. Article
430 of the Civil Code provides that "(e)very owner may enclose or
fence his land or tenements by means of walls, ditches, live or
dead hedges, or by any other means without detriment to
servitudes constituted thereon."

At the time of the construction of the fence, the lot was not subject
to any servitudes. There was no easement of way existing in favor
G.R. No. 160273             January 18, 2008 1. Ordering defendants to pay, jointly and severally,
plaintiff the amount of P2,340,000.00 as actual or
CEBU COUNTRY CLUB, INC., SABINO R. DAPAT, RUBEN D. compensatory damages.
ALMENDRAS, JULIUS Z. NERI, DOUGLAS L. LUYM, CESAR T.
LIBI, RAMONTITO* E. GARCIA and JOSE B. 2. Ordering defendants to pay, jointly and severally,
SALA, petitioners,  plaintiff the amount of P5,000,000.00 as moral damages.
vs.
RICARDO F. ELIZAGAQUE, respondent. 3. Ordering defendants to pay, jointly and severally,
plaintiff the amount of P1,000,000.00 as exemplary
DECISION damages.

SANDOVAL-GUTIERREZ, J.: 4. Ordering defendants to pay, jointly and severally,

plaintiff the amount of P1,000,000.00 as and by way of
For our resolution is the instant Petition for Review attorney’s fees and P80,000.00 as litigation expenses.
on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
as amended, assailing the Decision1 dated January 31, 2003 and 5. Costs of suit.
Resolution dated October 2, 2003 of the Court of Appeals in CA-
G.R. CV No. 71506. Counterclaims are hereby DISMISSED for lack of merit.

The facts are: SO ORDERED.2

Cebu Country Club, Inc. (CCCI), petitioner, is a domestic On appeal by petitioners, the Court of Appeals, in its Decision
corporation operating as a non-profit and non-stock private dated January 31, 2003, affirmed the trial court’s Decision with
membership club, having its principal place of business in modification, thus:
Banilad, Cebu City. Petitioners herein are members of its Board of
Directors. WHEREFORE, premises considered, the assailed
Decision dated February 14, 2001 of the Regional Trial
Sometime in 1987, San Miguel Corporation, a special company Court, Branch 71, Pasig City in Civil Case No. 67190 is
proprietary member of CCCI, designated respondent Ricardo F. hereby AFFIRMED with MODIFICATION as follows:
Elizagaque, its Senior Vice President and Operations Manager for
the Visayas and Mindanao, as a special non-proprietary member. 1. Ordering defendants-appellants to pay, jointly and
The designation was thereafter approved by the CCCI’s Board of severally, plaintiff-appellee the amount of P2,000,000.00
Directors. as moral damages;

In 1996, respondent filed with CCCI an application for proprietary 2. Ordering defendants-appellants to pay, jointly and
membership. The application was indorsed by CCCI’s two (2) severally, plaintiff-appellee the amount of P1,000,000.00
proprietary members, namely: Edmundo T. Misa and Silvano as exemplary damages;
Ludo.
3. Ordering defendants-appellants to pay, jointly and
As the price of a proprietary share was around the P5 million severally, plaintiff-appellee the mount of P500,000.00 as
range, Benito Unchuan, then president of CCCI, offered to sell attorney’s fees and P50,000.00 as litigation expenses;
respondent a share for only P3.5 million. Respondent, however, and
purchased the share of a certain Dr. Butalid for only P3 million.
Consequently, on September 6, 1996, CCCI issued Proprietary 4. Costs of the suit.
Ownership Certificate No. 1446 to respondent.
The counterclaims are DISMISSED for lack of merit.
During the meetings dated April 4, 1997 and May 30, 1997 of the
CCCI Board of Directors, action on respondent’s application for SO ORDERED.3
proprietary membership was deferred. In another Board meeting
held on July 30, 1997, respondent’s application was voted upon. On March 3, 2003, petitioners filed a motion for reconsideration
Subsequently, or on August 1, 1997, respondent received a letter and motion for leave to set the motion for oral arguments. In its
from Julius Z. Neri, CCCI’s corporate secretary, informing him Resolution4 dated October 2, 2003, the appellate court denied the
that the Board disapproved his application for proprietary motions for lack of merit.
membership.
Hence, the present petition.
On August 6, 1997, Edmundo T. Misa, on behalf of respondent,
wrote CCCI a letter of reconsideration. As CCCI did not answer, The issue for our resolution is whether in disapproving
respondent, on October 7, 1997, wrote another letter of respondent’s application for proprietary membership with CCCI,
reconsideration. Still, CCCI kept silent. On November 5, 1997, petitioners are liable to respondent for damages, and if so,
respondent again sent CCCI a letter inquiring whether any whether their liability is joint and several.
member of the Board objected to his application. Again, CCCI did
not reply.
Petitioners contend, inter alia, that the Court of Appeals erred in
awarding exorbitant damages to respondent despite the lack of
Consequently, on December 23, 1998, respondent filed with the evidence that they acted in bad faith in disapproving the latter’s
Regional Trial Court (RTC), Branch 71, Pasig City a complaint for application; and in disregarding their defense of damnum absque
damages against petitioners, docketed as Civil Case No. 67190. injuria.
After trial, the RTC rendered its Decision dated February 14, 2001 For his part, respondent maintains that the petition lacks merit,
in favor of respondent, thus: hence, should be denied.
WHEREFORE, judgment is hereby rendered in favor of CCCI’s Articles of Incorporation provide in part:
plaintiff:
SEVENTH: That this is a non-stock corporation and
membership therein as well as the right of participation
in its assets shall be limited to qualified persons who are
 duly accredited owners of Proprietary Ownership This article, known to contain what is commonly referred
Certificates issued by the corporation in accordance with to as the principle of abuse of rights, sets certain
its By-Laws. standards which must be observed not only in the
exercise of one's rights but also in the performance of
Corollary, Section 3, Article 1 of CCCI’s Amended By-Laws one's duties. These standards are the following: to act
provides: with justice; to give everyone his due; and to observe
honesty and good faith. The law, therefore, recognizes a
SECTION 3. HOW MEMBERS ARE ELECTED – The primordial limitation on all rights; that in their exercise,
procedure for the admission of new members of the Club the norms of human conduct set forth in Article 19 must
shall be as follows: be observed. A right, though by itself legal because
recognized or granted by law as such, may nevertheless
(a) Any proprietary member, seconded by another voting become the source of some illegality. When a right is
proprietary member, shall submit to the Secretary a exercised in a manner which does not conform with the
written proposal for the admission of a candidate to the norms enshrined in Article 19 and results in damage to
"Eligible-for-Membership List"; another, a legal wrong is thereby committed for which
the wrongdoer must be held responsible. But while
(b) Such proposal shall be posted by the Secretary for a Article 19 lays down a rule of conduct for the government
period of thirty (30) days on the Club bulletin board of human relations and for the maintenance of social
during which time any member may interpose objections order, it does not provide a remedy for its violation.
to the admission of the applicant by communicating the Generally, an action for damages under either Article 20
same to the Board of Directors; or Article 21 would be proper. (Emphasis in the original)

(c) After the expiration of the aforesaid thirty (30) days, if In rejecting respondent’s application for proprietary membership,
no objections have been filed or if there are, the Board we find that petitioners violated the rules governing human
considers the objections unmeritorious, the candidate relations, the basic principles to be observed for the rightful
shall be qualified for inclusion in the "Eligible-for- relationship between human beings and for the stability of social
Membership List"; order. The trial court and the Court of Appeals aptly held that
petitioners committed fraud and evident bad faith in disapproving
(d) Once included in the "Eligible-for-Membership List" respondent’s applications. This is contrary to morals, good custom
and after the candidate shall have acquired in his name or public policy. Hence, petitioners are liable for damages
a valid POC duly recorded in the books of the corporation pursuant to Article 19 in relation to Article 21 of the same Code.
as his own, he shall become a Proprietary Member, upon
a non-refundable admission fee of P1,000.00, provided It bears stressing that the amendment to Section 3(c) of CCCI’s
that admission fees will only be collected once from any Amended By-Laws requiring the unanimous vote of the directors
person. present at a special or regular meeting was not printed on the
application form respondent filled and submitted to CCCI. What
On March 1, 1978, Section 3(c) was amended to read as follows: was printed thereon was the original provision of Section 3(c)
which was silent on the required number of votes needed for
(c) After the expiration of the aforesaid thirty (30) days, admission of an applicant as a proprietary member.
the Board may, by unanimous vote of all directors
present at a regular or special meeting, approve the Petitioners explained that the amendment was not printed on the
inclusion of the candidate in the "Eligible-for- application form due to economic reasons. We find this excuse
Membership List". flimsy and unconvincing. Such amendment, aside from being
extremely significant, was introduced way back in 1978 or almost
As shown by the records, the Board adopted a secret balloting twenty (20) years before respondent filed his application. We
known as the "black ball system" of voting wherein each member cannot fathom why such a prestigious and exclusive golf country
will drop a ball in the ballot box. A white ball represents club, like the CCCI, whose members are all affluent, did not have
conformity to the admission of an applicant, while a black ball enough money to cause the printing of an updated application
means disapproval. Pursuant to Section 3(c), as amended, cited form.
above, a unanimous vote of the directors is required. When
respondent’s application for proprietary membership was voted It is thus clear that respondent was left groping in the dark
upon during the Board meeting on July 30, 1997, the ballot box wondering why his application was disapproved. He was not even
contained one (1) black ball. Thus, for lack of unanimity, his informed that a unanimous vote of the Board members was
application was disapproved. required. When he sent a letter for reconsideration and an inquiry
whether there was an objection to his application, petitioners
Obviously, the CCCI Board of Directors, under its Articles of apparently ignored him. Certainly, respondent did not deserve this
Incorporation, has the right to approve or disapprove an kind of treatment. Having been designated by San Miguel
application for proprietary membership. But such right should not Corporation as a special non-proprietary member of CCCI, he
be exercised arbitrarily. Articles 19 and 21 of the Civil Code on the should have been treated by petitioners with courtesy and civility.
Chapter on Human Relations provide restrictions, thus: At the very least, they should have informed him why his
application was disapproved.
Article 19. Every person must, in the exercise of his
rights and in the performance of his duties, act with The exercise of a right, though legal by itself, must nonetheless be
justice, give everyone his due, and observe honesty and in accordance with the proper norm. When the right is exercised
good faith. arbitrarily, unjustly or excessively and results in damage to
another, a legal wrong is committed for which the wrongdoer must
be held responsible.6 It bears reiterating that the trial court and
Article 21. Any person who willfully causes loss or injury
the Court of Appeals held that petitioners’ disapproval of
to another in a manner that is contrary to morals, good
respondent’s application is characterized by bad faith.
customs or public policy shall compensate the latter for
the damage.
As to petitioners’ reliance on the principle of damnum absque
injuria or damage without injury, suffice it to state that the same
In GF Equity, Inc. v. Valenzona,5 we expounded Article 19 and
is misplaced. In Amonoy v. Gutierrez,7 we held that this principle
correlated it with Article 21, thus:
does not apply when there is an abuse of a person’s right, as in
this case.
As to the appellate court’s award to respondent of moral damages,
we find the same in order. Under Article 2219 of the New Civil
Code, moral damages may be recovered, among others, in acts
and actions referred to in Article 21. We believe respondent’s
testimony that he suffered mental anguish, social humiliation and
wounded feelings as a result of the arbitrary denial of his
application. However, the amount of P2,000,000.00 is excessive.
While there is no hard-and-fast rule in determining what would be
a fair and reasonable amount of moral damages, the same should
not be palpably and scandalously excessive. Moral damages are
not intended to impose a penalty to the wrongdoer, neither to
enrich the claimant at the expense of the defendant. 8 Taking into
consideration the attending circumstances here, we hold that an
award to respondent of P50,000.00, instead of P2,000,000.00, as
moral damages is reasonable.

Anent the award of exemplary damages, Article 2229 allows it by

way of example or correction for the public good. Nonetheless,
since exemplary damages are imposed not to enrich one party or
impoverish another but to serve as a deterrent against or as a
negative incentive to curb socially deleterious actions, 9 we reduce
the amount from P1,000,000.00 to P25,000.00 only.

On the matter of attorney’s fees and litigation expenses, Article

2208 of the same Code provides, among others, that attorney’s
fees and expenses of litigation may be recovered in cases when
exemplary damages are awarded and where the court deems it
just and equitable that attorney’s fees and expenses of litigation
should be recovered, as in this case. In any event, however, such
award must be reasonable, just and equitable. Thus, we reduce
the amount of attorney’s fees (P500,000.00) and litigation
expenses (P50,000.00) to P50,000.00 and P25,000.00,
respectively.

Lastly, petitioners’ argument that they could not be held jointly

and severally liable for damages because only one (1) voted for the
disapproval of respondent’s application lacks merit.

Section 31 of the Corporation Code provides:

SEC. 31. Liability of directors, trustees or officers. —

Directors or trustees who willfully and knowingly vote for
or assent to patently unlawful acts of the corporation or
who are guilty of gross negligence or bad faith in
directing the affairs of the corporation or acquire any
personal or pecuniary interest in conflict with their duty
as such directors, or trustees shall be liable jointly and
severally for all damages resulting therefrom suffered by
the corporation, its stockholders or members and other
persons. (Emphasis ours)

WHEREFORE, we DENY the petition. The challenged Decision and

Resolution of the Court of Appeals in CA-G.R. CV No. 71506
are AFFIRMED with modification in the sense that (a) the award of
moral damages is reduced from P2,000,000.00 to P50,000.00; (b)
the award of exemplary damages is reduced from P1,000,000.00
to P25,000.00; and (c) the award of attorney’s fees and litigation
expenses is reduced from P500,000.00 and P50,000.00
to P50,000.00 and P25,000.00, respectively.

Costs against petitioners.

SO ORDERED.
G.R. No. 116100             February 9, 1996 there was an incident when her daughter was dragged by
a bicycle pedalled by a son of one of the tenants in said
SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES apartment along the first passageway. She also
LITO and MARIA CRISTINA SANTOS,petitioners,  mentioned some other inconveniences of having (at) the
vs. front of her house a pathway such as when some of the
COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and tenants were drunk and would bang their doors and
REGIONAL TRIAL COURT OF PASIG, METRO MANILA, windows. Some of their footwear were even lost. . . .
3 
BRANCH 181, respondents. (Emphasis in original text; corrections in parentheses
supplied)
DECISION
On February 27, 1990, a decision was rendered by the trial court,
REGALADO, J.: with this dispositive part:

This petition for review on certiorari assails the decision of Accordingly, judgment is hereby rendered as follows:
respondent Court of Appeals in CA-G.R. CV No. 29115,
promulgated on November 10, 1993, which affirmed with 1) Ordering defendants Custodios and Santoses to give
modification the decision of the trial court, as well as its resolution plaintiff permanent access ingress and egress, to the
dated July 8, 1994 denying petitioner's motion for public street;
reconsideration.1
2) Ordering the plaintiff to pay defendants Custodios and
On August 26, 1982, Civil Case No. 47466 for the grant of an Santoses the sum of Eight Thousand Pesos (P8,000) as
easement of right of way was filed by Pacifico Mabasa against indemnity for the permanent use of the passageway.
Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito
Santos and Maria Cristina C. Santos before the Regional Trial The parties to shoulder their respective litigation
Court of Pasig and assigned to Branch 22 thereof. 2 expenses.4

The generative facts of the case, as synthesized by the trial court Not satisfied therewith, therein plaintiff represented by his heirs,
and adopted by the Court of Appeals, are as follows: herein private respondents, went to the Court of Appeals raising
the sole issue of whether or not the lower court erred in not
Perusing the record, this Court finds that the original awarding damages in their favor. On November 10, 1993, as
plaintiff Pacifico Mabasa died during the pendency of this earlier stated, the Court of Appeals rendered its decision affirming
case and was substituted by Ofelia Mabasa, his surviving the judgment of the trial court with modification, the decretal
spouse [and children]. portion of which disposes as follows:

The plaintiff owns a parcel of land with a two-door WHEREFORE, the appealed decision of the lower court is
apartment erected thereon situated at Interior P. Burgos hereby AFFIRMED WITH MODIFICATION only insofar as
St., Palingon, Tipas, Tagig, Metro Manila. The plaintiff the herein grant of damages to plaintiffs-appellants. The
was able to acquire said property through a contract of Court hereby orders defendants-appellees to pay
sale with spouses Mamerto Rayos and Teodora Quintero plaintiffs-appellants the sum of Sixty Five Thousand
as vendors last September 1981. Said property may be (P65,000) Pesos as Actual Damages, Thirty Thousand
described to be surrounded by other immovables (P30,000) Pesos as Moral Damages, and Ten Thousand
pertaining to defendants herein. Taking P. Burgos Street (P10,000) Pesos as Exemplary Damages. The rest of the
as the point of reference, on the left side, going to appealed decision is affirmed to all respects. 5
plaintiff's property, the row of houses will be as follows:
That of defendants Cristino and Brigido Custodio, then On July 8, 1994, the Court of Appeals denied petitioner's motion
that of Lito and Maria Cristina Santos and then that of for reconsideration.6 Petitioners then took the present recourse to
Ofelia Mabasa. On the right side (is) that of defendant us, raising two issues, namely, whether or not the grant of right of
Rosalina Morato and then a Septic Tank (Exhibit "D"). As way to herein private respondents is proper, and whether or not
an access to P. Burgos Street from plaintiff's property, the award of damages is in order.
there are two possible passageways. The first passageway
is approximately one meter wide and is about 20 meters With respect to the first issue, herein petitioners are already
distan(t) from Mabasa's residence to P. Burgos Street. barred from raising the same. Petitioners did not appeal from the
Such path is passing in between the previously decision of the court a quo granting private respondents the right
mentioned row of houses. The second passageway is of way, hence they are presumed to be satisfied with the
about 3 meters in width and length from plaintiff adjudication therein. With the finality of the judgment of the trial
Mabasa's residence to P. Burgos Street; it is about 26 court as to petitioners, the issue of propriety of the grant of right
meters. In passing thru said passageway, a less than a of way has already been laid to rest.
meter wide path through the septic tank and with 5-6
meters in length, has to be traversed. For failure to appeal the decision of the trial court to the Court of
Appeals, petitioners cannot obtain any affirmative relief other than
When said property was purchased by Mabasa, there those granted in the decision of the trial court. That decision of
were tenants occupying the remises and who were the court below has become final as against them and can no
acknowledged by plaintiff Mabasa as tenants. However, longer be reviewed, much less reversed, by this Court. The rule in
sometime in February, 1982, one of said tenants vacated this jurisdiction is that whenever an appeal is taken in a civil case,
the apartment and when plaintiff Mabasa went to see the an appellee who has not himself appealed may not obtain from the
premises, he saw that there had been built an adobe appellate court any affirmative relief other than what was granted
fence in the first passageway making it narrower in width. in the decision of the lower court. The appellee can only advance
Said adobe fence was first constructed by defendants any argument that he may deem necessary to defeat the
Santoses along their property which is also along the first appellant's claim or to uphold the decision that is being disputed,
passageway. Defendant Morato constructed her adobe and he can assign errors in his brief if such is required to
fence and even extended said fence in such a way that strengthen the views expressed by the court a quo. These assigned
the entire passageway was enclosed. (Exhibit "1-Santoses errors, in turn, may be considered by the appellate court solely to
and Custodios, Exh. "D" for plaintiff, Exhs. "1-C", "1-D" maintain the appealed decision on other grounds, but not for the
and "1-E") And it was then that the remaining tenants of purpose of reversing or modifying the judgment in the appellee's
said apartment vacated the area. Defendant Ma. Cristina favor and giving him other affirmative reliefs. 7
Santos testified that she constructed said fence because
However, with respect to the second issue, we agree with of private respondents, either by law or by contract. The fact that
petitioners that the Court of Appeals erred in awarding damages private respondents had no existing right over the said
in favor of private respondents. The award of damages has no passageway is confirmed by the very decision of the trial court
substantial legal basis. A reading of the decision of the Court of granting a compulsory right of way in their favor after payment of
Appeals will show that the award of damages was based solely on just compensation. It was only that decision which gave private
the fact that the original plaintiff, Pacifico Mabasa, incurred losses respondents the right to use the said passageway after payment of
in the form of unrealized rentals when the tenants vacated the the compensation and imposed a corresponding duty on
leased premises by reason of the closure of the passageway. petitioners not to interfere in the exercise of said right.

However, the mere fact that the plaintiff suffered losses does not Hence, prior to said decision, petitioners had an absolute right
give rise to a right to recover damages. To warrant the recovery of over their property and their act of fencing and enclosing the same
damages, there must be both a right of action for a legal wrong was an act which they may lawfully perform in the employment
inflicted by the defendant, and damage resulting to the plaintiff and exercise of said right. To repeat, whatever injury or damage
therefrom. Wrong without damage, or damage without wrong, does may have been sustained by private respondents by reason of the
not constitute a cause of action, since damages are merely part of rightful use of the said land by petitioners is damnum absque
the remedy allowed for the injury caused by a breach or wrong. 8 injuria.17

There is a material distinction between damages and injury. Injury A person has a right to the natural use and enjoyment of his own
is the illegal invasion of a legal right; damage is the loss, hurt, or property, according to his pleasure, for all the purposes to which
harm which results from the injury; and damages are the such property is usually applied. As a general rule, therefore,
recompense or compensation awarded for the damage suffered. there is no cause of action for acts done by one person upon his
Thus, there can be damage without injury in those instances in own property in a lawful and proper manner, although such acts
which the loss or harm was not the result of a violation of a legal incidentally cause damage or an unavoidable loss to another, as
duty. These situations are often called damnum absque injuria.9 such damage or loss is damnum absque injuria. 18 When the owner
of property makes use thereof in the general and ordinary manner
In order that a plaintiff may maintain an action for the injuries of in which the property is used, such as fencing or enclosing the
which he complains, he must establish that such injuries resulted same as in this case, nobody can complain of having been injured,
from a breach of duty which the defendant owed to the plaintiff a because the incovenience arising from said use can be considered
concurrence of injury to the plaintiff and legal responsibility by as a mere consequence of community life. 19
the person causing it.10 The underlying basis for the award of tort
damages is the premise that an individual was injured in The proper exercise of a lawful right cannot constitute a legal
contemplation of law. Thus, there must first be the breach of some wrong for which an action will lie, 20 although the act may result in
duty and the imposition of liability for that breach before damages damage to another, for no legal right has been invaded. 21 One may
may be awarded; it is not sufficient to state that there should be use any lawful means to accomplish a lawful purpose and though
tort liability merely because the plaintiff suffered some pain and the means adopted may cause damage to another, no cause of
suffering.11 action arises in the latter's favor. An injury or damage occasioned
thereby is damnum absque injuria. The courts can give no redress
Many accidents occur and many injuries are inflicted by acts or for hardship to an individual resulting from action reasonably
omissions which cause damage or loss to another but which calculated to achieve a lawful means. 22
violate no legal duty to such other person, and consequently
create no cause of action in his favor. In such cases, the WHEREFORE, under the compulsion of the foregoing premises,
consequences must be borne by the injured person alone. The law the appealed decision of respondent Court of Appeals is hereby
affords no remedy for damages resulting from an act which does REVERSED and SET ASIDE and the judgment of the trial court is
not amount to a legal injury or wrong.12 correspondingly REINSTATED.

In other words, in order that the law will give redress for an act Romero and Puno, JJ., concur.
causing damage, that act must be not only hurtful, but wrongful.
There must be damnum et injuria.13 If, as may happen in many
cases, a person sustains actual damage, that is, harm or loss to
his person or property, without sustaining any legal injury, that
is, an act or omission which the law does not deem an injury, the
damage is regarded as damnum absque injuria.14

In the case at bar, although there was damage, there was no legal
injury. Contrary to the claim of private respondents, petitioners
could not be said to have violated the principle of abuse of right.
In order that the principle of abuse of right provided in Article 21
of the Civil Code can be applied, it is essential that the following
requisites concur: (1) The defendant should have acted in a
manner that is contrary to morals, good customs or public policy;
(2) The acts should be willful; and (3) There was damage or injury
to the plaintiff.15

The act of petitioners in constructing a fence within their lot is a

valid exercise of their right as owners, hence not contrary to
morals, good customs or public policy. The law recognizes in the
owner the right to enjoy and dispose of a thing, without other
limitations than those established by law.16 It is within the right of
petitioners, as owners, to enclose and fence their property. Article
430 of the Civil Code provides that "(e)very owner may enclose or
fence his land or tenements by means of walls, ditches, live or
dead hedges, or by any other means without detriment to
servitudes constituted thereon."

At the time of the construction of the fence, the lot was not subject
to any servitudes. There was no easement of way existing in favor
G.R. No. 161188             June 13, 2008 Defendants-appellants are ordered to pay, jointly and
severally, plaintiff-appellee the amount of P30,000.00 by
Heirs of PURISIMA NALA, represented by their attorney-in- way of moral damages. It is further ordered to pay him
fact EFEGENIA DIGNA DUYAN, petitioners,  exemplary damages in the amount of P10,000.00
vs. and P10,000.00, attorney's fees.
ARTEMIO CABANSAG, respondent.
SO ORDERED.6
DECISION
In affirming the RTC Decision, the CA took note of the Decision
AUSTRIA-MARTINEZ, J.: dated September 5, 1994 rendered by the RTC of Quezon City,
Branch 80, dismissing Civil Case No. 91-8821, an action for
This is a petition for review under Rule 45 of the Rules of Court reconveyance of real property and cancellation of TCT No. 281115
assailing the Court of Appeals (CA) Decision 1 dated December 19, with damages, filed by Nala against spouses Gomez. 7
2002 and Resolution2 dated October 28, 2003, dismissing
petitioners' appeal and affirming with modification the Regional Hence, herein petition by the heirs of Nala (petitioners) 8 with the
Trial Court (RTC) Decision dated August 10, 1994 rendered in following assignment of errors:
Civil Case No. Q-91-10541.
a) Respondent Court of Appeals erred in not considering
The facts of the case are as follows: the right of Purisima Nala to assert her rights and
interest over the property.
Artemio Cabansag (respondent) filed Civil Case No. Q-91-10541
for damages in October 1991. According to respondent, he bought b) Respondent Court of Appeals erred in not considering
a 50-square meter property from spouses Eugenio Gomez, Jr. and the Decision rendered by the Court of Appeals in the case
Felisa Duyan Gomez on July 23, 1990. Said property is part of a for reconveyance which upheld the rights and interest of
400-square meter lot registered in the name of the Gomez Purisima Nala and her children over a certain parcel of
spouses. In October 1991, he received a demand letter from Atty. land, a portion of which is subject of the present case.
Alexander del Prado (Atty. Del Prado), in behalf of Purisima Nala
(Nala), asking for the payment of rentals from 1987 to 1991 until c) Respondent Court of Appeals erred in awarding
he leaves the premises, as said property is owned by Nala, failing damages and attorney's fees without any basis. 9
which criminal and civil actions will be filed against him. Another
demand letter was sent on May 14, 1991. Because of such Atty. Del Prado filed a motion for extension of time to file his
demands, respondent suffered damages and was constrained to separate petition but it was denied by the Court per its Resolution
file the case against Nala and Atty. Del Prado. 3 dated January 19, 2004 issued in G.R. No. 160829.

Atty. Del Prado claimed that he sent the demand letters in good Petitioners argue that their predecessor-in-interest had every right
faith and that he was merely acting in behalf of his client, Nala, to protect and assert her interests over the property. Nala had no
who disputed respondent's claim of ownership. Nala alleged that knowledge that the property was sold by spouses Gomez to
said property is part of an 800-square meter property owned by respondent when the demand letters were sent. What she was
her late husband, Eulogio Duyan, which was subsequently divided aware of was the fact that spouses Gomez were managing the
into two parts. The 400-square meter property was conveyed to rentals on the property by virtue of the implied trust created
spouses Gomez in a fictitious deed of sale, with the agreement between them and Eulogio Duyan. When spouses Gomez failed to
that it will be merely held by them in trust for the Duyan's remit the rentals and claimed ownership of the property, it was
children. Said property is covered by Transfer Certificate of Title then that Nala decided to procure the services of legal counsel to
(TCT) No. 281115 in the name of spouses Gomez. Nala also protect their rights over the property.
claimed that respondent is only renting the property which he
occupies.4 Petitioners also contend that it was error for the CA to take note of
the RTC Decision in Civil Case No. 91-8821 without further noting
After trial, the RTC of Quezon City, Branch 93, rendered its that the CA had already reversed and set aside said RTC Decision
Decision on August 10, 1994, in favor of respondent. The and ordered reconveyance of the property to Nala and her children
dispositive portion of the Decision provides: in a Decision dated March 8, 2000 rendered in CA-G.R. CV No.
49163. Petitioners also argue that respondent did not substantiate
WHEREFORE, premises considered, by preponderance of his claim for damages.
evidence, the Court finds in favor of the plaintiff and
hereby orders the defendants, jointly and severally, to Preliminarily, the Court notes that both the RTC and the CA failed
pay plaintiff the following: to indicate the particular provision of law under which it held
petitioners liable for damages. Nevertheless, based on the
1. P150,000.00 by way of moral damages; allegations in respondent's complaint, it may be gathered that the
basis for his claim for damages is Article 19 of the Civil Code,
2. P30,000.00 by way of exemplary damages; which provides:

3. P20,000.00 as and for reasonable attorney's Art. 19. Every person must, in the exercise of his rights
fees and other litigation expenses; and and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good
4. to pay the costs. faith.

SO ORDERED.5 The foregoing provision sets the standards which may be observed
not only in the exercise of one's rights but also in the performance
Nala and Atty. Del Prado appealed to the CA. The herein assailed of one's duties. When a right is exercised in a manner which does
CA Decision dated December 19, 2002 affirmed the RTC Decision not conform with the norms enshrined in Article 19 and results in
with modification, thus: damage to another, a legal wrong is thereby committed for which
the wrongdoer must be held responsible. But a right, though by
WHEREFORE, premises considered, the instant appeal is itself legal because recognized or granted by law as such, may
hereby DISMISSED. The assailed decision of the Regional nevertheless become the source of some illegality. A person should
Trial Court, Branch 93, Quezon City, in Civil Case No. Q- be protected only when he acts in the legitimate exercise of his
91-10541 is heretofore AFFIRMED with MODIFICATION. right; that is, when he acts with prudence and in good faith, but
not when he acts with negligence or abuse. There is an abuse of are NULLIFIED. Civil Case No. Q-91-10541 is DISMISSED for lack
right when it is exercised only for the purpose of prejudicing or of merit.
injuring another. The exercise of a right must be in accordance
with the purpose for which it was established, and must not be Costs against respondent.
excessive or unduly harsh; there must be no intention to injure
another.[10] SO ORDERED.

In order to be liable for damages under the abuse of rights

principle, the following requisites must concur: (a) the existence of
a legal right or duty; (b) which is exercised in bad faith; and (c) for
the sole intent of prejudicing or injuring another. 11

It should be stressed that malice or bad faith is at the core of

Article 19 of the Civil Code. Good faith is presumed, and he who
alleges bad faith has the duty to prove the same. 12 Bad faith, on
the other hand, does not simply connote bad judgment to simple
negligence, dishonest purpose or some moral obloquy and
conscious doing of a wrong, or a breach of known duty due to
some motives or interest or ill will that partakes of the nature of
fraud. Malice connotes ill will or spite and speaks not in response
to duty. It implies an intention to do ulterior and unjustifiable
harm.13

In the present case, there is nothing on record which will prove

that Nala and her counsel, Atty. Del Prado, acted in bad faith or
malice in sending the demand letters to respondent. In the first
place, there was ground for Nala's actions since she believed that
the property was owned by her husband Eulogio Duyan and that
respondent was illegally occupying the same. She had no
knowledge that spouses Gomez violated the trust imposed on
them by Eulogio and surreptitiously sold a portion of the property
to respondent. It was only after respondent filed the case for
damages against Nala that she learned of such sale. The bare fact
that respondent claims ownership over the property does not give
rise to the conclusion that the sending of the demand letters by
Nala was done in bad faith. Absent any evidence presented by
respondent, bad faith or malice could not be attributed to
petitioner since Nala was only trying to protect their interests over
the property.

Moreover, respondent failed to show that Nala and Atty. Del

Prado's acts were done with the sole intention of prejudicing and
injuring him. It may be true that respondent suffered mental
anguish, serious anxiety and sleepless nights when he received
the demand letters; however, there is a material distinction
between damages and injury. Injury is the legal invasion of a legal
right while damage is the hurt, loss or harm which results from
the injury.14Thus, there can be damage without injury in those
instances in which the loss or harm was not the result of a
violation of a legal duty. In such cases, the consequences must be
borne by the injured person alone; the law affords no remedy for
damages resulting from an act which does not amount to a legal
injury or wrong. These situations are often called damnum absque
injuria.15

Nala was acting well within her rights when she instructed Atty.
Del Prado to send the demand letters. She had to take all the
necessary legal steps to enforce her legal/equitable rights over the
property occupied by respondent. One who makes use of his own
legal right does no injury. 16 Thus, whatever damages are suffered
by respondent should be borne solely by him.

Nala's acts in protecting her rights over the property find further
solid ground in the fact that the property has already been ordered
reconveyed to her and her heirs. In its Decision dated March 8,
2000 in CA-G.R. CV No. 49163, the CA reversed and set aside the
RTC's Decision and ordered the reconveyance of the property to
petitioners, and TCT No. 281115 was declared canceled. Said CA
Decision was affirmed by this Court in its Decision dated March
18, 2005 in G.R. No. 144148, which became final and executory
on July 27, 2005.

WHEREFORE, the petition is GRANTED. The Decision dated

December 19, 2002 and Resolution dated October 28, 2003
rendered by the Court of Appeals in CA-G.R. CV No. 48580
G.R. No. L-8385            March 24, 1914 conduct of her business or that she could make any less
amount therein than she could make if she did not suffer
LUCIO ALGARRA, plaintiff-appellant,  from this direct. The court, therefore, did not err in
vs. allowing her no further damages on this
SIXTO SANDEJAS, defendant-appellee. account, because there was no evidence that she had
suffered any.
Southworth, Hargis & Springer for appellant.
Rohde & Wright for appellee. The alleged damages which the court refused to entertain in that
case and under the discussion of which appears the above
TRENT, J.: quotation from Viada, were for pain and suffering the plaintiff may
have experienced. The court said: "For the profits which the
This is a civil action for personal injuries received from a collision plaintiff failed to obtain, spoken of in the latter part of this article,
with the defendant's automobile due to the negligence of the the plaintiff was allowed to recover, and the question is, whether
defendant, who was driving the car. The negligence of the the value of the loss which she suffered can be extended to pain
defendant is not questioned and this case involves only the which she experienced by reason of the accident."
amount of damages which should be allowed.
Actions for damages such as the case at bar are based upon
As a result of the injuries received, plaintiff was obliged to spend article 1902 of the Civil Code, which reads as follows: "A person
ten days in the hospital, during the first four or five of which he who, by act or omission, causes damage to another where there is
could not leave his bed. After being discharged from the hospital, fault or negligence shall be obliged to repair the damage so done."
he received medical attention from a private practitioner for
several days. The latter testified that after the last treatment the Of this article, the supreme court of Spain, in its decision of
plaintiff described himself as being well. On the trial the plaintiff February 7, 1900, in considering the indemnity imposed by it,
testified that he had done no work since the accident, which said: "It is undisputed that said reparation, to be efficacious and
occurred on July 9, 1912, and that he was not yet entirely substantial, must rationally include the generic idea of complete
recovered. Plaintiff testified that his earning capacity was P50 per indemnity, such as is defined and explained in article 1106 of the
month. It is not clear at what time plaintiff became entirely well said (Civil) Code."
again, but as to the doctor to whom he described himself as being
well stated that this was about the last of July, and the trial took Articles 1106 and 1107 of the Civil Code read as follows:
place September 19, two months' pay would seem sufficient for
the actual time lost from his work. Plaintiff further testified that 1106. Indemnity for losses and damages includes not
he paid the doctor P8 and expended P2 for medicines. This only the amount of the loss which may have been
expenses, amounting in all to P110 should also be allowed. suffered, but also that of the profit which the creditor
may have failed to realize, reserving the provisions
Plaintiff sold the products of a distillery on a 10 per cent contained in the following articles.
commission and made an average of P50 per month. He had about
twenty regular customers who, it seems, purchased in small 1107. The losses and damages for which a debtor in good
quantities, necessitating regular and frequent deliveries. Since the faith is liable, are those foreseen or which may have been
accident his wife had done something in a small way to keep up foreseen, at the time of constituting the obligation, and
this business but the total orders taken by her would not net which may be a necessary consequence of its
them over P15. He lost all his regular customers but four, other nonfulfillment.
agents filing their orders since his accident. It took him about four
years to build up the business he had at the time of the accident, In case of fraud, the debtor shall be liable for all those
and he could not say how long it would take him to get back the which clearly may originate from the nonfulfillment of the
business he had lost. obligation.

Under this state of facts, the lower court, while recognizing the Fraud is not an element of the present case, and we are not
justness of he claim, refused to allow him anything for injury to therefore concerned with it. The liability of the present defendant
his business due to his enforced absence therefrom, on the includes only those damages which were "foreseen or may have
ground that the doctrine of Marcelo vs. Velasco (11 Phil., Rep., been foreseen" at the time of the accident, and which are the
277) is opposed t such allowance. The trial court's opinion necessary and immediate consequences of his fault. In discussing
appears to be based upon the following quotation from Viada (vol. the question of damages under the civil law, Gutierrez (vol. 4, pp.
1 p. 539), quoted in that decision: ". . . with regard to the offense 64, 65) says:
of lesiones, for example, the civil liability is almost always limited
to indemnity for damage to the party aggrieved for the time during In the impossibility of laying down a surer rule, the Code
which he was incapacitated for work; . . ." understands known damages to be those which in the
prudent discernment of the judge merit such a
This statement, however, derives its force, not from any provision qualification, although their consequences may not be
of the law applicable to lesiones, but is a mere deduction from the direct, immediate inevitable.
operation of the law upon the cases arising under it. That the
interpretation placed upon this statement of Viada by the lower If it is a question of losses occasioned through other
court is either not correct, or that it does not apply to actions for causes, except fraud, and the contracting parties have
personal injuries under article 1902 of the Civil Code, is apparent not covenanted any indemnity for the case of
from the decisions of the supreme court of Spain of January 8, nonfulfillment, then the reparation of the losses or
1906, January 15, 1902, and October 19, 1909, to which a more damages shall only comprise those that fault. This rule
extended reference will be made further on in this opinion. There may not be very clear, but is the only one possible in a
is nothing said in the decision in question prohibiting the matter more of the domain of prudence than of law.
allowance of compensatory damages, nor does there seem to be
anything contained therein opposed to the allowance of such In its decision of April 18, 1901, the supreme court of Spain said:
damages occurring subsequent to the institution of the action. In "Neither were the errors incurred that are mentioned in the third
fact, it appears from the following quotation that the court would assignment, since the indemnity for damages is understood to
have been disposed to consider favorably the plaintiff's claim for apply to those caused the complainant directly, and not to those
injury to her business had the evidence presented it. which, indirectly and through more or less logical deductions, may
affect the interests of the Ayuntamiento de Viana, as occurs in the
No evidence was then offered by the plaintiff to show that present case where the increase of wealth concerns not only
this slight lameness in any way interfered with the
the Ayuntamiento but also the provide and the state, yet, not on against a contingency so natural as that of losing his
this account does any action lie in their behalf as derived from the balance to a greater or less extent when the car rounds a
contracts with Urioste." curve.

This doctrine is also affirmed in the more recent decision of March In Crespo vs. Garcia (112 Jurisp., 796), the plaintiff, a servant
18, 1909, in the following words: "For the calculation of the woman, 72 years old, was injured in the performance of her duties
damages claimed, it is necessary, pursuant to the provisions of by the sudden and unexpected failure of the upper floor of a house
article 924 of the Law of Civil Procedure, to give due regard to the in which she was working. The owner and the architect of the
nature of the obligation that was unfulfilled and to the reasonable building were made defendants and after due trial it was held that
consequences of its nonfulfillment, because the conviction sought no responsibility attached to them for the failure of the floor,
can be imposed only when there exists a natural and true relation consequently the plaintiff was not allowed to recover. On her
between such nonfulfillment and damages, whatever, reason there appeal to the supreme court that tribunal said:
may be to demand them on another account."
Whereas the trial court held, in view of all the evidence
In the case of Garcia Gamo vs. Compania Madrilena de Alumbrado, adduced, including the expert and other testimony, that
etc. (101 Juris, p., 662), it appeared that an employee of the the act which occasioned the injury suffered by Doña
defendant company whose duty it was to clean and light the street Maria Alonso Crespo, was accidental, without fault of
lamps left as stepladder leaning against a tree which stood in a anybody, and consequently fortuitous, and that, in so
public promenade. The seven-year old son of the plaintiff climbed considering it to absolve the defendants, he did not incur
the tree by means of the ladder, and while endeavoring to cut the second error assigned on the appeal, because,
some branches fell to the ground, sustaining severe injuries which without overlooking the import and legal value of the
eventually caused his death. The plaintiff lost in the lower courts affidavit adduced at the trial, he held that the defendants
and on appeal to the supreme court the decision of those lower in their conduct were not liable for any omission that
courts was affirmed with the following statement; might constitute such fault or negligence as would oblige
them to indemnify the plaintiff; and to support the error
That in this sense — aside from the fitness of the assigned no legal provision whatever was cited such as
judgment appealed from, inasmuch as the acquittal of would require a different finding, nor was any other
the defendant party resolves all the issues argued at the authentic document produced than the aforesaid
trial, if no counterclaim was made — the assignments of affidavit which contained an account of the ocular
error in the appeal cannot be sustained, because, while inspection and the expert's report, which, as well as the
the act of placing the stepladder against the tree in the testimony of the witnesses, the trial court was able to
manner and for the purposes aforestated, was not pass upon in accordance with its exclusive power-all
permissible it was regularly allowed by the local points of proof which do not reveal any mistake on the
authorities, and that fact did not precisely determine the part of the judge, whose opinion the appellant would
injury, which was due first to the abandonment of the substitute with his own by a different interpretation.
child by his parents and secondly to his own
imprudence, according to the findings of the trial court, These authorities are sufficient to show that liability for acts ex
not legally objected to in the appeal; so it is beyond delicto under the Civil Code is precisely that embraced within the
peradventure that the circumstances necessary for "proximate cause" of the Anglo-Saxon law of torts.
imposing the obligations arising from guilt or negligence
do not concur in the present case. The general rule, as frequently stated, is that in order
that an act omission may be the proximate cause of an
The court here simply held that the injury to the child could not injury, the injury must be the natural and probable
be considered as the probable consequence of an injury which consequence of the act or omission and such as might
could have been foreseen from the act of the company's employee have been foreseen by an ordinarily responsible and
in leaving the ladder leaning against the tree. prudent man, in the light of the attendant
circumstances, as likely to result therefrom . . .
In De Alba vs. Sociedad Anonima de Tranvias (102 Juris, p., 928),
a passenger was standing on the platform of a street car while it According to the latter authorities foreseeableness, as an
was in motion when, on rounding a curve, the plaintiff fell off and element of proximate cause, does not depend upon
under the car, thereby sustaining severe injuries which took whether an ordinarily reasonable and prudent man
several months to heal. He was not allowed to recover in the lower would or ought in advance to have anticipated the result
courts and on appeal the supreme court sustained the inferior which happened, but whether, if such result and the
tribunals saying: chain of events connecting it with the act complained of
had occurred to his mind, the same would have seemed
Whereas, considering the circumstances of the accident natural and probable and according to the ordinary
that happened to D. Antonio Morales de Alba, such as course of nature. Thus, as said in one case, "A person
they were held by the trail court to have been proved, the guilty of negligence, or an unlawful act, should be held
evidence does not disclose that any liability whatever in responsible for all the consequences which a prudent
the said accident, for acts or omissions, may be charged and experienced man, fully acquainted with all the
against the employees of the street car, as being guilty circumstances which in fact existed, would at the time of
through fault or negligence, since it was shown that the the negligent or unlawful act have thought reasonable to
car was not traveling at any unusual speed nor was this follow, if they had occurred to his mind." (Wabash R. etc.
increased on rounding the curve, but that the accident Co. vs. Coker, 81 Ill. App. 660, 664; Cooley on Torts, sec.
was solely due to the fact that the car in turning made a 15.)
movement which caused the plaintiff to lose his balance;
and whereas no act whatever has been proved of any The view which I shall endeavor to justify is that, for the
violation of the regulations, nor can it be required of purpose of civil liability, those consequences, and those
street-car employees, who have to attend to their only, are deemed "immediate," "proximate," or, to
respective duties, that they should foresee and be on the anticipate a little, "natural and probable," which a person
alert to notify the possibility of danger when not greater of average competence and knowledge, being in the like
than that which is more or less inherent to this mode of case with the person whose conduct is complained of,
travel; therefore the appeal can not be upheld, and with and having the like opportunities of observation, might
all the more reason since the passenger who takes the be expected to foresees as likely to follow upon such
risk of travelling on the platform, especially when there is conduct. This is only where the particular consequence is
an unoccupied seat in the car, should be on his guard not known to have been intended or foreseen by the
 actor. If proof of that be forthcoming, whether the and 1902 that he who causes damages must repair them, their
consequence was "immediate" or not does not matter. existence must be proved.
That which a man actually foresees is to him, at all
events, natural and probable. (Webb's Pollock on Torts, In at least one case decided by this court we held in effect that
p. 32.) nominal damages could not be allowed. (Mercado vs. Abangan, 10
Phil., Rep., 676.)
There is another line of definitions which have for their basis "the
natural and probable consequences" or "the direct and immediate The purpose of the law in awarding actual damages is to
consequences" of the defendant's act. (Joyce on Damages, sec. 82.) repair the wrong that has been done, to compensate for
the injury inflicted, and not to impose a penalty. Actual
It will be observed that the supreme court of Spain, in the above damages are not dependent on nor graded by the intent
decisions, has rather inclined to this line of definitions of what with which the wrongful act is done." (Field vs. Munster,
results a defendant is liable for as a consequence of his wrongful 11 Tex. Civ., Appl., 341, 32 S. W., 417.) "The words
acts, while the Civil Code uses the phraseology, "those foreseen or "actual damages" shall be construed to include all
which may have been foreseen." From either viewpoint the method damages that the plaintiff may he has suffered in respect
of arriving at the liability of the wrongdoer under the Civil Code to his property, business, trade, profession, or
and under the Anglo Saxon law is the same. Such was the holding occupation, and no other damages whatever." (Gen Stat.
of this court in Taylor vs. M. E. R. and L. Co. (16 Phil. Rep., 8, 15): Minn. 1894, sec., 5418.) "Actual damages are
compensatory only." (Lord, Owen and Co. vs. Wood, 120
We agree with counsel for appellant that under the Civil Iowa, 303, 94 N. W., 842.) " `Compensatory damages' as
Code, as under the generally accepted doctrine in the indicated by the word employed to characterize them,
United States, the plaintiff in an action such as that simply make good or replace the loss caused by the
under consideration, in order to establish his right to a wrong. They proceed from a sense of natural justice, and
recovery, must establish by competent evidence: are designed to repair that of which one has been
deprived by the wrong of another." (Reid vs. Terwilliger,
(1) Damages to the plaintiff. 116 N. Y., 530; 22 N. E., 1091.) "Compensatory damages'
are such as awarded to compensate the injured party for
(2) Negligence by act or omission of which defendant caused by the wrong, and must be only such as make
personally, or some person for whose acts it must just and fair compensation, and are due when the wrong
respond, was guilty. is established, whether it was committed maliciously —
that is, with evil intention — or not. (Wimer vs. Allbaugh,
(3) The connection of cause and effect between the 78 Iowa, 79; 42 N. W., 587; 16 Am. St. Rep., 422.)
negligence and the damages.
Finally, this court has itself held that actual damages are the
These propositions are, of course, elementary, and do not extent of the recovery allowed to the plaintiff. In Marker vs.
admit of discussion, the real difficulty arising in the Garcia (5 Phil., Rep., 557), which was an action for damages for
application of these principles to the particular facts breach of contract, this court said: "Except in those cases where
developed in the case under consideration. the law authorizes the imposition of punitive or exemplary
damages, the party claiming damages must establish by
Parenthetically it may be said that we are not now dealing with the competent evidence the amount of such damages, and courts can
doctrine of comparative (contributory) negligence which was not give judgment for a greater amount than those actually
established by Rakes vs. A. G. and P. Co. (7 Phil. Rep., 359), proven."
and Eades vs. A. G. and P. Co. (19 Phil., Rep., 561.)
We are of the opinion that the requirements of article 1902, that
The rules for the measure of damages, once that liability is the defendant repair the damage done can only mean what is set
determined, are, however, somewhat different. The Civil Code forth in the above definitions, Anything short of that would not
requires that the defendant repair the damage caused by his fault repair the damages and anything beyond that would be excessive.
or negligence. No distinction is made therein between damage Actual compensatory damages are those allowed for tortious
caused maliciously and intentionally and damages caused wrongs under the Civil Code; nothing more, nothing less.
through mere negligence in so far as the civil liability of the
wrongdoer in concerned. Nor is the defendant required to do more According to the text of article 1106 of the Civil Code, which,
than repair the damage done, or, in other words, to put the according to the decision of February 7, 1990 (referred to above),
plaintiff in the same position, so far as pecuniary compensation is the generic conception of what article 1902 embraces, actual
can do so, that he would have been in had the damage not been damages include not only loss already suffered, but loss of profits
inflicted. In this respect there is a notable difference between the which may not have been realized. The allowance of loss of
two systems. Under the Anglo-SAxon law, when malicious or prospective profits could hardly be more explicitly provided for.
willful intention to cause the damage is an element of the But it may not be amiss to refer to the decisions of the supreme
defendant's act, it is quite generally regarded as an aggravating court of Spain for its interpretation of this article. The decisions
circumstance for which the plaintiff is entitled to more than mere are numerous upon this point. The decisions are as epitomized by
compensation for the injury inflicted. These are called exemplary Sanchez Roman (vol. 1, 0. 281), interprets article 1106 as follows:
or punitive damages, and no provision is made for them in article
1902 of the Civil Code. Pursuant to articles 1106 and 1107 of the same Code,
which govern in general the matter of indemnity due for
Again it is quite common under the English system to award what the nonfulfillment of obligations, the indemnity
is called nominal damages where there is only a technical violation comprises, not only the value of loss suffered, but also
of the plaintiff's rights resulting in no substantial injury to him. that of the prospective profit that was not realized, and
This branch of damages is also unknown under the Civil Code. If the obligation of the debtor in good faith is limited to
no damages have actually occurred there can be none to repair such losses and damages as were foreseen or might have
and the doctrine of nominal damages is not applicable. Thus it been foreseen at the time the obligation was incurred and
has been often held by the supreme court of Spain that a mere which are a necessary consequence of his failure of
noncompliance with the obligations of a contract is not sufficient fulfillment. Losses and damages under such limitations
to sustain a judgment for damages. It must be shown that and frustrated profits must, therefore, be proved directly
damages actually existed. (Decision of February 10, 1904.) Again, by means of the evidence the law authorizes.
in its decision of January 9, 1897, that high tribunal said that as
a logical consequence of the requirements of articles 1101, 1718, The decisions of January 8, 1906 (published in 14 Jurisp. del
Codigo Civil, 516) had to do with the following case: The plaintiff,
a painter by occupation, was engaged to paint the poles from damages awarded by the lower court were base on too uncertain
which were suspended the trolley wires of a traction company. evidence, and the case was remanded for a new trial as to the
While at work on February 8, 1901, the electric current was amount of damages sustained. Also in Saldivar vs. Municipality of
negligently turned on by the company, whereby plaintiff received a Talisay (18 Phil., Rep., 362), where the lower court exonerated the
severe shock, causing him to fall to the ground. Plaintiff sustained defendant from liability, this court, after a consideration of the
injuries which took several months to heal and his right arm was evidence, held that the defendant was liable and remanded the
permanently disabled by the accident. The age of the plaintiff is case for the purpose of a new trial in order to ascertain the
not stated. His daily wage was four pesetas. He was awarded amount of damages sustained.
25,000 pesetas by the trial court and this judgment was affirmed
on appeal to the supreme court. This was equivalent to In this respect the law of damages under article 1902, as laid
approximately twenty year's salary. down by the decisions of the supreme court of Spain, has been
indirectly modified by the present Code of Civil Procedure so that
In its decision of January 15, 1902 (published in 10 Jurisp. del the finding of the lower court as to the amount of damages is not
Codigo Civil., 260), the supreme court had the following case conclusive on appeal.
under consideration: Plaintiff's son was a travelling salesman 48
years of age, who received an annual salary of 2,500 pesetas and Actual damages, under the American system, include pecuniary
expenses. While travelling on defendant's train an accident recompense for pain and suffering, injured feelings, and the like.
occurred which caused his death. The accident was held to be due Article 1902, as interpreted by this court in Marcelo vs.
to the failure of the defendant company to keep its track and Velasco (11 Phil., Rep., 287), does not extend to such incidents.
roadbed in good repair. Plaintiff was allowed 35,000 pesetas for Aside from this exception, actual damages, in this jurisdiction, in
the death of her son. this would be equivalent to about fourteen the sense that they mean just compensation for the loss suffered,
years' salary. are practically synonymous with actual damages under the
American system.
in the case dated October 19, 1909 (published in 116 Jurisp. del
Codigo Civil, 120), plaintiff as suing for the death of his son This court has already gone some distance in incorporating into
caused from injuries inflicted by the defendant's bull while our jurisprudence those principles of the American law of actual
plaintiff and his son were travelling along a public road. The age of damages which are of a general and abstract nature. In Baer
the son is not given. Plaintiff was awarded 3,000 pesetas damages. Senior and Co.'s Successors vs. Compañia Maritima (6 Phil. Rep.,
215), the American principle of admiralty law that the liability of
In each of the above-mentioned cases the supreme court refused the ship for a tow is not so great as that for her cargo was applied
to pass on the amount of damages which had been awarded. It in determining the responsibility of a ship, under the Code of
appears to be the unvarying rule of the supreme court of Spain to Commerce, for her tow. In Rodriguez, vs. Findlay and Co. (14
accept the amount of damages awarded by trial courts, its only Phil., Rep., 294), which was an action for breach of contract of
inquiry being as to whether damages have actually occurred as warranty, the following principle, supported entirely by American
the result of the defendant's fault or negligence. (Decision of July authority, was used in computing the amount of damages due the
5, 1909.) The reason why the supreme court of Spain refuses to plaintiff:
consider the amount of damages awarded is to be found in the
great importance attached by it to the provision of the Ley de The damages recoverable of a manufacturer or dealer for
Enjuiciamiento Civil, articles 659 and 1692, No. 7. In its auto of the breach of warranty of machinery, which he contracts
March 16, 1900 (published in 8 Jurisp. del Codigo Civil, 503), the to furnish, or place in operation for a known purpose are
following comment is made on these articles: not confined to the difference in value of the machinery
as warranted and as it proves to be, but includes such
As this supreme court has repeatedly held, the weight consequential damages as are the direct, immediate, and
given by the trial judge to the testimony, with good probable result of the breach.
discernment or otherwise, can not be a matter for
reversal, not even with the support of No. 7 of article In Aldaz vs. Gay (7 Phil., Rep., 268), it was held that the earnings
1692 of the Ley de Enjuiciamiento Civil, as it is or possible earnings of a workman wrongfully discharged should
exclusively submitted to him, pursuant to the provisions be considered in mitigation of his damages for the breach of
of article 659 of the said law and article 1248 of the contract by his employer, with the remark that nothing had been
Code. brought to our attention to the contrary under Spanish
jurisprudence.
The practice of this court, under our Code of Civil Procedure, does
not permit of our going to such lengths in sustaining the findings In Fernandez vs. M. E. R. and L. Co. (14 Phil., Rep., 274), a release
of fact in trial courts. We have repeatedly held that due weight will or compromise for personal injury sustained by negligence
be given in this court to the findings of fact by trial courts by attributed to the defendant company was held a bar to an action
reason of their opportunities to see and hear the witnesses testify, for the recovery of further damages, on the strength of American
note their demeanor and bearing upon the stand, etc., but when precedents.
the decision of the trial court, after permitting due allowance for
its superior advantages in weighing the evidence of the case, In Taylor vs. M. E. R. and L. Co., supra, in the course of an
appears to us to be against the fair preponderance of that extended reference to American case law, the doctrine of the so-
evidence, it is our duty to reverse or set aside the findings of fact called "Turntable" and "Torpedo" cases was adopted by this court
made by the trial court and render such judgment as the facts of as a factor in determining the question of liability for damages in
the same deem to us to warrant. (Code of Civ., Proc., sec. 496.) We such cases as the one the court the then had under consideration.
need go to no other branch of law than that of damages to support
this statement. In the following case the damages awarded by the In Martinez vs. Van Buskirk (18 Phil., 79), this court, after
lower court were reduced after a consideration of the evidence; remarking that the rules under the Spanish law by which the fact
Sparrevohn vs. Fisher (2 Phil. Rep., 676); Campbell and Go- of negligence is determined are, generally speaking, the same as
Tauco vs. Behn, Meyer and Co. (3 Phil., Rep., 590); they are in Anglo-Saxon countries, approved the following well-
Causin vs. Jakosalem 95 Phil., Rep., 155); Marker vs. Garcia (5 known rule of the Anglo-Saxon law of negligence, relying
Phil., Rep., 557); Uy Piaoco vs. Osmeña (9 Phil., Rep., 299); exclusively upon American authorities: ". . . acts, the performance
Macleod vs. Phil. Pub. Co. (12 Phil., Rep., 427); of which has not proven destructive or injurious and which have
Orense vs. Jaucian (18 Phil. Rep., 553). In Rodriguez vs. Findlay been generally acquiesced in by society for so long a time as to
and Co. (14 Phil. Rep., 294); and Cordoba y Conde vs. Castle Bros. have ripened into a custom, cannot be held to be unreasonable or
(18 Phil. Rep., 317), the damages awarded by the lower court were imprudent and that, under the circumstances, the driver was not
increased on appeal after a consideration of the evidence. In guilty of negligence in so leaving his team while assisting in
Brodek vs. Larson (18 Phil., Rep., 425), it was held that the unloading his wagon.
This court does not, as a rule, content itself in the determination damages resulting from the actual incapacity of the plaintiff to
of cases brought before it, with a mere reference to or quotation of attend to his business there is no question. They are, of course, to
the articles of the codes or laws applicable to the questions be allowed on the basis of his earning capacity, which in this case,
involved, for the reason that it is committed to the practice of is P50 per month. the difficult question in the present case is to
citing precedents for its rulings wherever practicable. (See determine the damage which has results to his business through
Ocampo vs. Cabangis, 15 Phil Rep., 626.) No better example of the his enforced absence. In Sanz vs. Lavin Bros. (6 Phil. Rep., 299),
necessity of amplifying the treatment of a subject given in the code this court, citing numerous decisions of the supreme court of
is afforded than article 1902 of the Civil Code. That article Spain, held that evidence of damages "must rest upon satisfactory
requires that the defendant repair the damage done. There is, proof of the existence in reality of the damages alleged to have
however, a world of difficulty in carrying out the legislative will in been suffered." But, while certainty is an essential element of an
this particular. The measure of damages is an ultimate fact, to be award of damages, it need not be a mathematical certainty. That
determined from the evidence submitted to the court. The this is true is adduced not only from the personal injury cases
question is sometimes a nice one to determine, whether the from the supreme court of Spain which we have discussed above,
offered evidence in such as sought to be considered by the court but by many cases decided by this court, reference to which has
in fixing the quantum of damages; and while the complexity of already been made. As stated in Joyce on Damages, section 75,
human affairs is such that two cases are seldom exactly alike, a "But to deny the injured party the right to recover any actual
thorough discussion of each case may permit of their more or less damages in cases f torts because they are of such a nature a
definite classification, and develop leading principles which will be cannot be thus certainly measured, would be to enable parties to
of great assistance to a court in determining the question, not only profit by and speculate upon their own wrongs; such is not the
of damages, but of the prior one of negligence. We are of the law."
opinion that as the Code is so indefinite (even though from
necessity) on the subject of damages arising from fault or As to the elements to be considered in estimating the damage
negligence, the bench and bar should have access to and avail done to plaintiff's business by reason of his accident, this same
themselves of those great, underlying principles which have been author, citing numerous authorities, has the following to say: It is
gradually and conservatively developed and thoroughly tested in proper to consider the business the plaintiff is engaged in, the
Anglo-Saxon courts. A careful and intelligent application of these nature and extent of such business, the importance of his
principles should have a tendency to prevent mistakes in the personal oversight and superintendence in conducting it, and the
rulings of the court on the evidence offered, and should assist in consequent loss arising from his inability to prosecure it.
determining damages, generally, with some degree of uniformity.
The business of the present plaintiff required his immediate
The law of damages has not, for some reason, proved as favorite a supervision. All the profits derived therefrom were wholly due to
theme with the civil-law writers as with those of the common-law his own exertions. Nor are his damages confined to the actual time
school. The decisions of the supreme court of Spain, though during which he was physically incapacitated for work, as is the
numerous on damages arising from contractual obligations, are case of a person working for a stipulated daily or monthly or
exceedingly few upon damages for personal injuries arising ex yearly salary. As to persons whose labor is thus compensated and
delicto. The reasons for this are not important to the present who completely recover from their injuries, the rule may be said to
discussion. It is sufficient to say that the law of damages has not be that their damages are confined to the duration of their
received the elaborate treatment that it has at the hands of the enforced absence from their occupation. But the present plaintiff
Anglo-Saxon jurists. If we in this jurisdiction desire to base our could not resume his work at the same profit he was making when
conclusions in damage cases upon controlling principles, we may the accident occurred. He had built up an establishing business
develop those principles and incorporate them into our which included some twenty regular customers. These customers
jurisprudence by that difficult and tedious process which represented to him a regular income. In addition to this he made
constitutes the centuries-old history of Anglo-Saxon sales to other people who were not so regular in their purchases.
jurisprudence; or we may avail ourselves of these principles in But he could figure on making at least some sales each month to
their present state of development without further effort than it others besides his regular customers. Taken as a whole his
costs to refer to the works and writings of many eminent text- average monthly income from his business was about P50. As a
writers and jurists. We shall not attempt to say that all these result of the accident, he lost all but four of his regular customers
principles will be applicable in this jurisdiction. It must be and his receipts dwindled down to practically nothing. Other
constantly borne in mind that the law of damages in this agents had invaded his territory, and upon becoming physically
jurisdiction was conceived in the womb of the civil law and under able to attend to his business, he found that would be necessary
an entirely different form of government. These influences have to start with practically no regular trade, and either win back his
had their effect upon the customs and institutions of the country. old customers from his competitors or else secure others. During
Nor are the industrial and social conditions the same. An Act this process of reestablishing his patronage his income would
which might constitute negligence or damage here, and vice versa. necessarily be less than he was making at the time of the accident
As stated in Story on Bailments, section 12, "It will thence follow and would continue to be so for some time. Of course, if it could
that, in different times and in different countries, the standard (of be mathematically determined how much less he will earn during
diligence) is necessary variable with respect to the facts, although this rebuilding process than he would have earned if the accident
it may be uniform with respect to the principle. So that it may had not occurred, that would be the amount he would be entitled
happen that the same acts which in one country or in one age to in this action. But manifestly this ideal compensation cannot be
may be deemed negligent acts, may at another time or in another ascertained. The question therefore resolves itself into whether
country be justly deemed an exercise of ordinary diligence." this damage to his business can be so nearly ascertained as to
justify a court in awarding any amount whatever.
The abstract rules for determining negligence and the measure of
damages are, however, rules of natural justice rather than man- When it is shown that a plaintiff's business is a going concern
made law, and are applicable under any enlightened system of with a fairly steady average profit on the investment, it may be
jurisprudence. There is all the more reason for our adopting the assumed that had the interruption to the business through
abstract principles of the Anglo- Saxon law of damages, when we defendant's wrongful act not occurred, it would have continued
consider that there are at least two important laws o n our statute producing this average income "so long as is usual with things of
books of American origin, in the application of which we must that nature." When in addition to the previous average income of
necessarily be guided by American authorities: they are the Libel the business it is further shown what the reduced receipts of the
Law (which, by the way, allows damages for injured feelings and business are immediately after the cause of the interruption has
reputation, as well as punitive damages, in a proper case), and the been removed, there can be no manner of doubt that a loss of
Employer's Liability Act. profits has resulted from the wrongful act of the defendant. In the
present case, we not only have the value of plaintiff's business to
The case at bar involves actual incapacity of the plaintiff for two him just prior to the accident, but we also have its value to him
months, and loss of the greater portion of his business. As to the after the accident. At the trial, he testified that his wife had earned
about fifteen pesos during the two months that he was disabled. The pioneer case of Gobel vs. Hough (26 Minn., 252) contains
That this almost total destruction of his business was directly perhaps one of the clearest statements of the rule and is generally
chargeable to defendant's wrongful act, there can be no manner of considered as one of the leading cases on this subject. In that case
doubt; and the mere fact that the loss can not be ascertained with the court said:
absolute accuracy, is no reason for denying plaintiff's claim
altogether. As stated in one case, it would be a reproach to the law When a regular and established business, the value of
if he could not recover damages at all. (Baldwin vs. Marquez, 91 which may be ascertained, has been wrongfully
Ga., 404) interrupted, the true general rule for compensating the
party injured is to ascertain how much less valuable the
Profits are not excluded from recovery because they are business was by reason of the interruption, and allow
profits; but when excluded, it is on the ground that there that as damages. This gives him only what the wrongful
are no criteria by which to estimate the amount with the act deprived him of. The value of such a business
certainty on which the adjudications of courts, and the depends mainly on the ordinary profits derived from it.
findings of juries, should be based. (Brigham vs. Carlisle Such value cannot be ascertained without showing what
(Ala.), 56 Am. Rep., 28, as quoted in Wilson vs. Wernwag, the usual profits are; nor are the ordinary profits incident
217 Pa., 82.) to such a business contingent or speculative, in the
sense that excludes profits from consideration as an
The leading English case on the subject is Phillips vs. London and element of damages. What they would have been, in the
Southwestern Ry. Co. (5 Q. B. D., 788; 41 L.T., 121; 8 Eng. Rul. ordinary course of the business, for a period during
Cases, 447). The plaintiff was a physician with a very lucrative which it was interrupted, may be shown with reasonable
practice. In one case he had received a fee of 5,000 guineas; but it certainty. What effect extraordinary circumstances would
appeared that his average income was between 6,000 and 7,000 have had upon the business might be contingent and
pounds sterling per year. The report does not state definitely how conjectural, and any profits anticipated from such cause
serious plaintiff's injuries were, but apparently he was would be obnoxious to the objection that they are merely
permanently disabled. The following instruction to the jury was speculative; but a history of the business, for a
approved, and we think should be set out in this opinion as reasonable time prior to a period of interruption, would
applicable to the present case: enable the jury to determine how much would be done
under ordinary circumstances, and in the usual course,
You cannot put the plaintiff back again into his original during the given period; and the usual rate of profit being
position, but you must bring your reasonable common shown, of course the aggregate becomes only a matter of
sense to bear, and you must always recollect that this is calculation.
the only occasion on which compensation can be given.
Dr. Philips can never sue again for it. You have, In the very recent case of Wellington vs. Spencer (Okla., 132 S. W.,
therefore, not to give him compensation a wrong at the 675), plaintiff had rented a building from the defendant and used
hands of the defendants, and you must take care o give it as a hotel. Defendant sued out a wrongful writ of attachment
him full, fair compensation. for that which he has upon the equipment of the plaintiff, which caused him to abandon
suffered. his hotel business. After remarking that the earlier cases held that
no recovery could be had for prospective profits, but that the later
The jury's award was seven thousand pounds. Upon a new trial, authorities have held that such damages may be allowed when the
on the ground of the insufficiency of the damages awarded, amount is capable of proof, the court had the following to say:
plaintiff received 16,000 pounds. On the second appeal, Bramwell,
L. J., put the case of a laborer earning 25 shillings a week, who, Where the plaintiff has just made his arrangements to
on account of injury, was totally incapacitated for work for twenty- begin business, and he is prevented from beginning
six weeks, and then for ten weeks could not earn more than ten either by tort or a breach of contract, or where the injury
shillings a week, and was not likely to get into full work for is to a particular subject matter, profits of which are
another twenty weeks. The proper measure of damages would be uncertain, evidence as to expected profits must be
in that case 25 shillings a week twenty-six weeks, plus 15 excluded from the jury because of the uncertainty. There
shillings a week for the ten and twenty weeks, and damages for is as much reason to believe that there will be no profits
bodily suffering and medical expenses. Damages for bodily as to believe that there will be no profits, but no such
suffering, of course, are not, for reasons stated above, applicable argument can be made against proving a usual profit of
to this jurisdiction; otherwise we believe this example to be the an established business. In this case the plaintiff,
ideal compensation for loss of profits which courts should strike to according to his testimony, had an established business,
reach, in cases like the present. and was earning a profit in the business, and had been
doing that for a sufficient length of time that evidence as
In Joslin vs. Grand Rapids Ice and Coal Co. (53 Mich., 322), the to prospective profits was not entirely speculative. Men
court said: "The plaintiff, in making proof of his damages, offered who have been engaged in business calculate with a
testimony to the effect that he was an attorney at law of ability reasonable certainty the income from their business,
and in good standing, and the extent and value of his practice, make their plans to live accordingly, and the value of
and that, in substance, the injury had rendered him incapable of such business is not a matter of speculation as to
pursuing his profession. This was objected to as irrelevant, exclude evidence from the jury.
immaterial and incompetent. We think this was competent. It was
within the declaration that his standing in his profession was A good example of a business not established for which loss of
such as to command respect, and was proper to be shown, and profits will be allowed may be found in the States vs. Durkin (65
his ability to earn, and the extent of his practice, were a portion of Kan., 101). Plaintiffs formed a partnership, and entered the
the loss he had sustained by the injury complained of. There was plumbing business in the city of Topeka in April. In July of the
no error in permitting this proof, and we further think it was same year, they brought an action against a plumbers' association
competent, upon the question of damages under the evidence in on the ground that the latter had formed an unlawful combination
this case, for the plaintiff to show, by Judge Hoyt, as was done, in restraint of trade and prevented them from securing supplies
that an interruption in his legal business and practice for eight for their business within a reasonable time. The court said:
months was a damage to him. It seems to have been a part of the
legitimate consequences of the plaintiff's injury." In the present case the plaintiffs had only been in
business a short time — not so long that it can be said
In Luck vs. City of Ripon (52 Wis., 196), plaintiff was allowed to that they had an established business. they had
prevent that she was a midwife and show the extent of her contracted three jobs of plumbing, had finished two, and
earnings prior to the accident in order to establish the damage lost money on both; not, however, because of any
done to her business. misconduct or wrongful acts on the part of the
 defendants or either of them. They carried no stock in
trade, and their manner of doing business was to secure
a contract and then purchase the material necessary for
its completion. It is not shown that they had any means
or capital invested in the business other than their tools.
Neither of them had prior thereto managed or carried on
a similar business. Nor was it shown that they were
capable of so managing this business as to make it earn
a profit. There was little of that class of business being
done at the time, and little, if any, profit derived
therefrom. The plaintiffs' business lacked duration,
permanency, and recognition. It was an adventure, as
distinguished from an established business. Its profits
were speculative and remote, existing only in
anticipation. The law, with all its vigor and energy in its
effort to right or wrongs and damages for injuries
sustained, may not enter into a domain of speculation or
conjecture. In view of the character and condition of the
plaintiffs' business, the jury had not sufficient evidence
from which to ascertain profits.

Other cases which hold that the profits of an established business

may be considered in calculating the measure of damages for an
interruption of it are: Wilkinson vs. Dunbar (149 N. C., 20);
Kinney vs. Crocker (18 Wis., 80); Sachra vs. Manila (120 la., 562);
Kramer vs. City of Los Angeles (147 Cal., 668); Mugge vs. Erkman
(161 Ill. App., 180); Fredonia Gas Co. vs. Bailey 977 Kan., 296);
Morrow vs. Mo. Pac. R. Co. (140 Mo. App., 200); City of
Indianapolis vs. Gaston (58 Ind., 24); National Fibre
Board vs. Auburn Electric Light Co. (95 Me., 318); Sutherland on
Damages, sec. 70.

We have now outlined the principles which should govern the

measure of damages in this case. We are of the opinion that the
lower court had before it sufficient evidence of the damage to
plaintiff's business in the way of prospective loss of profits to
justify it in calculating his damages as to his item. That evidence
has been properly elevated to this court of review. Under section
496 of the Code of Civil Procedure, we are authorized to enter final
judgment or direct a new trial, as may best subserve the ends of
justice. We are of the opinion that the evidence presented as to the
damage done to plaintiff's business is credible and that it is
sufficient and clear enough upon which to base a judgment for
damages. Plaintiff having had four years' experience in selling
goods on commission, it must be presumed that he will be able to
rebuild his business to its former proportions; so that at some
time in the future his commissions will equal those he was
receiving when the accident occurred. Aided by his experience, he
should be able to rebuild this business to its former proportions in
much less time than it took to establish it as it stood just prior to
the accident. One year should be sufficient time in which to do
this. The profits which plaintiff will receive from the business in
the course of its reconstruction will gradually increase. The injury
to plaintiff's business begins where these profits leave off, and, as
a corollary, there is where defendant's liability begins. Upon this
basis, we fix the damages to plaintiff's business at P250.

The judgment of the lower court is set aside, and the plaintiff is
awarded the following damages; ten pesos for medical expenses;
one hundred pesos for the two months of his enforced absence
from his business; and two hundred and fifty pesos for the
damage done to his business in the way of loss of profits, or a total
of three hundred and sixty pesos. No costs will be allowed in this
instance.

Arellano, C.J. and Araullo, J., concur.

Carson, J., concurs i
G.R. No. L-23882             February 17, 1968           Indeed, in his complaint, plaintiff premised his action
against herein appellant upon the allegation that the latter is
M. D. TRANSIT & TAXI CO., INC., petitioner,  "subsidiary liable for all damages caused by the negligence of its
vs. employee in the performance of his duties," and, accordingly,
COURT OF APPEALS and DAVID EPSTEIN, respondents. prayed that Sembrano be ordered and, "upon his inability,"
appellant herein, to pay the damages claimed in said pleading. In
CONCEPCION, C.J.: other words, plaintiff maintained that Sembrano
is primarily liable for said damages, and that appellant's liability
          Appeal by certiorari from a decision of the Court of therefor is purely secondary, which is typical of the civil liability
Appeals. arising from crimes, pursuant to articles 102 and 103 of the
Revised Penal Code. The effect of said allegation and subsequent
          While crossing Taft Avenue extension, near its intersection prayer upon the nature of the present action is illustrated by the
with Castro Street, Manila, passing by the pedestrian lane on case of De Leon Brokerage v. Court of Appeals  2 in which the
August 18, 1958, about 8:30 a.m., and as he was about to reach allegations of the complaint were not clear on whether or not the
the island in the middle of the road, David Epstein — hereinafter damages sued for resulted from a crime or from a quasi-delict. The
referred to as plaintiff — was hit by a Pasay bound bus of the MD issue was resolved in favor of the latter alternative, in view of
Transit & Taxi Co., Inc. — hereinafter referred to as appellant — the prayer in said pleading to the effect that the employer be
driven by Dominador Sembrano, in consequence of which hold "solidarily" liable with his employee. In fact, solidarity is one
plaintiff's left femur and right fibula were fractured, apart from of the main characteristics of obligations arising from quasi-
sustaining lacerations in the scalp, occipital region. Prosecuted for delicts. 3
serious physical injuries through reckless imprudence, the Court
of First Instance of Manila found Sembrano guilty thereof beyond           Another circumstance militating in favor of plaintiff's
reasonable doubt and sentenced him to suffer the corresponding contention is the fact that, in the criminal action, he had reserved
penalty of imprisonment, 1 but, refrained from making any the right to seek indemnity in a separate civil action. There can be
pronouncement on his civil liability, plaintiff having reserved the no doubt that the present action was filed in pursuance of said
right to file a separate civil action for damages. Although, from the reservation, which would have been unnecessary had plaintiff not
decision of said court, Sembrano appealed to the Court of Appeals, based his right of action upon Sembrano's criminal liability.
he, later, withdrew the appeal. As a consequence, said decision Further corroboration is supplied by the fact that the first piece of
became final and executory on May 5, 1961. evidence offered by plaintiff herein, at trial of this case in the court
of origin, was the decision of conviction rendered in the criminal
          Meanwhile, or on January 23, 1959, plaintiff had case against Sembrano.
commenced the present action for damages against Sembrano and
appellant herein. Sembrano was declared in default, whereas           Contrary to appellant's pretense, the absence of allegations,
appellant filed its answer alleging that it had exercised due in plaintiff's complaint, about Sembrano's conviction in the
diligence in the selection of its employees and in supervising them criminal case, and about his insolvency, does not impair the
in the performance of their duties, and that the accident was due theory of the plaintiff, for such allegations are not indispensable in
to plaintiff's recklessness or negligence. After appropriate an action for damages sustained on account of a crime committed
proceedings, the Court of First Instance of Manila rendered a by the employee. Indeed, the law authorizing the commencement
decision, the dispositive part of which reads: of a civil action based upon a liability arising from a crime,
even before the institution of the criminal action, 4 necessarily
          WHEREFORE, judgment is hereby rendered implies that the rendition of a judgment of conviction in the latter
finding defendant, Dominador Sembrano, primarily liable need not be alleged in the civil complaint.
to plaintiff, David Epstein, for the damages sustained by
the latter, and hereby orders the former to pay the latter           Neither is an allegation of insolvency of the employee
the following: essential to an action to enforce the subsidiary liability of the
employer, particularly when both are sued in the same action —
(1) Actual damages in the amount of P3,161.10; as in the case at bar — to exact the primary liability of the
employee, and the subsidiary liability of the employer. To be sure,
(2) Compensatory damages in the amount of P12,000.00; the secondary nature of the latter's obligation necessarily
connotes that his properties may not be levied upon, in pursuance
(3) Moral damages in the amount of P5,000.00; and of a writ of execution of the judgment declaring the existence of
both liabilities, as long and so long as the employer can point out
properties of the employee which may be levied upon in
(4) Counsel fees in the amount of P1,000.00; and
satisfaction of said judgment. 5 Thus, the employee's solvency is
merely a matter of defense which may be availed of by the
          Finding defendant MD Transit and Taxi Co., Inc.,
employer.
subsidiarily liable to plaintiff, David Epstein, in the
amounts above-indicated, in the event that defendant,
          It is next urged that the lower courts erred in considering in
Dominador Sembrano, fails to pay the same or is
this case the judgment of conviction in the criminal case, in which
insolvent. Costs against defendants.
appellant was not a party, and in disregarding appellant's
evidence on the alleged diligence exercised in selecting its
          On appeal, said decision was affirmed by the Court of
employees and in supervising them in the discharge of their
Appeals. Hence, this petition for review by certiorari, filed by
duties. Though relevant in an action based upon a quasi-delict,
appellant.
said diligence is, however, immaterial in the case at bar, the same
being predicated upon a liability arising from a crime. Moreover, it
          The main issue raised by the latter refers to the nature of is already settled that the judgment of conviction in the criminal
the present action, namely, whether the liability sought to be case against an employee is, not only admissible in evidence in
enforced therein arises from a crime, as contended by the plaintiff, the civil case against the employer, but, also, conclusive upon his
or from a quasi-delict, as urged by appellant. The importance of subsidiary liability arising from the employee's criminal liability.
this issue is due to the fact that appellant's alleged diligence in the Thus in Miranda v. Malate Garage & Taxicab, Inc. 6 we held:
selection of its employees and in exercising supervision over them
would be a good defense should the action be based upon a quasi-
          It is true that an employer, strictly speaking is not
delict, but not if predicated upon a liability springing from a crime.
a party to the criminal case instituted against his
The trial court and the appellate court rejected appellant's
employee but in substance and in effect he is, considering
pretense and sustained that of the plaintiff, and, we think,
the subsidiary liability imposed upon him by law. It is his
correctly.
concern, as well as of his employee, to see to it that his
 interest be protected in the criminal case by taking           Appellant likewise impugns the awards to plaintiff of
virtual participation in the defense of his employee. He P5,000 as moral damages, P12,000 as compensatory damages and
cannot leave him to his own fate because his failure is P1,000 as attorney's fees. In connection therewith, the Court of
also his. And if because of his indifference or inaction the Appeals, after quoting the findings of the court of origin on the
employee is convicted and damages are awarded against facts and circumstances justifying said awards, had the following
him he cannot later be heard to complain if brought to to say:
court for the enforcement of his subsidiary liability that he
was not given his day in court. (Emphasis           Bearing in mind that in crimes, the defendant is
supplied.)1äwphï1.ñët liable for all damages which are the natural and probable
consequences of the act or omission complained of,
          The language used in Martinez v. Barredo 7 was: including loss or impairment of earning capacity of the
offended party and injury to his business standing or
          The important question is whether a judgment of commercial credit as well as compensation for physical
conviction sentencing the defendant to pay an indemnity pain and suffering and mental anguish, which was a gap
is conclusive in an action against his employer for the in our legal system, filled in by the new Civil Code, and
enforcement of the latter's subsidiary liability under that attorney's fees are recoverable in a separate action
Articles 102 and 103 of the Revised Penal Code. The to recover civil liability arising from crime, and
appealed decision makes reference to two earlier considering that appellant has not adduced compelling
decisions of this Court, namely, City of Manila vs. Manila reasons to justify us in disturbing the abovementioned
Electric Co., 52 Phil., 586, holding that such judgment of findings of the lower court, by substituting ours for its
conviction is not admissible, and Arambulo vs. Manila sound discretion, exercised in the light of the facts and
Electric Co., 55 Phil., 75, in effect holding that it circumstances obtaining in this case as observed by it,
is merely prima facie evidence, and to the prevailing view the said last three assigned errors of appellant are
in the United States to the effect that the person likewise declared without sufficient merit.
subsidiarily liable is bound by the judgment if the former
had notice of the criminal case and could have defended it           Upon a review of the record, we do not feel justified in
had he seen fit to do so, and that otherwise such disturbing the conclusions reached by the appellate court and the
judgment is only prima facie evidence. court of origin.

          After very careful reflection, we have arrived at the           It may not be amiss to note that "actual" damages and
opinion that the judgment of conviction, in the absence of "consequential damages" are dealt with in the Civil Code of the
any collusion between the defendant and the offended Philippines under the same Chapter; 10 thereof that the two (2)
party, should bind the person subsidiarily liable. The terms are thus used therein as equivalent to one another; and
stigma of a criminal conviction surpasses in effect and that the decision appealed had characterized as "actual damages"
implications mere civil liability. Common sense dictates the expenses incurred by the plaintiff for his medical treatment
that a finding of guilt in a criminal case in which proof and as "compensatory damages" the earnings he failed to make
beyond reasonable doubt is necessary, should not be due to his consequent "inability to pursue his normal work or
nullified in a subsequent civil action requiring occupation." Considering, however, that — in the language of
only preponderance of evidence to support a judgment, Article 2200 of said Code, which is part of the aforementioned
unless those who support the contrary rule should also Chapter 2 — "indemnification for damages shall comprehend not
hold that an absolution in a civil case will operate to only the value of the loss suffered" — otherwise known as
automatically set aside the verdict against the defendant "damnum emergens," and alluded to in said decision as "actual
in the criminal case. It is anomalous, to say the least, to damages" — "but also that of the profits which the obligee failed to
suppose that the driver, excelling "Dr. Jekyl and Mr. obtain" — or "lucrum cessans" or "compensatory damages,"
Hyde", could be guilty of reckless negligence in so far as pursuant to the same decision the distinction therein made
his obligation to pay indemnity is concerned, and at the appears to be inconsequential, insofar as the law and this case is
same time could be free from blame when said concerned.
indemnity is sought to be collected from his employer,
although the right to the indemnity arose from and was           WHEREFORE, the decision appealed from is hereby
based on one and the same act of the driver. affirmed, with costs against appellant, MD Transit & Taxi Co., Inc.
It is so ordered.
          The employer cannot be said to have been
deprived of his day in court, because the situation before
us is not one wherein the employer is sued for
a primary liability under article 1903 of the Civil Code,
but one in which enforcement is sought of
a subsidiary civil liability incident to and dependent
upon his driver's criminal negligence which is a proper
issue to be tried and decided only in a criminal action.
In other words, the employer becomes ipso facto
subsidiarily liable upon his driver's conviction and upon
proof of the latter's insolvency, in the same way that
acquittal wipes out not only the employee's primary civil
liability but also his employer's subsidiary liability for
such criminal negligence. . . . (Emphasis supplied.)

          These views were reiterated in Nagrampa v.

Mulvaney 8 and Orsal v. Alisbo. 9

          Although conceding that the sum of P3,161 awarded as

actual damages "is not too excessive," appellant maintains that it
is "unreasonable and ought to be reduced." Actual damages is,
however, a question of fact, and the findings thereon of the Court
of Appeals, adopting those of the trial court, are conclusive upon
us.
G.R. No. 107518 October 8, 1998 LSCO tanker "Petroparcel" causing the former to
sink.
PNOC SHIPPING AND TRANSPORT CORPORATION, petitioner, 
vs. 2. The Board of Marine Inquiry conducted an
HONORABLE COURT OF APPEALS and MARIA EFIGENIA investigation of this marine accident and on 21
FISHING CORPORATION, respondents. November 1978, the Commandant of the
Philippine Coast Guard, the Honorable Simeon
ROMERO, J.: N. Alejandro, rendered a decision finding the
cause of the accident to be the reckless and
A party is entitled to adequate compensation only for such imprudent manner in which Edgardo Doruelo
pecuniary loss actually suffered and duly proved. 1Indeed, basic is navigated the LSCO "Petroparcel" and declared
the rule that to recover actual damages, the amount of loss must the latter vessel at fault.
not only be capable of proof but must actually be proven with a
reasonable degree of certainty, premised upon competent proof or 3. On 2 April 1978, defendant Luzon
best evidence obtainable of the actual amount thereof. 2 The Stevedoring Corporation (LUSTEVECO),
claimant is duty-bound to point out specific facts that afford a executed in favor of PNOC Shipping and
basis for measuring whatever compensatory damages are Transport Corporation a Deed of Transfer
borne.3 A court cannot merely rely on speculations, conjectures, or involving several tankers, tugboats, barges and
guesswork as to the fact and amount of damages4 as well as pumping stations, among which was the LSCO
hearsay5or uncorroborated testimony whose truth is Petroparcel.
suspect.6 Such are the jurisprudential precepts that the Court
now applies in resolving the instant petition. 4. On the same date on 2 April 1979 (sic),
defendant PNOC STC again entered into an
The records disclose that in the early morning of September 21, Agreement of Transfer with co-defendant
1977, the M/V Maria Efigenia XV, owned by private respondent Lusteveco whereby all the business properties
Maria Efigenia Fishing Corporation, was navigating the waters and other assets appertaining to the tanker and
near Fortune Island in Nasugbu, Batangas on its way to Navotas, bulk oil departments including the motor tanker
Metro Manila when it collided with the vessel Petroparcel which at LSCO Petroparcel of defendant Lusteveco were
the time was owned by the Luzon Stevedoring Corporation (LSC). sold to PNOC STC.

After investigation was conducted by the Board of Marine Inquiry, 5. The aforesaid agreement stipulates, among
Philippine Coast Guard Commandant Simeon N. Alejandro others, that PNOC-STC assumes, without
rendered a decision finding the Petroparcel at fault. Based on this qualifications, all obligations arising from and
finding by the Board and after unsuccessful demands on by virtue of all rights it obtained over the LSCO
petitioner, 7 private respondent sued the LSC and "Petroparcel".
the Petroparcel captain, Edgardo Doruelo, before the then Court of
First Instance of Caloocan City, paying thereto the docket fee of 6. On 6 July 1979, another agreement between
one thousand two hundred fifty-two pesos (P1,252.00) and the defendant LUSTEVECO and PNOC-STC was
legal research fee of two pesos (P2.00). 8 In particular, private executed wherein Board of Marine Inquiry Case
respondent prayed for an award of P692,680.00, allegedly No. 332 (involving the sea accident of 21
representing the value of the fishing nets, boat equipment and September 1977) was specifically identified and
cargoes of M/V Maria Efigenia XV, with interest at the legal rate assumed by the latter.
plus 25% thereof as attorney's fees. Meanwhile, during the
pendency of the case, petitioner PNOC Shipping and Transport 7. On 23 June 1979, the decision of Board of
Corporation sought to be substituted in place of LSC as it had Marine Inquiry was affirmed by the Ministry of
already acquired ownership of the Petroparcel. 9 National Defense, in its decision dismissing the
appeal of Capt. Edgardo Doruelo and Chief
For its part, private respondent later sought the amendment of its mate Anthony Estenzo of LSCO "Petroparcel".
complaint on the ground that the original complaint failed to plead
for the recovery of the lost value of the hull of M/V Maria Efigenia 8. LSCO "Petroparcel" is presently owned and
XV.  10Accordingly, in the amended complaint, private respondent operated by PNOC-STC and likewise Capt.
averred that M/V Maria Efigenia XV had an actual value of Edgardo Doruelo is still in their employ.
P800,000.00 and that, after deducting the insurance payment of
P200,000.00, the amount of P600,000.00 should likewise be 9. As a result of the sinking of M/V Maria
claimed. The amended complaint also alleged that inflation Efigenia caused by the reckless and imprudent
resulting from the devaluation of the Philippine peso had affected manner in which LSCO Petroparcel was
the replacement value of the hull of the vessel, its equipment and navigated by defendant Doruelo, plaintiff
its lost cargoes, such that there should be a reasonable suffered actual damages by the loss of its
determination thereof. Furthermore, on account of the sinking of fishing nets, boat equipments (sic) and cargoes,
the vessel, private respondent supposedly incurred unrealized which went down with the ship when it sank
profits and lost business opportunities that would thereafter be the replacement value of which should be left to
proven. 11 the sound discretion of this Honorable Court.

Subsequently, the complaint was further amended to include After trial, the lower court 15 rendered on November 18, 1989 its
petitioner as a defendant 12 which the lower court granted in its decision disposing of Civil Case No. C-9457 as follows:
order of September 16,
1985. 13 After petitioner had filed its answer to the second WHEREFORE, and in view of the foregoing,
amended complaint, on February 5, 1987, the lower court issued judgment is hereby rendered in favor of the
a pre-trial order 14 containing, among other things, a stipulations plaintiff and against the defendant PNOC
of facts, to wit: Shipping & Transport Corporation, to pay the
plaintiff:
1. On 21 September 1977, while the fishing
boat "M/V MARIA EFIGENIA" owned by plaintiff a. The sum of P6,438,048.00
was navigating in the vicinity of Fortune Island representing the value of the
in Nasugbu, Batangas, on its way to Navotas, fishing boat with interest
Metro Manila, said fishing boat was hit by the
 from the date of the filing of (g) Exhibit G — retainer agreement between Del Rosario
the complaint at the rate of and F. Sumulong Associates Law Offices stipulating an
6% per annum; acceptance fee of P5,000.00, per appearance fee of
P400.00, monthly retainer of P500.00, contingent fee of
b. The sum of P50,000.00 as 20% of the total amount recovered and that attorney's
and for attorney's fees; and fee to be awarded by the court should be given to Del
Rosario; and
c. The costs of suit.
(h) Exhibit H — price quotation issued by Seafgear
The counterclaim is hereby DISMISSED for lack Sales, Inc. dated April 10, 1987 to Del Rosario showing
of merit. Likewise, the case against defendant the cost of poly nettings as: 50 rolls of 400/18 3kts.
Edgardo Doruelo is hereby DISMISSED, for lack 100md x 100mtrs., P70,000.00; 50 rolls of 400/18
of jurisdiction. 5kts. 100md x 100mtrs., P81,500.00; 50 rolls of
400/18 8kts. 100md x 100mtrs., P116,000.00, and 50
SO ORDERED. rolls of 400/18 10kts. 100md x 100mtrs., P146,500
and bañera (tub) at P65.00 per piece or a total of
In arriving at the above disposition, the lower court cited the P414,065.00.
evidence presented by private respondent consisting of the
testimony of its general manager and sole witness, Edilberto del The lower court held that the prevailing replacement value of
Rosario. Private respondent's witness testified that M/V Maria P6,438,048.00 of the fishing boat and all its equipment would
Efigenia XV was owned by private respondent per Exhibit A, a regularly increase at 30% every year from the date the quotations
certificate of ownership issued by the Philippine Coast Guard were given.
showing that M/V Maria Efigenia XV was a wooden motor boat
constructed in 1965 with 128.23 gross tonnage. According to him, On the other hand, the lower court noted that petitioner only
at the time the vessel sank, it was then carrying 1,060 tubs presented Lorenzo Lazaro, senior estimator at PNOC Dockyard &
(bañeras) of assorted fish the value of which was never recovered. Engineering Corporation, as sole witness and it did not bother at
Also lost with the vessel were two cummins engines (250 all to offer any documentary evidence to support its position.
horsepower), radar, pathometer and compass. He further added Lazaro testified that the price quotations submitted by private
that with the loss of his flagship vessel in his fishing fleet of respondent were "excessive" and that as an expert witness, he
fourteen (14) vessels, he was constrained to hire the services of used the quotations of his suppliers in making his estimates.
counsel whom he paid P10,000 to handle the case at the Board of However, he failed to present such quotations of prices from his
Marine Inquiry and P50,000.00 for commencing suit for damages suppliers, saying that he could not produce a breakdown of the
in the lower court. costs of his estimates as it was "a sort of secret scheme." For this
reason, the lower court concluded:
As to the award of P6,438,048.00 in actual damages, the lower
court took into account the following pieces of documentary Evidently, the quotation of prices submitted by
evidence that private respondent proffered during trial: the plaintiff relative to the replacement value of
the fishing boat and its equipments in the tune
(a) Exhibit A — certified xerox copy of the certificate of of P6,438,048.00 which were lost due to the
ownership of M/V Maria Efigenia XV; recklessness and imprudence of the herein
defendants were not rebutted by the latter with
(b) Exhibit B — a document titled "Marine Protest" sufficient evidence. The defendants through
executed by Delfin Villarosa, Jr. on September 22, 1977 their sole witness Lorenzo Lazaro relied heavily
stating that as a result of the collision, the M/V Maria on said witness' bare claim that the amount
Efigenia XV sustained a hole at its left side that caused afore-said is excessive or bloated, but they did
it to sink with its cargo of 1,050 bañeras valued at not bother at all to present any documentary
P170,000.00; evidence to substantiate such claim. Evidence
to be believed must not only proceed from the
(c) Exhibit C — a quotation for the construction of a 95- mouth of the credible witness, but it must be
footer trawler issued by Isidoro A. Magalong of I. A. credible in itself. (Vda. de Bonifacio vs. B. L. T.
Magalong Engineering and Construction on January Bus Co., Inc. L-26810, August 31, 1970).
26, 1987 to Del Rosario showing that construction of
such trawler would cost P2,250,000.00; Aggrieved, petitioner filed a motion for the reconsideration of the
lower court's decision contending that: (1) the lower court erred in
(d) Exhibit D — pro forma invoice No. PSPI-05/87-NAV holding it liable for damages; that the lower court did not acquire
issued by E.D. Daclan of Power Systems, Incorporated jurisdiction over the case by paying only P1,252.00 as docket fee;
on January 20, 1987 to Del Rosario showing that two (2) assuming that plaintiff was entitled to damages, the lower
(2) units of CUMMINS Marine Engine model N855-M, court erred in awarding an amount greater than that prayed for in
195 bhp. at 1800 rpm. would cost P1,160,000.00; the second amended complaint; and (3) the lower court erred
when it failed to resolve the issues it had raised in its
(e) Exhibit E — quotation of prices issued by Scan memorandum. 16Petitioner likewise filed a supplemental motion for
Marine Inc. on January 20, 1987 to Del Rosario reconsideration expounding on whether the lower court acquired
showing that a unit of Furuno Compact Daylight jurisdiction over the subject matter of the case despite therein
Radar, Model FR-604D, would cost P100,000.00 while plaintiff's failure to pay the prescribed docket fee. 17
a unit of Furuno Color Video Sounder, Model FCV-501
would cost P45,000.00 so that the two units would cost On January 25, 1990, the lower court declined reconsideration for
P145,000.00; lack of merit. 18 Apparently not having received the order denying
its motion for reconsideration, petitioner still filed a motion for
(f) Exhibit F — quotation of prices issued by Seafgear leave to file a reply to private respondent's opposition to said
Sales, Inc. on January 21, 1987 to Del Rosario showing motion. 19 Hence, on February 12, 1990, the lower court denied
that two (2) rolls of nylon rope (5" cir. X 300fl.) would said motion for leave to file a reply on the ground that by the
cost P140,000.00; two (2) rolls of nylon rope (3" cir. X issuance of the order of January 25, 1990, said motion had
240fl.), P42,750.00; one (1) binocular (7 x 50), become moot and academic. 20
P1,400.00, one (1) compass (6"), P4,000.00 and 50 pcs.
of floats, P9,000.00 or a total of P197,150.00; Unsatisfied with the lower court's decision, petitioner elevated the
matter to the Court of Appeals which, however, affirmed the
same in toto on October 14, 1992. 21 On petitioner's assertion that respondent's failure to adduce evidence to support its claim for
the award of P6,438,048.00 was not convincingly proved by unrealized profit and business opportunities; and (5) private
competent and admissible evidence, the Court of Appeals ruled respondent's failure to prove the extent and actual value of
that it was not necessary to qualify Del Rosario as an expert damages sustained as a result of the 1977 collision of the
witness because as the owner of the lost vessel, "it was well within vessels. 23
his knowledge and competency to identify and determine the
equipment installed and the cargoes loaded" on the vessel. Under Article 2199 of the Civil Code, actual or compensatory
Considering the documentary evidence presented as in the nature damages are those awarded in satisfaction of, or in recompense
of market reports or quotations, trade journals, trade circulars for, loss or injury sustained. They proceed from a sense of natural
and price lists, the Court of Appeals held, thus: justice and are designed to repair the wrong that has been done,
to compensate for the injury inflicted and not to impose a
Consequently, until such time as the Supreme Court penalty. 24 In actions based on torts or quasi-delicts, actual
categorically rules on the admissibility or inadmissibility of damages include all the natural and probable consequences of the
this class of evidence, the reception of these documentary act or omission complained of. 25 There are two kinds of actual or
exhibits (price quotations) as evidence rests on the sound compensatory damages: one is the loss of what a person already
discretion of the trial court. In fact, where the lower court possesses (daño emergente), and the other is the failure to receive
is confronted with evidence which appears to be of doubtful as a benefit that which would have pertained to him (lucro
admissibility, the judge should declare in favor of cesante). 26 Thus:
admissibility rather than of non-admissibility (The
Collector of Palakadhari, 124 [1899], p. 13, cited in Where goods are destroyed by the wrongful act
Francisco, Revised Rules of Court, Evidence, Volume VII, of the defendant the plaintiff is entitled to
Part I, 1990 Edition, p. 18). Trial courts are enjoined to their value at the time of destruction, that is,
observe the strict enforcement of the rules of evidence normally, the sum of money which he would
which crystallized through constant use and practice and have to pay in the market for identical or
are very useful and effective aids in the search for truth essentially similar goods, plus in a proper case
and for the effective administration of justice. But in damages for the loss of use during the period
connection with evidence which may appear to be of before replacement. In other words, in the case
doubtful relevancy or incompetency or admissibility, it is the of profit-earning chattels, what has to be
safest policy to be liberal, not rejecting them on doubtful or assessed is the value of the chattel to its owner
technical grounds, but admitting them unless plainly as a going concern at the time and place of the
irrelevant, immaterial or incompetent, for the reason that loss, and this means, at least in the case of
their rejection places them beyond the consideration of the ships, that regard must be had to existing and
court. If they are thereafter found relevant or competent, pending engagements, . . .
can easily be remedied by completely discarding or ignoring
them. (Banaria vs. Banaria, et al., C.A. No. 4142, May 31, . . . . If the market value of the ship reflects the
1950; cited in Francisco, Supra). [Emphasis supplied]. fact that it is in any case virtually certain of
profitable employment, then nothing can be
Stressing that the alleged inadmissible documentary exhibits were added to that value in respect of charters
never satisfactorily rebutted by appellant's own sole witness in the actually lost, for to do so would be pro tanto to
person of Lorenzo Lazaro, the appellate court found that petitioner compensate the plaintiff twice over. On the
ironically situated itself in an "inconsistent posture by the fact other hand, if the ship is valued without
that its own witness, admittedly an expert one, heavily relies on reference to its actual future engagements and
the very same pieces of evidence (price quotations) appellant has only in the light of its profit-earning potentiality,
so vigorously objected to as inadmissible evidence." Hence, it then it may be necessary to add to the value
concluded: thus assessed the anticipated profit on a
charter or other engagement which it was
. . . The amount of P6,438,048.00 was duly unable to fulfill. What the court has to ascertain
established at the trial on the basis of appellee's in each case is the "capitalised value of the
documentary exhibits (price quotations) which vessel as a profit-earning machine not in the
stood uncontroverted, and which already abstract but in view of the actual
included the amount by way of adjustment as circumstances," without, of course, taking into
prayed for in the amended complaint. There was account considerations which were too remote
therefore no need for appellee to amend the at the time of the loss. 27 [Emphasis supplied].
second amended complaint in so far as to the
claim for damages is concerned to conform with As stated at the outset, to enable an injured party to recover
the evidence presented at the trial. The amount actual or compensatory damages, he is required to prove the
of P6,438,048.00 awarded is clearly within the actual amount of loss with reasonable degree of certainty
relief prayed for in appellee's second amended premised upon competent proof and on the best evidence
complaint. available. 28 The burden of proof is on the party who would be
defeated if no evidence would be presented on either side. He must
On the issue of lack of jurisdiction, the respondent court held that establish his case by a preponderance of evidence which means
following the ruling in Sun Insurance Ltd. v. Asuncion, 22 the that the evidence, as a whole, adduced by one side is superior to
additional docket fee that may later on be declared as still owing that of the other. 29 In other words, damages cannot be presumed
the court may be enforced as a lien on the judgment. and courts, in making an award must point out specific facts that
could afford a basis for measuring whatever compensatory or
Hence, the instant recourse. actual damages are borne. 30

In assailing the Court of Appeals' decision, petitioner posits the In this case, actual damages were proven through the sole
view that the award of P6,438,048 as actual damages should have testimony of private respondent's general manager and certain
been in light of these considerations, namely: (1) the trial court did pieces of documentary evidence. Except for Exhibit B where the
not base such award on the actual value of the vessel and its value of the 1,050 bañeras of fish were pegged at their September
equipment at the time of loss in 1977; (2) there was no evidence 1977 value when the collision happened, the pieces of
on extraordinary inflation that would warrant an adjustment of documentary evidence proffered by private respondent with
the replacement cost of the lost vessel, equipment and cargo; (3) respect to items and equipment lost show similar items and
the value of the lost cargo and the prices quoted in respondent's equipment with corresponding prices in early 1987 or
documentary evidence only amount to P4,336,215.00; (4) private approximately ten (10) years after the collision. Noticeably,
petitioner did not object to the exhibits in terms of the time index Under Section 45 of the aforesaid Rule, a document is a
for valuation of the lost goods and equipment. In objecting to the commercial list if: (1) it is a statement of matters of interest to
same pieces of evidence, petitioner commented that these were not persons engaged in an occupation; (2) such statement is contained
duly authenticated and that the witness (Del Rosario) did not have in a list, register, periodical or other published compilation; (3)
personal knowledge on the contents of the writings and neither said compilation is published for the use of persons engaged in
was he an expert on the subjects thereof. 31 Clearly ignoring that occupation, and (4) it is generally used and relied upon by
petitioner's objections to the exhibits, the lower court admitted persons in the same occupation.
these pieces of evidence and gave them due weight to arrive at the
award of P6,438,048.00 as actual damages. Based on the above requisites, it is our considered view that
Exhibits B, C, D, E, F and H 39 are not "commercial lists" for these
The exhibits were presented ostensibly in the course of Del do not belong to the category of "other published compilations"
Rosario's testimony. Private respondent did not present any other under Section 45 aforequoted. Under the principle of ejusdem
witnesses especially those whose signatures appear in the price generis, "(w)here general words follow an enumeration of persons
quotations that became the bases of the award. We hold, however, or things, by words of a particular and specific meaning, such
that the price quotations are ordinary private writings which general words are not to be construed in their widest extent, but
under the Revised Rules of Court should have been proffered are to be held as applying only to persons or things of the same
along with the testimony of the authors thereof. Del Rosario could kind or class as those specifically mentioned." 40 The exhibits
not have testified on the veracity of the contents of the writings mentioned are mere price quotations issued personally to Del
even though he was the seasoned owner of a fishing fleet because Rosario who requested for them from dealers of equipment similar
he was not the one who issued the price quotations. Section 36, to the ones lost at the collision of the two vessels. These are not
Rule 130 of the Revised Rules of Court provides that a witness can published in any list, register, periodical or other compilation on
testify only to those facts that he knows of his personal the relevant subject matter. Neither are these "market reports or
knowledge. quotations" within the purview of "commercial lists" as these are
not "standard handbooks or periodicals, containing data of
For this reason, Del Rosario's claim that private respondent everyday professional need and relied upon in the work of the
incurred losses in the total amount of P6,438,048.00 should be occupation." 41 These are simply letters responding to the queries
admitted with extreme caution considering that, because it was a of Del Rosario. Thus, take for example Exhibit D which reads:
bare assertion, it should be supported by independent evidence.
Moreover, because he was the owner of private respondent January 20, 1987
corporation 32 whatever testimony he would give with regard to the
value of the lost vessel, its equipment and cargoes should be PROFORMA INVOICE NO. PSPI-05/87-NAV
viewed in the light of his self-interest therein. We agree with the
Court of Appeals that his testimony as to the equipment installed MARIA EFIGINIA FISHING CORPORATION
and the cargoes loaded on the vessel should be given
credence 33 considering his familiarity thereto. However, we do not Navotas, Metro Manila
subscribe to the conclusion that his valuation of such equipment,
cargo and the vessel itself should be accepted as gospel Attention: MR. EDDIE DEL ROSARIO
truth. 34 We must, therefore, examine the documentary evidence
presented to support Del Rosario's claim as regards the amount of Gentlemen:
losses.
In accordance to your request, we are pleated to
The price quotations presented as exhibits partake of the nature of quote our Cummins Marine Engine, to wit.
hearsay evidence considering that the persons who issued them
were not presented as witnesses. 35 Any evidence, whether oral or Two (2) units CUMMINS Marine Engine model
documentary, is hearsay if its probative value is not based on the N855-M, 195 bhp. at 1800 rpm., 6-cylinder in-line,
personal knowledge of the witness but on the knowledge of 4-stroke cycle, natural aspirated, 5 1/2 in. x 6 in.
another person who is not on the witness stand. Hearsay bore and stroke, 855 cu. In. displacement, keel-
evidence, whether objected to or not, has no probative value cooled, electric starting coupled with Twin-Disc
unless the proponent can show that the evidence falls within the Marine gearbox model MG-509, 4.5:1 reduction
exceptions to the hearsay evidence rule. 36 On this point, we ratio, includes oil cooler, companion flange, manual
believe that the exhibits do not fall under any of the exceptions and standard accessories as per attached sheet.
provided under Sections 37 to 47 of Rule 130. 37
Price FOB Manila P580,000.00/unit
It is true that one of the exceptions to the hearsay rule pertains to
"commercial lists and the like" under Section 45, Rule 130 of the
Total FOB Manila P1,160,000.00
Revised Rules on Evidence. In this respect, the Court of Appeals
considered private respondent's exhibits as "commercial lists." It
TERMS : CASH
added, however, that these exhibits should be admitted in
evidence "until such time as the Supreme Court categorically rules
DELIVERY : 60-90 days from date of order.
on the admissibility or inadmissibility of this class of evidence"
because "the reception of these documentary exhibits (price
quotations) as evidence rests on the sound discretion of the trial VALIDITY : Subject to our final confirmation.
court." 38 Reference to Section 45, Rule 130, however, would show
that the conclusion of the Court of Appeals on the matter was WARRANTY : One (1) full year against factory
arbitrarily arrived at. This rule states: defect.

Commercial lists and the like. — Evidence of Very truly yours,

statements of matters of interest to persons
engaged in an occupation contained in a list,
register, periodical, or other published
compilation is admissible as tending to prove
the truth of any relevant matter so stated if that
compilation is published for use by persons
engaged in that occupation and is generally
used and relied upon by them there.
 POWER SYSTEMS, INC.Sgd.) Nonetheless, the non-admissibility of said exhibits does not mean
that it totally deprives private respondent of any redress for the
E. D. Daclan loss of its vessel. This is because in Lufthansa German Airlines v.
Court of Appeals, 49 the Court said:
To be sure, letters and telegrams are admissible in evidence but
these are, however, subject to the general principles of evidence In the absence of competent proof on the actual
and to various rules relating to documentary evidence. 42 Hence, in damage suffered, private respondent is "entitled
one case, it was held that a letter from an automobile dealer to nominal damages which, as the law says, is
offering an allowance for an automobile upon purchase of a new adjudicated in order that a right of the plaintiff,
automobile after repairs had been completed, was not a "price which has been violated or invaded by
current" or "commercial list" within the statute which made such defendant, may be vindicated and recognized,
items presumptive evidence of the value of the article specified and not for the purpose of indemnifying the
therein. The letter was not admissible in evidence as a plaintiff for any loss suffered." [Emphasis
"commercial list" even though the clerk of the dealer testified that supplied].
he had written the letter in due course of business upon
instructions of the dealer. 43 Nominal damages are awarded in every obligation arising from
law, contracts, quasi-contracts, acts or omissions punished by
But even on the theory that the Court of Appeals correctly ruled law, and quasi-delicts, or in every case where property right has
on the admissibility of those letters or communications when it been invaded. 50Under Article 2223 of the Civil Code, "(t)he
held that unless "plainly irrelevant, immaterial or incompetent," adjudication of nominal damages shall preclude further contest
evidence should better be admitted rather than rejected on upon the right involved and all accessory questions, as between
"doubtful or technical grounds," 44 the same pieces of evidence, the parties to the suit, or their respective heirs and assigns."
however, should not have been given probative weight. This is a
distinction we wish to point out. Admissibility of evidence refers to Actually, nominal damages are damages in name only and not in
the question of whether or not the circumstance (or evidence) is to fact. Where these are allowed, they are not treated as an
considered at all. 45 On the other hand, the probative value of equivalent of a wrong inflicted but simply in recognition of the
evidence refers to the question of whether or not it proves an existence of a technical injury. 51 However, the amount to be
issue. 46 Thus, a letter may be offered in evidence and admitted as awarded as nominal damages shall be equal or at least
such but its evidentiary weight depends upon the observance of commensurate to the injury sustained by private respondent
the rules on evidence. Accordingly, the author of the letter should considering the concept and purpose of such damages. 52 The
be presented as witness to provide the other party to the litigation amount of nominal damages to be awarded may also depend on
the opportunity to question him on the contents of the letter. certain special reasons extant in the case. 53
Being mere hearsay evidence, failure to present the author of the
letter renders its contents suspect. As earlier stated, hearsay Applying now such principles to the instant case, we have on
evidence, whether objected to or not, has no probative value. record the fact that petitioner's vessel Petroparcel was at fault as
Thus: well as private respondent's complaint claiming the amount of
P692,680.00 representing the fishing nets, boat equipment and
The courts differ as to the weight to be given to cargoes that sunk with the M/V Maria Efigenia XV. In its amended
hearsay evidence admitted without objection. complaint, private respondent alleged that the vessel had an
Some hold that when hearsay has been actual value of P800,000.00 but it had been paid insurance in the
admitted without objection, the same may be amount of P200,000.00 and, therefore, it claimed only the amount
considered as any other properly admitted of P600,000.00. Ordinarily, the receipt of insurance payments
testimony. Others maintain that it is entitled to should diminish the total value of the vessel quoted by private
no more consideration than if it had been respondent in his complaint considering that such payment is
excluded. causally related to the loss for which it claimed compensation.
This Court believes that such allegations in the original and
The rule prevailing in this jurisdiction is the amended complaints can be the basis for determination of a fair
latter one. Our Supreme Court held that amount of nominal damages inasmuch as a complaint alleges the
although the question of admissibility of ultimate facts constituting the plaintiffs cause of
evidence can not be raised for the first time on action. 54 Private respondent should be bound by its allegations on
appeal, yet if the evidence is hearsay it has no the amount of its claims.
probative value and should be disregarded
whether objected to or not. "If no objection is With respect to petitioner's contention that the lower court did not
made" — quoting Jones on Evidence — "it acquire jurisdiction over the amended complaint increasing the
(hearsay) becomes evidence by reason of the amount of damages claimed to P600,000.00, we agree with the
want of such objection even though its Court of Appeals that the lower court acquired jurisdiction over
admission does not confer upon it any new the case when private respondent paid the docket fee
attribute in point of weight. Its nature and corresponding to its claim in its original complaint. Its failure to
quality remain the same, so far as its intrinsic pay the docket fee corresponding to its increased claim for
weakness and incompetency to satisfy the mind damages under the amended complaint should not be considered
are concerned, and as opposed to direct primary as having curtailed the lower court's jurisdiction. Pursuant to the
evidence, the latter always prevails. ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, 55 the
unpaid docket fee should be considered as a lien on the judgment
The failure of the defense counsel to object to even though private respondent specified the amount of
the presentation of incompetent evidence, like P600,000.00 as its claim for damages in its amended complaint.
hearsay evidence or evidence that violates the
rules of res inter alios acta, or his failure to ask Moreover, we note that petitioner did not question at all the
for the striking out of the same does not give jurisdiction of the lower court on the ground of insufficient docket
such evidence any probative value. But fees in its answers to both the amended complaint and the second
admissibility of evidence should not be equated amended complaint. It did so only in its motion for reconsideration
with weight of evidence. Hearsay evidence of the decision of the lower court after it had received an adverse
whether objected to or not has no probative decision. As this Court held in Pantranco North Express, Inc. v.
value. 47 Court of Appeals, 56 participation in all stages of the case before
the trial court, that included invoking its authority in asking for
Accordingly, as stated at the outset, damages may not be awarded affirmative relief, effectively barred petitioner by estoppel from
on the basis of hearsay evidence. 48 challenging the court's jurisdiction. Notably, from the time it filed
its answer to the second amended complaint on April 16,
1985, 57 petitioner did not question the lower court's jurisdiction.
It was only on December 29, 1989 58 when it filed its motion for
reconsideration of the lower court's decision that petitioner raised
the question of the lower court's lack of jurisdiction. Petitioner
thus foreclosed its right to raise the issue of jurisdiction by its own
inaction.

WHEREFORE, the challenged decision of the Court of Appeals

dated October 14, 1992 in CA-G.R. CV No. 26680 affirming that of
the Regional Trial Court of Caloocan City, Branch 121, is hereby
MODIFIED insofar as it awarded actual damages to private
respondent Maria Efigenia Fishing Corporation in the amount of
P6,438,048.00 for lack of evidentiary bases therefor. Considering
the fact, however, that: (1) technically petitioner sustained injury
but which, unfortunately, was not adequately and properly
proved, and (2) this case has dragged on for almost two decades,
we believe that an award of Two Million (P2,000,000.00) 59 in favor
of private respondent as and for nominal damages is in order.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 172122              June 22, 2007 liable to pay respondents actual, compensatory, moral and
exemplary damages, attorney’s fees, and litigation expenses. The
MERCURY DRUG CORPORATION and ROLANDO J. DEL dispositive portion reads:
ROSARIO, petitioners, 
vs. WHEREFORE, judgment is rendered finding defendants Mercury
SPOUSES RICHARD HUANG and CARMEN HUANG, and Drug Corporation, Inc. and Rolando del Rosario, jointly and
STEPHEN HUANG, respondents. severally liable to pay plaintiffs Spouses Richard Y. Huang and
Carmen G. Huang, and Stephen Huang the following amounts:
DECISION
1. Two Million Nine Hundred Seventy Three Thousand Pesos
PUNO, C.J.: (₱2,973,000.00) actual damages;

On appeal are the Decision1 and Resolution2 of the Court of 2. As compensatory damages:

Appeals in CA-G.R. CV No. 83981, dated February 16, 2006 and
March 30, 2006, respectively which affirmed with modification the a. Twenty Three Million Four Hundred Sixty One Thousand, and
Decision3 of the Regional Trial Court (RTC) of Makati City, dated Sixty-Two Pesos (₱23,461,062.00) for life care cost of Stephen;
September 29, 2004. The trial court found petitioners jointly and
severally liable to pay respondents damages for the injuries b. Ten Million Pesos (₱10,000,000.00) as and for lost or impaired
sustained by respondent Stephen Huang, son of respondent earning capacity of Stephen;
spouses Richard and Carmen Huang.
3. Four Million Pesos (₱4,000,000.00) as moral damages;
First, the facts:
4. Two Million Pesos (₱2,000,000.00) as exemplary damages; and
Petitioner Mercury Drug Corporation (Mercury Drug) is the
registered owner of a six-wheeler 1990 Mitsubishi Truck with plate 5. One Million Pesos (₱1,000,000.00) as attorneys fees and
number PRE 641 (truck). It has in its employ petitioner Rolando J. litigation expense.4
del Rosario as driver. Respondent spouses Richard and Carmen
Huang are the parents of respondent Stephen Huang and own the On February 16, 2006, the Court of Appeals affirmed the decision
red 1991 Toyota Corolla GLI Sedan with plate number PTT 775 of the trial court but reduced the award of moral damages to
(car). ₱1,000,000.00. The appellate court also denied the motion for
reconsideration filed by petitioners.
These two vehicles figured in a road accident on December 20,
1996 at around 10:30 p.m. within the municipality of Taguig, Hence, this appeal.
Metro Manila. Respondent Stephen Huang was driving the car,
weighing 1,450 kg., while petitioner Del Rosario was driving the Petitioners cite the following grounds for their appeal:
truck, weighing 14,058 kg. Both were traversing the C-5 Highway,
north bound, coming from the general direction of Alabang going 1. That the subject Decision which dismissed the appeal of
to Pasig City. The car was on the left innermost lane while the petitioners herein but AFFIRMED WITH MODIFICATION the
truck was on the next lane to its right, when the truck suddenly decision of the Regional Trial Court, Branch 64, Makati City, in
swerved to its left and slammed into the front right side of the car. that the award of moral damages was reduced to ₱1,000,000.00
The collision hurled the car over the island where it hit a and its Resolution dated March 30, 2006, which dismissed
lamppost, spun around and landed on the opposite lane. The outright the Motion for Reconsideration must be set aside because
truck also hit a lamppost, ran over the car and zigzagged towards, the Honorable Court of Appeals committed reversible error:
and finally stopped in front of Buellah Land Church.
A. IN DENYING OUTRIGHTLY THE MOTION FOR
At the time of the accident, petitioner Del Rosario only had a RECONSIDERATION ON ALLEGEDLY BEING FILED OUT OF
Traffic Violation Receipt (TVR). His driver’s license had been TIME FOR ONE DAY;
confiscated because he had been previously apprehended for
reckless driving. B. IN ACCORDING GREATER WEIGHT TO THE EVIDENCE
ADDUCED BY THE RESPONDENTS HEREIN AND COMPLETELY
The car, valued at ₱300,000.00, was a total wreck. Respondent DISREGARDING THE DEFENSE INTERPOSED BY THE
Stephen Huang sustained massive injuries to his spinal cord, PETITIONERS HEREIN;
head, face, and lung. Despite a series of operations, respondent
Stephen Huang is paralyzed for life from his chest down and C. IN DISREGARDING COMPLETELY ALL EVIDENCES
requires continuous medical and rehabilitation treatment. PRESENTED BY THE PETITIONERS HEREIN AND PROCEEDED
TO RENDER ITS DECISION BASED ON PRESUMPTIONS AND
Respondents fault petitioner Del Rosario for committing gross PERSONAL OPINIONS OF PEOPLE WHO ARE NOT WITNESSES
negligence and reckless imprudence while driving, and petitioner TO THE ACCIDENT;
Mercury Drug for failing to exercise the diligence of a good father
of a family in the selection and supervision of its driver. D. IN AWARDING DAMAGES IN FAVOR OF RESPONDENTS
HEREIN;
In contrast, petitioners allege that the immediate and proximate
cause of the accident was respondent Stephen Huang’s E. IN FINDING THAT MERCURY DRUG CORPORATION FAILED
recklessness. According to petitioner Del Rosario, he was driving TO EXERCISE THE DILIGENCE REQUIRED IN SUPERVISING ITS
on the left innermost lane when the car bumped the truck’s front EMPLOYEES DESPITE OVERWHELMING EVIDENCE
right tire. The truck then swerved to the left, smashed into an PRESENTED BY PETITIONER COMPANY;
electric post, crossed the center island, and stopped on the other
side of the highway. The car likewise crossed over the center
F. IN FINDING THAT PETITIONER ROLANDO DEL ROSARIO WAS
island and landed on the same portion of C-5. Further, petitioner
NEGLIGENT IN DRIVING THE TRUCK AT THE TIME OF
Mercury Drug claims that it exercised due diligence of a good
ACCIDENT AND TOTALLY DISREGARDING THE EVIDENCES
father of a family in the selection and supervision of all its
PRESENTED DURING THE TRIAL OF THE CASE.
employees.
G. IN PRESENTING ONLY IN THE DECISION TESTIMONIES
The trial court, in its Decision dated September 29, 2004, found
FAVORABLE TO THE RESPONDENTS HEREIN AND
petitioners Mercury Drug and Del Rosario jointly and severally
COMPLETELY DISREGARDING THE EVIDENCES PRESENTED BY
THE PETITIONERS HEREIN WHICH CONTRADICTED SUCH ATTY. DIAZ:
TESTIMONIES NOT ONLY THROUGH ORAL TESTIMONIES BUT
AS WELL AS DOCUMENTARY EVIDENCES.5 Because as you said you lost control, correct sir?

We affirm the findings of the trial court and the appellate court WITNESS:
that petitioner Del Rosario was negligent. The evidence does not
support petitioners’ claim that at the time of the accident, the Yes, sir.
truck was at the left inner lane and that it was respondent
Stephen Huang’s car, at its right, which bumped the right front ATTY. DIAZ:
side of the truck. Firstly, petitioner Del Rosario could not precisely
tell which part of the truck was hit by the car, 6 despite the fact In other words, sir from the time your truck was hit according to
that the truck was snub-nosed and a lot higher than the car. you up to the time you rested on the shoulder, you traveled fifty
Petitioner Del Rosario could not also explain why the car landed meters?
on the opposite lane of C-5 which was on its left side. He said that
"the car did not pass in front of him after it hit him or under him WITNESS:
or over him or behind him."7 If the truck were really at the left lane
and the car were at its right, and the car hit the truck at its front Yes, sir, about that distance.
right side, the car would not have landed on the opposite side, but
would have been thrown to the right side of the C-5 Highway.
ATTY. DIAZ:
Noteworthy on this issue is the testimony of Dr. Marlon Rosendo
H. Daza, an expert in the field of physics. He conducted a study
And this was despite the fact that you were only traveling at the
based on the following assumptions provided by respondents:
speed of seventy five kilometers per hour, jumped over the island,
hit the lamppost, and traveled the three lanes of the opposite lane
1. Two vehicles collided;
of C-5 highway, is that what you want to impress upon this court?
2. One vehicle is ten times heavier, more massive than the other;
WITNESS:
3. Both vehicles were moving in the same direction and at the
Yes, sir.10
same speed of about 85 to 90 kilometers per hour;
We therefore find no cogent reason to disturb the findings of the
4. The heavier vehicle was driving at the innermost left lane, while
RTC and the Court of Appeals. The evidence proves petitioner Del
the lighter vehicle was at its right.
Rosario’s negligence as the direct and proximate cause of the
injuries suffered by respondent Stephen Huang. Petitioner Del
Dr. Daza testified that given the foregoing assumptions, if the Rosario failed to do what a reasonable and prudent man would
lighter vehicle hits the right front portion of the heavier vehicle, have done under the circumstances.
the general direction of the light vehicle after the impact would be
to the right side of the heavy vehicle, not the other way around.
We now come to the liability of petitioner Mercury Drug as
The truck, he opined, is more difficult to move as it is heavier. It is
employer of Del Rosario. Articles 2176 and 2180 of the Civil Code
the car, the lighter vehicle, which would move to the right of, and
provide:
away from the truck. Thus, there is very little chance that the car
will move towards the opposite side, i.e., to the left of the truck.
Art. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage
Dr. Daza also gave a further study on the basis of the same
done. Such fault or negligence, if there is no pre-existing
assumptions except that the car is on the left side of the truck, in
contractual relation between the parties, is called a quasi-delict
accordance with the testimony of respondent Stephen Huang. Dr.
and is governed by the provisions of this Chapter.
Daza concluded that the general direction of the car after impact
would be to the left of the truck. In this situation, the middle
Art. 2180. The obligation imposed by article 2176 is demandable
island against which the car was pinned would slow down the car,
not only for one’s own acts or omissions, but also for those of
and enable the truck to catch up and hit the car again, before
persons for whom one is responsible.
running over it.8
xxx
To support their thesis, petitioners tried to show the damages that
the truck sustained at its front right side. The attempt does not
The owners and managers of an establishment or enterprise are
impress. The photographs presented were taken a month after the
likewise responsible for damages caused by their employees in the
accident, and Rogelio Pantua, the automechanic who repaired the
service of the branches in which the latter are employed or on the
truck and authenticated the photographs, admitted that there
occasion of their functions.
were damages also on the left side of the truck. 9
xxx
Worse still, petitioner Del Rosario further admitted that after the
impact, he lost control of the truck and failed to apply his brakes.
Considering that the car was smaller and lighter than the six- The liability of the employer under Art. 2180 of the Civil Code is
wheeler truck, the impact allegedly caused by the car when it hit direct or immediate. It is not conditioned on a prior recourse
the truck could not possibly be so great to cause petitioner to lose against the negligent employee, or a prior showing of insolvency of
all control that he failed to even step on the brakes. He testified, such employee. It is also joint and solidary with the employee. 11
as follows:
To be relieved of liability, petitioner Mercury Drug should show
ATTY. DIAZ: that it exercised the diligence of a good father of a family, both in
the selection of the employee and in the supervision of the
performance of his duties. Thus, in the selection of its prospective
May I proceed, Your Honor. You were able to apply the brakes,
employees, the employer is required to examine them as to their
were you sir?
qualifications, experience, and service records. 12 With respect to
the supervision of its employees, the employer should formulate
WITNESS:
standard operating procedures, monitor their implementation, and
impose disciplinary measures for their breach. To establish
No more, sir, because I went over the island.
compliance with these requirements, employers must submit
concrete proof, including documentary evidence. 13
In the instant case, petitioner Mercury Drug presented testimonial Petitioners are also liable for all damages which are the natural
evidence on its hiring procedure. According to Mrs. Merlie Caamic, and probable consequences of the act or omission complained
the Recruitment and Training Manager of petitioner Mercury of.16 The doctors who attended to respondent Stephen are one in
Drug, applicants are required to take theoretical and actual their prognosis that his chances of walking again and performing
driving tests, and psychological examination. In the case of basic body functions are nil. For the rest of his life, he will need
petitioner Del Rosario, however, Mrs. Caamic admitted that he continuous rehabilitation and therapy to prevent further
took the driving tests and psychological examination when he complications such as pneumonia, bladder and rectum 
applied for the position of Delivery Man, but not when he applied infection, renal failure, sepsis and severe bed sores, osteoporosis
for the position of Truck Man. Mrs. Caamic also admitted that and fractures, and other spinal cord injury-related conditions. He
petitioner Del Rosario used a Galant which is a light vehicle, will be completely dependent on the care and support of his
instead of a truck during the driving tests. Further, no tests were family. We thus affirm the award of ₱23,461,062.00 for the life
conducted on the motor skills development, perceptual speed, care cost of respondent Stephen Huang, based on his average
visual attention, depth visualization, eye and hand coordination monthly expense and the actuarial computation of the remaining
and steadiness of petitioner Del Rosario. No NBI and police years that he is expected to live; and the conservative amount of
clearances were also presented. Lastly, petitioner Del Rosario ₱10,000,000.00, as reduced by the trial court, for the loss or
attended only three driving seminars – on June 30, 2001, impairment of his earning capacity, 17 considering his age,
February 5, 2000 and July 7, 1984. In effect, the only seminar he probable life expectancy, the state of his health, and his mental
attended before the accident which occurred in 1996 was held and physical condition before the accident. He was only seventeen
twelve years ago in 1984. years old, nearly six feet tall and weighed 175 pounds. He was in
fourth year high school, and a member of the school varsity
It also appears that petitioner Mercury Drug does not provide for a basketball team. He was also class president and editor-in-chief of
back-up driver for long trips. At the time of the accident, petitioner the school annual. He had shown very good leadership qualities.
Del Rosario has been out on the road for more than thirteen He was looking forward to his college life, having just passed the
hours, without any alternate. Mrs. Caamic testified that she does entrance examinations of the University of the Philippines, De La
not know of any company policy requiring back-up drivers for long Salle University, and the University of Asia and the Pacific. The
trips.14 University of Sto. Tomas even offered him a chance to obtain an
athletic scholarship, but the accident prevented him from
Petitioner Mercury Drug likewise failed to show that it exercised attending the basketball try-outs. Without doubt, he was an
due diligence on the supervision and discipline over its employees. exceptional student. He excelled both in his academics and
In fact, on the day of the accident, petitioner Del Rosario was extracurricular undertakings. He is intelligent and motivated, a
driving without a license. He was holding a TVR for reckless go-getter, as testified by Francisco Lopez, respondent Stephen
driving. He testified that he reported the incident to his superior, Huang’s godfather and a bank executive.18 Had the accident not
but nothing was done about it. He was not suspended or happened, he had a rosy future ahead of him. He wanted to
reprimanded.15 No disciplinary action whatsoever was taken embark on a banking career, get married and raise children.
against petitioner Del Rosario. We therefore affirm the finding that Taking into account his outstanding abilities, he would have
petitioner Mercury Drug has failed to discharge its burden of enjoyed a successful professional career in banking. But, as Mr.
proving that it exercised due diligence in the selection and Lopez stated, it is highly unlikely for someone like respondent to
supervision of its employee, petitioner Del Rosario. ever secure a job in a bank. To his knowledge, no bank has ever
hired a person suffering with 
We now consider the damages which respondents should recover the kind of disability as Stephen Huang’s. 19
from the petitioners.
We likewise uphold the award of moral and exemplary damages
The trial court awarded the following amounts: and attorney’s fees.

1. Two Million Nine Hundred Seventy-Three Thousand Pesos "The award of moral damages is aimed at a restoration, within the
(₱2,973,000.00) actual damages; limits of the possible, of the spiritual status quo ante." 20 Moral
damages are designed to compensate and alleviate in some way
2. As compensatory damages: the physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
a. Twenty-Three Million Four Hundred Sixty One Thousand, and humiliation, and similar injury unjustly caused a person.
Sixty-Two Pesos (₱23,461,062.00) for life care cost of Stephen; Although incapable of pecuniary computation, they must be
proportionate to the suffering inflicted. 21 The amount of the award
b. Ten Million Pesos (₱10,000,000.00) as and for lost or impaired bears no relation whatsoever with the wealth or means of the
earning capacity of Stephen; offender.

3. Four Million Pesos (₱4,000,000.00) as moral damages; In the instant case, respondent Stephen Huang and respondent
spouses Richard and Carmen Huang testified to the intense
suffering they continue to experience as a result of the accident.
4. Two Million Pesos (₱2,000,000.00) as exemplary damages; and
Stephen recounted the nightmares and traumas he suffers almost
every night when he relives the accident. He also gets depression
5. One Million Pesos (₱1,000,000.00) as attorney’s fees and
when he thinks of his bleak future. He feels frustration and
litigation expense.
embarrassment in needing to be helped with almost everything
and in his inability to do simple things he used to do. Similarly,
The Court of Appeals affirmed the decision of the trial court but respondent spouses and the rest of the family undergo their own
reduced the award of moral damages to ₱1,000,000.00. private suffering. They live with the day-to-day uncertainty of
respondent Stephen Huang’s condition. They know that the
With regard to actual damages, Art. 2199 of the Civil Code chance of full recovery is nil. Moreover, respondent Stephen
provides that "[E]xcept as provided by law or by stipulation one is Huang’s paralysis has made him prone to many other illnesses.
entitled to an adequate compensation only for such pecuniary loss His family, especially respondent spouses, have to make
suffered by him as he has duly proved x x x." In the instant case, themselves available for Stephen twenty-four hours a day. They
we uphold the finding that the actual damages claimed by have patterned their daily life around taking care of him,
respondents were supported by receipts. The amount of ministering to his daily needs, altering the lifestyle to which they
₱2,973,000.00 represented cost of hospital expenses, medicines, had been accustomed.
medical services and supplies, and nursing care services provided
respondent Stephen from December 20, 1996, the day of the
accident, until December 1998.
Respondent Carmen Huang’s brother testified on the insensitivity
of petitioner Mercury Drug towards the plight of respondent.
Stephen, viz.:

Maybe words cannot describe the anger that we feel towards the
defendants. All the time that we were going through the crisis,
there was none (sic) a single sign of nor offer of help, any
consolation or anything whatsoever. It is funny because, you
know, I have many colleagues, business associates, people even as
far as United States, Japan, that I probably met only once, when
they found out, they make a call, they sent card, they write small
notes, but from the defendant, absolute silence. They didn’t care,
and worst, you know, this is a company that have (sic) all the
resources to help us. They were (sic) on our part, it was doubly
painful because we have no choice but to go back to them and buy
the medicines that we need for Stephen. So, I don’t know how
someone will really have no sense of decency at all to at least find
out what happened to my son, what is his condition, or if there is
anything that they can do to help us.22

On the matter of exemplary damages, Art. 2231 of the Civil Code

provides that in cases of quasi-delicts, exemplary damages may be
granted if the defendant acted with gross negligence. The records
show that at the time of the accident, petitioner Del Rosario was
driving without a license because he was previously ticketed for
reckless driving. The evidence also shows that he failed to step on
his brakes immediately after the impact. Had petitioner Del
Rosario done so, the injuries which respondent Stephen sustained
could have been greatly reduced. Wanton acts such as that
committed by petitioner Del Rosario need be suppressed; and
employers like petitioner Mercury Drug should be more
circumspect in the observance of due diligence in the selection
and supervision of their employees. The award of exemplary
damages in favor of the respondents is therefore justified.

With the award of exemplary damages, we also affirm the grant of

attorney’s fees to respondents.23 In addition, attorney’s fees may
be granted when a party is compelled to litigate or incur expenses
to protect his interest by reason of an unjustified act of the other
party.24

Cost against petitioners.

IN VIEW THEREOF, the petition is DENIED. The Decision and

Resolution of the Court of Appeals dated February 16, 2006 and
March 30, 2006, respectively, in CA-G.R. CV No. 83981, are
AFFIRMED.

SO ORDERED.
GR L-25499 FEB, 18, 1970 P63,750.00 although as elsewhere shown in
this decision the damages for wake and burial
VILLA REY TRANSIT INC. VS CA AND QUINTOS ET. AL expenses, loss of income, death of the victim,
and attorneys fee reach the aggregate of
Petitioner, Villa Rey Transit, Inc., seeks the review by certiorari of P79,615.95, this Court finds it just that said
a decision of the Court of Appeals affirming that of the Court of damages be assessed at total of only P63,750.00
First Instance of Pangasinan. The basic facts are set forth in said as prayed for in plaintiffs' amended complaint.
decision of the Court of Appeals, from which We quote:
The despositive part of the decision of the trial Court reads:
At about 1:30 in the morning of March 17,
1960, an Izuzu First Class passenger bus WHEREFORE, judgment is hereby rendered
owned and operated by the defendant, bearing ordering the defendant to pay to the plaintiffs
Plate No. TPU-14871-Bulacan and driven by the amount of P63,750.00 as damages for
Laureano Casim, left Lingayen, Pangasinan, for breach of contract of carriage resulting from the
Manila. Among its paying passengers was the death of Policronio Quintos, Jr.
deceased, Policronio Quintos, Jr. who sat on the
first seat, second row, right side of the bus. At which, as above indicated, was affirmed by the Court of Appeals.
about 4:55 o'clock a.m. when the vehicle was Hence, the present petition for review on certiorari, filed by Villa
nearing the northern approach of the Sadsaran Rey Transit, Inc.
Bridge on the national highway in barrio Sto.
Domingo, municipality of Minalin, Pampanga, it The only issue raised in this appeal is the amount of damages
frontally hit the rear side of a bullcart filled with recoverable by private respondents herein. The determination of
hay. As a result the end of a bamboo pole such amount depends, mainly upon two (2) factors, namely: (1)
placed on top of the hayload and tied to the cart the number of years on the basis of which the damages shall be
to hold it in place, hit the right side of the computed and (2) the rate at which the losses sustained by said
windshield of the bus. The protruding end of the respondents should be fixed.
bamboo pole, about 8 feet long from the rear of
the bullcart, penetrated through the glass The first factor was based by the trial court — the view of which
windshield and landed on the face of Policronio was concurred in by the Court of Appeals — upon the life
Quintos, Jr. who, because of the impact, fell expectancy of Policronio Quintos, Jr., which was placed at 33-1/3
from his seat and was sprawled on the floor. years — he being over 29 years of age (or around 30 years for
The pole landed on his left eye and the bone of purposes of computation) at the time of his demise — by applying
the left side of his face was fractured. He the formula (2/3 x [80-301 = life expectancy) adopted in the
suffered other multiple wounds and was American Expectancy Table of Mortality or the actuarial of
rendered unconscious due, among other causes Combined Experience Table of Mortality. Upon the other hand,
to severe cerebral concussion. A La Mallorca petitioner maintains that the lower courts had erred in adopting
passenger bus going in the opposite direction said formula and in not acting in accordance with Alcantara v.
towards San Fernando, Pampanga, reached the Surro1 in which the damages were computed on a four (4) year
scene of the mishap and it was stopped by basis, despite the fact that the victim therein was 39 years old, at
Patrolman Felino Bacani of the municipal police the time of his death, and had a life expectancy of 28.90 years.
force of Minalin who, in the meantime, had gone
to the scene to investigate. Patrolman Bacani The case cited is not, however, controlling in the one at bar. In the
placed Policronio Quintos, Jr. and three other Alcantara case, none of the parties had questioned the propriety of
injured men who rode on the bullcart aboard the four-year basis adopted by the trial court in making its award
the La Mallorca bus and brought them to the of damages. Both parties appealed, but only as regards
provincial hospital of Pampanga at San the amount thereof. The plaintiffs assailed the non-inclusion, in its
Fernando for medical assistance. computation, of the bonus that the corporation, which was the
Notwithstanding such assistance, Policronio victim's employer, had awarded to deserving officers and
Quintos, Jr. died at 3:15 p.m. on the same day, employees, based upon the profits earned less than two (2)
March 17, 1960, due to traumatic shock due to months before the accident that resulted in his death. The
cerebral injuries. defendants, in turn, objected to the sum awarded for the fourth
year, which was treble that of the previous years, based upon the
The private respondents, Trinidad, Prima and Julita, all surnamed increases given, in that fourth year, to other employees of the
Quintos, are the sisters and only surviving heirs of Policronio same corporation. Neither this objection nor said claim for
Quintos Jr., who died single, leaving no descendants nor inclusion of the bonus was sustained by this Court. Accordingly,
ascendants. Said respondents herein brought this action against the same had not thereby laid down any rule on the length of time
herein petitioner, Villa Rey Transit, Inc., as owner and operator of to be used in the computation of damages. On the contrary, it
said passenger bus, bearing Plate No. TPU-14871-Bulacan, for declared:
breach of the contract of carriage between said petitioner and the
deceased Policronio Quintos, Jr., to recover the aggregate sum of The determination of the indemnity to be
P63,750.00 as damages, including attorney's fees. Said petitioner awarded to the heirs of a deceased person has
— defendant in the court of first instance — contended that the therefore no fixed basis. Much is left to the
mishap was due to a fortuitous event, but this pretense was discretion of the court considering the moral and
rejected by the trial court and the Court of Appeals, both of which material damages involved, and so it has been
found that the accident and the death of Policronio had been due said that "(t)here can be no exact or uniform rule
to the negligence of the bus driver, for whom petitioner was liable for measuring the value of a human life and the
under its contract of carriage with the deceased. In the language measure of damages cannot be arrived at by
of His Honor, the trial Judge: precise mathematical calculation, but the amount
recoverable depends on the particular facts and
The mishap was not the result of any circumstances of each case. The life expectancy
unforeseeable fortuitous event or emergency but of the deceased or of the beneficiary, whichever
was the direct result of the negligence of the is shorter, is an important factor.' (25 C.J.S.
driver of the defendant. The defendant must, 1241.) Other factors that are usually considered
therefore, respond for damages resulting from are: (1) pecuniary loss to plaintiff or beneficiary
its breach of contract for carriage. As the (25 C.J.S. 1243-1250) ; (2) loss of support (25
complaint alleged a total damage of only C.J.S., 1250-1251); (3) loss of service (25 C.J.S.
 1251-1254); (4) loss of society (25 C.J.S. 1254- thereon, at the legal rate, from December 29, 1961, date of the
1255); (5) mental suffering of beneficiaries (25 promulgation of the decision of the trial court.
C.J.S., 1258-1259) ; and (6) medical and
funeral expenses (26 C.J.S., 1254-1260)."2 Thus modified, said decision and that of the Court of Appeals are
hereby affirmed, in all other respects, with costs against
Thus, life expectancy is, not only relevant, but, also, petitioner, Villa Rey Transit, Inc. It is so ordered.
an important element in fixing the amount recoverable by private
respondents herein. Although it is not the sole element
determinative of said amount, no cogent reason has been given to
warrant its disregard and the adoption, in the case at bar, of a
purely arbitrary standard, such as a four-year rule. In short, the
Court of Appeals has not erred in basing the computation of
petitioner's liability upon the life expectancy of Policronio Quintos,
Jr.

With respect to the rate at which the damages shall be computed,

petitioner impugns the decision appealed from upon the ground
that the damages awarded therein will have to be paid now,
whereas most of those sought to be indemnified will be
suffered years later. This argument is basically true, and this is,
perhaps, one of the reasons why the Alcantara case points out the
absence of a "fixed basis" for the ascertainment of the damages
recoverable in litigations like the one at bar. Just the same, the
force of the said argument of petitioner herein is offset by the fact
that, although payment of the award in the case at bar will have to
take place upon the finality of the decision therein, the liability of
petitioner herein had been fixed at the rate only of P2,184.00 a
year, which is the annual salary of Policronio Quintos, Jr. at the
time of his death, as a young "training assistant" in the Bacnotan
Cement Industries, Inc. In other words, unlike the Alcantara case,
on which petitioner relies, the lower courts did not consider, in the
present case, Policronio's potentiality and capacity to increase his
future income. Indeed, upon the conclusion of his training period,
he was supposed to have a better job and be promoted from time
to time, and, hence, to earn more, if not — considering the
growing importance of trade, commerce and industry and the
concomitant rise in the income level of officers and employees 
therein — much more.

At this juncture, it should be noted, also, that We are mainly

concerned with the determination of the losses or damages
sustained by the private respondents, as dependents and intestate
heirs of the deceased, and that said damages consist, not of the
full amount of his earnings, but of the support, they received or
would have received from him had he not died in consequence of
the negligence of petitioner's agent. In fixing the amount of that
support, We must reckon with the "necessary expenses of his own
living", which should be deducted from his earnings. Thus, it has
been consistently held that earning capacity, as an element of
damages to one's estate for his death by wrongful act is
necessarily his net earning capacity or his capacity to acquire
money, "less the necessary expense for his own living.3 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.4 In other words, only net
earnings, not gross earning, are to be considered 5 that is, the total
of the earnings less expenses necessary in the creation of such
earnings or income6 and less living and other incidental expenses. 7

All things considered, We are of the opinion that it is fair and

reasonable to fix the deductible living and other expenses of the
deceased at the sum of P1,184.00 a year, or about P100.00 a
month, and that, consequently, the loss sustained by his sisters
may be roughly estimated at P1,000.00 a year or P33,333.33 for
the 33-1/3 years of his life expectancy. To this sum of P33,333.33,
the following should be added: (a) P12,000.00, pursuant to Arts.
104 and 107 of the Revised Penal Code, in relation to Article 2206
of our Civil Code, as construed and applied by this Court; 8 (b)
P1,727.95, actually spent by private respondents for medical and
burial expenses; and (c) attorney's fee, which was fixed by the trial
court, at P500.00, but which, in view of the appeal taken by
petitioner herein, first to the Court of Appeals and later to this
Supreme Court, should be increased to P2,500.00. In other words,
the amount adjudged in the decision appealed from should be
reduced to the aggregate sum of P49,561.28, with interest
G.R. No. 143008           June 10, 2002 The trial court6 (RTC) ruled in favor of Respondent Borja and held
petitioner liable for damages and loss of income. The RTC
SMITH BELL DODWELL SHIPPING AGENCY disposed as follows:
CORPORATION, petitioner, 
vs. "WHEREFORE, premises considered, judgment is hereby
CATALINO BORJA and INTERNATIONAL TO WAGE AND rendered ordering [Petitioner] Smith Bell Dodwell
TRANSPORT CORPORATION, respondents. [S]hipping Agency Corporation to pay [Borja]:

PANGANIBAN, J.: 1. The amount of P495,360.00 as actual

damages for loss of earning capacity:
The owner or the person in possession and control of a vessel is
liable for all natural and proximate damages caused to persons 2. The amount of P100,000.00 for moral
and property by reason of negligence in its management or damages; and
navigation. The liability for the loss of the earning capacity of the
deceased is fixed by taking into account the net income of the 3. The amount of P50,000.00 for and as
victim at the time of death -- of the incident in this case -- and reasonable attorney's fees.
that person's probable life expectancy.1âwphi1.nêt
"The cross-claim of [Petitioner] Smith Bell Dodwell
The Case Shipping Agency Corporation against co-defendant
International Towage and Transport Corporation and the
Before us is a Petition for Review on Certiorari under Rule 45 of latter's counterclaim against [Borja] and cross-claim with
the Rules of Court, challenging the March 6, 2000 Decision 1 and compulsory counterclaim against Smith Bell are hereby
the April 25, 2000 Resolution 2 of the Court of Appeals3 (CA) in CA- ordered dismissed."7
GR CV No. 57470. The assailed Decision disposed as follows:
Ruling of the Court of Appeals
"WHEREFORE, premises considered, the instant appeal
is hereby DENIED. The questioned decision of the lower Affirming the trial court, the CA rejected the plea of petitioner that
court is hereby AFFIRMED in toto. No pronouncement as it be exonerated from liability for Respondent Borja's injuries.
to costs."4 Contrary to the claim of petitioner that no physical evidence was
shown to prove that the explosion had originated from its vessel,
Reconsideration was denied in the assailed Resolution. the CA held that the fire had originated from M/T King
Family. This conclusion was amply supported by the testimonies
The Facts of Borja and Eulogio Laurente (the eyewitness of International
Towage and Transport Corporation or ITTC) as well as by the
The facts of the case are set forth by the CA as follows: investigation conducted by the Special Board of Marine Inquiry
and affirmed by the secretary of the Department of National
"It appears that on September 23, 1987, Smith Bell Defense. On the other hand, the RTC, which the CA sustained,
[herein petitioner] filed a written request with the Bureau had not given probative value to the evidence of petitioner, whose
of Customs for the attendance of the latter's inspection sole eyewitness had not shown up for cross-examination.
team on vessel M/T King Family which was due to arrive
at the port of Manila on September 24, 1987. Hence, this Petition.8

"Said vessel contained 750 metric tons of alkyl benzene The Issues
and methyl methacrylate monomer.
In its Memorandum,9 petitioner raises the following issues:
"On the same day, Supervising Customs Inspector
Manuel Ma. D. Nalgan instructed [Respondent Catalino "1. Whether petitioner should be held liable for the
Borja] to board said vessel and perform his duties as injuries of Respondent Catalino Borja.
inspector upon the vessel's arrival until its departure. At
that time, [Borja] was a customs inspector of the Bureau "2. Whether Respondent ITTC should be held liable for
of Customs receiving a salary of P31,188.25 per annum. the injuries of Respondent Catalino Borja.

"At about 11 o'clock in the morning on September 24, "3. Assuming without admitting that Respondent
1987, while M/T King Family was unloading chemicals Catalino Borja is entitled to damages, whether
unto two (2) barges [--] ITTC 101 and CLC-1002 [--] Respondent Borja is entitled to the amount of damages
owned by [Respondent] ITTC, a sudden explosion awarded to him by the trial court."10
occurred setting the vessels afire. Upon hearing the
explosion, [Borja], who was at that time inside the cabin Simply put, these issues can be summed up in these two
preparing reports, ran outside to check what happened. questions: (1) Who, if any, is liable for Borja's injuries? (2) What is
Again, another explosion was heard. the proper amount of liability?

"Seeing the fire and fearing for his life, [Borja] hurriedly This Court's Ruling
jumped over board to save himself. However, the [water]
[was] likewise on fire due mainly to the spilled chemicals. The Petition is partly meritorious.
Despite the tremendous heat, [Borja] swam his way for
one (1) hour until he was rescued by the people living in First Issue:
the squatters' area and sent to San Juan De Dios Responsibility for Injuries
Hospital.
Petitioner avers that both lower courts labored under a
"After weeks of intensive care at the hospital, his misapprehension of the facts. It claims that the documents
attending physician diagnosed [Borja] to be permanently adduced in the RTC conclusively revealed that the explosion that
disabled due to the incident. [Borja] made demands caused the fire on M/T King Family had originated from the
against Smith Bell and ITTC for the damages caused by barge ITTC-101, a conclusion based on three grounds. First, the
the explosion. However, both denied liabilities and Survey Report (Exh. "10") dated October 21, 1987 submitted by
attributed to each other negligence."5 the Admiral Surveyors and Adjusters, Inc., showed that no part
of M/T King Family sustained any sharp or violent damage that infract with neo-vascularization, left occipital region with right
would otherwise be observed if indeed an explosion had occurred sided headache and the blurring of vision of right eye." 17
on it. On the other hand, the fact that the vessel sustained cracks
on its shell plating was noted in two Survey Reports from Hence, the owner or the person in possession and control of a
Greutzman Divers Underwater Specialist, dated October 6, 1987 vessel and the vessel are liable for all natural and proximate
(Exh. "11"), and during the underwater inspection on the sunken damage caused to persons and property by reason of negligent
barge ITTC-101. management or navigation.18

Second, external fire damage on the hull of M/T King Second Issue:

Family indicated that the fire had started from outside the vessel Amount of Liability
and from ITTC-101. The port side of the vessel to which the ITTC
barge was tied was completely gutted by fire, while the starboard Petitioner insists that Borja is not entitled to the full amount of
side to which the barge CLC-1002 was tied sustained only slight damages awarded by the lower courts. It disputes the use of his
fire damage. gross earning as basis for the computation of the award for loss of
earning capacity. Both courts, in computing the value of such
Third, testimonial evidence proved that the explosion came from loss, used the remaining years of the victim as a government
the barge of the ITTC and not from its vessel. Security Guard employee and the amount he had been receiving per annum at the
Vivencio Estrella testified that he had seen the sudden explosion time of the incident.
of monomer on the barge with fire that went up to about 60
meters. Third Mate Choi Seong Hwan and Second Mate Nam Bang Counsel for Respondent Borja, on the other hand, claims that
Choun of M/T King Family narrated that while they were petitioner had no cause to complain, because the miscomputation
discharging the chemicals, they saw and heard an explosion from had ironically been in its favor. The multiplier used in the
the barge ITTC-101. Chief Security Guard Reynaldo Patron, in computation was erroneously based on the remaining years in
turn, testified that he was 7 to 10 meters away from the barge government service, instead of the life expectancy, of the victim.
when he heard the explosion from the port side of M/T King Borja's counsel also points out that the award was based on the
Family and saw the barge already on fire. former's meager salary in 1987, or about 23 years ago when the
foreign exchange was still P14 to $1. Hence, the questioned award
We are not persuaded. Both the RTC and the CA ruled that the is consistent with the primary purpose of giving what is just,
fire and the explosion had originated from petitioner's vessel. Said moral and legally due the victim as the aggrieved party.
the trial court:
Both parties have a point. In determining the reasonableness of
"The attempts of [Petitioner] Smith Bell to shift the blame the damages awarded under Article 1764 in conjunction with
on x x x ITTC were all for naught. First, the testimony of Article 2206 of the Civil Code, the factors to be considered are: (1)
its alleged eyewitness was stricken off the record for his life expectancy (considering the health of the victim and the
failure to appear for cross-examination (p. 361, Record). mortality table which is deemed conclusive) and loss of earning
Second, the documents offered to prove that the fire capacity; (b) pecuniary loss, loss of support and service; and (c)
originated from barge ITTC-101 were all denied moral and mental sufferings.19 The loss of earning capacity is
admission by the [c]ourt for being, in effect, hearsay (pp. based mainly on the number of years remaining in the person's
335 and 362). x x x Thus, there is nothing in the record expected life span. In turn, this number is the basis of the
to support [petitioner's] contention that the fire and damages that shall be computed and the rate at which the loss
explosion originated from barge ITTC-101." 11 sustained by the heirs shall be fixed.20

We find no cogent reason to overturn these factual findings. The formula for the computation of loss of earning capacity is as
Nothing is more settled in jurisprudence than that this Court is follows:21
bound by the factual findings of the Court of Appeals when these
are supported by substantial evidence and are not under any of Net earning capacity       =       Life expectancy x [Gross
the exceptions in Fuentes v. Court of Appeals; 12  more so, when Annual Income - Living Expenses (50% of gross annual
such findings affirm those of the trial court. 13 Verily, this Court income)], where life expectancy       =       2/3 (80 - the
reviews only issues of law. age of the deceased).22

Negligence is conduct that creates undue risk of harm to another. Petitioner is correct in arguing that it is net income (or gross
It is the failure to observe that degree of care, precaution and income less living expenses) which is to be used in the
vigilance that the circumstances justly demand, whereby that computation of the award for loss of income. Villa Rey Transit v.
other person suffers injury.14Petitioner's vessel was carrying Court of Appeals23 explained that "the amount recoverable is not
chemical cargo -- alkyl benzene and methyl methacrylate the loss of the entire earning, but rather the loss of that portion of
monomer.15 While knowing that their vessel was carrying the earnings which the beneficiary would have received." Hence, in
dangerous inflammable chemicals, its officers and crew failed to fixing the amount of the said damages, the necessary expenses of
take all the necessary precautions to prevent an accident. the deceased should be deducted from his earnings.
Petitioner was, therefore, negligent.
In other words, only net earnings, not gross earnings, are to be
The three elements of quasi delict are: (a) damages suffered by the considered; that is, the total of the earnings less expenses
plaintiff, (b) fault or negligence of the defendant, and (c) the necessary in the creation of such earnings or income, less living
connection of cause and effect between the fault or negligence of and other incidental expenses. When there is no showing that the
the defendant and the damages inflicted on the plaintiff. 16 All living expenses constituted a smaller percentage of the gross
these elements were established in this case. Knowing fully well income, we fix the living expenses at half of the gross income. To
that it was carrying dangerous chemicals, petitioner was negligent hold that one would have used only a small part of the income,
in not taking all the necessary precautions in transporting the with the larger part going to the support of one's children, would
cargo. be conjectural and unreasonable.24

As a result of the fire and the explosion during the unloading of Counsel for Respondent Borja is also correct in saying that life
the chemicals from petitioner's vessel, Respondent Borja suffered expectancy should not be based on the retirement age of
the following damage: and injuries: "(1) chemical burns of the face government employees, which is pegged at 65. In Negros
and arms; (2) inhalation of fumes from burning chemicals; (3) Navigation Co, Inc. v. CA,25 the Court resolved that in calculating
exposure to the elements [while] floating in sea water for about the life expectancy of an individual for the purpose of determining
three (3) hours; (4) homonymous hemianopsia or blurring of the loss of earning capacity under Article 2206(1) of the Civil Code, it
right eye [which was of] possible toxic origin; and (5) [c]erebral
is assumed that the deceased would have earned income even
after retirement from a particular job.1âwphi1.nêt

Respondent Borja should not be situated differently just because

he was a government employee. Private employees, given the
retirement packages provided by their companies, usually retire
earlier than government employees; yet, the life expectancy of the
former is not pegged at 65 years.

Petitioner avers that Respondent Borja died nine years after the
incident and, hence, his life expectancy of 80 years should yield to
the reality that he was only 59 when he actually died.

We disagree. The Court uses the American

Experience/Expectancy Table of Mortality or the Actuarial or
Combined Experience Table of Mortality, which consistently pegs
the life span of the average Filipino at 80 years, from which it
extrapolates the estimated income to be earned by the deceased
had he or she not been killed.26

Respondent Borja's demise earlier than the estimated life span is

of no moment. For purposes of determining loss of earning
capacity, life expectancy remains at 80. Otherwise, the
computation of loss of earning capacity will never become final,
being always subject to the eventuality of the victim's death. The
computation should not change even if Borja lived beyond 80
years. Fair is fair.

Based on the foregoing discussion, the award for loss of earning

capacity should be computed as follows:

Loss of earning = [2 (80-50)] x [(P2,752x12)-16,512]

capacity        3

= P330,240

Having been duly proven, the moral damages and attorney's fees
awarded are justified under the Civil Code's Article 2219,
paragraph 2; and Article 2208, paragraph 11, respectively.

WHEREFORE, the Petition is PARTLY GRANTED. The assailed

Decision is AFFIRMED with the
following MODIFICATIONS: petitioner is ordered to pay the heirs
of the victim damages in the amount of P320,240 as loss of
earning capacity, moral damages in the amount of P100,000, plus
another P50,000 as attorney's fees. Costs against petitioner.

SO ORDERED.
G.R. No. 116617 November 16, 1998 even know that he had bumped the girl victim
and had ran over her, demonstrating thereby
METRO MANILA TRANSIT CORPORATION (MMTC), PEDRO A. that he did not exercise diligence and take the
MUSA, CONRADO TOLENTINO, FELICIANA CELEBRADO and necessary precaution to avoid injury to persons
THE GOVERNMENT SERVICE INSURANCE in the operation of his vehicle, as, in fact, he
SYSTEM, petitioners,  ran over the girl victim who died as a result
vs. thereof. 6
COURT OF APPEALS, SPS. RODOLFO V. ROSALES and LILY R.
ROSALES, respondents. The spouses Rosales filed an independent civil action for damages
against MMTC, Musa, MMTC Acting General Manager Conrado
G.R. No. 126395 November 16, 1998 Tolentino, and the Government Service Insurance System (GSIS).
They subsequently amended their complaint to include Feliciana
RODOLFO V. ROSALES, and LILY R. ROSALES, petitioners,  Celebrado, a dispatcher of the MMTC, as a defendant therein. The
vs. counsel of MMTC and Musa attempted to introduce testimony that
THE COURT OF APPEALS, METRO MANILA TRANSIT Musa was not negligent in driving Bus No. 27 but was told by the
CORPORATION, (MMTC) PEDRO A. MUSA, CONRADO trial judge:
TOLENTINO, FELICIANA CELEBRADO and THE GOVERNMENT
SERVICE INSURANCE SYSTEM, respondents. COURT:

These are appeals brought, on the one hand, by the Metro Manila That is it. You can now limit your question to
Transit Corporation (MMTC) and Pedro Musa and, on the other, by the other defendant here but to re-try again the
the spouses Rodolfo V. Rosales and Lily R. Rosales from the actual facts of the accident, this Court would
decision,1 dated August 5, 1994, of the Court of Appeals, which not be in the position. It would be improper for
affirmed with modification the judgment of the Regional Trial this Court to make any findings with respect to
Court of Quezon City holding MMTC and Musa liable to the the negligence of herein driver. You ask
spouses Rosales for actual, moral, and exemplary damages, questions only regarding the civil aspect as to
attorney's fees, and the costs of suit for the death of the latter's the other defendant but not as to the
daughter. MMTC and Musa in G.R. No. 116617 appeal insofar as accused. 7
they are held liable for damages, while the spouses Rosales in
G.R. No. 126395 appeal insofar as the amounts awarded are The counsel submitted to the ruling of the court. 8
concerned.
In a decision rendered on March 6, 1990, the Regional Trial Court
The facts are as follows: of Quezon City found MMTC and Musa guilty of negligence and
ordered them to pay damages and attorney's fees, as follows:
MMTC is the operator of a fleet of passenger buses within the
Metro Manila area. Musa was its driver assigned to MMTC Bus No. WHEREFORE, foregoing premises considered,
27. The spouses Rosales were parents of Liza Rosalie, a third-year judgment is hereby rendered ordering defendant
high school student at the University of the Philippines Integrated Metro Manila Transit Corporation primarily and
School. defendant Pedro Musa subsidiarily liable to
plaintiffs-spouses Rodolfo V. Rosales and Lily R.
At around a quarter past one in the afternoon of August 9, 1986, Rosales as follows:
MMTC Bus No. 27, which was driven by Musa, hit Liza Rosalie
who was then crossing Katipunan Avenue in Quezon City. An eye 1. Actual damages in the amount of
witness said the girl was already near the center of the street P150,000.00;
when the bus, then bound for the south, hit her. 2 She fell to the
ground upon impact, rolled between the two front wheels of the 2. Moral damages in the amount of
bus, and was run over by the left rear tires thereof. 3 Her body was P500,000.00;
dragged several meters away from the point of impact. Liza Rosalie
was taken to the Philippine Heart Center,4 but efforts to revive her 3. Exemplary damages in the amount of
proved futile. P100,000.00;

Pedro Musa was found guilty of reckless imprudence resulting in 4. Attorney's fees in the amount of P50,000.00;
homicide and sentenced to imprisonment for a term of 2 years and and
4 months, as minimum, to 6 years, as maximum, by the Regional
Trial Court of Quezon 5. Costs of suit.9
City.5 The trial court found:
Both parties appealed to the Court of Appeals. On August 5, 1994,
All told, this Court, therefore, holds that the the Court of Appeals affirmed the decision of the trial court with
accused, who was then, the driver of MMTC Bus the following modification:
No. 027, is criminally responsible for the death
of the girl victim in violation of Article 365 (2) of WHEREFORE, except for the modification
the Revised Penal Code. For, in the light of the deleting the award of P150,000.00 as actual
evidence that the girl victim was already at the damages and awarding in lieu thereof the
center of the Katipunan Road when she was amount of P30,000.00 as death indemnity, the
bumped, and, therefore, already past the right decision appealed from is, in all other aspects,
lane when the MMTC Bus No. 027 was hereby AFFIRMED. 10
supposed to have passed; and, since the said
bus was then running at a speed of about 25 The spouses Rosales filed a motion for reconsideration, which the
kilometers per hour which is inappropriate appellate court, in a resolution, dated September 12, 1996, partly
since Katipunan road is a busy street, there is, granted by increasing the indemnity for the death of Liza Rosalie
consequently, sufficient proof to show that the from P30,000.00 to P50,000.00. Hence, these appeals.
accused was careless, reckless and imprudent
in the operation of his MMTC Bus No. 027, In G.R. No. 116617, MMTC and Musa assail the decision of the
which is made more evident by the Court of Appeals on the following grounds:
circumstance that the accused did not blow his
horn at the time of the accident, and he did not
 PUBLIC RESPONDENT COURT OF APPEALS within the scope of their assigned tasks, even though the former
ERRED IN AFFIRMING THE COURT A are not engaged in any business or industry." The responsibility of
QUO'S DECISION PARTICULARLY IN NOT employers for the negligence of their employees in the performance
HOLDING THAT APPELLANT MMTC of their duties is primary, that is, the injured party may recover
EXERCISED THE DILIGENCE OF A GOOD from the employers directly, regardless of the solvency of their
FATHER OF A FAMILY IN THE SELECTION employees. 13 The rationale for the rule on vicarious liability has
AND SUPERVISION OF ITS DRIVERS. THIS been adumbrated thus:
BEING THE CASE, APPELLANT MMTC IS
ENTITLED TO BE ABSOLVED FROM ANY What has emerged as the modern justification
LIABILITY OR AT LEAST TO A REDUCTION OF for vicarious liability is a rule of policy, a
THE RECOVERABLE DAMAGES. deliberate allocation of a risk. The losses caused
by the torts of employees, which as a practical
THE PUBLIC RESPONDENT COURT OF matter are sure to occur in the conduct of the
APPEALS, JUST LIKE THE COURT A QUO, employer's enterprise, are placed upon that
OVERLOOKED THE FACT THAT PETITIONER enterprise itself, as a required cost of doing
MMTC, A GOVERNMENT-OWNED business. They are placed upon the employer
CORPORATION, COMMITTED NO FRAUD, because, having engaged in an enterprise,
MALICE, BAD FAITH, NOR WANTON, which will on the basis of all past experience
FRAUDULENT, OPPRESSIVE AND involve harm to others through the tort of
MALEVOLENT ACTUATIONS AGAINST HEREIN employees, and sought to profit by it, it is just
RESPONDENTS-APPELLEES. that he, rather than the innocent injured
plaintiff, should bear them; and because he is
THE PUBLIC RESPONDENT COURT OF better able to absorb them, and to distribute
APPEALS ERRED IN AFFIRMING THE them, through prides, rates or liability
COURT A QUO'S DECISION TO HOLD insurance, to the public, and so to shift them to
PETITIONER-APPELLANT MMTC PRIMARILY society, to the community at large. Added to
LIABLE TO PRIVATE RESPONDENTS- this is the makeweight argument that an
APPELLEES IN THE AMOUNT OF P500,000 AS employer who is held strictly liable is under the
MORAL DAMAGES, P100,000 AS EXEMPLARY greatest incentive to be careful in the selection,
DAMAGES AND P30,000 BY WAY OF DEATH instruction and supervision of his servants, and
INDEMNITY. to take every precaution to see that the
enterprise is conducted safely. 14
THE PUBLIC RESPONDENT COURT OF
APPEALS ERRED IN AFFIRMING THE In Campo v. Camarote, 15 we explained the basis of the
COURT A QUO'S DECISION IN RENDERING presumption of negligence in this wise:
JUDGMENT FOR ATTORNEY'S FEES IN THE
AMOUNT OF P50,000.00 IN FAVOR OF The reason for the law is obvious. It is indeed
PRIVATE RESPONDENTS-APPELLEES. difficult for any person injured by the
carelessness of a driver to prove the negligence
On the other hand, in G.R. No. 126395, the spouses Rosales or lack of due diligence of the owner of the
contend: vehicle in the choice of the driver. Were we to
require the injured party to prove the owner's
The Court of Appeals erred in: lack of diligence, the right will in many cases
prove illusory, as seldom does a person in the
First, considering that death indemnity which community, especially in the cities, have the
this Honorable Court set at P50,000.00 is akin opportunity to observe the conduct of all
to actual damages; possible car owners therein. So the law imposes
the burden of proof of innocence on the vehicle
Second, not increasing the amount of damages owner. If the driver is negligent and causes
awarded; damage, the law presumes that the owner was
negligent and imposes upon him the burden of
Third, refusing to hold all the defendants, now proving the contrary.
private respondents, solidarily liable.
Employers may be relieved of responsibility for the negligent acts
MMTC and Musa do not specifically question the findings of the of their employees within the scope of their assigned tasks only if
Court of Appeals and the Regional Trial Court of Quezon City that they can show that "they observed all the diligence of a good father
Liza Rosalie was hit by MMTC Bus No. 27. Nonetheless, their of a family to prevent
petition contains discussions which cast doubts on this damage."16 For this purpose, they have the burden of proving that
point. 11 Not only can they not do this as the rule is that an they have indeed exercised such diligence, both in the selection of
appellant may not be heard on a question not specifically assigned the employee who committed the quasi-delict and in the
as error, but the rule giving great weight, and even finality, to the supervision of the performance of his duties.
factual conclusions of the Court of Appeals which affirm those of
the trial court bars a reversal of the finding of liability against In the selection of prospective employees, employers are required
petitioners MMTC and Musa. Only where it is shown that such to examine them as to their qualifications, experience, and service
findings are whimsical, capricious, and arbitrary can they be records. 17 On the other hand, with respect to the supervision of
overturned. To the contrary, the findings of both the Court of employees, employers should formulate standard operating,
Appeals and the Regional Trial Court are solidly anchored on the procedures, monitor their implementation, and impose
evidence submitted by the parties. We, therefore, regard them as disciplinary measures for breaches thereof. 18 To establish these
conclusive in resolving the petitions at bar. 12 Indeed, as already factors in a trial involving the issue of vicarious liability,
stated, petitioners' counsel submitted to the ruling of the court employers must submit concrete proof, including documentary
that the finding of the trial court in the criminal case was evidence. 19
conclusive on them with regard to the questions of whether Liza
Rosalie was hit by MMTC Bus No. 27 and whether its driver was In this case, MMTC sought to prove that it exercised the diligence
negligent. Rather, the issue in this case turns on Art. 2180 of the of a good father of a family with respect to the selection of
Civil Code, which provides that "employers shall be liable for the employees by presenting mainly testimonial evidence on its hiring
damages caused by their employees and household helpers acting procedure. According to MMTC, applicants are required to submit
professional driving licenses, certifications of work experience, and documentary evidence, or even object evidence
clearances from the National Bureau of Investigation; to undergo for that matter, inasmuch as the witnesses'
tests of their driving skills, concentration, reflexes, and vision; testimonies dwelt on mere generalities, we
and, to complete training programs on traffic rules, vehicle cannot consider the same as sufficiently
maintenance, and standard operating procedures during persuasive proof that there was observance of
emergency cases. 20 due diligence in the selection and supervision of
employees. Petitioner's attempt to prove
MMTC's evidence consists entirely of testimonial evidence (1) that its diligentissimi patris familias in the selection
transport supervisors are assigned to oversee field operations in and supervision of employees through oral
designated areas; (2) that the maintenance department daily evidence must fail as it was unable to buttress
inspects the engines of the vehicles; and, (3) that for infraction of the same with any other evidence, object or
company rules there are corresponding penalties. 21Although documentary, which might obviate the apparent
testimonies were offered that in the case of Pedro Musa all these biased nature of the testimony.
precautions were followed, 22 the records of his interview, of the
results of his examinations, and of his service were not presented. Having found both MMTC and its driver Pedro Musa liable for
negligence for the death of Liza Rosalie on August 9, 1986; we now
MMTC submitted brochures and programs of seminars for consider the question of damages which her parents, the spouses
prospective employees on vehicle maintenance, traffic regulations, Rosales, are entitled to recover, which is the subject of the appeal
and driving skills and claimed that applicants are given tests to in G.R. No. 126395.
determine driving skills, concentration, reflexes, and vision, 23 but
there is no record that Musa attended such training programs and Indemnity for Death. Art. 2206 provides for the payment of
passed the said examinations before he was employed. No proof indemnity for death caused by a crime or quasi-delict. Initially
was presented that Musa did not have any record of traffic fixed in said article of the Civil Code at P3,000.00, the amount of
violations. Nor were records of daily inspections, allegedly the indemnity has through the years been gradually increased
conducted by supervisors, ever presented. based on the value of the peso. At present, it is fixed at
P50,000.00. 26 To conform to this new ruling, the Court of Appeals
Normally, employers' keep files concerning the qualifications, work correctly increased the indemnity it had originally ordered the
experience, training evaluation, and discipline of their employees. spouses Rosales to be paid from P30,000.00 to P50,000.00 in its
The failure of MMTC to present such documentary proof puts in resolution, dated September 12, 1996.
doubt the credibility of its witnesses. What was said in Central
Taxicab Corporation v. Ex-Meralco Employees Transportation Actual Damages. Art. 2199 provides that "except as provided by
Corporation  24 applies to this case: law or by stipulation, one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has duly
This witness spoke of an affidavit of experience proved." The spouses Rosales are claiming actual damages in the
which a driver-applicant must accomplish amount of P239,245.40. However, during the trial, they submitted
before he is employed by the company, a written receipts showing that expenses for the funeral, wake, and
time schedule for each bus, and a record of the interment of Liza Rosalie amounted only to P60,226.65 itemized
inspections and thorough checks pertaining to as follows: 27
each bus before it leaves the car barn; yet no
attempt was ever made to present in evidence Medical Attendance P 739.65
any of these documents, despite the fact that
they were obviously in the possession and Funeral Services 5,100.00
control of the defendant company.
Wreaths 2,500.00
....
Embalment 1,000.00
Albert also testified that he kept records of the
preliminary and final tests given by him as well Obituaries 7,125.00
as a record of the qualifications and experience
of each of the drivers of the company. It is Interment fees 2,350.00
rather' strange, therefore, that he failed to
produce in court the all important record of Expenses during wake 14,935.00
Roberto, the driver involved in this case.
Mourning clothes 5,000.00
The failure of the defendant company to
produce in court any record or other Photography 3,500.00
documentary proof tending to establish that it
had exercised all the diligence of a good father Video Coverage 10,000.00
of a family in the selection and supervision of its
drivers and buses, notwithstanding the calls
Printing of invitation cards 7,977.00
therefor by both the trial court and the
opposing counsel, argues strongly against its
TOTAL
pretensions.
60,226.65
It is noteworthy that, in another case involving MMTC, testimonial
Hence, apart from the indemnity for death, the spouses Rosales
evidence of identical content, which MMTC presented to show that
are entitled to recover the above amount as actual damages.
it exercised the diligence of a good father of a family in the
selection and supervision of employees and thus avoid vicarious
Moral Damages. Under Art. 2206, the "spouse, legitimate and
liability for the negligent acts of its employees, was held to be
illegitimate descendants and ascendants of the deceased may
insufficient to overcome the presumption of negligence against it.
demand moral damages for mental anguish by reason of the death
In Metro Manila Transit Corp. v. Court of Appeals, 25 this Court
of the deceased." The reason for the grant of moral damages has
said:
been explained thus:
Coming now to the case at bar, while there is no
. . . the award of moral damages is aimed at a
rule which requires that testimonial evidence, to
restoration, within the limits of the possible, of
hold sway, must be corroborated by
 the spiritual status quo ante; and therefore, it there was a pending criminal case against Musa for reckless
must be proportionate to the suffering inflicted. imprudence resulting in slight physical injuries with another
The intensity of the pain experienced by the branch of the Regional Trial Court, Quezon City. 33 The evidence
relatives of the victim is proportionate to the also shows that he failed to stop his vehicle at once even after eye
intensity of affection for him and bears no witnesses shouted at him. The spouses Rosales claim exemplary
relation whatsoever with the wealth or means of damages in the amount of P5,000,000.00. Under the
the offender. 28 circumstances, we deem it reasonable to award the spouses
Rosales exemplary damages in the amount of five hundred
In the instant case, the spouses Rosales presented evidence of the thousand pesos (P500,000.00).
intense moral suffering they had gone through as a result of the
loss of Liza Rosalie who was their youngest child. Rodolfo Rosales Attorney's Fees. Pursuant to Art. 2208, attorney's fees may be
recounted the place of Liza Rosalie in the family and their recovered when, as in the instant case, exemplary damages are
relationship with her in the following words: awarded. In the recent case of Sulpicio Lines, Inc. v. Court of
Appeals, 34 which involved the death of a minor child in the
Q: Mr. Rosales, how was Liza to you as a daughter? sinking of a vessel, we held an award of P50,000.00 as attorney's
fees to be reasonable. Hence, we affirm the award of attorney's
A: Well, Liza as a daughter was the greatest joy of the fees made by the Court of Appeals to the spouses Rosales in that
family; she was our pride, and everybody loved her — amount.
all her brothers and sisters — because she was sweet
and unspoiled. . . . She was soft-spoken to all of us; Compensation for Loss of Earning Capacity. Art. 2206 of the Civil
and she still slept with us at night although she had Code provides that in addition to the indemnity for death caused
her own room. Sometimes in the middle of the night by a crime or quasi delict, the "defendant shall be liable for the
she would open our door and ask if she could sleep loss of the earning capacity of the deceased, and the indemnity
with us. So we let her sleep with us, as she was the shall be paid to the heirs of the latter; . . ." Compensation of this
youngest. 29 nature is awarded not for loss of earnings but for loss of capacity
to earn money. 35Evidence must be presented that the victim, if
The death of Liza Rosalie left a void in their lives. Rodolfo Rosales not yet employed at the time of death, was reasonably certain to
testified on the devastating effect of the death of Liza Rosalie: complete training for a specific profession. 36 In People v.
Teehankee  37 no award of compensation for loss of earning
Q: And after she died, what changes, if any, did you feel capacity was granted to the heirs of a college freshman because
in your family? there was no sufficient evidence on record to show that the victim
would eventually become a professional pilot. 38 But compensation
A: Well, there is something hollow in our family, should be allowed for loss of earning capacity resulting from the
something is missing. She used to greet me when I death of a minor who has not yet commenced employment or
came home and smell if I was drunk and would tell me training for a specific profession if sufficient evidence is presented
to dress up and take a shower before her mommy could to establish the amount thereof. In the United States it has been
see me. She would call me up at the office and say: observed:
"Daddy, come home, please help me with my
homework." Now, all these things, I am missing, you This raises the broader question of the proper
know. . . I do not feel like going home early. Sometimes measure of damages in death cases involving
my wife would complain and ask: "Where did you go?" children, housewives, the old, and others who
But I cannot explain to her how I feel. 30 do not have market income so that there is no
pecuniary loss to survivors or to the estate of
Lily Rosales described life without Liza Rosalie thus: the decedent. The traditional approach was to
award no or merely nominal damages in such
Q: Now, your life without Liza, how would you describe cases. . . . Increasingly, however, courts allow
it, Dr. Rosales? expert testimony to be used to project those lost
earnings. 39
A: You know it is very hard to describe. The family was
broken apart. We could not go together because we Thus, in Haumersen v. Ford Motor Co., 40 the court allowed the
remember Liza. Every time we go to the cemetery we try heirs of a seven-year-old boy who was killed in a car accident to
as much as possible not to go together. So, we go to the recover compensation for loss of earning capacity:
cemetery one at a time, sometimes, my husband and I,
or my son and another one, but we never go together Considerable evidence was presented by
because we remember Liza. But before her death we plaintiffs in an effort to give the jury a
would always be together, the whole family on foundation on which to make an award. Briefly
weekends and on our days off. My husband works very stated, this evidence showed Charles
hard, I also work very hard and my children go to Haumersen was a seven-year-old of above
school. They study very hard. Now we cannot go average characteristics. He was described as
together on outings because of the absence of Liza. 31 "very intelligent" and "all-American." He received
high marks in school. He was active in church
The spouses Rosales claim moral damages in the amount of affairs and participated in recreational and
P5,000,000.00. In People v. Teehankee, Jr.,32this Court awarded athletic events, often with, children older than
P1 million as moral damages to the heirs of a seventeen-year-old himself. In addition, he had an unusual talent
girl who was murdered. This amount seems reasonable to us as for creating numerous cartoons and other
moral damages for the loss of a minor child, whether he or she drawings, some of which plaintiffs introduced at
was a victim of a crime or a quasi-delict. Hence, we hold that the trial.
MMTC and Musa are solidarily liable to the spouses Rosales in the
amount of P1,000,000.00 as moral damages for the death of Liza The record does not disclose passion and
Rosalie. prejudice. The key question is whether the
verdict of $100,000 has support in the evidence.
Exemplary Damages. Art. 2231 provides that exemplary damages
may be recovered in cases involving quasi-delicts if "the defendant Upon analysis of the record, we conclude that
acted with gross negligence." This circumstance obtains in the we should not disturb the award.
instant case. The records indicate that at the time of the mishap,
The argument for allowing compensation for loss of earning thereof, were charged with the supervision of Musa and should,
capacity of a minor is even stronger if he or she was a student, therefore, be held vicariously liable under Art. 2180 of the Civil
whether already training for a specific profession or still engaged Code. With respect to the GSIS, they contend that it was the
in general studies. In Krohmer v. Dahl, 41 the court, in affirming insurer in a contract for third party liability it had with the MMTC.
the award by the jury of $85,000.00 to the heirs of an eighteen-
year-old college freshman who died of carbon monoxide poisoning, Although the fourth paragraph of Art. 2180 mentions "managers"
stated as follows: among those made responsible for the negligent acts of others, it
is settled that this term is used in the said provision in the sense
There are numerous cases that have held of "employers." 55 Thus, Tolentino and Celebrado cannot be held
admissible evidence of prospective earnings of a liable for the tort of Pedro Musa.
student or trainee. . . . The appellants contend
that such evidence is not admissible unless the In Vda. de Maglana v. Consolacion, 56 it was ruled that an insurer
course under study relates to a given in an indemnity contract for third party liability is directly liable to
occupation or profession and it is shown that the injured party up to the extent specified in the agreement, but
the student is reasonably certain to follow that it cannot be held solidarily liable beyond that amount. The GSIS
occupation or profession. It is true that the admitted in its answer that it was the insurer of the MMTC for
majority of these decisions deal with students third party liability with respect to MMTC Bus No. 27 to the extent
who are studying for a specific occupation or of P50,000.00. 57 Hence, the spouses Rosales have the option
profession. However, not one of these cases either to claim the said amount from the GSIS and the balance of
indicate that evidence of one's education as a the award from MMTC and Musa or to enforce the entire judgment
guide to future earnings is not admissible where against the latter, subject to reimbursement from the former to
the student is engaged in general studies or the extent of the insurance coverage. 58
whose education does not relate to a specific
occupation. One last word. The Regional Trial Court of Quezon City erred in
holding MMTC primarily and Musa secondarily liable for damages
In sharp contrast with the situation obtaining in People v. arising from the death of Liza Rosalie. It was error for the
Teehankee, where the prosecution merely presented evidence to appellate court to affirm this aspect of the trial court's decision.
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 As already stated, MMTC is primarily liable for damages for the
content themselves with simply establishing Liza Rosalie's negligence of its employee in view of Art. 2180. Pursuant to Art.
enrollment at UP Integrated School. They presented evidence to 2181, it can recover from its employee what it may pay. This does
show that Liza Rosalie was a good student, promising artist, and not make the employee's liability subsidiary. It only means that if
obedient child. She consistently performed well in her studies the judgment for damages is satisfied by the common carrier, the
since grade school. 42 A survey taken in 1984 when Liza Rosalie latter has a right to recover what it has paid from its employee
was twelve years old showed that she had good study habits and who committed the fault or negligence which gave rise to the
attitudes. 43 Cleofe Chi, guidance counselor of the University of the action based on quasi-delict. 59 Hence, the spouses Rosales have
Philippines Integrated School, described Liza Rosalie as the option of enforcing the judgment against either MMTC or
personable, well-liked, and with a balanced Musa.
personality. 44 Professor Alfredo Rebillon, a faculty member of the
University of the Philippines College of Fine Arts, who organized From another point of view, Art. 2194 provides that "the
workshops which Liza Rosalie attended in 1982 and 1983, responsibility of two or more persons who are liable for a quasi-
testified that Liza Rosalie had the potential of eventually becoming delict is solidary." We ruled in Gelisan v. Alday  60 that "the
an artist. 45 Professor Rebillon's testimony is more than registered owner/operator of a public service vehicle is jointly and
sufficiently established by the 51 samples of Liza Rosalie's severally liable with the driver for damages incurred by passengers
watercolor, charcoal, and pencil drawings submitted as exhibits or third persons as a consequence of injuries sustained in the
by the spouses Rosales. 46 Neither MMTC nor Pedro Musa operation of said vehicle." In Baliwag Transit Inc. v. Court of
controverted this evidence. Appeals 61 it was held that "to escape solidary liability for
a quasi-delict committed by an employee, the employer must
Considering her good academic record, extra-curricular activities, adduce sufficient proof that it exercised such degree of care."
and varied interests, it is reasonable to assume that Liza Rosalie Finally, we held in the recent case of Philtranco Service
would have enjoyed a successful professional career had it not Enterprises, Inc. v. Court of Appeals  62 that "the liability of the
been for her untimely death. Hence, it is proper that registered owner of a public service vehicle . . . for damages arising
compensation for loss of earning capacity should be awarded to from the tortious acts of the driver is primary, direct, and joint
her heirs in accordance with the formula established in decided and several or solidary with the driver."
cases 47 for computing net earning capacity, to wit:
WHEREFORE, the decision of the Court of Appeals is SET ASIDE
Net Earning = Life [Gross Necessary and another one is RENDERED holding the Metro Manila Transit
Corporation and Pedro Musa jointly and severally liable for the
Capacity Expectancy x [Annual — Living death of Liza Rosalie R. Rosales and ORDERING them as such to
pay to the spouses Rodolfo V. Rosales and Lily R. Rosales the
[Income Expenses following amounts:

Life expectancy is equivalent to two thirds (2/3) multiplied by the 1) death indemnity in the amount of fifty-thousand pesos
difference of eighty (80) and the age of the deceased. 48 Since Liza (P50,000,00);
Rosalie was 16 at the time of her death, her life expectancy was 44
more years. 49 Her projected gross annual income, computed 2) actual damages in the amount of sixty thousand two hundred
based on the minimum wage for workers in the non-agricultural twenty six pesos and sixty five centavos (P60,226.65);
sector in effect at the time of her death, 50 then fixed at
P37.00, 51 is P14,630.46. 52 Allowing for necessary living expenses 3) moral damages in the amount of one million pesos
of fifty percent (50%) of her projected gross annual income, 53 her (P1,000,000.00);
total net earning capacity amounts to P321,870.12. 54
4) exemplary damages in the amount of five hundred thousand
Finally, the spouses Rosales argue that the Court of Appeals erred pesos (P500,000.00);
in absolving Conrado Tolentino, Feliciana Celebrado, and the GSIS
of liability. The Spouses Rosales alleged that Tolentino, as Acting
General Manager of the MMTC, and Celebrado, as a dispatcher
5) attorney's fees in the amount of fifty thousand pesos
(P50,000.00);

6) compensation for loss of earning capacity in the amount of

three hundred twenty-one thousand eight hundred seventy pesos
and twelve centavos (P321,870.12); and

7) the costs of suit.

SO ORDERED.
 WHERFORE, the appealed decision is AFFIRMED subject to the
following modifications:
G.R. No. 148974               July 2, 2010
1. Absolving appellant Chito Calauag from liability for the
OMC CARRIERS, INC. and JERRY AÑALUCAS y death of Regie Nabua; and
PITALINO, Petitioners, 
vs. 2. Deleting, for want of basis, the following damages
SPOUSES ROBERTO C. NABUA and ROSARIO T. awarded by the court a quo, viz:
NABUA, Respondents.
a. P2,000,000.00 as lost earnings of the
DECISION deceased; and

PERALTA, J.: b. P100,000.00 as exemplary damages.

Before this Court is a petition for review on certiorari, 1 under Rule SO ORDERED.10
45 of the Rules of Court, seeking to set aside the December 28,
1999 Decision2 and July 3, 2001 Resolution 3 of the Court of Not satisfied with the CA’s disposition of their petition, petitioners
Appeals (CA) in CA-G.R. CV No. 60034. The CA affirmed, with filed a Partial Motion for Reconsideration. 11 On July 3, 2001, the
modification, the Decision4 of the Regional Trial Court (RTC), CA issued a Resolution denying petitioners’ motion for
National Capital Judicial Region, Branch 224, Quezon City, in reconsideration.
Civil Case No. Q-95-24838, which found petitioners liable to
respondents for damages. Hence, herein petition, with petitioners raising the following
assignment of errors, to wit:
The facts of the case are as follows:
I. THE COURT OF APPEALS, WITH DUE RESPECT,
On August 4, 1995, at about 3:00 p.m., an Isuzu private tanker COMMITTED ERROR IN ITS DECISION WHEN IT
with plate no. PCH 612, owned by and registered in the name of DISREGARDED OR REFUSED TO FOLLOW AND APPLY
petitioner OMC Carriers, Inc. and then being driven by its THE APPLICABLE RULINGS OF THIS HONORABLE
employee Jerry P. Añalucas (Añalucas), was cruising along COURT WHICH NOW FORM THE LAW OF THE LAND.
Quirino Highway towards the general direction of Lagro, Quezon
City. At Barangay Pasong Putik, Novaliches, Quezon City, the II. AS A RESULT OF THE COURT OF APPEALS’
aforesaid private tanker hit a private vehicle, an Isuzu Gemini REFUSAL TO FOLLOW AND APPLY THE
with plate no. NDF 372, which was making a left turn towards a JURISPRUDENCE LAID DOWN BY THIS HONORABLE
nearby Caltex gasoline station. The impact heavily damaged the COURT, ITS DECISION TENDS TO MODIFY, AMEND OR
right side portion of the latter motor and mortally injured its 18- REJECT THE JURISPRUDENCE APPLICABLE TO THE
year-old driver, Reggie T. Nabua, who was later pronounced dead CASE AT BAR.12
on arrival at the Fairview Polymedic Hospital. 5
The petition is partly meritorious.
Respondent spouses Berlino and Rosario Nabua, the parents of
the victim, filed a Complaint6 for damages against petitioners and Prefatorily, this Court shall address petitioners’ position that the
the General Manager of OMC Carriers, Chito Calauag, 7 before the proximate and immediate cause of the accident was the negligence
RTC of Quezon City, Branch 224. The complaint was docketed as of the victim, Reggie Nabua. 13 This Court is not persuaded as the
Civil Case No. Q-95-24838 and entitled, Spouses Berlino C. Nabua same is a question of fact.
and Rosario T. Nabua, Plaintiffs, vs. OMC Carriers, Inc., its
General Manager, Chito Calauag, and Jerry Añalucas y Pitalino, A petition for review on certiorari under Rule 45 of the Rules of
Defendants. Court should include only questions of law questions of fact are
not reviewable. A question of law exists when the doubt centers on
On January 19, 1998, the RTC rendered a Decision, 8 the what the law is on a certain set of facts, while a question of fact
dispositive portion of which reads: exists when the doubt centers on the truth or falsity of the alleged
facts. There is a question of law if the issue raised is capable of
Accordingly, therefore, the Court finds and renders judgment in being resolved without need of reviewing the probative value of the
favor of the plaintiffs as against defendants and ordering the latter evidence. Once the issue invites a review of the evidence, the
to pay the plaintiffs, jointly and solidarily, the following: question is one of fact.14

1. P110,000.00 for actual damages, or for money spent Factual findings of the Court of Appeals are binding on the Court.
during the funeral, wake and burial of the deceased Absent grave abuse of discretion, the Court will not disturb the
Regie Nabua; factual findings of the Court of Appeals.15 In Encarnacion v. Court
of Appeals,16 the Court held that, "unless there is a clearly grave or
2. P2,000,000.00 for compensatory damages and the whimsical abuse on its part, findings of fact of the appellate court
amount of P60,000.00 as indemnity for the death of will not be disturbed. The Supreme Court will only exercise its
Reggie Nabua; power of review in known exceptions such as gross
misappreciation of evidence or a total void of evidence."
3. P100,000.00 as moral damages and another
P100,000.00 as exemplary damages; and After a painstaking review of the records of the case at bar, this
Court holds that petitioners’ stand is bereft of any evidence to
4. P50,000.00 as attorney’s fees; support it as both the RTC and CA had correctly found that the
proximate cause of the accident was the negligence of petitioner
5. Costs of the suit. Añalucas. The testimony of eyewitness Marlon Betiranta shows
that the victim, Reggie Nabua, was driving at a slow pace when he
IT IS SO ORDERED.9 was entering the Caltex station, to wit:

Aggrieved, petitioners appealed the RTC Decision to the CA. On Q - You mean to say that you were immediately behind
December 28, 1999, the CA rendered a Decision, partially granting this Gemini car?
the petition, the dispositive portion of which states:
A - Yes, sir.
 Q- Now, when this Gemini car was about to go to the x x x x19
direction of the Caltex Station coming from the right
portion, what did you notice this car or the driver did? All told, this Court is convinced, and thus affirms the findings of
fact of the RTC and the CA that the proximate cause of the
A - He gave a sign that he was going at (sic)the left, sir. accident was the negligence of petitioner Añalucas.

Q - And did you notice the manner by which this driver Having resolved the same, this Court shall now address the
was driving at that time, when he made the sign? defense of petitioner company that they exercised due diligence in
the selection and supervision of their employees. On this note, the
A - Yes, sir. CA ruled that petitioners had failed to overturn the presumption of
negligence on the part of the employer, to wit:
Q - What?
In their defense, the appellants’ witnesses have admittedly
A - He were (sic) just in a slow pace, sir. testified at length regarding the hiring and supervisory policies of
the appellant company. While they were able to amply
Q - Now, Mr. Witness, when this vehicle Gemini met an demonstrate the implantation of the company’s hiring procedure
accident and have (sic) a collision you said, with the insofar as appellant Jerry Añalucas was concerned, the same
other vehicle, please explain to the Court the type of witnesses failed to similarly individualize the company’s purported
vehicle that had a collision with this Gemini? supervisory policies. The introduction of evidence showing the
employer exercised the required amount of care in selecting its
A - It was a large tanker truck, sir.17 employees is only half of the employer’s burden is (sic) overcome.
The question of diligent supervision depends on the circumstances
In addition, another eyewitness corroborated the testimony of of employment, which, in the instant case was not sufficiently
Betiranta that the victim was slowly driving his car towards the proved by the appellants. In discounting merit from the
gas station. He also emphasized that the truck which bumped the appellants’ second assignment of error, this Court is,
Gemini car was very fast. Second eyewitness Teddy Villarama consequently, guided by the principle that the existence of hiring
testified, thus: procedure and supervisory policies cannot be casually invoked to
overturn the presumption of negligence on the part of the
"Q - Now, you said, Mr. Witness that you saw this car employer.20
entering the gasoline station, can you tell the Court how
fast or the speed of this vehicle or at what phase (sic) Article 2180 of the Civil Code provides:
were they moving?
xxxx
A - Very[,] very slow.
Employers shall be liable for the damages caused by their
Q - How about the truck, did you notice what is the employees and household helpers acting within the scope of their
phase (sic) of the truck? assigned tasks, even though the former are not engaged in any
business or industry.
A – The truck was very fast that it suddenly came in."18
xxxx
Lastly, even petitioners’ own witness, PO3 Edgardo Talacay,
testified that petitioners’ truck left skid marks, which would not The responsibility treated in this article shall cease when the
be present if the truck was running in a normal speed, to wit: persons herein mentioned prove they observed all the diligence of
a good father of a family to prevent damage.
Q - Do you know, as a traffic investigator, Mr. Witness,
what causes skid marks? It is thus clear that the employer of a negligent employee is liable
for the damages caused by the latter. When an injury is caused by
A - Well, the cause of skid marks is (sic), if the vehicle is the negligence of an employee, there instantly arises a
running in a speed greater that what the law is being presumption of the law that there was negligence on the part of
regulated (sic), it cause skid marks when you apply the the employer, either in the selection of his employee or in the
breaks. supervision over him after such selection. However, the
presumption may be overcome by a clear showing on the part of
the employer that he has exercised the care and diligence of a
Q - What about sudden application of breaks upon notice
good father of a family in the selection and supervision of his
of danger ahead, will it cause skid marks?
employee.21In other words, the burden of proof is on the
employer.22 Thus, petitioners must prove two things: first, that
A- It will cause skid marks because your intention is to
they had exercised due diligence in the selection of petitioner
stop your driven vehicle right then and there.
Añalucas, and second, that after hiring Añalucas, petitioners had
exercised due diligence in supervising him.
Q- Although the vehicle may not be running necessarily
beyond the lawful speed?
The question is: how does an employer prove that he indeed
exercised the diligence of a good father of a family in the selection
A - I think, if the vehicle is running in a normal speed, and supervision of his employee? The case of Metro Manila Transit
skid marks would not be present in the mishap. Corporation v. Court of Appeals23is instructive:
Q- Notwithstanding, the sudden application of breaks? In fine, the party, whether plaintiff or defendant, who asserts the
affirmative of the issue has the burden of presenting at the trial
A- Yes, sir. such amount of evidence required by law to obtain a favorable
judgment….In making proof in its or his case, it is paramount that
Court the best and most complete evidence is formally entered.

Q - The skid marks, Mr. Witness, refer to the skid marks Coming now to the case at bar, while there is no rule which
made by the truck or the Isuzu Gemini? requires that testimonial evidence, to hold sway, must be
corroborated by documentary evidence, inasmuch as the
A - Made by the truck, your Honor. witnesses’ testimonies dwelt on mere generalities, we cannot
consider the same as sufficiently persuasive proof that there was 6. That, in the meantime, a substitute driver is assigned
observance of due diligence in the selection and supervision of to the tanker to temporarily take the place of the
employees. Petitioner’s attempt to prove its "deligentissimi patris grounded driver.26
familias" in the selection and supervision of employees through oral
evidence must fail as it was unable to buttress the same with any After a thorough and extensive review of the records, this Court is
other evidence, object or documentary, which might obviate the unconvinced that petitioner company had satisfactorily discharged
apparent biased nature of the testimony. its burden. The alleged Memorandum (Exhibit 6) alluded to by
petitioner company amounts to nothing more than a "reminder
Our view that the evidence for petitioner MMTC falls short of the memo on offenses punishable by dismissal,"27 wherein specific
required evidentiary quantum as would convincingly and offenses are spelled out to which erring employees may be
undoubtedly prove its observance of the diligence of a good father punished by the company. Likewise, the alleged circulars 28 from
of a family has its precursor in the underlying rationale Petron amount to nothing more than minutes of the "Haulers
pronounced in the earlier case of Central Taxicab Corp. vs. Ex- Meeting," a list of "Hot Spots" and a "Table of Penalties." These
Meralco Employees Transportation Co., et al., set amidst an almost circulars do not, in any way, concern safety procedures to prevent
identical factual setting, where we held that: accident or damage to property or injury to people on the road. It
bears to stress that the existence of supervisory policies cannot be
xxxx casually invoked to overturn the presumption of negligence on the
part of the employer.29
The failure of the defendant company to produce in court any
‘record’ or other documentary proof tending to establish that it The testimonies relating to the checking of damages during
had exercised all the diligence of a good father of a family in the carbarn time, the inspection if drivers were given traffic violation
selection and supervision of its drivers and buses, tickets and inspection of the validity of the drivers’ licenses are all
notwithstanding the calls therefore by both the trial court and the oral evidence without any object or documentary evidence to
opposing counsel, argues strongly against its pretensions. support them. Like in Metro Transit, this Court is unable to
accept the self-serving nature of the testimonies without any other
We are fully aware that there is no hard-and-fast rule on the evidence. The alleged daily inspections conducted were not
quantum of evidence needed to prove due observance of all the supported by any evidence on record. Moreover, even the seminars
diligence of a good father of a family as would constitute a valid regarding safety and driving,30 allegedly conducted by petitioners’
defense to the legal presumption of negligence on the part of an witness, Max Pagsaligan, were not satisfactorily established in
employer or master whose employee has by his negligence, caused evidence. Specifically, there is no record that petitioner Añalucas
damage to another. x x x (R)educing the testimony of Albert to its attended such seminars.
proper proportion, we do not have enough trustworthy evidence left
to go by. We are of the considerable opinion, therefore, that the Normally, employers keep files concerning the qualifications, work
believable evidence on the degree of care and diligence that has experience, training, evaluation, and discipline of their
been exercised in the selection and supervision of Roberto Leon y employees.31 The failure of petitioners to put forth evidence to
Salazar, is not legally sufficient to overcome the presumption of substantiate the testimonies of the witnesses is certainly fatal to
negligence against the defendant company. (Italics supplied.) 24 its cause.

In the case at bar, while this Court may be satisfied that petitioner Having resolved the same, this Court shall now address the issue
company had exercised due diligence in the selection of petitioner of damages. Petitioners contend that the CA erred when it affirmed
Añalucas, the focus now shifts as to whether or not petitioner the RTC’s award of P60,000.00 as death indemnity and
company had satisfied the test of due supervision. P100,000.00 as moral damages. Petitioners contend that such an
award was contrary to prevailing jurisprudence. In addition,
Petitioner company’s attempt to prove that it had exercised due petitioners also argue that the award of attorney’s fees was
diligence of a good father of a family in the supervision of without legal basis.
petitioner Añalucas is summarized in its Memorandum 25 and was
testified to by its Operations Manager, Chito Calauag, to wit: The same is meritorious.

1. The new employee was given formal/written papers as Death indemnity has been fixed by jurisprudence at
to things expected from him as a driver; about driving P50,000.00.32 Hence, the amount awarded by the RTC and the CA
habits, about things he should do just in case and was must be reduced accordingly. On the issue of moral damages,
issued guidelines, circulars both from OMC Carriers prevailing jurisprudence fixes moral damages of P50,000.00 for
(Exhs. 6, 6-A, 6-B, 6-C, 6-D, 6-E) and from Petron (Exhs. death.33 It must be stressed that moral damages are not intended
8, 8-A to 8-A-5); to enrich a plaintiff at the expense of the defendant. 34 They are
awarded to allow the plaintiff to obtain means, diversion or
2. That the circulars and guidelines are placed in each of amusements that will serve to alleviate the moral suffering he/she
the tankers to see to it that they are brought to the has undergone due to the defendant’s culpable action and must,
knowledge and attention of the drivers and helpers; perforce, be proportional to the suffering inflicted. 35 Thus, given
the circumstances of the case at bar, an award of P50,000.00 as
3. That every carbarn time, the Chief Mechanic and Asst. moral damages is proper.
Operations Manager check the tanker for any sign of
damage to ascertain if the driver had been involved in an Next, the rule on the award of attorney's fees is that there must be
accident; a justification for the same. In the absence of a statement why
attorney's fees were awarded, the same should be disallowed. 36 On
4. That every weekend, when the drivers are paid their this note, after reading through the text of the CA decision, this
salaries/wages, the Cashier is made to examine the Court finds that the same is bereft of any findings of fact and law
licenses of the drivers to know if they had been issued to justify the award of attorney's fees. While it may be safe to
Traffic Violation Tickets; surmise that the RTC granted attorney’s fees as a consequence of
its grant of exemplary damages, such cannot be said for the CA,
5. That if the license has expired or a ticket had been since the same deleted the award of exemplary damages after
issued and has expired, the driver is grounded until the finding that petitioner Añalucas was not grossly negligent. The CA
licenses is (sic) renewed or the license, if confiscated has did not explain why it was still awarding attorney’s fees to
been redeemed; respondents, therefore, such an award must be deleted.

While petitioners did not put in error the award of actual

damages, this Court feels that the same should nevertheless be
reviewed as an appellate court is clothed with ample authority to xxxx
review rulings even if they are not assigned as errors. This is
especially so if the court finds that their consideration is In sharp contrast with the situation obtaining in People v.
necessary in arriving at a just decision of the case before it. 37 Teehankee, where the prosecution merely presented evidence to
show the fact of the victim's graduation from high school and the
For one to be entitled to actual damages, it is necessary to prove fact of his enrollment in a flying school, the spouses Rosales did
the actual amount of loss with a reasonable degree of certainty, not content themselves with simply establishing Liza Rosalie's
premised upon competent proof and the best evidence obtainable enrollment at UP Integrated School. They presented evidence to
by the injured party. 38 Actual damages are such compensation or show that Liza Rosalie was a good student, promising artist, and
damages for an injury that will put the injured party in the obedient child. She consistently performed well in her studies
position in which he had been before he was injured. They pertain since grade school. A survey taken in 1984 when Liza Rosalie was
to such injuries or losses that are actually sustained and twelve years old showed that she had good study habits and
susceptible of measurement. To justify an award of actual attitudes. Cleofe Chi, guidance counselor of the University of the
damages, there must be competent proof of the actual amount of Philippines Integrated School, described Liza Rosalie as
loss. Credence can be given only to claims which are duly personable, well-liked, and with a balanced personality. Professor
supported by receipts.39 Alfredo Rebillon, a faculty member of the University of the
Philippines College of Fine Arts, who organized workshops which
In the case at bar, respondents only submitted the following Liza Rosalie attended in 1982 and 1983, testified that Liza Rosalie
evidence to substantiate their claim for actual damages: had the potential of eventually becoming an artist. Professor
Rebillon's testimony is more than sufficiently established by the
51 samples of Liza Rosalie's watercolor, charcoal, and pencil
Provisional Receipt No. 773, dated August 13, 1995, issued
drawings submitted as exhibits by the spouses Rosales. Neither
by La Funeraria Novaliches. (Exhibit "A")
MMTC nor Pedro Musa controverted this evidence. 44

Official Receipt Nos. 105675, dated August 12, 1995, issued In the case at bar, respondents only testified to the fact that the
by Philippine Memorial Park Inc. for payment of interment victim, Reggie Nabua, was a freshman taking up Industrial
fees received from respondents. (Exhibit "B") Engineering at the Technological Institute of the Philippines in
Cubao.45 Unlike in Metro Transit where evidence of good academic
record, extra-curricular activities, and varied interests were
Official Receipt No. 105656, dated August 8, 1995, issued by presented in court, herein respondents offered no such evidence.
Philippine Memorial Park Inc. for payment of interment fees Hence, the CA was correct when it deleted the award of
received from respondents. (Exhibit "B-1") compensatory damages amounting to P2,000,000.00, as the same
is without any basis.
Letter-Certification, dated August 17, 1995 from Philippine
WHEREFORE, the instant petition is PARTIALLY GRANTED. The
Memorial Park, Inc. to certify the amount of the lot used for
Decision of the Court of Appeals in CA-G.R. CV No. 60034
the burial of Mr. Reggie Nabua. (Exhibit "C")
is AFFIRMED with MODIFICATION. The award of death indemnity
is REDUCED to P50,000.00. The award of actual damages is
Official Receipt No. 10596, dated August 4, 1995, issued by hereby REDUCED to P59,173.50. The award of moral damages is
Fairview Polymedic Clinic for emergency treatment of Reggie likewise REDUCED to P50,000.00. The award of attorney’s fees is
Nabua. (Exhibit "D") DELETED. All other awards of the Court of Appeals
are AFFIRMED. Following jurisprudence,46 petitioners are ordered
to PAY legal interest of 6% per annum from the date of
TOTAL promulgation of the Decision dated January 19, 1998 of the
Regional Trial Court, National Capital Judicial Region, Branch
Based on the foregoing, the RTC erred when it awarded the 224, Quezon City and 12% per annum from the time the Decision
amount of P110,000.00 as actual damages, as the said amount of this Court attains finality, on all sums awarded until their full
was not duly substantiated with receipts. Hence, the amount of satisfaction.
actual damages that can only be recovered is P59,173.50.
SO ORDERED.
Lastly, although respondents did not appeal the CA Decision, they
now pray in their Memorandum40 that this Court reinstate the
RTC award of P2,000,000.00 as compensatory damages which
was deleted by the CA.41Respondents point out that the victim,
Reggie Nabua, was 18 years old and at the time of his death, a
freshman taking up Industrial Engineering. On this point, Metro
Manila Transit Corporation v. Court of Appeals 42 is instructive, to
wit:

x x x Art. 2206 of the Civil Code provides that in addition to the

indemnity for death caused by a crime or quasi delict, the
"defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the
latter; . . ." Compensation of this nature is awarded not for loss of
earnings but for loss of capacity to earn money. Evidence must be
presented that the victim, if not yet employed at the time of death,
was reasonably certain to complete training for a specific
profession. In  People v. Teehankee,  no award of compensation for
loss of earning capacity was granted to the heirs of a college
freshman because there was no sufficient evidence on record to
show that the victim would eventually become a professional
pilot. But compensation should be allowed for loss of earning
capacity resulting from the death of a minor who has not yet
commenced employment or training for a specific profession if
sufficient evidence is presented to establish the amount thereof x
x x.431avvphi1
G.R. No. 84751 June 6, 1990 After initial approval in the amount applied for,
the Pag-ibig housing loan was downgraded to
SPOUSES EDUARDO and ANN AGUSTIN, petitioners,  P128,000.00 after reassessment. Under date of
vs. December 18, 1982, plaintiff-appellee apprised
HON. COURT OF APPEALS and LABRADOR DEVELOPMENT defendants-appellants of said development
CORPORATION, respondents. (Exh. 'F') enclosing the formal bank December
16, 1982 letter (Exh. 'E') requiring a co-
This petition for review on certiorari impugns the decision of the borrower related within the fourth degree of
Court of Appeals, dated March 28, 1988, with the following consanguinity should the defendants-appellants
decretal portion: desire approval of an increased loan amount.

WHEREFORE, the present appeal is accordingly Defendants-appellants appear to have disdained

resolved deleting the adjudicated award of a reply to plaintiff-appellee's said letter. Thus,
P20,000.00 as exemplary damages, and under date of December 28, 1982, plaintiff-
otherwise by AFFIRMING the Decision dated appellee again wrote a follow- up letter to
October 10, 1985 in Civil Case No. Q-42390 defendants-appellants (Exh. 'G') affording the
entitled "Labrador Development Corporation vs. latter time to decide on their options, on pain of
Sps. Eduardo Agustin, et al." in all other enforcement of the terms of the contract to sell.
respects.
Failing reaction from defendants-appellants
Without pronouncement as to costs. 1 thereto, plaintiff-appellee resorted to
enforcement of the contractual stipulations
Said judgment of respondent court is based on the findings of fact under date of March 1, 1983 (Exh. 'H') and
set out in its decision thus: remitted an enclosed check for P30,133.00
(Exh. 'I') representing the equity paid in by
Plaintiff-appellee, being a subdivision developer, defendants-appellants. The latter accepted said
owned Lot 14, Block 1 of the San Pedro check and deposited same into their account.
Compound IV at Tandang Sora, Quezon City,
under Transfer Certificate of Title No. 277209. Instead of reconveyance of title to the lot,
On November 7, 1981, plaintiff-appellee agreed defendants-appellants however sought time to
to sell said parcel of land to defendants- buy the property; plaintiff-appellee agreed
appellants on a package deal together with a provided that payment be effected in cash.
residential house per House Plan Model B-203 Defendants-appellants failed to make such
to be constructed thereon for the sum of payment in cash, despite the lapse of a second
P202,980.00 (Exh. 'B'). As therein stipulated, 30-day period afforded therefor. Thereupon,
the defendants-appellants were to pay plaintiff-appellee demanded anew for
P42,980.00 as equity-P30,133.00 as down reconveyance in a July 27, 1984 letter (Exh. 'J').
payment and the balance of P12,847.00 upon
completion and de very of the property, the On August 8, 1984, plaintiff-appellee filed Civil
other P160,000.00 to have been funded through Case No. Q42390 for reconveyance and damage.
a Pag-Ibig Fund loan to be applied for by In answer, defendants-appellants maintained
defendants-appellants. Central to the above was inter alia that approval of a P160,000.00
a stipulation that in the event the housing loan housing loan had been assured upon
be insufficient to pay the full contract price completion of the house with proof of its
owing, they shall pay the same in cash on or delivery and acceptance, but that acceptance
before occupancy and acceptance of the could not be reasonably given by them in that
housing unit (ref. Exh. 'B', para. [e]). The certain specifications for the housing unit had
agreement further provided — not been complied with. 2

(f) Failure of the Vendee to comply with any or After trial on the merits, the lower court rendered judgment in
all of the above stipulations shall ipso facto favor of private respondent, the dispositive part whereof reads:
cancel this contract to sell; and thereupon, this
contract to sell or any other contract executed WHEREFORE, judgment is hereby rendered
in connection thereof, shall be of no further ordering defendants, jointly and severally:
force and effect; and the title to the property, if
already transferred in the name of the Vendee, a) to reconvey to plaintiff the parcel of land
shall automatically revert to the Vendor. covered by Transfer Certificate of Title No.
284735 ** of the Register of Deeds, Quezon
The foregoing stipulation encompassed the City;
necessity of transferring title to the lot to
defendants-appellants as an accommodation to b) to pay plaintiff the sum of P20,000.00 as
enable their application for a housing loan in exemplary damages;
their names.
c) to pay plaintiff the sum of P5,000.00 as
Hence, plaintiff-appellee executed a deed of sale attorney's fees, plus costs of the suit. 3
over the lot (Exh. 'C') in favor of defendants-
appellants, without additional consideration which judgment, as earlier stated, was affirmed by respondent
beyond the P30,133.00 down payment adverted court but with the deletion of the award of exemplary damages.
to, and the issuance to said defendants-
appellants of Transfer Certificate of title No. On August 22, 1988, respondent court denied petitioners' motion
29435 * (Exh. 'D'). Thusly accommodated, for reconsideration, hence this present petition raising the
defendants-appellants applied for a following issues:
P160,000.00 housing loan with the First
Summa Savings and Mortgage Bank as an I
accredited financing institution.
 The 'Contract to Sell' dated November 7, 1981 ownership is retained by the vender until full payment of the
creates a reciprocal obligation between Labrador purchase price. Without such full payment, there is no obligation
Development Corporation, as seller, and to sell and deliver. The subsequent execution of the deed of
spouses Eduardo and Ann Agustin, as buyer, of absolute sale and the transfer and registration of the title of the lot
the questioned house and lot. in the name of petitioners is of no moment, considering that the
same, by mutual agreement of the parties, was made without
II consideration and solely for the purpose of facilitating the
approval and release of the PAG-IBIG loan and not for the purpose
The failure of Labrador Development of actually transferring ownership.
Corporation (LADECO) to complete construction
of the housing unit pursuant to the 'Contract to Under the contract to sell, the obligation of petitioners to
Sell' constitutes a substantial and serious completely pay the purchase price is a condition precedent to the
breach thereof as would bar LADECO from obligation of private respondent to sell and deliver the house as
executing the option of cancellation (rescission) provided in the contract to sell, which specifically states:
of the 'Contract to Sell' under Article 1191 of
the Civil Code. 5. Upon complete payment of the VENDEE/S of
the purchase price herein above stated, and
III faithful compliance with all his obligations
stipulated therein, the VENDOR, agrees to
The justifiable refusal of Spouses Agustin to execute a valid deed of sale in favor of the
sign the 'House Acceptance Form' certifying that VENDEE/S and cause the issuance of the
they accept the house as 100% complete Certificate of Title in the name of the latter, free
constitutes merely a slight or casual breach of from all liens and encumbrances except those
the 'Contract to Sell' which does not warrant the provided for in the Land Registration Act and
unilateral cancellation (rescission,) of the other laws, Presidential Decrees, General
contract under par. 4 (f) thereof and Article Orders, Letters of Instruction, Zoning
1191 of the Civil Code. Ordinances, and the attached Deed of
Restrictions, which form part of this
IV Contract; ... 6

The remedy of reconveyance of title of the The repeated failure and refusal of petitioners, despite due notice,
property in question cannot be availed of by to look for a co- borrower related to them within the fourth degree
LADECO as there was no valid, binding and of consanguinity as required by the bank in order to prevent the
effective cancellation (rescission) of the downgrading of the loan, nor to communicate to private
'Contract to Sell'. respondent the arrangement they intended to make regarding the
difference between the approved loan of P128,000.00 and the
V unpaid amount of P160,000.00, clearly indicate their intention not
to perform their obligations under the contract. This constituted
Private respondent LADECO is not entitled to not only a substantial or serious breach, but prevented the
attorney's fees of P5,000.00 under the facts and happening of the condition precedent which would give rise to the
circumstances of the case. 4 obligation of private respondent to sell and transfer ownership of
the house and lot to petitioners.
We agree with the Court of Appeals that reconveyance is proper in
this case. Herein petitioners are already barred from questioning We have repeatedly ruled that:
the validity of the cancellation of the contract to sell by their
acquiescence thereto. Their acceptance and encashment of the In contracts to sell, where ownership is retained
checks representing the total amount paid by them to private by the seller and is not to pass until the full
respondent as equity, coupled by their failure to object or file an payment of the price, such payment, as we said
action, despite due notice, to question the validity of the is a positive suspensive condition, the failure of
extrajudicial cancellation of said contract and to ask for specific which is not a breach, casual or serious, but
performance for more than one year, clearly show that they simply an event that prevented the obligation of
assented to the same. the vendor to convey title from acquiring
binding force, in accordance with Article 1117
Furthermore, after receiving the check refunding their equity of the Old Civil Code. To argue that there was
payment incident to the reconveyance desired by private only a casual breach is to proceed from the
respondents, petitioners, disregarding the original agreement of assumption that the contract is one of absolute
the parties, offered to purchase anew the property in question to sale, where non-payment is a resolutory
which private respondent agreed. This novatory agreement, condition, which is not the case.
however, was not consummated as petitioners again failed to raise
and pay the purchase price despite two 30-day extensions. They ... appellant overlooks that its contract with
never at that juncture questioned the propriety of the rescission appellee Myers is not the ordinary sale
and reconveyance desired by private respondent. Obviously, envisaged by Article 1592, transferring
extrajudicial rescission produces legal effects where the other ownership simultaneously with the delivery of
party does not oppose it. 5 the real property sold, but one in which the
vendor retained ownership of the immovable
Moreover, even assuming that there was no implied assent to the object of the sale, merely undertaking to convey
cancellation of the contract to sell, reconveyance is still proper. it provided the buyer strictly complied with the
The non-fulfillment by petitioners of their obligation to pay, which terms of the contract (see paragraph [d], ante,
is a suspensive condition to the obligation of private respondent to page 5). In suing to recover possession of the
sell and deliver the house and lot, rendered the contract to sell building from Maritime, appellee Myers is not
and the subsequent contract executed pursuant thereto ineffective after the resolution or setting aside of the
and without force and effect. contract and the restoration of the parties to the
status quo ante, as contemplated by Article
The contract between petitioners and private respondent is not an 1592, but precisely enforcing the provisions of
absolute sale but a conditional sale or contract to sell, whereby the agreement that it is no longer obligated to
part with the ownership or possession of the
 property because Maritime failed to comply with
the specific condition precedent, which is to pay
the installment as they fell due.

The distinction between contracts of sale and

contracts to sell with reserved title has been
recognized by this Court in repeated decisions
upholding the power of promissors under
contracts to sell in case of failure of the other
party to complete payment, to extrajudicially
terminate the operation of the contract, refuse
conveyance and retain the sums or installments
already received, where such rights are
expressly provided for, as in the case at bar. 7

We repeat, the obligation of petitioners to fully comply with their

undertakings was necessarily determinative of the obligation of
private respondent to complete the construction of the house.
Where one of the parties to a contract did not perform the
undertaking which he was bound by the terms of the agreement to
perform, he is not entitled to insist upon the performance of the
other party. 8 For failure of one party to assume and perform the
obligation imposed on him, the other patty does not incur in
delay. 9

Correspondingly, we reject the argument of petitioners that the

failure of private respondent to complete the construction of the
house constitutes a substantial breach as would bar the latter
from cancelling the contract. Instead, the facts of this case
persuade us to hold that petitioners were merely posturing when,
after being required to reconvey the premises, they came up with
belated complaints about the imperfections or incompleteness of
the house involved, in the same manner that they also pretended
to be interested in purchasing the property but failed to do so after
importuning private respondents to grant them extensions of time
for that purpose.

With the foregoing circumstances, reconveyance is proper and

exigible pursuant to Paragraph 4 (f) of the contract to sell quoted
in the decision of respondent court, supra, and on the basic
principle that when an obligation has been extinguished or
resolved, it is the duty of the court to require the parties to
surrender whatever they may have received from the other, and
the parties must be restored, as far as practicable, to their original
situation. 10

The award to private respondent of attorney's fees, however, must

be disallowed considering that the award of exemplary damages
was eliminated by respondent court and the text of the decision of
the trial court, which was aimed by the Court of Appeals, is bereft
of any findings of fact and law to justify such award. The accepted
rule is that the reason for the award of attorney's fees must be
stated in the text of the court's decision; otherwise, if it is stated
only in the dispositive portion of the decision, the same must be
disallowed on appeal. The award of attorney's fees being an
exception rather than the general rule, it is necessary for the court
to make findings of facts and law that would bring the case within
the exception and justify the grant of such award. 11

WHEREFORE, except for the award of attorney's fees which is

hereby deleted, the decision of respondent Court of Appeals is
hereby AFFIRMED.

SO ORDERED.
G.R. No. 164749 Cosmos denied liability, insisting that it had not been the
organizer of the marathon, but only its sponsor; that its
ROMULO ABROGAR and ERLINDA ABROGAR, Petitioners  participation had been limited to providing financial assistance to
vs Intergames;6 that the financial assistance it had extended to
COSMOS BOTTLING COMPANY and INTERGAMES, INC., Intergames, the sole organizer of the marathon, had been in
Respondents answer to the Government's call to the private sector to help
promote sports development and physical fitness; 7 that the
DECISION petitioners had no cause of action against it because there was no
privity of contract between the participants in the marathon and
BERSAMIN, J.: Cosmos; and that it had nothing to do with the organization,
operation and running of the event.8
This case involves a claim for damages arising from the negligence
causing the death of a participant in an organized marathon As counterclaim, Cosmos sought attorney's fees and expenses of
bumped by a passenger jeepney on the route of the race. The litigation from the petitioners for their being unwarrantedly
issues revolve on whether the organizer and the sponsor of the included as a defendant in the case. It averred a cross-claim
marathon were guilty of negligence, and, if so, was their against Intergames, stating that the latter had guaranteed to hold
negligence the proximate cause of the death of the participant; on Cosmos "completely free and harmless from any claim or action
whether the negligence of the driver of the passenger jeepney was for liability for any injuries or bodily harm which may be
an efficient intervening cause; on whether the doctrine of sustained by any of the entries in the '1st Pop Cola Junior
assumption of risk was applicable to the fatality; and on whether Marathon' or for any damage to the property or properties of third
the heirs of the fatality can recover damages for loss of earning parties, which may likewise arise in the course of the race." 9 Thus,
capacity of the latter who, being then a minor, had no gainful Cosmos sought to hold Intergames solely liable should the claim of
employment. the petitioners prosper.10

The Case On its part, Intergames asserted that Rommel's death had been an
accident exclusively caused by the negligence of the jeepney
By this appeal, the parents of the late Rommel Abrogar (Rommel), driver; that it was not responsible for the accident; that as the
a marathon runner, seek the review and reversal of the decision marathon organizer, it did not assume the responsibilities of an
promulgated on March l 0, 2004,1 whereby the Court of Appeals insurer of the safety of the participants; that it nevertheless
(CA) reversed and set aside the judgment rendered in their favor caused the participants to be covered with accident insurance, but
on May 10, 1991 by the Regional Trial Court (RTC), Branch 83, in the petitioners refused to accept the proceeds thereof; 11 that there
Quezon City2finding and declaring respondents Cosmos Bottling could be no cause of action against it because the acceptance and
Company (Cosmos), a domestic soft-drinks company whose approval of Rommel's application to join the marathon had been
products included Pop Cola, and Intergames, Inc. (Intergames), conditioned on his waiver of all rights and causes of action arising
also a domestic corporation organizing and supervising the 1st from his participation in the marathon; 12 that it exercised due
Pop Cola Junior Marathon" held on June 15, 1980 in Quezon City, diligence in the conduct of the race that the circumstances called
solidarily liable for damages arising from the untimely death of for and was appropriate, it having availed of all its know-how and
Rommel, then a minor 18 years of age,3 after being bumped by a expertise, including the adoption and implementation of all known
recklessly driven passenger jeepney along the route of the and possible safety and precautionary measures in order to
marathon. protect the participants from injuries arising from vehicular and
other forms of accidents;13 and, accordingly, the complaint should
Antecedents be dismissed.

The CA narrated the antecedents in the assailed judgment, 4 viz.: In their reply and answer to counterclaim, the petitioners averred
that contrary to its claims, Intergames did not provide adequate
[T]o promote the sales of "Pop Cola", defendant Cosmos, jointly measures for the safety and protection of the race participants,
with Intergames, organized an endurance running contest billed considering that motor vehicles were traversing the race route and
as the "1st Pop Cola Junior Marathon" scheduled to be held on the participants were made to run along the flow of traffic, instead
June 15, 1980. The organizers plotted a 10-kilometer course of against it; that Intergames did not provide adequate traffic
starting from the premises of the Interim Batasang Pambansa (IBP marshals to secure the safety and protection of the
for brevity), through public roads and streets, to end at the participants;14that Intergames could not limit its liability on the
Quezon Memorial Circle. Plaintiffs' son Rommel applied with the basis of the accident insurance policies it had secured to cover the
defendants to be allowed to participate in the contest and after race participants; that the waiver signed by Rommel could not be
complying with defendants' requirements, his application was a basis for denying liability because the same was null and void
accepted and he was given an official number. Consequently, on for being contrary to law, morals, customs and public
June 15, 1980 at the designated time of the marathon, Rommel policy;15 that their complaint sufficiently stated a cause of action
joined the other participants and ran the course plotted by the because in no way could they be held liable for attorney's fees,
defendants. As it turned out, the plaintiffs' (sic) further alleged, litigation expenses or any other relief due to their having abided
the defendants failed to provide adequate safety and precautionary by the law and having acted honestly, fairly, in good faith by
measures and to exercise the diligence required of them by the according to Intergames its due, as demanded by the facts and
nature of their undertaking, in that they failed to insulate and circumstances.16
protect the participants of the marathon from the vehicular and
other dangers along the marathon route. Rommel was bumped by At the pre-trial held on April 12, 1981, the parties agreed that the
a jeepney that was then running along the route of the marathon principal issue was whether or not Cosmos and lntergames were
on Don Mariano Marcos A venue (DMMA for brevity), and in spite liable for the death of Rommel because of negligence in conducting
of medical treatment given to him at the Ospital ng Bagong the marathon.17
Lipunan, he died later that same day due to severe head injuries.
Judgment of the RTC
On October 28, 1980, the petitioners sued the respondents in the
then Court of First Instance of Rizal (Quezon City) to recover In its decision dated May 10, 1991,18 the RTC ruled as follows:
various damages for the untimely death of Rommel (i.e., actual
and compensatory damages, loss of earning capacity, moral WHEREFORE, judgment is hereby rendered in favor of plaintiffs-
damages, exemplary damages, attorney's fees and expenses spouses Romulo Abrogar and Erlinda Abrogar and against
oflitigation).5 defendants Cosmos Bottling Company, Inc. and Intergames, Inc.,
ordering both defendants, jointly and severally, to pay and deliver
to the plaintiffs the amounts of Twenty Eight Thousand Sixty One
Pesos and Sixty Three Centavos (₱28,061.63) as actual damages; 4. Whether or not the appellants Abrogar are entitled to the
One Hundred Thousand Pesos (₱100,000.00) as moral damages; actual, moral, and exemplary damages granted to them by the
Fifty Thousand Pesos (₱50,000.00) as exemplary damages and Ten Trial Court.24
Percent (10%) of the total amount of One Hundred Seventy Eight
Thousand Sixty One Pesos and Sixty Three Centavos In its assailed judgment promulgated on March 10, 2004, 25 the CA
(₱178,061,63) or Seventeen Thousand Eight Hundred Six Pesos ruled as follows:
and Sixteen Centavos (₱17,806.16) as attorney's fees.
As to the first issue, this Court finds that appellant Intergames
On the cross-claim of defendant Cosmos Bottling Company, Inc., was not negligent in organizing the said marathon.
defendant Intergames, Inc, is hereby ordered to reimburse to the
former any and all amounts which may be recovered by the Negligence is the omission to do something which a reasonable
plaintiffs from it by virtue of this Decision. man, guided upon those considerations which ordinarily regulate
the conduct to human affairs, would do, or doing something which
SO ORDERED. a prudent and reasonable man would not do.

The RTC observed that the safeguards allegedly instituted by The whole theory of negligence presuppose some uniform standard
Intergames in conducting the marathon had fallen short of the of behavior which must be an external and objective one, rather
yardstick to satisfy the requirements of due diligence as called for than the individual judgment good or bad, of the particular actor;
by and appropriate under the circumstances; that the accident it must be, as far as possible, the same for all persons; and at the
had happened because of inadequate preparation and Intergames' same time make proper allowance for the risk apparent to the
failure to exercise due diligence;19 that the respondents could not actor for his capacity to meet it, and for the circumstances under
be excused from liability by hiding behind the waiver executed by which he must act.
Rommel and the permission given to him by his parents because
the waiver could only be effective for risks inherent in the The question as to what would constitute the conduct of a prudent
marathon, such a:s stumbling, heat stroke, heart attack during man in a given situation must of course be always determined in
the race, severe exhaustion and similar occurrences; 20 that the the light of human experience and of the acts involved in the
liability of the respondents towards the participants and third particular case.
persons was solidary, because Cosmos, the sponsor of the event,
had been the principal mover of the event, and, as such, had In the case at bar, the trial court erred in finding that the
derived benefits from the marathon that in turn had carried appellant Intergames failed to satisfy the requirements of due
responsibilities towards the participants and the public; that the diligence in the conduct of the race.
respondents' agreement to free Cosmos from any liability had been
an agreement binding only between them, and did not bind third The trial court in its decision said that the accident in question
persons; and that Cosmos had a cause of action against could have been avoided if the route of the marathon was blocked
Intergames for whatever could be recovered by the petitioners from off from the regular traffic, instead of allowing the runners to run
Cosmos.21 together with the flow of traffic. Thus, the said court considered
the appellant Intergames at fault for proceeding with the
Decision of the CA marathon despite the fact that the Northern Police District, MPF,
Quezon City did not allow the road to be blocked off from traffic.
All the parties appealed to the CA.
This Court finds that the standard of conduct used by the trial
The petitioners contended that the RTC erred in not awarding court is not the ordinary conduct of a prudent man in such a
damages for loss of earning capacity on the part of Rommel for the given situation. According to the said court, the only way to
reason that such damages were not recoverable due to Rommel conduct a safe road race is to block off the traffic for the duration
not yet having finished his schooling; and that it would be of the event and direct the cars and public utilities to take
premature to award such damages upon the assumption that he alternative routes in the meantime that the marathon event is
would finish college and be gainfully employed. 22 being held. Such standard is too high and is even inapplicable in
the case at bar because, there is no alternative route from IBP to
On their part, Cosmos and Intergames separately raised Don Mariano Marcos to Quezon City Hall.
essentially similar errors on the part of the RTC, to wit: (1) in
holding them liable for the death of Rommel; (2) in finding them The Civil Code provides that if the law or contract does not state
negligent in conducting the marathon; (3) in holding that Rommel the diligence which is to be observed in the performance of an
and his parents did not assume the risks of the marathon; (4) in obligation that which is expected of a good father of the family
not holding that the sole and proximate cause of the death of shall only be required. Accordingly, appellant Intergames is only
Rommel was the negligence of the jeepney driver; and (5) in bound to exercise the degree of care that would be exercised by an
making them liable, jointly and solidarily, for damages, attorney's ordinarily careful and prudent man in the same position and
fees and expenses of litigation. 23 circumstances and not that of the cautious man of more than
average prudence. Hence, appellant Intergames is only expected to
The CA reduced the issues to four, namely: observe ordinary diligence and not extraordinary diligence.

1. Whether or not appellant Intergames was negligent in its In this case, the marathon was allowed by the Northern Police
conduct of the "1st Pop Cola Junior Marathon" held on June 15, District, MPF, Quezon City on the condition that the road should
1980 and if so, whether its negligence was the proximate cause of not be blocked off from traffic. Appellant Intergames had no
the death of Rommel Abrogar. choice. It had to comply with it or else the said marathon would
not be allowed at all.
2. Whether or not appellant Cosmos can be held jointly and
solidarily liable with appellant Intergames for the death of Rommel The trial court erred in contending that appellant Intergames
Abrogar, assuming that appellant Intergames is found to have should have looked for alternative places in Metro Manila given
been negligent in the conduct of the Pop Cola marathon and such the condition set by the Northern Police District, MPF, Quezon
negligence was the proximate cause of the death of Rommel City; precisely because as Mr. Jose Castro has testified the said
Abrogar. route was found to be the best route after a careful study and
consideration of all the factors involved. Having conducted several
3. Whether or not the appellants Abrogar are entitled to be marathon events in said route, appellant Intergames as well as the
compensated for the "loss of earning capacity" of their son volunteer groups and the other agencies involved were in fact
Rommel. familiar with the said route. And assuming that there was an
alternative place suitable for the said race, the question is would Neither does this Court find the appellant Intergames' conduct of
they be allowed to block off the said road from traffic? the marathon the proximate cause of the death of Rommel
Abrogar. Proximate cause has been defined as that which, in
Also, the trial court erred in stating that there was no adequate natural and continuous sequence, unbroken by any efficient
number of marshals, police officers and personnel to man the race intervening cause, produces injury, and without which the result
so as to prevent injury to the participants. would not have occurred.

The general rule is that the party who relies on negligence for his It appears that Rommel Abrogar, while running on Don Mariano
cause of action has the burden of proving the existence of the Marcos A venue and after passing the Philippine Atomic Energy
same, otherwise his action fails. Commission Building, was bumped by a jeepney which apparently
was racing against a minibus and the two vehicles were trying to
Here, the appellants-spouses failed to prove that there was crowd each other. In fact, a criminal case was filed against the
inadequate number of marshals, police officers, and personnel jeepney driver by reason of his having killed Rommel Abrogar.
because they failed to prove what number is considered adequate.
This proves that the death of Rommel Abrogar was caused by the
This court considers that seven (7) traffic operatives, five (5) negligence of the jeepney driver. Rommel Abrogar cannot be
motorcycle policemen, fifteen (15) patrolmen deployed along the faulted because he was performing a legal act; the marathon was
route, fifteen (15) boyscouts, twelve (12) CA Ts, twenty (20) conducted with the permission and approval of all the city officials
barangay tanods, three (3) ambulances and three (3) medical involved. He had the right to be there. Neither can the appellant
teams were sufficient to stage a safe marathon. Intergames be faulted, as the organizer of the said marathon,
because it was not negligent in conducting the marathon.
Moreover, the failure of Mr. Jose R. Castro, Jr. to produce records
of the lists of those constituting the volunteer help during the Given the facts of this case, We believe that no amount of
marathon is not fatal to the case considering that one of the precaution can prevent such an accident. Even if there were
volunteers, Victor Landingin of the Citizens Traffic Action (CTA) fences or barriers to separate the lanes for the runners and for the
testified in court that CTA fielded five units on June 15, 1980, vehicles, it would not prevent such an accident in the event that a
assigned as follows: (1) at the sphere head; (2) at the finish line; negligent driver loses control of his vehicle. And even if the road
(3) tail ender; (4) & (5) roving. was blocked off from traffic, it would still not prevent such an
accident, if a jeepney driver on the other side of the road races
The trial court again erred in concluding that the admission of with another vehicle loses control of his wheel and as a result hits
P/Lt. Jesus Lipana, head of the traffic policemen assigned at the a person on the other side of the road. Another way of saying this
marathon, that he showed up only at the finish line means that he is: A defendant's tort cannot be considered a legal cause of
did not bother to check on his men and did not give them plaintiffs damage if that damage would have occurred just the
appropriate instructions. P/Lt. Lipana in his testimony explained same even though the defendant's tort had not been committed.
that he did not need to be in the start of the race because he had
predesignated another capable police officer to start the race. This Court also finds the doctrine of assumption of risk applicable
in the case at bar. As explained by a well-known authority on
In addition, this Court finds that the precautionary measures and torts:
preparations adopted by appellant Intergames were sufficient
considering the circumstances surrounding the case. "The general principle underlying the defense of assumption of
risk is that a plaintiff who voluntarily assumes a risk of harm
Appellant Intergames, using its previous experiences in arising from the negligent or reckless conduct of the defendant
conducting safe and successful road races, took all the necessary cannot recover for such harm. The defense may arise where a
precautions and made all the preparations for the race. The initial plaintiff, by contract or otherwise, expressly agrees to accept a risk
preparations included: determination of the route to be taken; and or harm arising from the defendant's conduct, or where a plaintiff
an ocular inspection of the same to see if it was well-paved, who fully understands a risk or harm caused by the defendant's
whether it had less corners for easy communication and conduct, or by a condition created by the defendant, voluntarily
coordination, and whether it was wide enough to accommodate chooses to enter or remain, or to permit his property to enter or
runners and transportation. Appellant Intergames choose the Don remain, within the area of such risk, under circumstances
Mariano Marcos Avenue primarily because it was well-paved; had manifesting his willingness to accept the risk.
wide lanes to accommodate runners and vehicular traffic; had less
corners thus facilitating easy communication and coordination xxxx
among the organizers and cooperating agencies; and was familiar
to the race organizers and operating agencies. The race covered a "Assumption of the risk in its primary sense arises by assuming
ten-kilometer course from the IBP lane to the Quezon City Hall through contract, which may be implied, the risk of a known
Compound passing through the Don Mariano Marcos A venue, danger. Its essence is venturousness. It implies intentional
which constituted the main stretch of the route. Appellant exposure to a known danger; It embraces a mental state of
Intergames scheduled the marathon on a Sunday morning, when willingness; It pertains to the preliminary conduct of getting into a
traffic along the route was at its lightest. Permission was sought dangerous employment or relationship, it means voluntary
from the then Quezon City Mayor Adelina Rodriguez for the use of incurring the risk of an accident, which may or may not occur,
the Quezon City Hall Grandstand and the street fronting it as the and which the person assuming the risk may be careful to avoid;
finish line. Police assistance was also obtained to control and and it defeats recovery because it is a previous abandonment of
supervise the traffic. The Quezon City Traffic Detachment took the right to complain if an accident occurs.
charge of traffic control by assigning policemen to the traffic route.
The particular unit assigned during the race underwent extensive "Of course, if the defense is predicated upon an express agreement
training and had been involved in past marathons, including the agreement must be valid, and in the light of this qualification
marathons in highly crowded areas. The Philippine Boy Scouts the rule has been stated that a plaintiff who, by contract or
tasked to assist the police and monitor the progress of the race; otherwise, expressly agreed to accept a risk of harm arising from
and Citizens Traffic Action Group tasked with the monitoring of the defendant's negligent or reckless conduct, cannot recover for
the race, which assigned five units consisting of ten operatives, to such harm unless the agreement is invalid as contrary to public
provide communication and assistance were likewise obtained. policy.
Finally, medical equipments and personnel were also requested
from Camp Aguinaldo, the Philippine Red Cross and the Hospital xxxx
ng Bagong Lipunan.
"The defense of assumption of risk presupposes: (1) that the the country in the annual Spirit of Pheidippides Marathon Classic
plaintiff had actual knowledge of the danger; (2) that he in Greece, if he equals or breaks the 29-minute mark for the 10-
understood and appreciated the risk from the danger; and (3) that km. race. Thus, Rommel Abrogar having voluntarily participated
he voluntarily exposed himself to such risk. x x x in the race, with his parents' consent, assumed all the risks of the
race.
"The term 'risk' as used in this connection applies to known
dangers, and not to things from which danger may possibly flow. Anent the second issue, this Court finds that appellant Cosmos
The risk referred to is the particular risk, or one of the risks, must also be absolved from any liability in the instant case.
which the plaintiff accepted within the context of the situation in
which he placed himself and the question is whether the specific This Court finds that the trial court erred in holding appellant
conduct or condition which caused the injury was such a risk." Cosmos liable for being the principal mover and resultant
beneficiary of the event.
In this case, appellant Romulo Abrogar himself admitted that his
son, Rommel Abrogar, surveyed the route of the marathon and In its decision it said that in view of the fact that appellant
even attended a briefing before the race. Consequently, he was Cosmos will be deriving certain benefits from the marathon event,
aware that the marathon would pass through a national road and it has the responsibility to ensure the safety of all the participants
that the said road would not be blocked off from traffic. And and the public. It further said that the stipulations in the contract
considering that he was already eighteen years of age, had entered into by the two appellants, Cosmos and Intergames,
voluntarily participated in the marathon, with his parents' relieving the former from any liability does not bind third persons.
consent, and was well aware of the traffic hazards along the route,
he thereby assumed all the risks of the race. This is precisely why This Court does not agree with the reasoning of the trial court.
permission from the participant's parents, submission of a The sponsorship contract entered between appellant Cosmos and
medical certificate and a waiver of all rights and causes of action appellant Intergames specifically states that:
arising from the participation in the marathon which the
participant or his heirs may have against appellant Intergames 1. COSMOS BOTTLING CORPORATION shall pay INTERGAMES
were required as conditions in joining the marathon. the amount of FIFTY FIVE THOUSAND PESOS (₱55,000.00)
representing full sponsorship fee and in consideration thereof,
In the decision of the trial court, it stated that the risk mentioned INTERGAMES shall organize and stage a marathon race to be
in the waiver signed by Rommel Abrogar only involved risks such called '1st POP COLA JUNIOR MARATHON.
as stumbling, suffering heatstroke, heart attack and other similar
risks. It did not consider vehicular accident as one of the risks xxxx
included in the said waiver.
3. INTER GAMES shall draw up all the rules of the marathon race,
This Court does not agree. With respect to voluntary participation eligibility requirements of participants as well as provide all the
in a sport, the doctrine of assumption of risk applies to any facet staff required in the organization and actual staging of the race. It
of the activity inherent in it and to any open and obvious condition is understood that all said staff shall be considered under the
of the place where it is carried on. We believe that the waiver direct employ of INTERGAMES which shall have full control over
included vehicular accidents for the simple reason that it was a them.
road race run on public roads used by vehicles. Thus, it cannot be
denied that vehicular accidents are involved. It was not a track xxxx
race which is held on an oval and insulated from vehicular traffic.
In a road race, there is always the risk of runners being hit by 5. INTERGAMES shall secure all the necessary permits,
motor vehicles while they train or compete. That risk is inherent in clearances, traffic and police assistance in all the areas covered by
the sport and known to runners. It is a risk they assume every the entire route of the '1st POP COLA JUNIOR MARATHON.
time they voluntarily engage in their sport.
12. INTERGAMES shall hold COSMOS BOTTLING CORPORATION,
Furthermore, where a person voluntarily participates in a lawful completely free and harmless from any claim or action for liability
game or contest, he assumes the ordinary risks of such game or for any injuries or bodily harm which may be sustained by any of
contest so as to preclude recovery from the promoter or operator the entries in the '1st POP COLA JUNIOR MARATHON', or for any
of the game or contest for injury or death resulting therefrom. damages to the property or properties of third parties, which may
Proprietors of amusements or of places where sports and games likewise arise in the course of the race.
are played are not insurers of safety of the public nor of their
patrons. From the foregoing, it is crystal clear that the role of the appellant
Cosmos was limited to providing financial assistance in the form
In McLeod Store v. Vinson 213 Ky 667, 281 SW 799 (1926), it was of sponsorship. Appellant Cosmos' sponsorship was merely in
held that a boy, seventeen years of age, of ordinary intelligence pursuance to the company's commitment for spo1is development
and physique, who entered a race conducted by a department of the youth as well as for advertising purposes. The use of the
store, the purpose of which was to secure guinea fowl which could name Cosmos was done for advertising purposes only; it did not
be turned in for cash prizes, had assumed the ordinary risks mean that it was an organizer of the said marathon. As pointed
incident thereto and was barred from recovering against the out by Intergames' President, Jose Castro Jr., appellant Cosmos
department store for injuries suffered when, within catching did not even have the right to suggest the location and the number
distance, he stopped to catch a guinea, and was tripped or of runners.
stumbled and fell to the pavement, six or eight others falling upon
him. The court further said: "In this (the race) he was a voluntary To hold a defendant liable for torts, it must be clearly shown that
participant. xxx The anticipated danger was as obvious to him as he is the proximate cause of the harm done to the plaintiff. The
it was to appellant (the department store). While not an adult, he nexus or connection of the cause and effect, between a negligent
was practically 17 years of age, of ordinary intelligence, and act and the damage done, must be established by competent
perfectly able to determine the risks ordinarily incident to such evidence.
games. An ordinary boy of that age is practically as well advised as
to the hazards of baseball, basketball, football, foot races and
In this case, appellant Cosmos was not negligent in entering into a
other games of skill and endurance as is an adult
contract with the appellant Intergames considering that the record
of the latter was clean and that it has conducted at least thirty
x x x." (30) road races.
In the case at bar, the "1st Pop Cola Junior Marathon" held on
June 15, 1980 was a race the winner of which was to represent
Also there is no direct or immediate causal connection between The petitioners contend that Intergames was negligent; that
the financial sponsorship and the death of Rommel Abrogar. The Cosmos as the sponsor and Intergames as the organizer of the
singular act of providing financial assistance without participating marathon both had the obligation to provide a reasonably safe
in any manner in the conduct of the marathon cannot be palmed place for the conduct of the race byblocking the route of the race
off as such proximate cause. In fact, the appellant spouses never from vehicular traffic and by providing adequate manpower and
relied on any representation that Cosmos organized the race. It personnel to ensure the safety of the participants; and that
was not even a factor considered by the appellants-spouses in Intergames had foreseen the harm posed by the situation but had
allowing their son to join said marathon. not exercised the diligence of a good father of a family to avoid the
risk;28 hence, for such omission, Intergames was negligent. 29
In view of the fact that both defendants are not liable for the death
of Rommel Abrogar, appellants-spouses are not entitled to actual, Refuting, Cosmos and Intergames submit that the latter as the
moral, exemplary damages as well as for the "loss of earning organizer was not negligent because it had undertaken all the
capacity" of their son. The third and fourth issues are thus moot precautionary measures to ensure the safety of the race; and that
and academic. there was no duty on the part of the latter as the organizer to keep
a racecourse "free and clear from reasonably avoidable elements
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the judgment that would [occasion] or have the probable tendency, to occasion
appealed from must be, as it hereby is, REVERSED and SET injury."30
ASIDE, and another entered DISMISSING the complaint a quo.
The appellants shall bear their respective costs. The issue of whether one or both defendants were negligent is a
mixed issue of fact and law. Does this not restrict the Court
SO ORDERED.26 against reviewing the records in this appeal on certiorari in order
to settle the issue?
Issues
The Court can proceed to review the factual findings of the CA as
In this appeal, the petitioners submit that the CA gravely erred: an exception to the general rule that it should not review issues of
fact on appeal on certiorari. We have recognized exceptions to the
A. rule that the findings of fact of the CA are conclusive and binding
in the following instances: (1) when the findings are grounded
x x x in reversing the RTC Decision, (and) in holding that entirely on speculation, surmises or conjectures; (2) when the
respondent Intergames was not negligent considering that: inference made is manifestly mistaken, absurd or impossible; (3)
when there is grave abuse of discretion; (4) when the judgment is
1. Respondent Intergames failed to exercise the diligence of a good based on a misapprehension of facts; (5) when the findings of facts
father of the family in the conduct of the marathon in that it did are conflicting; (6) when in making its findings the CA went
not block off from traffic the marathon route; and beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the
2. Respondent Intergames' preparations for the race, including the findings are contrary to the trial court; (8) when the findings are
number of marshal during the marathon, were glaringly conclusions without citation of specific evidence on which they are
inadequate to prevent the happening of the injury to its based; (9) when the facts set forth in the petition as well as in the
participants. petitioner's main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on
B.
record; and (11) when the CA manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly
x x x in reversing the RTC Decision, (and) in holding that the
considered, would justify a different conclusion. 31 Considering that
doctrine of assumption of risk finds application to the case at bar
the CA arrived at factual findings contrary to those of the trial
even though getting hit or run over by a vehicle is not an inherent
court, our review of the records in this appeal should have to be
risk in a marathon race. Even assuming arguendo that deceased
made.
Abrogar made such waiver as claimed, still there can be no valid
waiver of one's right to life and limb for being against public
Negligence is the failure to observe for the protection of the
policy.
interests of another person that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such
C.
other person suffers injury.32 Under Article 1173 of the Civil
Code, it consists of the "omission of that diligence which is
x x x in reversing the RTC Decision, (and) in absolving respondent required by the nature of the obligation and corresponds with the
Cosmos from liability to petitioners on the sole ground that circumstances of the person, of the time and of the
respondent Cosmos' contract with respondent Intergames place."33 The Civil Code makes liability for negligence clear under
contained a stipulation exempting the former from liability. Article 2176,34 and Article 20.35
D. To determine the existence of negligence, the following time-
honored test has been set in Picart v. Smith:36
x x x m reversing the RTC Decision and consequently holding
respondents free from liability, (and) in not awarding petitioners The test by which to determine the existence of negligence in a
with actual, moral and exemplary damages for the death of their particular case may be stated as follows: Did the defendant in
child, Rommel Abrogar. 27 doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in
Ruling of the Court the same situation? If not, then he is guilty of negligence. The law
here in effect adopts the standard supposed to be supplied by the
The appeal is partly meritorious. imaginary conduct of the discreet paterfamilias of the Roman law.
The existence of negligence in a given case is not determined by
I reference to the personal judgment of the actor in the situation
before him. The law considers what would be reckless,
Review of factual issues is allowed because of blameworthy, or negligent in the man of ordinary intelligence and
the conflict between the findings of fact prudence and determines liability by that.
by the RTC and the CA on the issue of negligence
The question as to what would constitute the conduct of a prudent
man in a given situation must of course be always determined in
the light of human experience and in view of the facts involved in relatively safer than any other areas within the vicinity. As a
the particular case. Abstract speculation cannot here be of much matter of fact, we had more runners in the Milo Marathon at that
value but this much can be profitably said: Reasonable men time and nothing happened, your Honor.52
govern their conduct by the circumstances which are before them
or known to them. They are not, and are not supposed to be, The chosen route (IBP Lane, on to Don Mariano Marcos Highway,
omniscient of the future. Hence they can be expected to take care and then to Quezon City Hall) was not the only route appropriate
only when there is something before them to suggest or warn of for the marathon. In fact, Intergames came under no obligation to
danger. Could a prudent man, in the case under consideration, use such route especially considering that the participants, who
foresee harm as a result of the course actually pursued? If so, it were young and inexperienced runners, would be running
was the duty of the actor to take precautions to guard against that alongside moving vehicles.
harm. Reasonable foresight of harm, followed by the ignoring of
the suggestion born of this prevision, is always necessary before Intergames further conceded that the marathon could have been
negligence can be held to exist. Stated in these terms, the proper staged on a blocked-off route like Roxas Boulevard in Manila
criterion for determining the existence of negligence in a given where runners could run against the flow of vehicular
case is this: Conduct is said to be negligent when a prudent man traffic.53 Castro, Jr. stated in that regard:
in the position of the tortfeasor would have foreseen that an effect
harmful to another was sufficiently probable to warrant his COURT TO WITNESS
foregoing the conduct or guarding against its
consequences.37 (bold underscoring supplied for emphasis) q What law are you talking about when you say I cannot violate
the law?
A careful review of the evidence presented, particularly the
testimonies of the relevant witnesses, in accordance with the a The police authority, your Honor, would not grant us permit
foregoing guidelines reasonably leads to the conclusion that the because that is one of the conditions that if we are to conduct a
safety and precautionary measures undertaken by Intergames race we should run the race in accordance with the flow of traffic.
were short of the diligence demanded by the circumstances of
persons, time and place under consideration. Hence, Intergames q Did you not inform the police this is in accordance with the
as the organizer was guilty of negligence. standard safety measures for a marathon race?

The race organized by Intergames was a junior marathon a I believed we argued along that line but but (sic) again, if we
participated in by young persons aged 14 to 18 years. It was insist the police again would not grant us any permit like ... except
plotted to cover a distance of 10 kilometers, starting from the IBP in the case of Roxas Boulevard when it is normally closed from 8
Lane,38 then going towards the Batasang Pambansa, and on to the a.m. when you can run against the flow of traffic.
circular route towards the Don Mariano Marcos Highway, 39 and
then all the way back to the Quezon City Hall compound where q You were aware for a runner to run on the same route of the
the finish line had been set.40 In staging the event, Intergames had traffic would be risky because he would not know what is coming
no employees of its own to man the race,41 and relied only on the behind him?
"cooperating agencies" and volunteers who had worked with it in
previous races.42 The cooperating agencies included the Quezon
a I believed we talked of the risk, your Honor when the risk has
City police, barangay tanods, volunteers from the Boy Scouts of
been minimized to a certain level. Yes, there is greater risk when
the Philippines, the Philippine National Red Cross, the Citizens
you run with the traffic than when you run against the traffic to a
Traffic Action Group, and the medical teams of doctors and nurses
certain level, it is correct but most of the races in Manila or
coming from the Office of the Surgeon General and the Ospital ng
elsewhere are being run in accordance with the flow of the traffic.
Bagong Lipunan.43 According to Jose R. Castro, Jr., the President
of Intergames, the preparations for the event included conducting
xxxx
an ocular inspection of the route of the race, 44 sending out letters
to the various cooperating agencies,45 securing permits from
ATTY. VINLUAN
proper authorities,46 putting up directional signs,47 and setting up
the water stations.48
q Following the observation of the Court, considering the local
condition, you will agree with me the risks here are greater than in
We consider the "safeguards" employed and adopted by
the United States where drivers on the whole follow traffic rules?
Intergames not adequate to meet the requirement of due diligence.
a That is correct.
For one, the police authorities specifically prohibited Intergames
from blocking Don Mariano Marcos Highway in order not to impair
road accessibility to the residential villages located beyond the IBP q And because of that fact, it is with all the more reason that you
Lanc.49 should take all necessary precautions to insure the safety of the
runners?
However, contrary to the findings of the CA, 50 Intergames had a
choice on where to stage the marathon, considering its admission a That is correct.54
of the sole responsibility for the conduct of the event, including
the choice of location. xxxx

Moreover, the CA had no basis for holding that "the said route was COURT:
found to be the best route after a careful study and consideration
of all the factors involved."51 Castro, Jr. himself attested that the xxxx
route had been the best one only within the vicinity of the
Batasan Pambansa, to wit: Q In your case in all the marathons that you had managed, how
many cases have you encountered where the routes are blocked
COURT off for vehicular traffic?

q Was there any specific reason from ... Was there any specific A These are the International Marathon, Philippines Third World
reason why you used this route from Batasan to City Hall? Was Marathon and the Milo Marathon. We are blocking them to a
there any special reason? certain length of time.

a We have, your Honor, conducted for example the Milo Marathon Q What was the purpose of blocking the routes? Is it for the safety
in that area in the Batasan Pambansa and we found it to be of the runners or just a matter of convenience?
A In blocking off the route, Your Honor, it is light easier for the Q How is it done.
runners to run without impediments to be rendered by the people
or by vehicles and at the same time it would be also advantageous A You can still run a race safely even if it is partially blocked off as
if the road will be blocked off for vehicle traffic permitted to us by long as you have the necessary cooperation with the police
the traffic authorities. authorities, and the police assigned along the route of the race
and the police assigned would be there, this will contribute the
Q So, in this case, you actually requested for the traffic authorities safety of the participants, and also the vehicular division, as long
to block off the route? as there are substantial publicities in the newspapers, normally
they will take the precautions in the use of the particular route of
A As far as I remember we asked Sgt. Pascual to block off the the race.
route but considering that it is the main artery to Fairview Village,
it would not be possible to block off the route since it will cause a Q Let me clarify this. Did you say that it is possible to hold a
lot of inconvenience for the other people in those areas and marathon safely if you have this traffic assistance or coordination
jeepney drivers. even if the route is blocked or not blocked?

Q In other words, if you have your way you would have opted to A It is preferable to have the route blocked but in some cases, it
block off the route. would be impossible for the portions of the road to be blocked
totally. The route of the race could still be safe for runners if a
A Yes, Your Honor. proper coordination or the agencies are notified especially police
detailees to man the particular stage.58
Q But the fact is that the people did not agree.
Sadly, Intergames' own evidence did not establish the conduct of
A Yes, Your Honor, and it is stated in the permit given to us. 55 proper coordination and instruction. Castro, Jr. described the
action plan adopted by Intergames in the preparation for the race,
Based on the foregoing testimony of Castro, Jr., Intergames had as follows:
full awareness of the higher risks involved in staging the race
alongside running vehicles, and had the option to hold the race in COURT
a route where such risks could be minimized, if not eliminated.
But it did not heed the danger already foreseen, if not expected, a Did you have any rehearsal let us say the race was conducted on
and went ahead with staging the race along the plotted route on June 15, now before June 15 you call a meeting of all these
Don Mariano Marcos Highway on the basis of its supposedly runners so you can have more or less a map-up and you would
familiarity with the route. Such familiarity of the organizer with indicate or who will be stationed in their places etc. Did you have
the route and the fact that previous races had been conducted such a rehearsal?
therein without any untoward incident56 were not in themselves
sufficient safeguards. The standards for avoidance of injury WITNESS
through negligence further required Intergames to establish that it
did take adequate measures to avert the foreseen danger, but it a It is not being done, your honor, but you have to specify them.
failed to do so. You meet with the group and you tell them that you wanted them
to be placed in their particular areas which we pointed out to
Another failing on the part of Intergames was the patent them for example in the case of the Barangay Tanod, I specifically
inadequacy of the personnel to man the route. As borne by the assigned them in the areas and we sat down and we met.
records, Intergames had no personnel of its own for that purpose,
and relied exclusively on the assistance of volunteers, that is, COURT
"seven (7) traffic operatives, five (5) motorcycle policemen, fifteen
(15) patrolmen deployed along the route, fifteen (15) boy scouts, q Did you have any action, plan or brochure which would indicate
twelve (12) CATs, twenty (20) barangay tanods, three (3) the assignment of each of the participating group?
ambulances and three (3) medical teams" 57 to ensure the safety of
the young runners who would be running alongside moving WITNESS
vehicular traffic, to make the event safe and well coordinated.
a Normally, sir, many of the races don't have that except when
Although the party relying on negligence as his cause of action they called them to meeting either as a whole group or the entire
had the burden of proving the existence of the same, Intergames' cooperating agency or meet them per group.
coordination and supervision of the personnel sourced from the
cooperating agencies did not satisfy the diligence required by the COURT
relevant circumstances. In this regard, it can be pointed out that
the number of deployed personnel, albeit sufficient to stage the q Did you have a check list of the activities that would have to be
marathon, did not per se ensure the safe conduct of the race entered before the actual marathon some kind of system where
without proof that such deployed volunteers had been properly you will indicate this particular activity has to be checked etc. You
coordinated and instructed on their tasks. did not have that?

That the proper coordination and instruction were crucial WITNESS

elements for the safe conduct of the race was well known to
Intergames. Castro, Jr. stated as much, to wit: q Are you asking, your honor, as a race director of I will check this
because if I do that, I won't have a race because that is not being
ATTY. LOMBOS: done by any race director anywhere in the world?

xxxx COURT

Q You also said that if you block off one side of the road, it is I am interested in your planning activities.
possible that it would be more convenient to hold the race in that
matter. Will you tell the Honorable Court if it is possible also to q In other words, what planning activities did you perform before
hold a race safely if the road is not blocked off? the actual marathon?
A Yes, sir.
a The planning activities we had, your honor, was to coordinate g How about Serrano, where did you meet him?
with the different agencies involved informing them where they
would be more or less placed. a We met in my place.

COURT q From your house? He went in your house?

q Let us go to ... Who was supposed to be coordinating with you as a Yes, your honor.
to the citizens action group who was your ... you were referring to
a person who was supposed to be manning these people and who q So you did not have let us say a ... you don't have records of
was the person whom you coordinate with the Traffic Action your meetings with these people?
Group?
WITNESS
WITNESS
a With the Citizens Traffic Action, your honor?
a I can only remember his name ... his family name is Esguerra.
COURT
q How about with the Tanods?
a Yes.
a With the Tanods his name is Pedring Serrano.
WITNESS
q And with the Boys Scouts? (sic)
a I don't have, your honor.
a And with the Boys Scouts of the Phils. (sic) it is Mr. Greg Panelo.
COURT
COURT
q Because you are familiar, I was just thinking this is an activity
q When did you last meet rather how many times did you meet which requires planning etc., what I was thinking when you said
with Esguerra before the marathon on June 15? this was never done in any part of the world but all activities it
has to be planned. There must be some planning, now are you
WITNESS saying that in this particular case you had no written plan or
check list of activities what activities have to be implemented on a
a The Citizens Traffic Action Group, your honor, had been with me certain point and time, who are the persons whom you must meet
m previous races. in a certain point and time.

COURT WITNESS

q I am asking you a specific question. I am not interested in the a Normally, we did not have that, your honor, except the check list
Citizen Traffic Action Group. The marathon was on June 15, did of all the things that should be ready at a particular time prior to
you meet with him on June 14, June 13 or June 12? the race and the people to be involved and we have a check list to
see to it that everything would be in order before the start of the
a We met once, your honor, I cannot remember the date. race.

q You don't recall how many days before? COURT

a I cannot recall at the moment. Proceed.

q How about with Mr. Serrano, how many times did you meet with ATTY. VINLUAN
him before the race?
q Following the question of the Court Mr. Castro, did you meet
a If my mind does not fail me, your honor, I met him twice with Lt. Depano of the Police Department who were supposed to
because he lives just within our area and we always see each supervise the police officers assigned to help during the race?
other.
a I did not meet with him, sir.
q How about with Panelo, how many times did you meet him?
q You did not meet with him?
a With Mr. Panelo, I did not meet with them, your honor.
a I did not meet with him.
q Was there an occasion where before the race you met with these
three people together since you did not meet with Panelo anytime? q In fact, ever before or during the race you had no occasion to
Was there anytime where you met with Serrano and Esguerra talk to Lt. Depano. Is that correct?
together?
a That is correct, sir.
WITNESS
ATTY. VINLUAN
a No, your honor.
Based on the question of the Court and your answer to the
COURT question of the Court, are you trying to say that this planning
before any race of all these groups who have committed to help in
g When you met once with Esguerra, where did you meet? What the race, this is not done in any part of the world?
place?
WITNESS
a I cannot recall at the moment, your honor, since it was already
been almost six years ago. a In the latter years when your race became bigger and bigger,
this is being done now slowly.
ATTY. VINLUAN dealing with people who had been manning similar races for a
long period of time.
q But for this particular race you will admit that you failed to do it
when you have to coordinate and even have a dry run of the race The evidence presented undoubtedly established that Intergames'
you failed to do all of that in this particular race, yes or no? notion of coordination only involved informing the cooperating
agencies of the date of the race, the starting and ending points of
a Because there was ... the route, and the places along the route to man. Intergames did
not conduct any general assembly with all of them, being content
COURT with holding a few sporadic meetings with the leaders of the
coordinating agencies. It held no briefings of any kind on the
It was already answered by him when I asked him. The Court actual duties to be performed by each group of volunteers prior to
has ... Everybody has a copy how of this time planner. Any activity the race. It did not instruct the volunteers on how to minimize, if
or even meeting a girlfriend or most people plan. not avert, the risks of danger in manning the race, despite such
being precisely why their assistance had been obtained in the first
A TTY. F .M. LOMBOS place.

If your honor please, before we proceed ... Intergames had no right to assume that the volunteers had
already been aware of what exactly they would be doing during the
WITNESS race. It had the responsibility and duty to give to them the proper
instructions despite their experience from the past races it had
In the latter years, your honor, when your race became bigger and organized considering that the particular race related to runners
bigger, this is being done now slowly. of a different level of experience, and involved different weather
and environmental conditions, and traffic situations. It should
have remembered that the personnel manning the race were not
q For this particular race you will admit that you failed to do it?
its own employees paid to perform their tasks, but volunteers
whose nature of work was remotely associated with the safe
a Because there was no need, sir.59
conduct of road races. Verily, that the volunteers showed up and
assumed their proper places or that they were sufficient in
Probably sensing that he might have thereby contradicted himself, number was not really enough. It is worthy to stress that proper
Castro, Jr. clarified on re-direct examination: coordination in the context of the event did not consist in the mere
presence of the volunteers, but included making sure that they
ATTY. LOMBOS had been properly instructed on their duties and tasks in order to
ensure the safety of the young runners.
Q Now, you also responded to a question during the same hearing
and this appears on page 26 of the transcript that you did not It is relevant to note that the participants of the 1st Pop Cola
hold any rehearsal or dry run for this particular marathon. Could Junior Marathon were mostly minors aged 14 to 18 years joining a
you tell the Court why you did not hold any such rehearsal or dry race of that kind for the first time. The combined factors of their
run? youth, eagerness and inexperience ought to have put a reasonably
prudent organizer on higher guard as to their safety and security
A Because I believe there was no need for us to do that since we needs during the race, especially considering Intergames'
have been doing this for many years and we have been the same awareness of the risks already foreseen and of other risks already
people, same organization with us for so many years conducting known to it as of similar events in the past organizer. There was
several races including some races in that area consisting of no question at all that a higher degree of diligence was required
longer distances and consisting of more runners, a lot more given that practically all of the participants were children or
runners in that areay (sic) so these people, they know exactly what minors like Rommel; and that the law imposes a duty of care
to do and there was no need for us to have a rehearsal. I believe towards children and minors even if ordinarily there was no such
this rehearsal would only be applicable if I am new and these duty under the same circumstances had the persons involved
people are new then, we have to rehearse. been adults of sufficient discretion.61 In that respect, Intergames
did not observe the degree of care necessary as the organizer,
ATTY. LOMBOS rendering it liable for negligence. As the Court has emphasized
in Corliss v. The Manila Railroad Company,62 where the danger is
q You also stated Mr. Castro that you did not have any action plan great, a high degree of care is necessary, and the failure to observe
or brochure which you would indicate, an assignment of each of it is a want of ordinary care under the circumstances. 63
the participating group as to what to do during the race. Will you
please explain what you meant when you said you have no action The circumstances of the persons, time and place required far
plan or brochure? more than what Intergames undertook in staging the race. Due
diligence would have made a reasonably prudent organizer of the
WITNESS race participated in by young, inexperienced or beginner runners
to conduct the race in a route suitably blocked off from vehicular
a What I mean of action plan, I did not have any written action traffic for the safety and security not only of the participants but
plan but I was fully aware of what to do. I mean, those people did the motoring public as well. Since the marathon would be run
not just go there out of nowhere. Obviously, there was an action alongside moving vehicular traffic, at the very least, Intergames
on my part because I have to communicate with them previously ought to have seen to the constant and closer coordination among
and to tell them exactly what the race is all about; where to start; the personnel manning the route to prevent the foreseen risks
where it would end, and that is the reason why we have the from befalling the participants. But this it sadly failed to do.
ambulances, we have the Boy Scouts, we have the CT A, we have
the police, so it was very obvious that there was a plan of action II
but not written because I know pretty well exactly what to do. I
was dealing with people who have been doing this for a long period The negligence of Intergames as the organizer
of time.60 was the proximate cause of the death of Rommel

While the level of trust Intergames had on its volunteers was As earlier mentioned, the CA found that Rommel, while running
admirable, the coordination among the cooperating agencies was the marathon on Don Mariano Marcos A venue and after passing
predicated on circumstances unilaterally assumed by Intergames. the Philippine Atomic Energy Commission Building, was bumped
It was obvious that Intergames' inaction had been impelled by its by a passenger jeepney that was racing with a minibus and two
belief that it did not need any action plan because it had been other vehicles as if trying to crowd each other out. As such, the
death of Rommel was caused by the negligence of the jeepney possible, if there intervened between such prior or remote cause
driver. and the injury a distinct, successive, unrelated and efficient cause,
even though such injury would not have happened but for such
Intergames staunchly insists that it was not liable, maintaining condition or occasion. If no damage exists in the condition except
that even assuming arguendo that it was negligent, the because of the independent cause, such condition was not the
negligence of the jeepney driver was the proximate cause of the proximate cause. And if an independent negligent act or defective
death of Rommel; hence, it should not be held liable. condition sets into operation the circumstances which result in
injury because of the prior defective condition, such act or condition
Did the negligence of Intergames give rise to its liability for the is the proximate cause."
death of ommel notwithstanding the negligence of the jeepney
driver? Bouvier adds:

In order for liability from negligence to arise, there must be not In many cases important questions arise as to which, in the chain
only proof of damage and negligence, but also proof that the of acts tending to the production of a given state of things, is to be
damage was the consequence of the negligence. The Court has considered the responsible cause. It is not merely distance of place
said in Vda. de Gregorio v. Go Chong Bing:64 or of causation that renders a cause remote. The cause nearest in
the order of causation, without any efficient concurring cause to
x x x Negligence as a source of obligation both under the civil law produce the result, may be considered the direct cause. In the
and in American cases was carefully considered and it was held: course of decisions of cases in which it is necessary to determine
which of several causes is so far responsible for the happening of
We agree with counsel for appellant that under the Civil Code, as the act or injury complained of, what is known as the doctrine of
under the generally accepted doctrine in the United States, the proximate cause is constantly resorted to in order to ascertain
plaintiff in an action such as that under consideration, in order to whether the act, omission, or negligence of the person whom it is
establish his right to a recovery, must establish by competent sought to hold liable was in law and in fact responsible for the
evidence: result which is the foundation of the action. 71

(1) Damages to the plaintiff. xxxx

(2) Negligence by act or omission of which defendant personally or The question of proximate cause is said to be determined, not by
some person for whose acts it must respond, was guilty. the existence or non-existence of intervening events, but by their
character and the natural connection between the original act or
(3) The connection of cause and effect between the negligence and omission and the injurious consequences. When the intervening
the damage." (Taylor vs. Manila Electric Railroad and Light cause is set in operation by the original negligence, such
Co., supra, p. 15.) negligence is still the proximate cause; x x x If the party guilty of
the first act of negligence might have anticipated the intervening
In accordance with the decision of the Supreme Court of Spain, in cause, the connection is not broken; x x x. Any number of causes
order that a person may be held guilty for damage through and effects may intervene, and if they arc such as might with
negligence, it is necessary that there be an act or omission on the reasonable diligence have been foreseen, the last result is to be
part of the person who is to be charged with the liability and that considered as the proximate result. But whenever a new cause
damage is produced by the said act or omission. 65 (Emphasis intervenes, which is not a consequence of the first wrongful cause,
supplied) which is not under control of the wrongdoer, which could not have
been foreseen by the exercise of reasonable diligence, and except
We hold that the negligence of Intergames was the proximate for which the final injurious consequence could not have
cause despite the intervening negligence of the jeepney driver. happened, then such injurious consequence must be deemed too
remote; x x x.72 (bold underscoring supplied for emphasis)
Proximate cause is "that which, in natural and continuous
sequence, unbroken by any new cause, produces an event, and An examination of the records in accordance with the foregoing
without which the event would not have occurred." 66 In Vda. de concepts supports the conclusions that the negligence of
Bataclan, et al. v. Medina,67 the Court, borrowing from American Intergames was the proximate cause of the death of Rommel; and
Jurisprudence, has more extensively defined proximate that the negligence of the jeepney driver was not an efficient
cause thusly: intervening cause.

"* * * 'that cause, which, in natural and continuous sequence, First of all, Intergames' negligence in not conducting the race in a
unbroken by any efficient intervening cause, produces the injury road blocked off from vehicular traffic, and in not properly
and without which the result would not have occurred.' And more coordinating the volunteer personnel manning the marathon route
comprehensively, 'the proximate legal cause is that acting first and effectively set the stage for the injury complained of. The
producing the injury, either immediately or by setting other events submission that Intergames had previously conducted numerous
in motion, all constituting a natural and continuous chain of safe races did not persuasively demonstrate that it had exercised
events, each having a close causal connection with its immediate due diligence because, as the trial court pointedly observed,
predecessor, the final event in the chain immediately effecting the "[t]hey were only lucky that no accident occurred during the
injury as a natural and probable result of the cause which first previous marathon races but still the danger was there."73
acted, under such circumstances that the person responsible for
the first event should, as an ordinarily prudent and intelligent Secondly, injury to the participants arising from an unfortunate
person, have reasonable ground to expect at the moment of his act vehicular accident on the route was an event known to and
or default that an injury to some person might probably result foreseeable by Intergames, which could then have been avoided if
therefrom."68 only Intergames had acted with due diligence by undertaking the
race on a blocked-off road, and if only Intergames had enforced
To be considered the proximate cause of the injury, the negligence and adopted more efficient supervision of the race through its
need not be the event closest in time to the injury; a cause is still volunteers.
proximate, although farther in time in relation to the injury, if the
happening of it set other foreseeable events into motion resulting And, thirdly, the negligence of the jeepney driver, albeit an
ultimately in the damage.69 According to an authority on civil intervening cause, was not efficient enough to break the chain of
law:70"A prior and remote cause cannot be made the basis of an connection between the negligence of Intergames and the
action, if such remote cause did nothing more than furnish the injurious consequence suffered by Rommel. An intervening cause,
condition or give rise to the occasion by which the injury was made to be considered efficient, must be "one not produced by a
wrongful act or omission, but independent of it, and adequate to
bring the injurious results. Any cause intervening between the first to the hazards of baseball, basketball, football, foot races and
wrongful cause and the final injury which might reasonably have other games of skill and endurance as is an adult
been foreseen or anticipated by the original wrongdoer is not such
an efficient intervening cause as will relieve the original wrong of its x x x."
character as the proximate cause of the final injury." 74
In the case at bar, the "1st Pop Cola Junior Marathon" held on
In fine, it was the duty of Intergames to guard Rommel against the June 15, 1980 was a race the winner of which was to represent
foreseen risk, but it failed to do so. the country in the annual Spirit of Pheidippides Marathon Classic
in Greece, if he equals or breaks the 29-minute mark for the 19-
III km. race. Thus, Rommel Abrogar having voluntarily participated
in the race, with his parents' consent, assumed all the risks of the
The doctrine of assumption of risk race.75
had no application to Rommel
The doctrine of assumption of risk means that one who voluntarily
Unlike the R TC, the CA ruled that the doctrine of assumption of exposes himself to an obvious, known and appreciated danger
risk applied herein; hence, it declared Intergames and Cosmos not assumes the risk of injury that may result therefrom. 76 It rests on
liable. The CA rendered the following rationalization to buttress its the fact that the person injured has consented to relieve the
ruling, to wit: defendant of an obligation of conduct toward him and to take his
chance of injury from a known risk, and whether the former has
In this case, appellant Romulo Abrogar himself admitted that his exercised proper caution or not is immaterial. 77 In other words, it
son, Rommel Abrogar, surveyed the route of the marathon and is based on voluntary consent, express or implied, to accept
even attended a briefing before the race. Consequently, he was danger of a known and appreciated risk; it may sometimes include
aware that the marathon would pass through a national road and acceptance of risk arising from the defendant's negligence, but one
that the said road would not be blocked off from traffic. And does not ordinarily assume risk of any negligence which he does
considering that he was already eighteen years of age, had not know and appreciate.78 As a defense in negligence cases,
voluntarily participated in the marathon, with his parents' therefore, the doctrine requires the concurrence of three elements,
consent, and was well aware of the traffic hazards along the route, namely: (1) the plaintiff must know that the risk is present; (2) he
he thereby assumed all the risks of the race. This is precisely why must further understand its nature; and (3) his choice to incur it
permission from the participant's parents, submission of a must be free and voluntary. 79 According to Prosser:80"Knowledge of
medical certificate and a waiver of all rights and causes of action the risk is the watchword of assumption of risk."
arising from the participation in the marathon which the
participant or his heirs may have against appellant Intergames Contrary to the notion of the CA, the concurrence of the three
were required as conditions in joining the marathon. elements was not shown to exist. Rommel could not have assumed
the risk of death when he participated in the race because death
In the decision of the trial court, it stated that the risk mentioned was neither a known nor normal risk incident to running a race.
in the waiver signed by Rommel Abrogar only involved risks such Although he had surveyed the route prior to the race and should
as stumbling, suffering heatstroke, heart attack and other similar be presumed to know that he would be running the race alongside
risks. It did not consider vehicular accident as one of the risks moving vehicular traffic, such knowledge of the general danger
included in the said waiver. was not enough, for some authorities have required that the
knowledge must be of the specific risk that caused the harm to
This Court does not agree. With respect to voluntary participation him.81 In theory, the standard to be applied is a subjective one,
in a sport, the doctrine of assumption of risk applies to any facet and should be geared to the particular plaintiff and his situation,
of the activity inherent in it and to any open and obvious condition rather than that of the reasonable person of ordinary prudence
of the place where it is carried on. We believe that the waiver who appears in contributory negligence.82 He could not have
included vehicular accidents for the simple reason that it was a appreciated the risk of being fatally struck by any moving vehicle
road race run on public roads used by vehicles. Thus, it cannot be while running the race. Instead, he had every reason to believe
denied that vehicular accidents are involved. It was not a track that the organizer had taken adequate measures to guard all
race which is held on an oval and insulated from vehicular traffic. participants against any danger from the fact that he was
In a road race, there is always the risk of runners being hit by participating in an organized marathon. Stated differently, nobody
motor vehicles while they train or compete. That risk is inherent in in his right mind, including minors like him, would have joined
the sport and known to runners. It is a risk they assume every the marathon if he had known of or appreciated the risk of harm
time they voluntarily engage in their sport. or even death from vehicular accident while running in the
organized running event. Without question, a marathon route safe
Furthermore, where a person voluntarily participates in a lawful and free from foreseeable risks was the reasonable expectation of
game or contest, he assumes the ordinary risks of such game or every runner participating in an organized running event.
contest so as to preclude recovery from the promoter or operator
of the game or contest for injury or death resulting therefrom. Neither was the waiver by Rommel, then a minor, an effective form
Proprietors of amusements or of places where sports and games of express or implied consent in the context of the doctrine of
are played are not insurers of safety of the public nor of their assumption of risk. There is ample authority, cited in Prosser, 83 to
patrons. the effect that a person does not comprehend the risk involved in
a known situation because of his youth,84 or lack of information or
In Mc Leod Store v. Vinson 213 Ky 667, 281 SW 799 (1926), it was experience,85 and thus will not be taken to consent to assume the
held that a boy, seventeen years of age, of ordinary intelligence risk.
and physique, who entered a race conducted by a department
store, the purpose of which was to secure guinea fowl which could Clearly, the doctrine of assumption of risk does not apply to bar
be turned in for cash prizes, had assumed the ordinary risks recovery by the petitioners.
incident thereto and was barred from recovering against the
department store for injuries suffered when, within catching IV
distance, he stopped to catch a guinea, and was tripped or
stumbled and fell to the pavement, six or eight others falling upon Cosmos is not liable for the negligence
him. The comi further said: "In this (the race) he was a voluntary of Intergames as the organizer
participant. x x x The anticipated danger was as obvious to him as
it was to appellant (the department store). While not an adult, he Nonetheless, the CA did not err in absolving Cosmos from liability.
was practically 17 years of age, of ordinary intelligence, and
perfectly able to determine the risks ordinarily incident to such
games. An ordinary boy of that age is practically as well advised as
The sponsorship of the marathon by Cosmos was limited to organizers of sports events should exercise utmost diligence in
financing the race. Cosmos did nothing beyond that, and did not preventing injury to the participants and the public as well,
involve itself at all in the preparations for the actual conduct of exemplary damages should also be paid by the defendants and
the race. This verity was expressly confirmed by Intergames, this Court considers the amount of ₱50,000.00
through Castro, Jr., who declared as follows:
as reasonable.87
COURT
Although we will not disturb the foregoing findings and
q Do you discuss all your preparation with Cosmos Bottling determinations, we need to add to the justification for the grant of
Company? exemplary damages. Article 2231 of the Civil Code stipulates that
exemplary damages are to be awarded in cases of quasi-delict if
a As far as the Cosmos Bottling Company (sic) was a sponsor as to the defendant acted with gross negligence. The foregoing
the actual conduct of the race, it is my responsibility. The conduct characterization by the RTC indicated that Intergames' negligence
of the race is my responsibility. The sponsor has nothing to do as was gross. We agree with the characterization. Gross negligence,
well as its code of the race because they are not the ones running. according to Mendoza v. Spouses Gomez,88 is the absence of care
I was the one running. The responsibility of Cosmos was just to or diligence as to amount to a reckless disregard of the safety of
provide the sponsor's money. persons or property; it evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. Indeed,
COURT the failure of Intergames to adopt the basic precautionary
measures for the safety of the minor participants like Rommel was
q They have no right to who (sic) suggest the location, the number in reckless disregard of their safety. Conduct is reckless when it is
of runners, you decide these yourself without consulting them? an extreme departure from ordinary care, in a situation in which a
high degree of danger is apparent; it must be more than any mere
a Yes, your honor.86 mistake resulting from inexperience, excitement, or confusion,
and more than mere thoughtlessness or inadvertence, or simple
We uphold the finding by the CA that the role of Cosmos was to inattention.89 The RTC did not recognize the right of the petitioners
pursue its corporate commitment to sports development of the to recover the loss of earning capacity of Rommel. It should have,
youth as well as to serve the need for advertising its business. In for doing so would have conformed to jurisprudence whereby the
the absence of evidence showing that Cosmos had a hand in the Court has unhesitatingly allowed such recovery in respect of
organization of the race, and took part in the determination of the children, students and other non-working or still unemployed
route for the race and the adoption of the action plan, including victims. The legal basis for doing so is Article 2206 (l) of the Civil
the safety and security measures for the benefit of the runners, we Code, which stipulates that the defendant "shall be liable for the
cannot but conclude that the requirement for the direct or loss of the earning capacity of the deceased, and the indemnity
immediate causal connection between the financial sponsorship of shall be paid to the heirs of the latter; such indemnity shall in every
Cosmos and the death of Rommel simply did not exist. Indeed, case be assessed and awarded by the court, unless the deceased
Cosmos' mere sponsorship of the race was, legally speaking, too on account of permanent physical disability not caused by the
remote to be the efficient and proximate cause of the injurious defendant, had no earning capacity at the time of his death."
consequences.
Indeed, damages for loss of earning capacity may be awarded to
V the heirs of a deceased non-working victim simply because
earning capacity, not necessarily actual earning, may be lost.
Damages
In Metro Manila Transit Corporation v. Court of Appeals, 90 damages
Article 2202 of the Civil Code lists the damages that the plaintiffs for loss of earning capacity were granted to the heirs of a third-
in a suit upon crimes and quasi-delicts can recover from the year high school student of the University of the Philippines
defendant, viz.: Integrated School who had been killed when she was hit and run
over by the petitioner's passenger bus as she crossed Katipunan
Avenue in Quezon City. The Court justified the grant in this wise:
Art. 2202. In crimes and quasi-delicts, the defendant shall be
liable for all damages which are the natural and probable
consequences of the act or omission complained of. It is not Compensation of this nature is awarded not for loss of earnings
necessary that such damages have been foreseen or could have but for loss of capacity to earn money. Evidence must be
reasonably been foreseen by the defendant. 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
Accordingly, Intergames was liable for all damages that were the
loss of earning capacity was granted to the heirs of a college
natural and probable consequences of its negligence. In its
freshman because there was no sufficient evidence on record to
judgment, the RTC explained the award of damages in favor of the
show that the victim would eventually become a professional pilot.
petitioners, as follows:
But compensation should be allowed for loss of earning capacity
resulting from the death of a minor who has not yet commenced
As borne by the evidence on record, the plaintiffs incurred
employment or training for a specific profession if sufficient
medical, hospitalization and burial expenses for their son in this
evidence is presented to establish the amount thereor. 91 (bold
aggregate amount of ₱28,061.65 (Exhibits "D'', "D-1" and "D-2"). In
underscoring supplied for emphasis)
instituting this case, they have paid their lawyer ₱5,000 as initial
deposit, their arrangement being that they would pay attorney's
In People v. Sanchez,92 damages for loss of earning capacity was
fees to the extent of 10% of whatever amount would be awarded to
also allowed to the heirs of the victims of rape with homicide
them in this case.
despite the lack of sufficient evidence to establish what they would
have earned had they not been killed. The Court rationalized its
For the loss of a son, it is unquestionable that plaintiffs suffered
judgment with the following observations:
untold grief which should entitle them to recover moral damages,
and this Court believes that if only to assuage somehow their
Both Sarmenta and Gomez were senior agriculture students at
untold grief but not necessarily to compensate them to the fullest,
UPLB, the country's leading educational institution in
the nominal amount of ₱l00,00.00 should be paid by the
agriculture.1âwphi1 As reasonably assumed by the trial court,
defendants.
both victims would have graduated in due course. Undeniably,
their untimely death deprived them of their future time and
For failure to adopt elementary and basic precautionary measure
earning capacity. For these deprivation, their heirs are entitled to
to insure the safety of the participants so that sponsors and
compensation. xxxx. However, considering that Sarmenta and
Gomez would have graduated in due time from a reputable absolved COSMOS BOTTLING COMPANY, INC. from
university, it would not be unreasonable to assume that in 1993 liability; REVERSES and SETS ASIDE the decision as
they would have earned more than the minimum wage. All factors to INTERGAMES, INC., and REINSTATES as to it the judgment
considered, the Court believes that it is fair and reasonable to fix rendered on May 10, 1991 by the Regional Trial Court, Branch 83,
the monthly income that the two would have earned in 1993 at in Quezon City subject to
₱8,000.000 per month (or ₱96,000.00/year) and their deductible the MODIFICATIONS that INTERGAMES, INC. is ORDERED TO
living and other incidental expenses at ₱3,000.00 per month (or PAY to the petitioners, in addition to the aw3:rds thereby allowed:
₱36,000.00/year).93 (bold underscoring supplied for emphasis) (a) the sum of ₱l13,484.52 as damages for the loss of Rommel
Abrogar's earning capacity; (b) interest of 6% per annum on the
In Perena v. Zarate,94 the Court fixed damages for loss of earning actual damages, moral damages, exemplary damages and loss of
capacity to be paid to the heirs of the 15-year-old high school earning capacity reckoned from May 10, 1991 until full payment;
student of Don Bosco Technical Institute killed when a moving (c) compounded interest of 6% per annum from the finality of this
train hit the school van ferrying him to school while it was decision until full payment; and (d) costs of suit.
traversing the railroad tracks. The RTC and the CA had awarded
damages for loss of earning capacity computed on the basis of the SO ORDERED.
minimum wage in effect at the time of his death. Upholding said
findings, the Court opined:

x x x, the fact that Aaron was then without a history of earnings

should not be taken against his parents and in favor of the
defendants whose negligence not only cost Aaron his life and his
right to work and earn money, but also deprived his parents of
their right to his presence and his services as well. x x x.
Accordingly, we emphatically hold in favor of the indemnification
for Aaron's loss of earning capacity despite him having been
unemployed, because compensation of this nature is awarded not
for loss of time or earnings but for loss of the deceased's power or
ability to earn money.

The petitioners sufficiently showed that Rommel was, at the time

of his untimely but much lamented death, able-bodied, in good
physical and mental state, and a student in good standing. 95 It
should be reasonable to assume that Rommel would have finished
his schooling and would turn out to be a useful and productive
person had he not died. Under the foregoing jurisprudence, the
petitioners should be compensated for losing Rommel's power or
ability to earn. The basis for the computation of earning capacity
is not what he would have become or what he would have wanted
to be if not for his untimely death, but the minimum wage in effect
at the time of his death. The formula for this purpose is:

Net Earning Capacity = Life Expectancy x [Gross Annual Income

less Necessary Living Expenses ]96

Life expectancy is equivalent to 2/3 multiplied by the difference of

80 and the age of the deceased. Since Rommel was 18 years of age
at the time of his death, his life expectancy was 41 years. His
projected gross annual income, computed based on the minimum
wage for workers in the non-agricultural sector in effect at the
time of his death,97then fixed at ₱l4.00/day, is ₱5,535.83. Allowing
for necessary living expenses of 50% of his projected gross annual
income, his total net earning capacity is ₱l13,484.52.

Article 2211 of the Civil Code expressly provides that interest, as

a part of damages, may be awarded in crimes and quasi-delicts at
the discretion of the court. The rate of interest provided under
Article 2209 of the Civil Code is 6% per annum in the absence of
stipulation to the contrary. The legal interest rate of 6% per
annum is to be imposed upon the total amounts herein awarded
from the time of the judgment of the RTC on May 10, 1991 until
finality of judgment.98 Moreover, pursuant to Article 221299 of
the Civil Code, the legal interest rate of 6o/o per annum is to be
further imposed on the interest earned up to the time this
judgment of the Court becomes final and executory until its full
satisfaction.100

Article 2208 of the Civil Code expressly allows the recovery of

attorney's fees and expenses of litigation when exemplary damages
have been awarded.1âwphi1 Thus, we uphold the RTC's allocation
of attorney's fees in favor of the petitioners equivalent to 10% of
the total amount to be recovered, inclusive of the damages for loss
of earning capacity and interests, which we consider to be
reasonable under the circumstances.

WHEREFORE, the Court PARTLY AFFIRMS the decision

promulgated on March 10, 2004 to the extent that it
 For their part, petitioners capitalized on the issue of ownership of
the bus in question. Respondents argued that although the
registered owner was Lim, the actual owner of the bus was SPO1
Cirilo Enriquez (Enriquez), who had the bus attached with
Mayamy Transportation Company (Mayamy Transport) under the
so-called "kabit system." Respondents then impleaded both Lim
G.R. No. 160110               June 18, 2014 and Enriquez.

MARIANO C. MENDOZA and ELVIRA LIM, Petitioners,  Petitioners, on the other hand, presented Teresita Gutierrez
vs. (Gutierrez), whose testimony was offered to prove that Mayamy
SPOUSES LEONORA J. GOMEZ and GABRIEL V. Bus or Mayamy Transport is a business name registered under
GOMEZ, Respondents. her name, and that such business is a sole proprietorship. Such
was presented by petitioners to rebut the allegation of respondents
DECISION that Mayamy Transport is a corporation;15 and to show, moreover,
that although Gutierrez is the sole proprietor of Mayamy
PEREZ, J.: Transport, she was not impleaded by respondents in the case at
bar.16
Assailed in the present appeal by certiorari is the Decision 1 dated
29 September 2003 of the Special Fourth Division of the Court of After weighing the evidence, the RTC found Mendoza liable for
Appeals (CA) in CA-G.R. CV No. 71877, which affirmed with direct personal negligence under Article 2176 of the Civil Code,
modification the Decision2 dated 31 January 2001 of the Regional and it also found Lim vicariously liable under Article 2180 of the
Trial Court (RTC), Branch 172, Valenzuela City in Civil Case No. same Code.
5352-V-97, and which effectively allowed the award of actual,
moral, and exemplary damages, as well as attorney's fees and As regards Lim, the RTC relied on the Certificate of Registration
costs of the suit in favor of respondent Spouses Leonora and issued by the Land Transportation Office on 9 December 1996 17 in
Gabriel Gomez (respondents). concluding that she is the registered owner of the bus in question.
Although actually owned by Enriquez, following the established
Antecedent Facts principle in transportation law, Lim, as the registered owner, is
the one who can be held liable.
On 7 March 1997, an Isuzu Elf truck (Isuzu truck) with plate
number UAW 582,3 owned by respondent Leonora J. Gomez Thus, the RTC disposed of the case as follows:
(Leonora)4 and driven by Antenojenes Perez (Perez), 5 was hit by a
Mayamy Transportation bus (Mayamy bus) with temporary plate WHEREFORE, judgment is hereby rendered in favor of the
number 1376-1280,6 registered under the name of petitioner [respondents] and against the [petitioners]:
Elvira Lim (Lim)7 and driven by petitioner Mariano C. Mendoza
(Mendoza).8 1. Ordering the [petitioners] except Enriquez to pay
[respondents], jointly and severally, the costs of repair of
Owing to the incident, an Information for reckless imprudence the damaged vehicle in the amount of ₱142,757.40;
resulting in damage to property and multiple physical injuries was
filed against Mendoza. 9 Mendoza, however, eluded arrest, thus, 2. Ordering the defendants except Enriquez to pay
respondents filed a separate complaint for damages against [respondents], jointly and severally, the amount of
Mendoza and Lim, seeking actual damages, compensation for lost ₱1,000.00 per day from March 7, 1997 up to November
income, moral damages, exemplary damages, attorney’s fees and 1997 representing the unrealized income of the
costs of the suit.10 This was docketed as Civil Case No. 5352-V-97. [respondents] when the incident transpired up to the
time the damaged Isuzu truck was repaired;
According to PO1 Melchor F. Rosales (PO1 Rosales), investigating
officer of the case, at around 5:30 a.m., the Isuzu truck, coming 3. Ordering the [petitioners] except Enriquez to pay
from Katipunan Road and heading towards E. Rodriguez, Sr. [respondents], jointly and severally, the amount of
Avenue, was travelling along the downward portion of Boni ₱100,000.00 as moral damages, plus a separate amount
Serrano Avenue when, upon reaching the corner of Riviera Street, of ₱50,000.00 as exemplary damages;
fronting St. Ignatius Village, its left front portion was hit by the
Mayamy bus.11 According to PO1 Rosales, the Mayamy bus, while 4. Ordering the [petitioners] except Enriquez to pay
traversing the opposite lane, intruded on the lane occupied by the [respondents], jointly and severally, the amount of
Isuzu truck.12 ₱50,000.00 as attorney’s fees; 5. Ordering the
[petitioners] except Enriquez to pay [respondents] the
PO1 Rosales also reported that Mendoza tried to escape by costs of suit.18
speeding away, but he was apprehended in Katipunan Road
corner C. P. Garcia Avenue by one Traffic Enforcer Galante and a Displeased, petitioners appealed to the CA, which appeal was
security guard of St. Ignatius Village.13 docketed as CA-G.R. CV No. 71877. After evaluating the damages
awarded by the RTC, such were affirmed by the CA with the
As a result of the incident, Perez,as well as the helpers on board exception of the award of unrealized income which the CA ordered
the Isuzu truck, namely Melchor V. Anla (Anla), Romeo J. Banca deleted, viz:
(Banca), and Jimmy Repisada (Repisada), sustained injuries
necessitating medical treatment amounting to ₱11,267.35,which WHEREFORE, premises considered, the appeal is PARTLY
amount was shouldered by respondents. Moreover, the Isuzu GRANTED. The judgment of the Regional Trial Court of Valenzuela
truck sustained extensive damages on its cowl, chassis, lights and City, Branch 172 dated January 31, 2001, is MODIFIED, in that
steering wheel, amounting to ₱142,757.40.14 the award of ₱1,000.00 per day from March 1997 up to November
1997 representing unrealized income is DELETED. The award of
Additionally, respondents averred that the mishap deprived them ₱142,757.40 for the cost of repair of the damaged vehicle, the
of a daily income of ₱1,000.00. Engaged in the business of buying award of ₱100,000.00 as moral damages, the award of ₱50,000.00
plastic scraps and delivering them to recycling plants, as exemplary damages, the award of ₱50,000.00 as attorney’s fees
respondents claimed that the Isuzu truck was vital in the and the costs of the suit are hereby MAINTAINED. 19
furtherance of their business.
The Present Petition
Unsatisfied with the CA ruling, petitioners filed an appeal by observe for the protection of the interests of another person, that
certiorari before the Court, raising the following issues: 20 degree of care, precaution and vigilance which the circumstances
justly demand, whereby such other person suffers injury. 21
1. The court a quo has decided questions of substance in
a way not in accord with law or with the applicable As found by the RTC, and affirmed by the CA, Mendoza was
decisions of the Supreme Court when it awarded: negligent in driving the subject Mayamy bus, as demonstrated by
the fact that, at the time of the collision, the bus intruded on the
a. Moral damages in spite of the fact that the lane intended for the Isuzu truck. Having encroached on the
[respondents’] cause of action is clearly based opposite lane, Mendoza was clearly in violation of traffic laws.
on quasi-delict and [respondents] did not Article2185 of the Civil Code provides that unless there is proof to
sustain physical injuries to be entitled thereto the contrary, it is presumed that a person driving a motor vehicle
pursuant to Article 2219 (2) of the New Civil has been negligent if at the time of the mishap, he was violating
Code and pertinent decisions of the Supreme any traffic regulation. In the case at bar, Mendoza’s violation of
Court to that effect. The court a quo traffic laws was the proximate cause of the harm.
erroneously concluded that the driver acted in
bad faith and erroneously applied the provision Proximate cause is defined as that cause, which, in natural and
of Article 21 of the same code to justify the continuous sequence, unbroken by any efficient intervening
award for bad faith is not consistent with quasi- cause, produces the injury, and without which the result would
delict which is founded on fault or negligence. not have occurred. And more comprehensively, the proximate legal
cause is that acting first and producing the injury, either
b. Exemplary damages in spite of the fact that immediately or by setting other events in motion, all constituting a
there is no finding that the vehicular accident natural and continuous chain of events, each having a close
was due to petitioner-driver’s gross negligence causal connection with its immediate predecessor, the final event
to be entitled thereto pursuant to Article 2231 in the chain immediately effecting the injury as a natural and
of the New Civil Code and pertinent decisions of probable result of the cause which first acted, under such
the Supreme Court to that effect. The factual circumstances that the person responsible for the first event
basis of the court a quo that "the act of the should, as an ordinary prudent and intelligent person, have
driver of the bus in attempting to escape after reasonable ground to expect at the moment of his act or default
causing the accident in wanton disregard of the that an injury to some person might probably result therefrom. 22
consequences of his negligent act is such gross
negligence that justifies an award of exemplary The evidence on record shows that before the collision, the Isuzu
damages" is an act after the fact which is not truck was in its rightful lane, and was even at a stop, having been
within the contemplation of Article 2231 of the flagged down by a security guard of St. Ignatius Village. 23 The
New Civil Code. mishap occurred when the Mayamy bus, travelling at a fast speed
as shown by the impact of the collision, and going in the opposite
c. Attorney’s fees in spite of the fact that the direction as that of the Isuzu truck, encroached on the lane
assailed decisions of the trial court and the rightfully occupied by said Isuzu truck, and caused the latter to
court a quo are bereft with jurisdictions for the spin, injuring Perez, Anla, Banca, and Repisada, and considerably
award of attorney’s fees pursuant to the damaging the Isuzu truck.
pertinent decisions of the Supreme Court on the
matter and provision Article 2208 of the New Having settled the fact of Mendoza’s negligence, then, the next
Civil Code. The court a quo erroneously applied question that confronts us is who may beheld liable. According to
the decision of the Supreme Court in Bañas, Jr. Manresa, liability for personal acts and omissions is founded on
vs. Court of Appeals, 325 SCRA 259. that indisputable principle of justice recognized by all legislations
that when a person by his act or omission causes damage or
The Court’s Ruling prejudice to another, a juridical relation is created by virtue of
which the injured person acquires a right to be indemnified and
The petition is partially meritorious. the person causing the damage is charged with the corresponding
duty of repairing the damage. The reason for this is found in the
Respondents anchor their claim for damages on Mendoza’s obvious truth that man should subordinate his acts to the
negligence, banking on Article 2176 of the Civil Code, to wit: precepts of prudence and if he fails to observe them and causes
damage to another, he must repair the damage.24 His negligence
Whoever by act or omission causes damage to another, there having caused the damage, Mendoza is certainly liable to repair
being fault or negligence, is obliged to pay for the damage done. said damage.
Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is Additionally, Mendoza’s employer may also be held liable under
governed by the provisions of this Chapter. the doctrine of vicarious liability or imputed negligence. Under
such doctrine, a person who has not committed the act or
In impleading Lim, on the other hand, respondents invoke the omission which caused damage or injury to another may
latter’s vicarious liability as espoused in Article 2180 of the same nevertheless be held civilly liable to the latter either directly or
Code: subsidiarily under certain circumstances. 25 In our jurisdiction,
vicarious liability or imputed negligence is embodied in Article
The obligation imposed by Article 2176 is demandable not only for 2180 of the Civil Code and the basis for damages in the action
one’s own acts or omissions, but also for those of persons for under said article is the direct and primary negligence of the
whom one is responsible. employer in the selection or supervision, or both, of his
employee.26
xxxx
In the case at bar, who is deemed as Mendoza’s employer? Is it
Employers shall be liable for the damages caused by their Enriquez, the actual owner of the bus or Lim, the registered owner
employees and household helpers acting within the scope of their of the bus?
assigned tasks, even though the former are not engaged in any
business of industry. In Filcar Transport Services v. Espinas, 27 we held that the
registered owner is deemed the employer of the negligent driver,
The first question to address, then, is whether or not Mendoza’s and is thus vicariously liable under Article 2176, in relation to
negligence was duly proven. Negligence is defined as the failure to Article 2180, of the Civil Code. Citing Equitable Leasing
Corporation v. Suyom,28 the Court ruled that in so far as third
persons are concerned, the registered owner of the motor vehicle Actual or Compensatory Damages. Actual or compensatory
is the employer of the negligent driver, and the actual employer is damages are those awarded in satisfaction of, or in recompense
considered merely as an agent of such owner. Thus, whether there for, loss or injury sustained. They simply make good or replace the
is an employer-employee relationship between the registered loss caused by the wrong.34
owner and the driver is irrelevant in determining the liability of the
registered owner who the law holds primarily and directly Article 2202 of the Civil Code provides that in crimes and quasi
responsible for any accident, injury or death caused by the delicts, the defendant shall be liable for all damages which are the
operation of the vehicle in the streets and highways. 29 natural and probable consequences of the act or omission
complained of. It is not necessary that such damages have been
As early as Erezo v. Jepte,30 the Court, speaking through Justice foreseen or could have reasonably been foreseen by the defendant.
Alejo Labrador summarized the justification for holding the Article 2199 of the same Code, however, sets the limitation that,
registered owner directly liable, to wit: except as provided by law or by stipulation, one is entitled to an
adequate compensation only for such pecuniary loss suffered by
x x x The main aim of motor vehicle registration is to identify the him as he has duly proved. As such, to warrant an award of actual
owner so that if any accident happens, or that any damage or or compensatory damages, the claimant must prove that the
injury is caused by the vehicles on the public highways, damage sustained is the natural and probable consequences of
responsibility therefore can be fixed on a definite individual, the the negligent act and, moreover, the claimant must adequately
registered owner. Instances are numerous where vehicle running prove the amount of such damage.
on public highways caused accidents or injuries to pedestrians or
other vehicles without positive identification of the owner or In the case at bar, the RTC, basing on the receipts submitted by
drivers, or with very scant means of identification. It is to forestall respondents and which receipts petitioners had the opportunity to
these circumstances, so inconvenient or prejudicial to the public, examine, found that the total repairs on the Isuzu truck amounted
that the motor vehicle registration is primarily ordained, in the to ₱142,757.40, and that the full hospitalization and medical
interest of the determination of persons responsible for damages expenses of Perez, Anla, Banca, and Repisada amounted to
or injuries caused on public highways. ₱11,267.35. As such, these are the amounts that respondents are
entitled to as actual and compensatory damages.
"‘One of the principal purposes of motor vehicles legislation is
identification of the vehicle and of the operator, in case of Although respondents alleged in their complaint that the damage
accident; and another is that the knowledge that means of to their Isuzu truck caused them the loss of a daily income of
detection are always available may act as a deterrent from lax ₱1,000.00, such claim was not duly substantiated by any evidence
observance of the law and of the rules of conservative and safe on record, and thus cannot be awarded in their favor.
operation. Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of rendering it Moral Damages. Moral damages are awarded to enable the injured
certain that the violator of the law or of the rules of safety shall party to obtain means, diversions or amusements that will serve to
not escape because of lack of means to discover him." The purpose alleviate the moral suffering he has undergone, by reason of the
of the statute is thwarted, and the displayed number becomes a defendant's culpable action.35
"snare and delusion," if courts will entertain such defenses as that
put forward by appellee in this case. No responsible person or In prayers for moral damages, however, recovery is more an
corporation could be held liable for the most outrageous acts of exception rather than the rule. Moral damages are not meant to be
negligence, if they should be allowed to place a "middleman" punitive but are designed to compensate and alleviate the physical
between them and the public, and escape liability by the manner suffering, mental anguish, fright, serious anxiety, besmirched
in which they recompense their servants. 31 reputation, wounded feelings, moral shock, social humiliation,
and similar harm unjustly caused to a person. To be entitled to
Generally, when an injury is caused by the negligence of a servant such an award, the claimant must satisfactorily prove that he has
or employee, there instantly arises a presumption of law that there suffered damages and that the injury causing it has sprung from
was negligence on the part of the master or employer either in the any of the cases listed in Articles 2219 and 2220 of the Civil Code.
selection of the servant or employee (culpa in eligiendo) or in the Moreover, the damages must be shown to be the proximate result
supervision over him after the selection (culpa vigilando), or both. of a wrongful act or omission. The claimant must thus establish
The presumption is juris tantum and not juris et de jure; the factual basis of the damages and its causal tie with the acts of
consequently, it may be rebutted. Accordingly, the general rule is the defendant.36
that if the employer shows to the satisfaction of the court that in
the selection and supervision of his employee he has exercised the In fine, an award of moral damages calls for the presentation of 1)
care and diligence of a good father of a family, the presumption is evidence of besmirched reputation or physical, mental or
overcome and he is relieved of liability. 32 However, with the psychological suffering sustained by the claimant; 2)a culpable act
enactment of the motor vehicle registration law, the defenses or omission factually established; 3) proof that the wrongful act or
available under Article 2180 of the Civil Code - that the employee omission of the defendant is the proximate cause of the damages
acts beyond the scope of his assigned task or that it exercised the sustained by the claimant; and 4) the proof that the act is
due diligence of a good father of a family to prevent damage – are predicated on any of the instances expressed or envisioned by
no longer available to the registered owner of the motor vehicle, Article 2219 and Article 2220 of the Civil Code. 37
because the motor vehicle registration law, to a certain extent,
modified Article 2180.33 A review of the complaint and the transcript of stenographic notes
yields the pronouncement that respondents neither alleged nor
As such, there can be no other conclusion but to hold Lim offered any evidence of besmirched reputation or physical, mental
vicariously liable with Mendoza. or psychological suffering incurred by them. All that Leonora and
her counsel had to say on the matter of damages other than
This does not mean, however, that Lim is left without any recourse actual or compensatory damages is this:38
against Enriquez and Mendoza. Under the civil law principle of
unjust enrichment, the registered owner of the motor vehicle has a Q: Did you ever spend covering attorney’s fees?
right to be indemnified by the actual employer of the driver; and
under Article 2181 of the Civil Code, whoever pays for the damage A: Yes, sir. ₱50,000.00.
caused by his dependents or employees may recover from the
latter what he has paid or delivered in satisfaction of the claim. Q: Aside from the actual damage that you have mentioned x x x,
how much more would you like this Court to award you by way of
Having identified the persons liable, our next question is what moral damages?
may be awarded.
A: ₱100,000.00, sir. Gross negligence is the absence of care or diligence as to amount
to a reckless disregard of the safety of persons or property. It
Q: How about exemplary damages? evinces a thoughtless disregard of consequences without exerting
any effort to avoid them.46
A: ₱50,000.00, sir.
In the case at bar, having established respondents’ right to
Q: What happened to you, what did you feel when the defendants compensatory damages, exemplary damages are also in order,
failed to immediately repair your vehicle that was damaged given the fact that Mendoza was grossly negligent in driving the
Madam Witness? Mayamy bus. His act of intruding or encroaching on the lane
rightfully occupied by the Isuzu truck shows his reckless
A: I have incurred expenses and I was forced to apply for a loan, disregard for safety.
sir.
In Baño v. Bachelor Express, Inc., et al., 47 where an erring bus, in
39
In Kierulf v. CA,  we observed that this Court cannot remind the the process of overtaking a jeepney, also encroached on the
bench and the bar often enough that in order that moral damages opposite lane, and consequently collided with a dump truck, the
may be awarded, there must be pleading and proof of moral Court held the driver of the bus grossly negligent and affirmed the
suffering, mental anguish, fright and the like. Citing Francisco v. award of exemplary damages. Attorney’s Fees. Article 2208 of the
GSIS,40 the Court held that there must be clear testimony on the Civil Code enumerates the instances when attorney’s fees may be
anguish and other forms of mental suffering. Thus, if the plaintiff recovered:
fails to take the witness stand and testify as to his social
humiliation, wounded feelings and anxiety, moral damages cannot Art. 2208. In the absence of stipulation, attorney’s fees and
be awarded. expenses of litigation, other than judicial costs, cannot be
recovered, except:
Moreover, respondents were not able to show that their claim
properly falls under Articles 2219 and 2220 of the Civil Code. (1) When exemplary damages are awarded;
Respondents cannot rely on Article 2219 (2) of the Civil Code
which allows moral damages in quasi-delicts causing physical (2) When the defendant’s act or omission has compelled
injuries because in physical injuries, moral damages are the plaintiff to litigate with third persons or to incur
recoverable only by the injured party, 41and in the case at bar, expenses to protect his interest;
herein respondents were not the ones who were actually injured.
(3) In criminal cases of malicious prosecution against the
In B.F. Metal (Corp.) v. Sps. Lomotan, et al., 42 the Court, in a plaintiff;
claim for damages based on quasi-delict causing physical injuries,
similarly disallowed an award of moral damages to the owners of (4) In case of a clearly unfounded civil action or
the damaged vehicle, when neither of them figured in the accident proceeding against the plaintiff;
and sustained injuries.
(5) Where the defendant acted in gross and evident bad
Neither can respondents rely on Article 21 of the Civil Code as the faith in refusing to satisfy the plaintiff’s valid and
RTC erroneously did. Article 21 deals with acts contra bonus demandable claim;
mores, and has the following elements: (1) There is an act which is
legal; (2) but which is contrary to morals, good custom, public (6) In actions for legal support;
order, or public policy; (3) and it is done with intent to injure. 43 In
the present case, it can hardly be said that Mendoza’s negligent (7) In actions for the recovery of wages of household
driving and violation of traffic laws are legal acts. Moreover, it was helpers, laborers and skilled workers;
not proven that Mendoza intended to injure Perez, et al. Thus,
Article 21 finds no application to the case at bar. All in all, we find (8) In actions for indemnity under workmen’s
that the RTC and the CA erred in granting moral damages to compensation and employer’s liability laws;
respondents. Exemplary Damages. Article 2229 of the Civil Code
provides that exemplary or corrective damages are imposed, by (9) In a separate civil action to recover civil liability
way of example or correction for the public good, in addition to arising from a crime;
moral, temperate, liquidated or compensatory damages. Article
2231 of the same Code further states that in quasi-delicts, (10) When at least double judicial costs are awarded;
exemplary damages may be granted if the defendant acted with
gross negligence. (11) In any other case where the court deems it just and
equitable that attorney’s fees and expenses of litigation
Our jurisprudence sets certain conditions when exemplary should be recovered;
damages may be awarded: First, they may be imposed by way of
example or correction only in addition, among others, to In all cases, the attorney’s fees and expenses of litigation must be
compensatory damages, and cannot be recovered as a matter of reasonable.
right, their determination depending upon the amount of
compensatory damages that may be awarded to the claimant.
From the very opening sentence of Article 2208 of the Civil Code, it
Second, the claimant must first establish his right to moral,
is clearly intended to retain the award of attorney’s fees as the
temperate, liquidated or compensatory damages. Third, the
exception in our law, as the general rule remains that attorney’s
wrongful act must be accompanied by bad faith, and the award
fees are not recoverable in the absence of a stipulation thereto, the
would be allowed only if the guilty party acted in a wanton,
reason being that it is not sound policy to set a premium on the
fraudulent, reckless, oppressive or malevolent manner. 44
right to litigate.48
In motor vehicle accident cases, exemplary damages may be
As such, in Spouses Agustin v. CA,49 we held that, the award of
awarded where the defendant’s misconduct is so flagrant as to
attorney’s fees being an exception rather than the general rule, it
transcend simple negligence and be tantamount to positive or
is necessary for the court to make findings of facts and law that
affirmative misconduct rather than passive or negative
would bring the case within the exception and justify the grant of
misconduct. In characterizing the requisite positive misconduct
such award. Thus, the reason for the award of attorney’s fees
which will support a claim for punitive damages, the courts have
must be stated in the text of the court’s decision; otherwise, if it is
used such descriptive terms as willful, wanton, grossly negligent,
stated only in the dispositive portion of the decision, the same
reckless, or malicious, either alone or in combination. 45
must be disallowed on appeal.
In the case at bar, the RTC Decision had nil discussion on the 7) MAINTAIN the award of costs of suit.
propriety of attorney’s fees, and it merely awarded such in the
dispositive. The CA Decision, on the other hand, merely stated SO ORDERED.
that the award of attorney’s fees is merited as such is allowed
when exemplary damages are awarded.50 Following established
jurisprudence,51however, the CA should have disallowed on appeal
said award of attorney’s fees as the RTC failed to substantiate said
award. Costs of suit. The Rules of Court provide that, generally,
costs shall be allowed to the prevailing party as a matter of course,
thus:52

Section 1. Costs ordinarily follow results of suit.- Unless otherwise

provided in these rules, costs shall be allowed to the prevailing
party as a matter of course, but the court shall have power, for
special reasons, to adjudge that either party shall pay the costs of
an action, or that the same be divided, as may be equitable. No
costs shall be allowed against the Republic of the Philippines,
unless otherwise provided by law.

In the present case, the award of costs of suit to respondents, as

the prevailing party, is in order. Interests.1âwphi1 Interest by way
of damages has been defined as interest allowed in actions for
breach of contractor tort for the unlawful detention of money
already due. This type of interest is frequently called "moratory
interest." Interest as a part of damage, is allowed, not by
application of arbitrary rules, but as a result of the justice of the
individual case and as compensation to the injured party. 53

The legal provision on interests in quasi-delicts is Article 2211 of

the Civil Code which provides that in crimes and quasi-delicts,
interest as part of the damage, may, in a proper case, be
adjudicated in the discretion of the court.

Generally, interest is allowed as a matter of right for failure to pay

liquidated claims when due.54 For unliquidated claims, however,
Article 2213 of the Civil Code provides that interest cannot be
recovered upon unliquidated claims or damages, except when the
demand can be established with reasonable certainty.

In the case at bar, although the award of exemplary damages is

unliquidated in the sense that petitioners cannot know for sure,
before judgment, the exact amount that they are required to pay
to respondents, the award of actual or compensatory damages,
however, such as the truck repairs and medical expenses, is
arguably liquidated in that they can be measured against a
reasonably certain standard.55 Moreover, justice would seem to
require that the delay in paying for past losses which can be made
reasonably certain should be compensated through an award of
interest.56

WHEREFORE, premises considered, the Court Resolves to

PARTIALLY GRANT the appeal by certiorari, as follows:

1) DECLARE Mariano Mendoza and Elvira Lim solidarily

liable to respondent Spouses Leonora and Gabriel
Gomez;

2) MAINTAIN the award of actual or compensatory

damages in the amount of ₱142,757.40 for the repair of
the Isuzu Elf truck, with legal interest beginning 31
January 2001 until fully paid;

3) GRANT additional actual or compensatory damages in

the amount of ₱11,267.35 for the medical expenses
shouldered by respondent Spouses Leonora and Gabriel
Gomez, with legal interest beginning 31 January 2001
until fully paid;

4) DELETE the award of moral damages;

5) MAINTAIN the award of exemplary damages at

₱50,000.00;

6) DELETE the award of attorney's fees; and

 Defendants filed their respective answers, traversing the
material allegations of the complaint contending that: As
for defendant Eastern Shipping it alleged that the shipment
was discharged in good order from the vessel unto the
G.R. No. 97412 July 12, 1994 custody of Metro Port Service so that any damage/losses
incurred after the shipment was incurred after the
EASTERN SHIPPING LINES, INC., petitioner,  shipment was turned over to the latter, is no longer its
vs. liability (p. 17, Record); Metroport averred that although
HON. COURT OF APPEALS AND MERCANTILE INSURANCE subject shipment was discharged unto its custody, portion
COMPANY, INC., respondents. of the same was already in bad order (p. 11, Record); Allied
Brokerage alleged that plaintiff has no cause of action
VITUG, J.: against it, not having negligent or at fault for the shipment
was already in damage and bad order condition when
The issues, albeit not completely novel, are: (a) whether or not a received by it, but nonetheless, it still exercised extra
claim for damage sustained on a shipment of goods can be a ordinary care and diligence in the handling/delivery of the
solidary, or joint and several, liability of the common carrier, the cargo to consignee in the same condition shipment was
arrastre operator and the customs broker; (b) whether the received by it.
payment of legal interest on an award for loss or damage is to be
computed from the time the complaint is filed or from the date the From the evidence the court found the following:
decision appealed from is rendered; and (c) whether the applicable
rate of interest, referred to above, is twelve percent (12%) or six The issues are:
percent (6%).
1. Whether or not the shipment sustained losses/damages;
The findings of the court a quo, adopted by the Court of Appeals,
on the antecedent and undisputed facts that have led to the 2. Whether or not these losses/damages were sustained
controversy are hereunder reproduced: while in the custody of defendants (in whose respective
custody, if determinable);
This is an action against defendants shipping company,
arrastre operator and broker-forwarder for damages 3. Whether or not defendant(s) should be held liable for the
sustained by a shipment while in defendants' custody, filed losses/damages (see plaintiff's pre-Trial Brief, Records, p.
by the insurer-subrogee who paid the consignee the value 34; Allied's pre-Trial Brief, adopting plaintiff's Records, p.
of such losses/damages. 38).

On December 4, 1981, two fiber drums of riboflavin were As to the first issue, there can be no doubt that the
shipped from Yokohama, Japan for delivery vessel "SS shipment sustained losses/damages. The two drums were
EASTERN COMET" owned by defendant Eastern Shipping shipped in good order and condition, as clearly shown by
Lines under Bill of Lading  the Bill of Lading and Commercial Invoice which do not
No. YMA-8 (Exh. B). The shipment was insured under indicate any damages drum that was shipped (Exhs. B and
plaintiff's Marine Insurance Policy No. 81/01177 for C). But when on December 12, 1981 the shipment was
P36,382,466.38. delivered to defendant Metro Port Service, Inc., it excepted
to one drum in bad order.
Upon arrival of the shipment in Manila on December 12,
1981, it was discharged unto the custody of defendant Correspondingly, as to the second issue, it follows that the
Metro Port Service, Inc. The latter excepted to one drum, losses/damages were sustained while in the respective
said to be in bad order, which damage was unknown to and/or successive custody and possession of defendants
plaintiff. carrier (Eastern), arrastre operator (Metro Port) and broker
(Allied Brokerage). This becomes evident when the Marine
On January 7, 1982 defendant Allied Brokerage Cargo Survey Report (Exh. G), with its "Additional Survey
Corporation received the shipment from defendant Metro Notes", are considered. In the latter notes, it is stated that
Port Service, Inc., one drum opened and without seal (per when the shipment was "landed on vessel" to dock of Pier #
"Request for Bad Order Survey." Exh. D). 15, South Harbor, Manila on December 12, 1981, it was
observed that "one (1) fiber drum (was) in damaged
On January 8 and 14, 1982, defendant Allied Brokerage condition, covered by the vessel's Agent's Bad Order Tally
Corporation made deliveries of the shipment to the Sheet No. 86427." The report further states that when
consignee's warehouse. The latter excepted to one drum defendant Allied Brokerage withdrew the shipment from
which contained spillages, while the rest of the contents defendant arrastre operator's custody on January 7, 1982,
was adulterated/fake (per "Bad Order Waybill" No. 10649, one drum was found opened without seal, cello bag partly
Exh. E). torn but contents intact. Net unrecovered spillages was 
15 kgs. The report went on to state that when the drums
Plaintiff contended that due to the losses/damage reached the consignee, one drum was found with
sustained by said drum, the consignee suffered losses adulterated/faked contents. It is obvious, therefore, that
totaling P19,032.95, due to the fault and negligence of these losses/damages occurred before the shipment
defendants. Claims were presented against defendants who reached the consignee while under the successive
failed and refused to pay the same (Exhs. H, I, J, K, L). custodies of defendants. Under Art. 1737 of the New Civil
Code, the common carrier's duty to observe extraordinary
As a consequence of the losses sustained, plaintiff was diligence in the vigilance of goods remains in full force and
compelled to pay the consignee P19,032.95 under the effect even if the goods are temporarily unloaded and
aforestated marine insurance policy, so that it became stored in transit in the warehouse of the carrier at the
subrogated to all the rights of action of said consignee place of destination, until the consignee has been advised
against defendants (per "Form of Subrogation", "Release" and has had reasonable opportunity to remove or dispose
and Philbanking check, Exhs. M, N, and O). (pp. 85- of the goods (Art. 1738, NCC). Defendant Eastern
86, Rollo.) Shipping's own exhibit, the "Turn-Over Survey of Bad
Order Cargoes" (Exhs. 3-Eastern) states that on December
12, 1981 one drum was found "open".
There were, to be sure, other factual issues that confronted
both courts. Here, the appellate court said:
and thus held:
 WHEREFORE, PREMISES CONSIDERED, judgment is damaged condition, a presumption arises against the carrier of its
hereby rendered: failure to observe that diligence, and there need not be an express
finding of negligence to hold it liable (Art. 1735, Civil Code;
A. Ordering defendants to pay plaintiff, jointly and Philippine National Railways vs. Court of Appeals, 139 SCRA 87;
severally: Metro Port Service vs. Court of Appeals, 131 SCRA 365). There
are, of course, exceptional cases when such presumption of fault
1. The amount of P19,032.95, with the present legal is not observed but these cases, enumerated in Article 1734 1 of
interest of 12% per annum from October 1, 1982, the date the Civil Code, are exclusive, not one of which can be applied to
of filing of this complaints, until fully paid (the liability of this case.
defendant Eastern Shipping, Inc. shall not exceed US$500
per case or the CIF value of the loss, whichever is lesser, The question of charging both the carrier and the arrastre
while the liability of defendant Metro Port Service, Inc. operator with the obligation of properly delivering the goods to the
shall be to the extent of the actual invoice value of each consignee has, too, been passed upon by the Court. In Fireman's
package, crate box or container in no case to exceed Fund Insurance vs. Metro Port Services (182 SCRA 455), we have
P5,000.00 each, pursuant to Section 6.01 of the explained, in holding the carrier and the arrastre operator liable
Management Contract); in solidum, thus:

2. P3,000.00 as attorney's fees, and The legal relationship between the consignee
and the arrastre operator is akin to that of a
3. Costs. depositor and warehouseman (Lua Kian v.
Manila Railroad Co., 19 SCRA 5 [1967]. The
B. Dismissing the counterclaims and crossclaim of relationship between the consignee and the
defendant/cross-claimant Allied Brokerage Corporation. common carrier is similar to that of the
consignee and the arrastre operator (Northern
SO ORDERED. (p. 207, Record). Motors, Inc. v. Prince Line, et al., 107 Phil. 253
[1960]). Since it is the duty of the ARRASTRE to
Dissatisfied, defendant's recourse to US. take good care of the goods that are in its
custody and to deliver them in good condition to
The appeal is devoid of merit. the consignee, such responsibility also devolves
upon the CARRIER. Both the ARRASTRE and
the CARRIER are therefore charged with the
After a careful scrutiny of the evidence on record. We find
obligation to deliver the goods in good condition
that the conclusion drawn therefrom is correct. As there is
to the consignee.
sufficient evidence that the shipment sustained damage
while in the successive possession of appellants, and
therefore they are liable to the appellee, as subrogee for the We do not, of course, imply by the above pronouncement that the
amount it paid to the consignee. (pp. 87-89, Rollo.) arrastre operator and the customs broker are themselves always
and necessarily liable solidarily with the carrier, or vice-versa, nor
that attendant facts in a given case may not vary the rule. The
The Court of Appeals thus affirmed in toto the judgment of
instant petition has been brought solely by Eastern Shipping
the court 
Lines, which, being the carrier and not having been able to rebut
a quo.
the presumption of fault, is, in any event, to be held liable in this
particular case. A factual finding of both the court a quo and the
In this petition, Eastern Shipping Lines, Inc., the common
appellate court, we take note, is that "there is sufficient evidence
carrier, attributes error and grave abuse of discretion on
that the shipment sustained damage while in the successive
the part of the appellate court when —
possession of appellants" (the herein petitioner among them).
Accordingly, the liability imposed on Eastern Shipping Lines, Inc.,
I. IT HELD PETITIONER CARRIER JOINTLY AND the sole petitioner in this case, is inevitable regardless of whether
SEVERALLY LIABLE WITH THE ARRASTRE OPERATOR there are others solidarily liable with it.
AND CUSTOMS BROKER FOR THE CLAIM OF PRIVATE
RESPONDENT AS GRANTED IN THE QUESTIONED
It is over the issue of legal interest adjudged by the appellate court
DECISION;
that deserves more than just a passing remark.
II. IT HELD THAT THE GRANT OF INTEREST ON THE
Let us first see a chronological recitation of the major rulings of
CLAIM OF PRIVATE RESPONDENT SHOULD COMMENCE
this Court:
FROM THE DATE OF THE FILING OF THE COMPLAINT AT
THE RATE OF TWELVE PERCENT PER ANNUM INSTEAD
The early case of Malayan Insurance Co., Inc., vs. Manila Port 
OF FROM THE DATE OF THE DECISION OF THE TRIAL
Service,2 decided3 on 15 May 1969, involved a suit for recovery of
COURT AND ONLY AT THE RATE OF SIX PERCENT PER
money arising out of short deliveries and pilferage of goods. In this
ANNUM, PRIVATE RESPONDENT'S CLAIM BEING
case, appellee Malayan Insurance (the plaintiff in the lower court)
INDISPUTABLY UNLIQUIDATED.
averred in its complaint that the total amount of its claim for the
value of the undelivered goods amounted to P3,947.20. This
The petition is, in part, granted.
demand, however, was neither established in its totality nor
definitely ascertained. In the stipulation of facts later entered into
In this decision, we have begun by saying that the questions by the parties, in lieu of proof, the amount of P1,447.51 was
raised by petitioner carrier are not all that novel. Indeed, we do agreed upon. The trial court rendered judgment ordering the
have a fairly good number of previous decisions this Court can appellants (defendants) Manila Port Service and Manila Railroad
merely tack to. Company to pay appellee Malayan Insurance the sum of
P1,447.51 with legal interest thereon from the date the complaint
The common carrier's duty to observe the requisite diligence in the was filed on 28 December 1962 until full payment thereof. The
shipment of goods lasts from the time the articles are surrendered appellants then assailed, inter alia, the award of legal interest. In
to or unconditionally placed in the possession of, and received by, sustaining the appellants, this Court ruled:
the carrier for transportation until delivered to, or until the lapse
of a reasonable time for their acceptance by, the person entitled to Interest upon an obligation which calls for the
receive them (Arts. 1736-1738, Civil Code; Ganzon vs. Court of payment of money, absent a stipulation, is the
Appeals, 161 SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52 legal rate. Such interest normally is allowable
Phil. 863). When the goods shipped either are lost or arrive in from the date of demand, judicial or
 extrajudicial. The trial court opted for judicial forbearance of any money, goods or credits. Any
demand as the starting point. other kind of monetary judgment which has
nothing to do with, nor involving loans or
But then upon the provisions of Article 2213 of forbearance of any money, goods or credits does
the Civil Code, interest "cannot be recovered not fall within the coverage of the said law for it
upon unliquidated claims or damages, except is not within the ambit of the authority granted
when the demand can be established with to the Central Bank.
reasonable certainty." And as was held by this
Court in Rivera vs. Perez,4 L-6998, February xxx xxx xxx
29, 1956, if the suit were for
damages, "unliquidated and not known until Coming to the case at bar, the decision herein
definitely ascertained, assessed and determined sought to be executed is one rendered in an
by the courts after proof (Montilla c. Corporacion Action for Damages for injury to persons and
de P.P. Agustinos, 25 Phil. 447; Lichauco loss of property and does not involve any loan,
v. Guzman,  much less forbearances of any money, goods or
38 Phil. 302)," then, interest "should be from credits. As correctly argued by the private
the date of the decision." (Emphasis supplied) respondents, the law applicable to the said case
is Article 2209 of the New Civil Code which
The case of Reformina vs. Tomol,5 rendered on 11 October 1985, reads —
was for "Recovery of Damages for Injury to Person and Loss of
Property." After trial, the lower court decreed: Art. 2209. — If the obligation consists in the
payment of a sum of money, and the debtor
WHEREFORE, judgment is hereby rendered in incurs in delay, the indemnity for damages,
favor of the plaintiffs and third party defendants there being no stipulation to the contrary, shall
and against the defendants and third party be the payment of interest agreed upon, and in
plaintiffs as follows: the absence of stipulation, the legal interest
which is six percent per annum.
Ordering defendants and third party plaintiffs
Shell and Michael, Incorporated to pay jointly The above rule was reiterated in Philippine Rabbit Bus Lines, Inc.,
and severally the following persons: v. Cruz,7 promulgated on 28 July 1986. The case was for damages
occasioned by an injury to person and loss of property. The trial
xxx xxx xxx court awarded private respondent Pedro Manabat actual and
compensatory damages in the amount of P72,500.00 with legal
(g) Plaintiffs Pacita F. Reformina and Francisco interest thereon from the filing of the complaint until fully paid.
Reformina the sum of P131,084.00 which is the Relying on the Reformina v. Tomol case, this Court8 modified the
value of the boat F B Pacita III together with its interest award from 12% to 6% interest per annum but sustained
accessories, fishing gear and equipment minus the time computation thereof, i.e., from the filing of the complaint
P80,000.00 which is the value of the insurance until fully paid.
recovered and the amount of P10,000.00 a
month as the estimated monthly loss suffered In Nakpil and Sons vs. Court of Appeals,9 the trial court, in an
by them as a result of the fire of May 6, 1969 up action for the recovery of damages arising from the collapse of a
to the time they are actually paid or already the building, ordered, 
total sum of P370,000.00 as of June 4, 1972 inter alia, the "defendant United Construction Co., Inc. (one of the
with legal interest from the filing of the complaint petitioners) 
until paid and to pay attorney's fees of . . . to pay the plaintiff, . . . , the sum of P989,335.68 with interest
P5,000.00 with costs against defendants and at the legal rate from November 29, 1968, the date of the filing of
third party plaintiffs. (Emphasis supplied.) the complaint until full payment . . . ." Save from the modification
of the amount granted by the lower court, the Court of Appeals
On appeal to the Court of Appeals, the latter modified the sustained the trial court's decision. When taken to this Court for
amount of damages awarded but sustained the trial review, the case, on 03 October 1986, was decided, thus:
court in adjudging legal interest from the filing of the
complaint until fully paid. When the appellate court's WHEREFORE, the decision appealed from is
decision became final, the case was remanded to the hereby MODIFIED and considering the special
lower court for execution, and this was when the trial and environmental circumstances of this case,
court issued its assailed resolution which applied the 6% we deem it reasonable to render a decision
interest per annum prescribed in Article 2209 of the Civil imposing, as We do hereby impose, upon the
Code. In their petition for review on certiorari, the defendant and the third-party defendants (with
petitioners contended that Central Bank Circular  the exception of Roman Ozaeta) a solidary (Art.
No. 416, providing thus — 1723, Civil Code, Supra. 
p. 10) indemnity in favor of the Philippine Bar
By virtue of the authority granted to it under Association of FIVE MILLION (P5,000,000.00)
Section 1 of Act 2655, as amended, Monetary Pesos to cover all damages (with the exception
Board in its Resolution No. 1622 dated July 29, to attorney's fees) occasioned by the loss of the
1974, has prescribed that the rate of interest for building (including interest charges and lost
the loan, or forbearance of any money, goods, or rentals) and an additional ONE HUNDRED
credits and the rate allowed in judgments, in THOUSAND (P100,000.00) Pesos as and for
the absence of express contract as to such rate attorney's fees, the total sum being payable
of interest, shall be twelve (12%) percent per upon the finality of this decision. Upon failure to
annum. This Circular shall take effect pay on such finality, twelve (12%) per cent
immediately. (Emphasis found in the text) — interest per annum shall be imposed upon
aforementioned amounts from finality until paid.
should have, instead, been applied. This Court 6 ruled: Solidary costs against the defendant and third-
party defendants (Except Roman Ozaeta).
The judgments spoken of and referred to are (Emphasis supplied)
judgments in litigations involving loans or
 A motion for reconsideration was filed by United and an entry of judgment was made. The writ of
Construction, contending that "the interest of twelve execution issued by the trial court directed that only
(12%) per cent per annum imposed on the total amount compensatory damages should earn interest at 6% per
of the monetary award was in contravention of law." The annum from the date of the filing of the complaint.
Court10 ruled out the applicability of the Reformina and Ascribing grave abuse of discretion on the part of the
Philippine Rabbit Bus Lines cases and, in its resolution trial judge, a petition for certiorari assailed the said
of 15 April 1988, it explained: order. This Court said:

There should be no dispute that the imposition . . . , it is to be noted that the Court of Appeals
of 12% interest pursuant to Central Bank ordered the payment of interest "at the legal
Circular No. 416 . . . is applicable only in the rate" from the time of the filing of the
following: (1) loans; (2) forbearance of any complaint. . . Said circular [Central Bank
money, goods or credit; and  Circular No. 416] does not apply to actions
(3) rate allowed in judgments (judgments based on a breach of employment contract like
spoken of refer to judgments involving loans or the case at bar. (Emphasis supplied)
forbearance of any money, goods or credits.
(Philippine Rabbit Bus Lines Inc. v. Cruz, 143 The Court reiterated that the 6% interest per annum on
SCRA 160-161 [1986]; Reformina v. Tomol, Jr., the damages should be computed from the time the
139 SCRA 260 [1985]). It is true that in the complaint was filed until the amount is fully paid.
instant case, there is neither a loan or a
forbearance, but then no interest is actually Quite recently, the Court had another occasion to rule on the
imposed provided the sums referred to in the matter. National Power Corporation vs. Angas,14decided on 08
judgment are paid upon the finality of the May 1992, involved the expropriation of certain parcels of land.
judgment. It is delay in the payment of such After conducting a hearing on the complaints for eminent
final judgment, that will cause the imposition of domain, the trial court ordered the petitioner to pay the private
the interest. respondents certain sums of money as just compensation for their
lands so expropriated "with legal interest thereon . . . until fully
It will be noted that in the cases already paid." Again, in applying the 6% legal interest per annum under
adverted to, the rate of interest is imposed on the Civil Code, the Court15 declared:
the total sum, from the filing of the complaint
until paid; in other words, as part of the . . . , (T)he transaction involved is clearly not a
judgment for damages. Clearly, they are not loan or forbearance of money, goods or credits
applicable to the instant case. (Emphasis but expropriation of certain parcels of land for a
supplied.) public purpose, the payment of which is
without stipulation regarding interest, and the
The subsequent case of American Express International, Inc., interest adjudged by the trial court is in the
vs. Intermediate Appellate Court11 was a petition for review nature of indemnity for damages. The legal
on certiorari from the decision, dated 27 February 1985, of the interest required to be paid on the amount of
then Intermediate Appellate Court reducing the amount of moral just compensation for the properties
and exemplary damages awarded by the trial court, to expropriated is manifestly in the form of
P240,000.00 and P100,000.00, respectively, and its resolution, indemnity for damages for the delay in the
dated 29 April 1985, restoring the amount of damages awarded by payment thereof. Therefore, since the kind of
the trial court, i.e., P2,000,000.00 as moral damages and interest involved in the joint judgment of the
P400,000.00 as exemplary damages with interest thereon at 12% lower court sought to be enforced in this case is
per annum from notice of judgment, plus costs of suit. In a decision interest by way of damages, and not by way of
of 09 November 1988, this Court, while recognizing the right of the earnings from loans, etc. Art. 2209 of the Civil
private respondent to recover damages, held the award, however, Code shall apply.
for moral damages by the trial court, later sustained by the IAC, to
be inconceivably large. The Court12 thus set aside the decision of Concededly, there have been seeming variances in the above
the appellate court and rendered a new one, "ordering the holdings. The cases can perhaps be classified into two groups
petitioner to pay private respondent the sum of One Hundred according to the similarity of the issues involved and the
Thousand (P100,000.00) Pesos as moral damages, with  corresponding rulings rendered by the court. The "first group"
six (6%) percent interest thereon computed from the finality of this would consist of the cases of Reformina v. Tomol (1985),
decision until paid. (Emphasis supplied) Philippine Rabbit Bus Lines v. Cruz (1986), Florendo
v. Ruiz (1989) 
Reformina came into fore again in the 21 February 1989 case and National Power Corporation v. Angas (1992). In the "second
of Florendo v. Ruiz13 which arose from a breach of employment group" would be Malayan Insurance Company v. Manila Port
contract. For having been illegally dismissed, the petitioner was Service (1969), Nakpil and Sons v. Court of
awarded by the trial court moral and exemplary damages without, Appeals (1988), and American Express International
however, providing any legal interest thereon. When the decision v. Intermediate Appellate Court (1988).
was appealed to the Court of Appeals, the latter held:
In the "first group", the basic issue focuses on the application of
WHEREFORE, except as modified hereinabove either the 6% (under the Civil Code) or 12% (under the Central
the decision of the CFI of Negros Oriental dated Bank Circular) interest per annum. It is easily discernible in these
October 31, 1972 is affirmed in all respects, cases that there has been a consistent holding that the Central
with the modification that defendants- Bank Circular imposing the 12% interest per annum applies only
appellants, except defendant-appellant Merton to loans or forbearance16 of money, goods or credits, as well as to
Munn, are ordered to pay, jointly and severally, judgments involving such loan or forbearance of money, goods or
the amounts stated in the dispositive portion of credits, and that the 6% interest under the Civil Code governs
the decision, including the sum of P1,400.00 in when the transaction involves the payment of indemnities in the
concept of compensatory damages, with interest concept of damage arising from the breach or a delay in the
at the legal rate from the date of the filing of the performance of obligations in general. Observe, too, that in these
complaint until fully paid (Emphasis supplied.) cases, a common time frame in the computation of the 6%
interest per annum has been applied, i.e., from the time the
The petition for review to this Court was denied. The complaint is filed until the adjudged amount is fully paid.
records were thereupon transmitted to the trial court,
The "second group", did not alter the pronounced rule on the 03 February 1988, of the court a quo. A TWELVE PERCENT (12%)
application of the 6% or 12% interest per annum,17depending on interest, in lieu of SIX PERCENT (6%), shall be imposed on such
whether or not the amount involved is a loan or forbearance, on amount upon finality of this decision until the payment thereof.
the one hand, or one of indemnity for damage, on the other hand.
Unlike, however, the "first group" which remained consistent in SO ORDERED.
holding that the running of the legal interest should be from the
time of the filing of the complaint until fully paid, the "second
group" varied on the commencement of the running of the legal
interest.

Malayan held that the amount awarded should bear legal interest

from the date of the decision of the court a quo, explaining that "if
the suit were for damages, 'unliquidated and not known until
definitely ascertained, assessed and determined by the courts
after proof,' then, interest 'should be from the date of the
decision.'" American Express International v. IAC, introduced a
different time frame for reckoning the 6% interest by ordering it to
be "computed from the finality of (the) decision until paid." The
Nakpil and Sons case ruled that 12% interest per annum should
be imposed from the finality of the decision until the judgment
amount is paid.

The ostensible discord is not difficult to explain. The factual

circumstances may have called for different applications, guided
by the rule that the courts are vested with discretion, depending
on the equities of each case, on the award of interest. Nonetheless,
it may not be unwise, by way of clarification and reconciliation, to
suggest the following rules of thumb for future guidance.

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

quasi-contracts, delicts or quasi-delicts18 is breached, the
contravenor can be held liable for damages. 19 The provisions
under Title XVIII on "Damages" of the Civil Code govern in
determining the measure of recoverable damages. 20

II. With regard particularly to an award of interest in the concept

of actual and compensatory damages, the rate of interest, as well
as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment

of a sum of money, i.e., a loan or forbearance of money, the
interest due should be that which may have been stipulated in
writing.21 Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. 22 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.

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 court24 at the rate
of 6% per annum.25 No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand
can be established with reasonable certainty. 26 Accordingly, where
the demand is established with reasonable certainty, the interest
shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money

becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a
forbearance of credit.

WHEREFORE, the petition is partly GRANTED. The appealed

decision is AFFIRMED with the MODIFICATION that the legal
interest to be paid is SIX PERCENT (6%) on the amount due
computed from the decision, dated 
 WHEREFORE, premises considered, judgment is hereby rendered
finding respondents guilty of constructive dismissal and are
therefore, ordered:

To pay jointly and severally the complainant the amount of sixty-

two thousand nine hundred eighty-six pesos and 56/100
G.R. No. 189871               August 13, 2013 (₱62,986.56) Pesos representing his separation pay;

DARIO NACAR, PETITIONER,  To pay jointly and severally the complainant the amount of nine
vs. (sic) five thousand nine hundred thirty-three and 36/100
GALLERY FRAMES AND/OR FELIPE BORDEY, (₱95,933.36) representing his backwages; and
JR., RESPONDENTS.
All other claims are hereby dismissed for lack of merit.
DECISION
SO ORDERED.4
PERALTA, J.:
Respondents appealed to the NLRC, but it was dismissed for lack
This is a petition for review on certiorari assailing the of merit in the Resolution5 dated February 29, 2000. Accordingly,
Decision1 dated September 23, 2008 of the Court of Appeals (CA) the NLRC sustained the decision of the Labor Arbiter.
in CA-G.R. SP No. 98591, and the Resolution 2 dated October 9, Respondents filed a motion for reconsideration, but it was denied. 6
2009 denying petitioner’s motion for reconsideration.
Dissatisfied, respondents filed a Petition for Review on Certiorari
The factual antecedents are undisputed. before the CA. On August 24, 2000, the CA issued a Resolution
dismissing the petition. Respondents filed a Motion for
Petitioner Dario Nacar filed a complaint for constructive dismissal Reconsideration, but it was likewise denied in a Resolution dated
before the Arbitration Branch of the National Labor Relations May 8, 2001.7
Commission (NLRC) against respondents Gallery Frames (GF)
and/or Felipe Bordey, Jr., docketed as NLRC NCR Case No. 01- Respondents then sought relief before the Supreme Court,
00519-97. docketed as G.R. No. 151332. Finding no reversible error on the
part of the CA, this Court denied the petition in the Resolution
On October 15, 1998, the Labor Arbiter rendered a Decision 3 in dated April 17, 2002.8
favor of petitioner and found that he was dismissed from
employment without a valid or just cause. Thus, petitioner was An Entry of Judgment was later issued certifying that the
awarded backwages and separation pay in lieu of reinstatement in resolution became final and executory on May 27, 2002. 9The case
the amount of ₱158,919.92. The dispositive portion of the was, thereafter, referred back to the Labor Arbiter. A pre-execution
decision, reads: conference was consequently scheduled, but respondents failed to
appear.10
With the foregoing, we find and so rule that respondents failed to
discharge the burden of showing that complainant was dismissed On November 5, 2002, petitioner filed a Motion for Correct
from employment for a just or valid cause. All the more, it is clear Computation, praying that his backwages be computed from the
from the records that complainant was never afforded due process date of his dismissal on January 24, 1997 up to the finality of the
before he was terminated. As such, we are perforce constrained to Resolution of the Supreme Court on May 27, 2002. 11 Upon
grant complainant’s prayer for the payments of separation pay in recomputation, the Computation and Examination Unit of the
lieu of reinstatement to his former position, considering the NLRC arrived at an updated amount in the sum of ₱471,320.31.12
strained relationship between the parties, and his apparent
reluctance to be reinstated, computed only up to promulgation of On December 2, 2002, a Writ of Execution 13 was issued by the
this decision as follows: Labor Arbiter ordering the Sheriff to collect from respondents the
total amount of ₱471,320.31. Respondents filed a Motion to
Quash Writ of Execution, arguing, among other things, that since
SEPARATION PAY
the Labor Arbiter awarded separation pay of ₱62,986.56 and
Date Hired = August 1990 limited backwages of ₱95,933.36, no more recomputation is
required to be made of the said awards. They claimed that after
Rate = ₱198/day the decision becomes final and executory, the same cannot be
Date of Decision = Aug. 18, 1998 altered or amended anymore.14 On January 13, 2003, the Labor
Arbiter issued an Order15 denying the motion. Thus, an Alias Writ
Length of Service = 8 yrs. & 1 month of Execution16 was issued on January 14, 2003.
₱198.00 x 26 days x 8 months = ₱41,184.00 Respondents again appealed before the NLRC, which on June 30,
BACKWAGES 2003 issued a Resolution 17 granting the appeal in favor of the
respondents and ordered the recomputation of the judgment
Date Dismissed = January 24, 1997 award.
Rate per day = ₱196.00
On August 20, 2003, an Entry of Judgment was issued declaring
Date of Decisions = Aug. 18, 1998 the Resolution of the NLRC to be final and executory.
Consequently, another pre-execution conference was held, but
a) 1/24/97 to 2/5/98 = 12.36 mos. respondents failed to appear on time. Meanwhile, petitioner moved
₱196.00/day x 12.36 mos. = ₱62,986.56 that an Alias Writ of Execution be issued to enforce the earlier
recomputed judgment award in the sum of ₱471,320.31.18
b) 2/6/98 to 8/18/98 = 6.4 months
The records of the case were again forwarded to the Computation
Prevailing Rate per day = ₱62,986.00
and Examination Unit for recomputation, where the judgment
₱198.00 x 26 days x 6.4 mos. = ₱32,947.20 award of petitioner was reassessed to be in the total amount of
only ₱147,560.19.
TOTAL = ₱95.933.76
xxxx
Petitioner then moved that a writ of execution be issued ordering On their part, respondents assert that since only separation pay
respondents to pay him the original amount as determined by the and limited backwages were awarded to petitioner by the October
Labor Arbiter in his Decision dated October 15, 1998, pending the 15, 1998 decision of the Labor Arbiter, no more recomputation is
final computation of his backwages and separation pay. required to be made of said awards. Respondents insist that since
the decision clearly stated that the separation pay and backwages
On January 14, 2003, the Labor Arbiter issued an Alias Writ of are "computed only up to [the] promulgation of this decision," and
Execution to satisfy the judgment award that was due to considering that petitioner no longer appealed the decision,
petitioner in the amount of ₱147,560.19, which petitioner petitioner is only entitled to the award as computed by the Labor
eventually received. Arbiter in the total amount of ₱158,919.92. Respondents added
that it was only during the execution proceedings that the
Petitioner then filed a Manifestation and Motion praying for the re- petitioner questioned the award, long after the decision had
computation of the monetary award to include the appropriate become final and executory. Respondents contend that to allow
interests.19 the further recomputation of the backwages to be awarded to
petitioner at this point of the proceedings would substantially vary
On May 10, 2005, the Labor Arbiter issued an Order 20 granting the decision of the Labor Arbiter as it violates the rule on
the motion, but only up to the amount of ₱11,459.73. The Labor immutability of judgments.
Arbiter reasoned that it is the October 15, 1998 Decision that
should be enforced considering that it was the one that became The petition is meritorious.
final and executory. However, the Labor Arbiter reasoned that
since the decision states that the separation pay and backwages The instant case is similar to the case of Session Delights Ice
are computed only up to the promulgation of the said decision, it Cream and Fast Foods v. Court of Appeals (Sixth
is the amount of ₱158,919.92 that should be executed. Thus, Division),27 wherein the issue submitted to the Court for resolution
since petitioner already received ₱147,560.19, he is only entitled was the propriety of the computation of the awards made, and
to the balance of ₱11,459.73. whether this violated the principle of immutability of judgment.
Like in the present case, it was a distinct feature of the judgment
Petitioner then appealed before the NLRC, 21 which appeal was of the Labor Arbiter in the above-cited case that the decision
denied by the NLRC in its Resolution22 dated September 27, 2006. already provided for the computation of the payable separation
Petitioner filed a Motion for Reconsideration, but it was likewise pay and backwages due and did not further order the computation
denied in the Resolution23dated January 31, 2007. of the monetary awards up to the time of the finality of the
judgment. Also in Session Delights, the dismissed employee failed
Aggrieved, petitioner then sought recourse before the CA, docketed to appeal the decision of the labor arbiter. The Court clarified,
as CA-G.R. SP No. 98591. thus:

On September 23, 2008, the CA rendered a Decision 24 denying the In concrete terms, the question is whether a re-computation in the
petition. The CA opined that since petitioner no longer appealed course of execution of the labor arbiter's original computation of
the October 15, 1998 Decision of the Labor Arbiter, which already the awards made, pegged as of the time the decision was rendered
became final and executory, a belated correction thereof is no and confirmed with modification by a final CA decision, is legally
longer allowed. The CA stated that there is nothing left to be done proper. The question is posed, given that the petitioner did not
except to enforce the said judgment. Consequently, it can no immediately pay the awards stated in the original labor arbiter's
longer be modified in any respect, except to correct clerical errors decision; it delayed payment because it continued with the
or mistakes. litigation until final judgment at the CA level.

Petitioner filed a Motion for Reconsideration, but it was denied in A source of misunderstanding in implementing the final decision
the Resolution25 dated October 9, 2009. in this case proceeds from the way the original labor arbiter
framed his decision. The decision consists essentially of two parts.
Hence, the petition assigning the lone error:
The first is that part of the decision that cannot now be disputed
I because it has been confirmed with finality. This is the finding of
the illegality of the dismissal and the awards of separation pay in
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS lieu of reinstatement, backwages, attorney's fees, and legal
SERIOUSLY ERRED, COMMITTED GRAVE ABUSE OF interests.
DISCRETION AND DECIDED CONTRARY TO LAW IN UPHOLDING
THE QUESTIONED RESOLUTIONS OF THE NLRC WHICH, IN The second part is the computation of the awards made. On its
TURN, SUSTAINED THE MAY 10, 2005 ORDER OF LABOR face, the computation the labor arbiter made shows that it was
ARBITER MAGAT MAKING THE DISPOSITIVE PORTION OF THE time-bound as can be seen from the figures used in the
OCTOBER 15, 1998 DECISION OF LABOR ARBITER LUSTRIA computation. This part, being merely a computation of what the
SUBSERVIENT TO AN OPINION EXPRESSED IN THE BODY OF first part of the decision established and declared, can, by its
THE SAME DECISION.26 nature, be re-computed. This is the part, too, that the petitioner
now posits should no longer be re-computed because the
Petitioner argues that notwithstanding the fact that there was a computation is already in the labor arbiter's decision that the CA
computation of backwages in the Labor Arbiter’s decision, the had affirmed. The public and private respondents, on the other
same is not final until reinstatement is made or until finality of hand, posit that a re-computation is necessary because the relief
the decision, in case of an award of separation pay. Petitioner in an illegal dismissal decision goes all the way up to
maintains that considering that the October 15, 1998 decision of reinstatement if reinstatement is to be made, or up to the finality
the Labor Arbiter did not become final and executory until the of the decision, if separation pay is to be given in lieu
April 17, 2002 Resolution of the Supreme Court in G.R. No. reinstatement.
151332 was entered in the Book of Entries on May 27, 2002, the
reckoning point for the computation of the backwages and That the labor arbiter's decision, at the same time that it found
separation pay should be on May 27, 2002 and not when the that an illegal dismissal had taken place, also made a
decision of the Labor Arbiter was rendered on October 15, 1998. computation of the award, is understandable in light of Section 3,
Further, petitioner posits that he is also entitled to the payment of Rule VIII of the then NLRC Rules of Procedure which requires that
interest from the finality of the decision until full payment by the a computation be made. This Section in part states:
respondents.
[T]he Labor Arbiter of origin, in cases involving monetary awards
and at all events, as far as practicable, shall embody in any such
decision or order the detailed and full amount awarded.
Clearly implied from this original computation is its currency up Finally, anent the payment of legal interest. In the landmark case
to the finality of the labor arbiter's decision. As we noted above, of Eastern Shipping Lines, Inc. v. Court of Appeals, 32 the Court
this implication is apparent from the terms of the computation laid down the guidelines regarding the manner of computing legal
itself, and no question would have arisen had the parties interest, to wit:
terminated the case and implemented the decision at that point.
II. With regard particularly to an award of interest in the concept
However, the petitioner disagreed with the labor arbiter's findings of actual and compensatory damages, the rate of interest, as well
on all counts - i.e., on the finding of illegality as well as on all the as the accrual thereof, is imposed, as follows:
consequent awards made. Hence, the petitioner appealed the case
to the NLRC which, in turn, affirmed the labor arbiter's decision. 1. When the obligation is breached, and it consists in the
By law, the NLRC decision is final, reviewable only by the CA on payment of a sum of money, i.e., a loan or forbearance of
jurisdictional grounds. money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due
The petitioner appropriately sought to nullify the NLRC decision shall itself earn legal interest from the time it is judicially
on jurisdictional grounds through a timely filed Rule 65 petition demanded. In the absence of stipulation, the rate of
for certiorari. The CA decision, finding that NLRC exceeded its interest shall be 12% per annum to be computed from
authority in affirming the payment of 13th month pay and default, i.e., from judicial or extrajudicial demand under
indemnity, lapsed to finality and was subsequently returned to the and subject to the provisions of Article 1169 of the Civil
labor arbiter of origin for execution. Code.

It was at this point that the present case arose. Focusing on the 2. When an obligation, not constituting a loan or
core illegal dismissal portion of the original labor arbiter's forbearance of money, is breached, an interest on the
decision, the implementing labor arbiter ordered the award re- amount of damages awarded may be imposed at the
computed; he apparently read the figures originally ordered to be discretion of the court at the rate of 6% per annum. No
paid to be the computation due had the case been terminated and interest, however, shall be adjudged on unliquidated
implemented at the labor arbiter's level. Thus, the labor arbiter re- claims or damages except when or until the demand can
computed the award to include the separation pay and the be established with reasonable certainty. Accordingly,
backwages due up to the finality of the CA decision that fully where the demand is established with reasonable
terminated the case on the merits. Unfortunately, the labor certainty, the interest shall begin to run from the time
arbiter's approved computation went beyond the finality of the CA the claim is made judicially or extrajudicially (Art. 1169,
decision (July 29, 2003) and included as well the payment for Civil Code) but when such certainty cannot be so
awards the final CA decision had deleted - specifically, the reasonably established at the time the demand is made,
proportionate 13th month pay and the indemnity awards. Hence, the interest shall begin to run only from the date the
the CA issued the decision now questioned in the present petition. judgment of the court is made (at which time the
quantification of damages may be deemed to have been
We see no error in the CA decision confirming that a re- reasonably ascertained). The actual base for the
computation is necessary as it essentially considered the labor computation of legal interest shall, in any case, be on the
arbiter's original decision in accordance with its basic component amount finally adjudged.
parts as we discussed above. To reiterate, the first part contains
the finding of illegality and its monetary consequences; the second 3. When the judgment of the court awarding a sum of
part is the computation of the awards or monetary consequences money becomes final and executory, the rate of legal
of the illegal dismissal, computed as of the time of the labor interest, whether the case falls under paragraph 1 or
arbiter's original decision.28 paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being
Consequently, from the above disquisitions, under the terms of deemed to be by then an equivalent to a forbearance of
the decision which is sought to be executed by the petitioner, no credit.33
essential change is made by a recomputation as this step is a
necessary consequence that flows from the nature of the illegality Recently, however, the Bangko Sentral ng Pilipinas Monetary
of dismissal declared by the Labor Arbiter in that decision. 29 A Board (BSP-MB), in its Resolution No. 796 dated May 16, 2013,
recomputation (or an original computation, if no previous approved the amendment of Section 234 of Circular No. 905, Series
computation has been made) is a part of the law – specifically, of 1982 and, accordingly, issued Circular No. 799, 35 Series of
Article 279 of the Labor Code and the established jurisprudence 2013, effective July 1, 2013, the pertinent portion of which reads:
on this provision – that is read into the decision. By the nature of
an illegal dismissal case, the reliefs continue to add up until full The Monetary Board, in its Resolution No. 796 dated 16 May
satisfaction, as expressed under Article 279 of the Labor Code. 2013, approved the following revisions governing the rate of
The recomputation of the consequences of illegal dismissal upon interest in the absence of stipulation in loan contracts, thereby
execution of the decision does not constitute an alteration or amending Section 2 of Circular No. 905, Series of 1982:
amendment of the final decision being implemented. The illegal
dismissal ruling stands; only the computation of monetary Section 1. The rate of interest for the loan or forbearance of any
consequences of this dismissal is affected, and this is not a money, goods or credits and the rate allowed in judgments, in the
violation of the principle of immutability of final judgments. 30 absence of an express contract as to such rate of interest, shall be
six percent (6%) per annum.
That the amount respondents shall now pay has greatly increased
is a consequence that it cannot avoid as it is the risk that it ran Section 2. In view of the above, Subsection X305.1 36 of the Manual
when it continued to seek recourses against the Labor Arbiter's of Regulations for Banks and Sections 4305Q.1, 37 4305S.338 and
decision. Article 279 provides for the consequences of illegal 4303P.139 of the Manual of Regulations for Non-Bank Financial
dismissal in no uncertain terms, qualified only by jurisprudence Institutions are hereby amended accordingly.
in its interpretation of when separation pay in lieu of
reinstatement is allowed. When that happens, the finality of the This Circular shall take effect on 1 July 2013.
illegal dismissal decision becomes the reckoning point instead of
the reinstatement that the law decrees. In allowing separation pay, Thus, from the foregoing, in the absence of an express stipulation
the final decision effectively declares that the employment as to the rate of interest that would govern the parties, the rate of
relationship ended so that separation pay and backwages are to legal interest for loans or forbearance of any money, goods or
be computed up to that point.31 credits and the rate allowed in judgments shall no longer be twelve
percent (12%) per annum - as reflected in the case of Eastern
Shipping Lines40and Subsection X305.1 of the Manual of period being deemed to be by then an equivalent to a forbearance
Regulations for Banks and Sections 4305Q.1, 4305S.3 and of credit.
4303P.1 of the Manual of Regulations for Non-Bank Financial
Institutions, before its amendment by BSP-MB Circular No. 799 - And, in addition to the above, judgments that have become final
but will now be six percent (6%) per annum effective July 1, 2013. and executory prior to July 1, 2013, shall not be disturbed and
It should be noted, nonetheless, that the new rate could only be shall continue to be implemented applying the rate of interest
applied prospectively and not retroactively. Consequently, the fixed therein.
twelve percent (12%) per annum legal interest shall apply only
until June 30, 2013. Come July 1, 2013 the new rate of six WHEREFORE, premises considered, the Decision dated September
percent (6%) per annum shall be the prevailing rate of interest 23, 2008 of the Court of Appeals in CA-G.R. SP No. 98591, and
when applicable. the Resolution dated October 9, 2009 are REVERSED and SET
ASIDE. Respondents are Ordered to Pay petitioner:
Corollarily, in the recent case of Advocates for Truth in Lending,
Inc. and Eduardo B. Olaguer v. Bangko Sentral Monetary (1) backwages computed from the time petitioner was
Board,41 this Court affirmed the authority of the BSP-MB to set illegally dismissed on January 24, 1997 up to May 27,
interest rates and to issue and enforce Circulars when it ruled 2002, when the Resolution of this Court in G.R. No.
that "the BSP-MB may prescribe the maximum rate or rates of 151332 became final and executory;
interest for all loans or renewals thereof or the forbearance of any
money, goods or credits, including those for loans of low priority (2) separation pay computed from August 1990 up to
such as consumer loans, as well as such loans made by May 27, 2002 at the rate of one month pay per year of
pawnshops, finance companies and similar credit institutions. It service; and
even authorizes the BSP-MB to prescribe different maximum rate
or rates for different types of borrowings, including deposits and (3) interest of twelve percent (12%) per annum of the total
deposit substitutes, or loans of financial intermediaries." monetary awards, computed from May 27, 2002 to June
30, 2013 and six percent (6%) per annum from July 1,
Nonetheless, with regard to those judgments that have become 2013 until their full satisfaction.
final and executory prior to July 1, 2013, said judgments shall not
be disturbed and shall continue to be implemented applying the The Labor Arbiter is hereby ORDERED to make another
rate of interest fixed therein.1awp++i1 recomputation of the total monetary benefits awarded and due to
petitioner in accordance with this Decision.
To recapitulate and for future guidance, the guidelines laid down
in the case of Eastern Shipping Lines42 are accordingly modified to SO ORDERED.
embody BSP-MB Circular No. 799, as follows:

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

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

II. With regard particularly to an award of interest in the

concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as
follows:

When the obligation is breached, and it consists in the payment of

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

When an obligation, not constituting a loan or forbearance of

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

When the judgment of the court awarding a sum of money

becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 6%
per annum from such finality until its satisfaction, this interim
 arrange for the payment of the amount to the extent of
the hospitalization benefit.

c. The limitations and restrictions listed in Annex "B"

must be observed.

d. Payment shall be direct to the hospital and doctor and

must be covered by actual billings.
G.R. No. 175773               June 17, 2013
Each employee shall pay one hundred pesos (₱100.00) per month
MITSUBISHI MOTORS PHILIPPINES SALARIED EMPLOYEES through salary deduction as his share in the payment of the
UNION (MMPSEU), Petitioner,  insurance premium for the above coverage with the balance of the
vs. premium to be paid by the COMPANY. If the COMPANY is self-
MITSUBISHI MOTORS PHILIPPINES insured the one hundred pesos (₱100.00) per employee monthly
CORPORATION, Respondent. contribution shall be given to the COMPANY which shall shoulder
the expenses subject to the above level of benefits and subject to
DECISION the same limitations and restrictions provided for in Annex "B"
hereof.
DEL CASTILLO, J.:
The hospitalization expenses must be covered by actual hospital
The Collective Bargaining Agreement (CBA) of the parties in this and doctor’s bills and any amount in excess of the above
case provides that the company shoulder the hospitalization mentioned level of benefits will be for the account of the employee.
expenses of the dependents of covered employees subject to
certain limitations and restrictions. Accordingly, covered For purposes of this provision, eligible dependents are the covered
employees pay part of the hospitalization insurance premium employees’ natural parents, legal spouse and legitimate or legally
through monthly salary deduction while the company, upon adopted or step children who are unmarried, unemployed who
hospitalization of the covered employees' dependents, shall pay have not attained twenty-one (21) years of age and wholly
the hospitalization expenses incurred for the same. The conflict dependent upon the employee for support.
arose when a portion of the hospitalization expenses of the
covered employees' dependents were paid/shouldered by the This provision applies only in cases of actual confinement in the
dependent's own health insurance. While the company refused to hospital for at least six (6) hours.
pay the portion of the hospital expenses already shouldered by the
dependents' own health insurance, the union insists that the Maternity cases are not covered by this section but will be under
covered employees are entitled to the whole and undiminished the next succeeding section on maternity benefits. 6
amount of said hospital expenses.
When the CBA expired on July 31, 1999, the parties executed
By this Petition for Review on Certiorari, 1 petitioner Mitsubishi another CBA7 effective August 1, 1999 to July 31, 2002
Motors Philippines Salaried Employees Union (MMPSEU) assails incorporating the same provisions on dependents’ hospitalization
the March 31, 2006 Decision2 and December 5, 2006 insurance benefits but in the increased amount of ₱50,000.00.
Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 75630, The room and board expenses, as well as the doctor’s call fees,
which reversed and set aside the Voluntary Arbitrator’s December were also increased to ₱375.00.
3, 2002 Decision4 and declared respondent Mitsubishi Motors
Philippines Corporation (MMPC) to be under no legal obligation to On separate occasions, three members of MMPSEU, namely,
pay its covered employees’ dependents’ hospitalization expenses Ernesto Calida (Calida), Hermie Juan Oabel (Oabel) and Jocelyn
which were already shouldered by other health insurance Martin (Martin), filed claims for reimbursement of hospitalization
companies. expenses of their dependents.

Factual Antecedents MMPC paid only a portion of their hospitalization insurance

claims, not the full amount. In the case of Calida, his wife, Lanie,
The parties’ CBA5 covering the period August 1, 1996 to July 31, was confined at Sto. Tomas University Hospital from September 4
1999 provides for the hospitalization insurance benefits for the to 9, 1998 due to Thyroidectomy. The medical expenses incurred
covered dependents, thus: totalled ₱29,967.10. Of this amount, ₱9,000.00 representing
professional fees was paid by MEDICard Philippines, Inc.
SECTION 4. DEPENDENTS’ GROUP HOSPITALIZATION (MEDICard) which provides health maintenance to Lanie. 8 MMPC
INSURANCE – The COMPANY shall obtain group hospitalization only paid ₱12,148.63.9 It did not pay the ₱9,000.00 already paid
insurance coverage or assume under a self-insurance basis by MEDICard and the ₱6,278.47 not covered by official receipts. It
hospitalization for the dependents of regular employees up to a refused to give to Calida the difference between the amount of
maximum amount of forty thousand pesos (₱40,000.00) per medical expenses of ₱27,427.1010 which he claimed to be entitled
confinement subject to the following: to under the CBA and the ₱12,148.63 which MMPC directly paid
to the hospital.
a. The room and board must not exceed three hundred
pesos (₱300.00) per day up to a maximum of thirty-one In the case of Martin, his father, Jose, was admitted at The
(31) days. Similarly, Doctor’s Call fees must not exceed Medical City from March 26 to 27, 2000 due to Acid Peptic
three hundred pesos (₱300.00) per day for a maximum of Disease and incurred medical expenses amounting to
thirty-one (31) days. Any excess of this amount shall be ₱9,101.30.14 MEDICard paid ₱8,496.00.15Consequently, MMPC
borne by the employee. only paid ₱288.40,16 after deducting from the total medical
expenses the amount paid by MEDICard and the ₱316.90
b. Confinement must be in a hospital designated by the discount given by the hospital.
COMPANY. For this purpose, the COMPANY shall
designate hospitals in different convenient places to be Claiming that under the CBA, they are entitled to hospital benefits
availed of by the dependents of employees. In cases of amounting to ₱27,427.10, ₱6,769.35 and ₱8,123.80, respectively,
emergency where the dependent is confined without the which should not be reduced by the amounts paid by MEDICard
recommendation of the company doctor or in a hospital and by Prosper, Calida, Oabel and Martin asked for
not designated by the COMPANY, the COMPANY shall reimbursement from MMPC. However, MMPC denied the claims
look into the circumstances of such confinement and contending that double insurance would result if the said
employees would receive from the company the full amount of of the same reimbursable amount of medical expenses under a
hospitalization expenses despite having already received payment contract of health or medical insurance.
of portions thereof from other health insurance providers.
We wish to opine that in cases of claims for reimbursement of
This prompted the MMPSEU President to write the MMPC medical expenses where there are two contracts providing benefits
President17 demanding full payment of the hospitalization benefits. to that effect, recovery may be had on both simultaneously. In the
Alleging discrimination against MMPSEU union members, she absence of an Other Insurance provision in these coverages, the
pointed out that full reimbursement was given in a similar claim courts have uniformly held that an insured is entitled to receive
filed by Luisito Cruz (Cruz), a member of the Hourly Union. In a the insurance benefits without regard to the amount of total
letter-reply,18 MMPC, through its Vice-President for Industrial benefits provided by other insurance. (INSURANCE LAW, A Guide
Relations Division, clarified that the claims of the said MMPSEU to Fundamental Principles, Legal Doctrines, and Commercial
members have already been paid on the basis of official receipts Practices; Robert E. Keeton, Alau I. Widiss, p. 261). The result is
submitted. It also denied the charge of discrimination and consistent with the public policy underlying the collateral source
explained that the case of Cruz involved an entirely different rule – that is, x x x the courts have usually concluded that the
matter since it concerned the admissibility of certified true copies liability of a health or accident insurer is not reduced by other
of documents for reimbursement purposes, which case had been possible sources of indemnification or compensation. (ibid).
settled through voluntary arbitration.
Very truly yours,
On August 28, 2000, MMPSEU referred the dispute to the
National Conciliation and Mediation Board and requested for RICHARD DAVID C. FUNK II
preventive mediation.19 Officer-in-Charge
Claims Adjudication Division
Proceedings before the Voluntary Arbitrator
(SGD.)
On October 3, 2000, the case was referred to Voluntary Arbitrator Attorney IV
Rolando Capocyan for resolution of the issue involving the
interpretation of the subject CBA provision. 20 On December 3, 2002, the Voluntary Arbitrator rendered a
Decision27 finding MMPC liable to pay or reimburse the amount of
MMPSEU alleged that there is nothing in the CBA which prohibits hospitalization expenses already paid by other health insurance
an employee from obtaining other insurance or declares that companies. The Voluntary Arbitrator held that the employees may
medical expenses can be reimbursed only upon presentation of demand simultaneous payment from both the CBA and their
original official receipts. It stressed that the hospitalization dependents’ separate health insurance without resulting to double
benefits should be computed based on the formula indicated in insurance, since separate premiums were paid for each contract.
the CBA without deducting the benefits derived from other He also noted that the CBA does not prohibit reimbursement in
insurance providers. Besides, if reduction is permitted, MMPC case there are other health insurers.
would be unjustly benefited from the monthly premium
contributed by the employees through salary deduction. MMPSEU Proceedings before the Court of Appeals
added that its members had legitimate claims under the CBA and
that any doubt as to any of its provisions should be resolved in MMPC filed a Petition for Review with Prayer for the Issuance of a
favor of its members. Moreover, any ambiguity should be resolved Temporary Restraining Order and/or Writ of Preliminary
in favor of labor.21 Injunction28 before the CA. It claimed that the Voluntary Arbitrator
committed grave abuse of discretion in not finding that recovery
On the other hand, MMPC argued that the reimbursement of the under both insurance policies constitutes double insurance as
entire amounts being claimed by the covered employees, including both had the same subject matter, interest insured and risk or
those already paid by other insurance companies, would peril insured against; in relying solely on the unauthorized legal
constitute double indemnity or double insurance, which is opinion of Atty. Funk; and in not finding that the employees will
circumscribed under the Insurance Code. Moreover, a contract of be benefited twice for the same loss. In its Comment, 29 MMPSEU
insurance is a contract of indemnity and the employees cannot be countered that MMPC will unjustly enrich itself and profit from
allowed to profit from their dependents’ loss. 22 the monthly premiums paid if full reimbursement is not made.

Meanwhile, the parties separately sought for a legal opinion from On March 31, 2006, the CA found merit in MMPC’s Petition. It
the Insurance Commission relative to the issue at hand. In its ruled that despite the lack of a provision which bars recovery in
letter23 to the Insurance Commission, MMPC requested for case of payment by other insurers, the wordings of the subject
confirmation of its position that the covered employees cannot provision of the CBA showed that the parties intended to make
claim insurance benefits for a loss that had already been covered MMPC liable only for expenses actually incurred by an employee’s
or paid by another insurance company. However, the Office of the qualified dependent. In particular, the provision stipulates that
Insurance Commission opted not to render an opinion on the payment should be made directly to the hospital and that the
matter as the same may become the subject of a formal complaint claim should be supported by actual hospital and doctor’s bills.
before it.24 On the other hand, when queried by MMPSEU, 25the These mean that the employees shall only be paid amounts not
Insurance Commission, through Atty. Richard David C. Funk II covered by other health insurance and is more in keeping with the
(Atty. Funk) of the Claims Adjudication Division, rendered an principle of indemnity in insurance contracts. Besides, a contrary
opinion contained in a letter, 26 viz: interpretation would "allow unscrupulous employees to unduly
profit from the x x x benefits" and shall "open the floodgates to
Ms. Cecilia L. ParasPresident questionable claims x x x."30
Mitsubishi Motors Phils.
The dispositive portion of the CA Decision 31 reads:
[Salaried] Employees Union
Ortigas Avenue Extension, WHEREFORE, the instant petition is GRANTED. The decision of
Cainta, Rizal the voluntary arbitrator dated December 3, 2002 is REVERSED
and SET ASIDE and judgment is rendered declaring that under
Madam: Art. XI, Sec. 4 of the Collective Bargaining Agreement between
petitioner and respondent effective August 1, 1999 to July 31,
We acknowledge receipt of your letter which, to our impression, 2002, the former’s obligation to reimburse the Union members for
basically poses the question of whether or not recovery of medical the hospitalization expenses incurred by their dependents is
expenses from a Health Maintenance Organization bars recovery exclusive of those paid by the Union members to the hospital.
SO ORDERED.32 The Petition has no merit.

In its Motion for Reconsideration,33 MMPSEU pointed out that the Atty. Funk erred in applying the
alleged oppression that may be committed by abusive employees is collateral source rule.
a mere possibility whereas the resulting losses to the employees
are real. MMPSEU cited Samsel v. Allstate Insurance The Voluntary Arbitrator based his ruling on the opinion of Atty.
Co.,34 wherein the Arizona Supreme Court explicitly ruled that an Funk that the employees may recover benefits from different
insured may recover from separate health insurance providers, insurance providers without regard to the amount of benefits paid
regardless of whether one of them has already paid the medical by each. According to him, this view is consistent with the theory
expenses incurred. On the other hand, MMPC argued in its of the collateral source rule.
Comment35 that the cited foreign case involves a different set of
facts. As part of American personal injury law, the collateral source rule
was originally applied to tort cases wherein the defendant is
36
The CA, in its Resolution  dated December 5, 2006, denied prevented from benefiting from the plaintiff’s receipt of money
MMPSEU’s motion. from other sources.38 Under this rule, if an injured person receives
compensation for his injuries from a source wholly independent of
Hence, this Petition. the tortfeasor, the payment should not be deducted from the
damages which he would otherwise collect from the tortfeasor. 39 In
Issues a recent Decision40 by the Illinois Supreme Court, the rule has
been described as "an established exception to the general rule
MMPSEU presented the following grounds in support of its that damages in negligence actions must be compensatory." The
Petition: Court went on to explain that although the rule appears to allow a
double recovery, the collateral source will have a lien or
A. subrogation right to prevent such a double recovery. 41 In Mitchell
v. Haldar,42 the collateral source rule was rationalized by the
THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT Supreme Court of Delaware:
REVERSED THE DECISION DATED 03 [DECEMBER] 2002 OF
THE VOLUNTARY ARBITRATOR BELOW WHEN THE SAME WAS The collateral source rule is ‘predicated on the theory that a
SUPPORTED BY SUBSTANTIAL EVIDENCE, INCLUDING THE tortfeasor has no interest in, and therefore no right to benefit from
OPINION OF THE INSURANCE COMMISSION THAT RECOVERY monies received by the injured person from sources unconnected
FROM BOTH THE CBA AND SEPARATE HEALTH CARDS IS NOT with the defendant’. According to the collateral source rule, ‘a
PROHIBITED IN THE ABSENCE OF ANY SPECIFIC PROVISION IN tortfeasor has no right to any mitigation of damages because of
THE CBA. payments or compensation received by the injured person from an
independent source.’ The rationale for the collateral source rule is
B. based upon the quasi-punitive nature of tort law liability. It has
been explained as follows:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
OVERTURNING THE DECISION OF THE VOLUNTARY The collateral source rule is designed to strike a balance between
ARBITRATOR WITHOUT EVEN GIVING ANY LEGAL OR two competing principles of tort law: (1) a plaintiff is entitled to
JUSTIFIABLE BASIS FOR SUCH REVERSAL. compensation sufficient to make him whole, but no more; and (2)
a defendant is liable for all damages that proximately result from
C. his wrong. A plaintiff who receives a double recovery for a single
tort enjoys a windfall; a defendant who escapes, in whole or in
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN part, liability for his wrong enjoys a windfall. Because the law
REFUSING TO CONSIDER OR EVEN MENTION ANYTHING must sanction one windfall and deny the other, it favors the victim
ABOUT THE AMERICAN AUTHORITIES CITED IN THE RECORDS of the wrong rather than the wrongdoer.
THAT DO NOT PROHIBIT, BUT IN FACT ALLOW, RECOVERY
FROM TWO SEPARATE HEALTH PLANS. Thus, the tortfeasor is required to bear the cost for the full value
of his or her negligent conduct even if it results in a windfall for
D. the innocent plaintiff. (Citations omitted)

THE COURT OF APPEALS GRAVELY ERRED IN GIVING MORE As seen, the collateral source rule applies in order to place the
IMPORTANCE TO A POSSIBLE, HENCE MERELY SPECULATIVE, responsibility for losses on the party causing them. 43Its
ABUSE BY EMPLOYEES OF THE BENEFITS IF DOUBLE application is justified so that "'the wrongdoer should not benefit
RECOVERY WERE ALLOWED INSTEAD OF THE REAL INJURY TO from the expenditures made by the injured party or take
THE EMPLOYEES WHO ARE PAYING FOR THE CBA advantage of contracts or other relations that may exist between
HOSPITALIZATION BENEFITS THROUGH MONTHLY SALARY the injured party and third persons."44Thus, it finds no application
DEDUCTIONS BUT WHO MAY NOT BE ABLE TO AVAIL OF THE to cases involving no-fault insurances under which the insured is
SAME IF THEY OR THEIR DEPENDENTS HAVE OTHER HEALTH indemnified for losses by insurance companies, regardless of who
INSURANCE.37 was at fault in the incident generating the losses. 45 Here, it is clear
that MMPC is a no-fault insurer. Hence, it cannot be obliged to
pay the hospitalization expenses of the dependents of its
MMPSEU avers that the Decision of the Voluntary Arbitrator
employees which had already been paid by separate health
deserves utmost respect and finality because it is supported by
insurance providers of said dependents.
substantial evidence and is in accordance with the opinion
rendered by the Insurance Commission, an agency equipped with
vast knowledge concerning insurance contracts. It maintains that The Voluntary Arbitrator therefore erred in adopting Atty. Funk’s
under the CBA, member-employees are entitled to full view that the covered employees are entitled to full payment of the
reimbursement of medical expenses incurred by their dependents hospital expenses incurred by their dependents, including the
regardless of any amounts paid by the latter’s health insurance amounts already paid by other health insurance companies based
provider. Otherwise, non-recovery will constitute unjust on the theory of collateral source rule.
enrichment on the part of MMPC. It avers that recovery from both
the CBA and other insurance companies is allowed under their The conditions set forth in the CBA provision indicate an intention
CBA and not prohibited by law nor by jurisprudence. to limit MMPC’s liability only to actual expenses incurred by the
employees’ dependents, that is, excluding the amounts paid by
Our Ruling dependents’ other health insurance providers.
The Voluntary Arbitrator ruled that the CBA has no express Moreover, since the subject CBA provision is an insurance
provision barring claims for hospitalization expenses already paid contract, the rights and obligations of the parties must be
by other insurers. Hence, the covered employees can recover from determined in accordance with the general principles of insurance
both. The CA did not agree, saying that the conditions set forth in law.52 Being in the nature of a non-life insurance contract and
the CBA implied an intention of the parties to limit MMPC’s essentially a contract of indemnity, the CBA provision obligates
liability only to the extent of the expenses actually incurred by MMPC to indemnify the covered employees’ medical expenses
their dependents which excludes the amounts shouldered by other incurred by their dependents but only up to the extent of the
health insurance companies. expenses actually incurred.53 This is consistent with the principle
of indemnity which proscribes the insured from recovering greater
We agree with the CA. The condition that payment should be than the loss.54 Indeed, to profit from a loss will lead to unjust
direct to the hospital and doctor implies that MMPC is only liable enrichment and therefore should not be countenanced. As aptly
to pay medical expenses actually shouldered by the employees’ ruled by the CA, to grant the claims of MMPSEU will permit
dependents. It follows that MMPC’s liability is limited, that is, it possible abuse by employees.
does not include the amounts paid by other health insurance
providers. This condition is obviously intended to thwart not only WHEREFORE, the Petition is DENIED. The Decision dated March
fraudulent claims but also double claims for the same loss of the 31, 2006 and Resolution dated December 5, 2006 of the Court of
dependents of covered employees. Appeals in CA-G.R. SP No. 75630, are AFFIRMED.

It is well to note at this point that the CBA constitutes a contract SO ORDERED.
between the parties and as such, it should be strictly construed
for the purpose of limiting the amount of the employer’s MARIANO C. DEL 
liability.46 The terms of the subject provision are clear and provide
no room for any other interpretation. As there is no ambiguity, the
terms must be taken in their plain, ordinary and popular
sense.47 Consequently, MMPSEU cannot rely on the rule that a
contract of insurance is to be liberally construed in favor of the
insured. Neither can it rely on the theory that any doubt must be
resolved in favor of labor.

Samsel v. Allstate Insurance Co. is not

on all fours with the case at bar.

MMPSEU cannot rely on Samsel v. Allstate Insurance Co. where

the Supreme Court of Arizona allowed the insured to enjoy
medical benefits under an automobile policy insurance despite
being able to also recover from a separate health insurer. In that
case, the Allstate automobile policy does not contain any clause
restricting medical payment coverage to expenses actually paid by
the insured nor does it specifically provide for reduction of medical
payments benefits by a coordination of benefits. 48 However, in the
case before us, the dependents’ group hospitalization insurance
provision in the CBA specifically contains a condition which limits
MMPC’s liability only up to the extent of the expenses that should
be paid by the covered employee’s dependent to the hospital and
doctor. This is evident from the portion which states that
"payment by MMPC shall be direct to the hospital and doctor." 49 In
contrast, the Allstate automobile policy expressly gives Allstate the
authority to pay directly to the insured person or on the latter’s
behalf all reasonable expenses actually incurred. Therefore,
reliance on Samsel is unavailing because the facts therein are
different and not decisive of the issues in the present case.

To allow reimbursement of amounts paid

under other insurance policies shall
constitute double recovery which is not
sanctioned by law.

MMPSEU insists that MMPC is also liable for the amounts covered
under other insurance policies; otherwise, MMPC will unjustly
profit from the premiums the employees contribute through
monthly salary deductions.

This contention is unmeritorious.

To constitute unjust enrichment, it must be shown that a party

was unjustly enriched in the sense that the term unjustly could
mean illegally or unlawfully. 50 A claim for unjust enrichment fails
when the person who will benefit has a valid claim to such
benefit.51

The CBA has provided for MMPC’s limited liability which extends
only up to the amount to be paid to the hospital and doctor by the
employees’ dependents, excluding those paid by other insurers.
Consequently, the covered employees will not receive more than
what is due them; neither is MMPC under any obligation to give
more than what is due under the CBA.
 SO ORDERED.2

On appeal by D. M. Consunji, the Court of Appeals (CA) affirmed

the decision of the RTC in toto.

D. M. Consunji now seeks the reversal of the CA decision on the

G.R. No. 137873       April 20, 2001 following grounds:

D. M. CONSUNJI, INC., petitioner,   THE APPELLATE COURT ERRED IN HOLDING

vs. THAT THE POLICE REPORT WAS ADMISSIBLE
COURT OF APPEALS and MARIA J. JUEGO, respondents. EVIDENCE OF THE ALLEGED NEGLIGENCE
OF PETITIONER.
KAPUNAN, J.:
 THE APPELLATE COURT ERRED IN HOLDING
At around 1:30 p.m., November 2, 1990, Jose Juego, a THAT THE DOCTRINE OF RES IPSA
construction worker of D. M. Consunji, Inc., fell 14 floors from the LOQUITOR [sic] IS APPLICABLE TO PROVE
Renaissance Tower, Pasig City to his death. NEGLIGENCE ON THE PART OF PETITIONER.

PO3 Rogelio Villanueva of the Eastern Police District investigated  THE APPELLATE COURT ERRED IN HOLDING
the tragedy and filed a report dated November 25, 1990, stating THAT PETITIONER IS PRESUMED NEGLIGENT
that: UNDER ARTICLE 2180 OF THE CIVIL CODE,
AND
x x x. [The] [v]ictim was rushed to [the] Rizal Medical
Center in Pasig, Metro Manila where he was pronounced  THE APPELLATE COURT ERRED IN HOLDING
dead on arrival (DOA) by the attending physician, Dr. THAT RESPONDENT IS NOT PRECLUDED
Errol de Yzo[,] at around 2:15 p.m. of the same date. FROM RECOVERING DAMAGES UNDER THE
CIVIL CODE.3
Investigation disclosed that at the given time, date and
place, while victim Jose A. Juego together with Jessie Petitioner maintains that the police report reproduced above is
Jaluag and Delso Destajo [were] performing their work as hearsay and, therefore, inadmissible. The CA ruled otherwise. It
carpenter[s] at the elevator core of the 14 th floor of the held that said report, being an entry in official records, is an
Tower D, Renaissance Tower Building on board a exception to the hearsay rule.
[p]latform made of channel beam (steel) measuring 4.8
meters by 2 meters wide with pinulid plywood flooring The Rules of Court provide that a witness can testify only to those
and cable wires attached to its four corners and hooked facts which he knows of his personal knowledge, that is, which are
at the 5 ton chain block, when suddenly, the bolt or pin derived from his perception.4 A witness, therefore, may not testify
which was merely inserted to connect the chain block as what he merely learned from others either because he was told
with the [p]latform, got loose xxx causing the whole or read or heard the same. Such testimony is considered hearsay
[p]latform assembly and the victim to fall down to the and may not be received as proof of the truth of what he has
basement of the elevator core, Tower D of the building learned.5 This is known as the hearsay rule.
under construction thereby crushing the victim of death,
save his two (2) companions who luckily jumped out for Hearsay is not limited to oral testimony or statements; the general
safety. rule that excludes hearsay as evidence applies to written, as well
as oral statements.6
It is thus manifest that Jose A. Juego was crushed to
death when the [p]latform he was then on board and The theory of the hearsay rule is that the many possible
performing work, fell. And the falling of the [p]latform deficiencies, suppressions, sources of error and
was due to the removal or getting loose of the pin which untrustworthiness, which lie underneath the bare untested
was merely inserted to the connecting points of the chain assertion of a witness, may be best brought to light and exposed
block and [p]latform but without a safety lock. 1 by the test of cross-examiantion.7 The hearsay rule, therefore,
excludes evidence that cannot be tested by cross-examination. 8
On May 9, 1991, Jose Juego’s widow, Maria, filed in the Regional
Trial Court (RTC) of Pasig a complaint for damages against the The Rules of Court allow several exceptions to the rule, 9 among
deceased’s employer, D.M. Consunji, Inc. The employer raised, which are entries in official records. Section 44, Rule 130
among other defenses, the widow’s prior availment of the benefits provides:
from the State Insurance Fund.
Entries in official records made in the performance of his
After trial, the RTC rendered a decision in favor of the widow duty made in the performance of his duty by a public
Maria Juego. The dispositive portion of the RTC decision reads: officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law
WHEREFORE, judgment is hereby rendered ordering are prima facie evidence of the facts therein stated.
defendant to pay plaintiff, as follows:
In Africa, et al. vs. Caltex (Phil.), Inc., et al.,10 this Court, citing the
1. P50,000.00 for the death of Jose A. Juego. work of Chief Justice Moran, enumerated the requisites for
admissibility under the above rule:
2. P10,000.00 as actual and compensatory
damages. (a) that the entry was made by a public officer or by
another person specially enjoined by law to do so;
3. P464,000.00 for the loss of Jose A. Juego’s
earning capacity. (b) that it was made by the public officer in the
performance of his duties, or by such other person in the
4. P100,000.00 as moral damages. performance of a duty specially enjoined by law; and

5. P20,000.00 as attorney’s fees, plus the costs (c) that the public officer or other person had sufficient
of suit. knowledge of the facts by him stated, which must have
 been acquired by him personally or through official discharge their several trusts with accuracy and
information. fidelity; and, therefore, whatever acts they do in
discharge of their duty may be given in evidence
The CA held that the police report meets all these requisites. and shall be taken to be true under such a
Petitioner contends that the last requisite is not present. degree of caution as to the nature and
circumstances of each case may appear to
The Court notes that PO3 Villanueva, who signed the report in require.
question, also testified before the trial court. In Rodriguez vs.
Court of Appeals,11 which involved a Fire Investigation Report, the It would have been an entirely different matter if Major
officer who signed the fire report also testified before the trial Enriquez was not presented to testify on his report. In
court. This Court held that the report was inadmissible for the that case the applicability of Section 44 of Rule 143
purpose of proving the truth of the statements contained in the would have been ripe for determination, and this Court
report but admissible insofar as it constitutes part of the would have agreed with the Court of Appeals that said
testimony of the officer who executed the report. report was inadmissible since the aforementioned third
requisite was not satisfied. The statements given by the
x x x. Since Major Enriquez himself took the witness sources of information of Major Enriquez failed to qualify
stand and was available for cross-examination, the as "official information," there being no showing that, at
portions of the report which were of his personal the very least, they were under a duty to give the
knowledge or which consisted of his perceptions and statements for record.
conclusions were not hearsay. The rest of the report,
such as the summary of the statements of the parties Similarly, the police report in this case is inadmissible for the
based on their sworn statements (which were annexed to purpose of proving the truth of the statements contained therein
the Report) as well as the latter, having been included in but is admissible insofar as it constitutes part of the testimony of
the first purpose of the offer [as part of the testimony of PO3 Villanueva.
Major Enriquez], may then be considered
as independently relevant statements which were In any case, the Court holds that portions of PO3 Villanueva’s
gathered in the course of the investigation and may thus testimony which were of his personal knowledge suffice to prove
be admitted as such, but not necessarily to prove the that Jose Juego indeed died as a result of the elevator crash. PO3
truth thereof. It has been said that: Villanueva had seen Juego’s remains at the morgue, 12 making the
latter’s death beyond dispute. PO3 Villanueva also conducted an
"Where regardless of the truth or falsity of a ocular inspection of the premises of the building the day after the
statement, the fact that it has been made is incident13 and saw the platform for himself.14 He observed that the
relevant, the hearsay rule does not apply, but platform was crushed15 and that it was totally damaged.16 PO3
the statement may be shown. Evidence as to the Villanueva also required Garcia and Fabro to bring the chain
making of such statement is not secondary but block to the police headquarters. Upon inspection, he noticed that
primary, for the statement itself may constitute the chain was detached from the lifting machine, without any pin
a fact in issue, or be circumstantially relevant or bolt.17
as to the existence of such a fact."
What petitioner takes particular exception to is PO3 Villanueva’s
When Major Enriquez took the witness stand, testified for testimony that the cause of the fall of the platform was the
petitioners on his Report and made himself available for loosening of the bolt from the chain block. It is claimed that such
cross-examination by the adverse party, the Report, portion of the testimony is mere opinion. Subject to certain
insofar as it proved that certain utterances were made exceptions,18 the opinion of a witness is generally not admissible. 19
(but not their truth), was effectively removed from the
ambit of the aforementioned Section 44 of Rule 130. Petitioner’s contention, however, loses relevance in the face of the
Properly understood, this section does away with the application of res ipsa loquitur by the CA. The effect of the doctrine
testimony in open court of the officer who made the is to warrant a presumption or inference that the mere fall of the
official record, considers the matter as an exception to elevator was a result of the person having charge of the
the hearsay rule and makes the entries in said official instrumentality was negligent. As a rule of evidence, the doctrine
record admissible in evidence as prima facie evidence of of res ipsa loquitur is peculiar to the law of negligence which
the facts therein stated. The underlying reasons for this recognizes that prima facie negligence may be established without
exceptionary rule are necessity and trustworthiness, as direct proof and furnishes a substitute for specific proof of
explained in Antillon v. Barcelon. negligence.20

The litigation is unlimited in which testimony by The concept of res ipsa loquitur has been explained in this wise:
officials is daily needed; the occasions in which
the officials would be summoned from his While negligence is not ordinarily inferred or presumed,
ordinary duties to declare as a witness are and while the mere happening of an accident or injury
numberless. The public officers are few in will not generally give rise to an inference or presumption
whose daily work something is not done in that it was due to negligence on defendant’s part, under
which testimony is not needed from official the doctrine of res ipsa loquitur, which means, literally,
sources. Were there no exception for official the thing or transaction speaks for itself, or in one
statements, hosts of officials would be found jurisdiction, that the thing or instrumentality speaks for
devoting the greater part of their time to itself, the facts or circumstances accompanying an injury
attending as witnesses in court or delivering may be such as to raise a presumption, or at least permit
deposition before an officer. The work of an inference of negligence on the part of the defendant,
administration of government and the interest or some other person who is charged with negligence.
of the public having business with officials
would alike suffer in consequence. For these x x x where it is shown that the thing or instrumentality
reasons, and for many others, a certain verity is which caused the injury complained of was under the
accorded such documents, which is not control or management of the defendant, and that the
extended to private documents. (3 Wigmore on occurrence resulting in the injury was such as in the
Evidence, Sec. 1631). ordinary course of things would not happen if those who
had its control or management used proper care, there is
The law reposes a particular confidence in sufficient evidence, or, as sometimes stated, reasonable
public officers that it presumes they will evidence, in the absence of explanation by the defendant,
 that the injury arose from or was caused by the the last requisite is also present. All the requisites for the
defendant’s want of care.21 application of the rule of res ipsa loquitur are present,
thus a reasonable presumption or inference of
One of the theoretical based for the doctrine is its necessity, i.e., appellant’s negligence arises. x x x. 24
that necessary evidence is absent or not available. 22
Petitioner does not dispute the existence of the requisites for the
The res ipsa loquitur doctrine is based in part upon the application of res ipsa loquitur, but argues that the presumption or
theory that the defendant in charge of the inference that it was negligent did not arise since it "proved that it
instrumentality which causes the injury either knows the exercised due care to avoid the accident which befell respondent’s
cause of the accident or has the best opportunity of husband."
ascertaining it and that the plaintiff has no such
knowledge, and therefore is compelled to allege Petitioner apparently misapprehends the procedural effect of the
negligence in general terms and to rely upon the proof of doctrine. As stated earlier, the defendant’s negligence is presumed
the happening of the accident in order to establish or inferred25 when the plaintiff establishes the requisites for the
negligence. The inference which the doctrine permits is application of res ipsa loquitur. Once the plaintiff makes out a
grounded upon the fact that the chief evidence of the prima facie case of all the elements, the burden then shifts to
true cause, whether culpable or innocent, is practically defendant to explain.26 The presumption or inference may be
accessible to the defendant but inaccessible to the rebutted or overcome by other evidence and, under appropriate
injured person. circumstances disputable presumption, such as that of due care
or innocence, may outweigh the inference. 27 It is not for the
It has been said that the doctrine of res ipsa loquitur defendant to explain or prove its defense to prevent the
furnishes a bridge by which a plaintiff, without presumption or inference from arising. Evidence by the defendant
knowledge of the cause, reaches over to defendant who of say, due care, comes into play only after the circumstances for
knows or should know the cause, for any explanation of the application of the doctrine has been established.1âwphi1.nêt
care exercised by the defendant in respect of the matter
of which the plaintiff complains. The res ipsa loquitur In any case, petitioner cites the sworn statement of its leadman
doctrine, another court has said, is a rule of necessity, in Ferdinand Fabro executed before the police investigator as
that it proceeds on the theory that under the peculiar evidence of its due care. According to Fabro’s sworn statement,
circumstances in which the doctrine is applicable, it is the company enacted rules and regulations for the safety and
within the power of the defendant to show that there was security of its workers. Moreover, the leadman and
no negligence on his part, and direct proof of defendant’s the bodegero inspect the chain block before allowing its use.
negligence is beyond plaintiff’s power. Accordingly, some
court add to the three prerequisites for the application of It is ironic that petitioner relies on Fabro’s sworn statement as
the res ipsa loquitur doctrine the further requirement proof of its due care but, in arguing that private respondent failed
that for the res ipsa loquitur doctrine to apply, it must to prove negligence on the part of petitioner’s employees, also
appear that the injured party had no knowledge or assails the same statement for being hearsay.
means of knowledge as to the cause of the accident, or
that the party to be charged with negligence has superior Petitioner is correct. Fabro’s sworn statement is hearsay and
knowledge or opportunity for explanation of the inadmissible. Affidavits are inadmissible as evidence under the
accident.23 hearsay rule, unless the affiant is placed on the witness stand to
testify thereon.28 The inadmissibility of this sort of evidence is
The CA held that all the requisites of res ipsa loquitur are present based not only on the lack of opportunity on the part of the
in the case at bar: adverse party to cross-examine the affiant, but also on the
commonly known fact that, generally, an affidavit is not prepared
There is no dispute that appellee’s husband fell down by the affiant himself but by another who uses his own language
from the 14th floor of a building to the basement while he in writing the affiant’s statements which may either be omitted or
was working with appellant’s construction project, misunderstood by the one writing them.29 Petitioner, therefore,
resulting to his death. The construction site is within the cannot use said statement as proof of its due care any more than
exclusive control and management of appellant. It has a private respondent can use it to prove the cause of her husband’s
safety engineer, a project superintendent, a carpenter death. Regrettably, petitioner does not cite any other evidence to
leadman and others who are in complete control of the rebut the inference or presumption of negligence arising from the
situation therein. The circumstances of any accident that application of res ipsa loquitur, or to establish any defense relating
would occur therein are peculiarly within the knowledge to the incident.
of the appellant or its employees. On the other hand, the
appellee is not in a position to know what caused the Next, petitioner argues that private respondent had previously
accident. Res ipsa loquitur is a rule of necessity and it availed of the death benefits provided under the Labor Code and
applies where evidence is absent or not readily available, is, therefore, precluded from claiming from the deceased’s
provided the following requisites are present: (1) the employer damages under the Civil Code.
accident was of a kind which does not ordinarily occur
unless someone is negligent; (2) the instrumentality or Article 173 of the Labor Code states:
agency which caused the injury was under the exclusive
control of the person charged with negligence; and (3) the Article 173. Extent of liability. – Unless otherwise
injury suffered must not have been due to any voluntary provided, the liability of the State Insurance Fund under
action or contribution on the part of the person injured. this Title shall be exclusive and in place of all other
x x x. liabilities of the employer to the employee, his
dependents or anyone otherwise entitled to receive
No worker is going to fall from the 14th floor of a building damages on behalf of the employee or his dependents.
to the basement while performing work in a construction The payment of compensation under this Title shall not
site unless someone is negligent[;] thus, the first bar the recovery of benefits as provided for in Section
requisite for the application of the rule of res ipsa 699 of the Revised Administrative Code, Republic Act
loquitur is present. As explained earlier, the construction Numbered Eleven hundred sixty-one, as amended,
site with all its paraphernalia and human resources that Republic Act Numbered Six hundred ten, as amended,
likely caused the injury is under the exclusive control Republic Act Numbered Forty-eight hundred sixty-four
and management of appellant[;] thus[,] the second as amended, and other laws whose benefits are
requisite is also present. No contributory negligence was administered by the System or by other agencies of the
attributed to the appellee’s deceased husband[;] thus[,] government.
The precursor of Article 173 of the Labor Code, Section 5 of the WE hold that although the other petitioners had received
Workmen’s Compensation Act, provided that: the benefits under the Workmen’s Compensation Act,
such my not preclude them from bringing an action
Section 5. Exclusive right to compensation. – The rights before the regular court because they became cognizant
and remedies granted by this Act to an employee by of the fact that Philex has been remiss in its contractual
reason of a personal injury entitling him to compensation obligations with the deceased miners only after receiving
shall exclude all other rights and remedies accruing to compensation under the Act. Had petitioners been aware
the employee, his personal representatives, dependents of said violation of government rules and regulations by
or nearest of kin against the employer under the Civil Philex, and of its negligence, they would not have sought
Code and other laws because of said injury x x x. redress under the Workmen’s Compensation Commission
which awarded a lesser amount for compensation. The
Whether Section 5 of the Workmen’s Compensation Act allowed choice of the first remedy was based on ignorance or a
recovery under said Act as well as under the Civil Code used to be mistake of fact, which nullifies the choice as it was not
the subject of conflicting decisions. The Court finally settled the an intelligent choice. The case should therefore be
matter in Floresca vs.Philex Mining Corporation,30 which involved a remanded to the lower court for further proceedings.
cave-in resulting in the death of the employees of the Philex However, should the petitioners be successful in their bid
Mining Corporation. Alleging that the mining corporation, in before the lower court, the payments made under the
violation of government rules and regulations, failed to take the Workmen’s Compensation Act should be deducted from
required precautions for the protection of the employees, the heirs the damages that may be decreed in their favor.
of the deceased employees filed a complaint against Philex Mining [Underscoring supplied.]
in the Court of First Instance (CFI). Upon motion of Philex Mining,
the CFI dismissed the complaint for lack of jurisdiction. The heirs The ruling in Floresca providing the claimant a choice of remedies
sought relief from this Court. was reiterated in Ysmael Maritime Corporation vs. Avelino,32 Vda.
De Severo vs. Feliciano-Go,33 and Marcopper Mining Corp. vs.
Addressing the issue of whether the heirs had a choice of Abeleda.34 In the last case, the Court again recognized that a
remedies, majority of the Court En Banc,31 following the rule claimant who had been paid under the Act could still sue under
in Pacaña vs. Cebu Autobus Company, held in the affirmative. the Civil Code. The Court said:

WE now come to the query as to whether or not the In the Robles case, it was held that claims for damages
injured employee or his heirs in case of death have a sustained by workers in the course of their employment
right of selection or choice of action between availing could be filed only under the Workmen’s Compensation
themselves of the worker’s right under the Workmen’s Law, to the exclusion of all further claims under other
Compensation Act and suing in the regular courts under laws. In Floresca, this doctrine was abrogated in favor of
the Civil Code for higher damages (actual, moral and the new rule that the claimants may invoke either the
exemplary) from the employers by virtue of the negligence Workmen’s Compensation Act or the provisions of the
or fault of the employers or whether they may avail Civil Code, subject to the consequence that the choice of
themselves cumulatively of both actions, i.e., collect the one remedy will exclude the other and that the
limited compensation under the Workmen’s acceptance of compensation under the remedy chosen
Compensation Act and sue in addition for damages in the will preclude a claim for additional benefits under the
regular courts. other remedy. The exception is where a claimant who has
already been paid under the Workmen’s Compensation
In disposing of a similar issue, this Court in Pacaña vs. Act may still sue for damages under the Civil Code on the
Cebu Autobus Company, 32 SCRA 442, ruled that an basis of supervening facts or developments occurring
injured worker has a choice of either to recover from the after he opted for the first remedy. (Underscoring
employer the fixed amounts set by the Workmen’s supplied.)
Compensation Act or to prosecute an ordinary civil action
against the tortfeasor for higher damages but he cannot Here, the CA held that private respondent’s case came under the
pursue both courses of action simultaneously. exception because private respondent was unaware of petitioner’s
[Underscoring supplied.] negligence when she filed her claim for death benefits from the
State Insurance Fund. Private respondent filed the civil complaint
Nevertheless, the Court allowed some of the petitioners in said for damages after she received a copy of the police investigation
case to proceed with their suit under the Civil Code despite having report and the Prosecutor’s Memorandum dismissing the criminal
availed of the benefits provided under the Workmen’s complaint against petitioner’s personnel. While stating that there
Compensation Act. The Court reasoned: was no negligence attributable to the respondents in the
complaint, the prosecutor nevertheless noted in the Memorandum
With regard to the other petitioners, it was alleged by that, "if at all," the "case is civil in nature." The CA thus applied
Philex in its motion to dismiss dated May 14, 1968 before the exception in Floresca:
the court a quo, that the heirs of the deceased
employees, namely Emerito Obra, Larry Villar, Jr., x x x We do not agree that appellee has knowledge of the
Aurelio Lanuza, Lorenzo Isla and Saturnino submitted alleged negligence of appellant as early as November 25,
notices and claims for compensation to the Regional 1990, the date of the police investigator’s report. The
Office No. 1 of the then Department of Labor and all of appellee merely executed her sworn statement before the
them have been paid in full as of August 25, 1967, police investigator concerning her personal
except Saturnino Martinez whose heirs decided that they circumstances, her relation to the victim, and her
be paid in installments x x x. Such allegation was knowledge of the accident. She did not file the complaint
admitted by herein petitioners in their opposition to the for "Simple Negligence Resulting to Homicide" against
motion to dismiss dated may 27, 1968 x x x in the lower appellant’s employees. It was the investigator who
court, but they set up the defense that the claims were recommended the filing of said case and his supervisor
filed under the Workmen’s Compensation Act before they referred the same to the prosecutor’s office. This is a
learned of the official report of the committee created to standard operating procedure for police investigators
investigate the accident which established the criminal which appellee may not have even known. This may
negligence and violation of law by Philex, and which explain why no complainant is mentioned in the
report was forwarded by the Director of Mines to then preliminary statement of the public prosecutor in her
Executive Secretary Rafael Salas in a letter dated October memorandum dated February 6, 1991, to wit:
19, 1967 only x x x. "Respondent Ferdinand Fabro x x x are being charged by
complainant of "Simple Negligence Resulting to
 Homicide." It is also possible that the appellee did not [It] is an act of understanding that presupposes that a
have a chance to appear before the public prosecutor as party has knowledge of its rights, but chooses not to
can be inferred from the following statement in said assert them. It must be generally shown by the party
memorandum: "Respondents who were notified pursuant claiming a waiver that the person against whom the
to Law waived their rights to present controverting waiver is asserted had at the time knowledge, actual or
evidence," thus there was no reason for the public constructive, of the existence of the party’s rights or of all
prosecutor to summon the appellee. Hence, notice of material facts upon which they depended. Where one
appellant’s negligence cannot be imputed on appellee lacks knowledge of a right, there is no basis upon which
before she applied for death benefits under ECC or before waiver of it can rest. Ignorance of a material fact negates
she received the first payment therefrom. Her using the waiver, and waiver cannot be established by a consent
police investigation report to support her complaint filed given under a mistake or misapprehension of fact.
on May 9, 1991 may just be an afterthought after
receiving a copy of the February 6, 1991 Memorandum of A person makes a knowing and intelligent waiver when
the Prosecutor’s Office dismissing the criminal complaint that person knows that a right exists and has adequate
for insufficiency of evidence, stating therein that: "The knowledge upon which to make an intelligent decision.
death of the victim is not attributable to any negligence
on the part of the respondents. If at all and as shown by Waiver requires a knowledge of the facts basic to the
the records this case is civil in nature." (Underscoring exercise of the right waived, with an awareness of its
supplied.) Considering the foregoing, We are more consequences. That a waiver is made knowingly and
inclined to believe appellee’s allegation that she learned intelligently must be illustrated on the record or by the
about appellant’s negligence only after she applied for evidence.40
and received the benefits under ECC. This is a mistake of
fact that will make this case fall under the exception held That lack of knowledge of a fact that nullifies the election of a
in the Floresca ruling.35 remedy is the basis for the exception in Floresca.

The CA further held that not only was private respondent ignorant It is in light of the foregoing principles that we address petitioner’s
of the facts, but of her rights as well: contentions.

x x x. Appellee [Maria Juego] testified that she has Waiver is a defense, and it was not incumbent upon private
reached only elementary school for her educational respondent, as plaintiff, to allege in her complaint that she had
attainment; that she did not know what damages could availed of benefits from the ECC. It is, thus, erroneous for
be recovered from the death of her husband; and that petitioner to burden private respondent with raising waiver as an
she did not know that she may also recover more from issue. On the contrary, it is the defendant who ought to plead
the Civil Code than from the ECC. x x x.36 waiver, as petitioner did in pages 2-3 of its Answer; 41 otherwise,
the defense is waived. It is, therefore, perplexing for petitioner to
Petitioner impugns the foregoing rulings. It contends that private now contend that the trial court had no jurisdiction over the issue
respondent "failed to allege in her complaint that her application when petitioner itself pleaded waiver in the proceedings before the
and receipt of benefits from the ECC were attended by ignorance trial court.
or mistake of fact. Not being an issue submitted during the trial,
the trial court had no authority to hear or adjudicate that issue." Does the evidence show that private respondent knew of the facts
that led to her husband’s death and the rights pertaining to a
Petitioner also claims that private respondent could not have been choice of remedies?
ignorant of the facts because as early as November 28, 1990,
private respondent was the complainant in a criminal complaint It bears stressing that what negates waiver is lack of knowledge or
for "Simple Negligence Resulting to Homicide" against petitioner’s a mistake of fact. In this case, the "fact" that served as a basis for
employees. On February 6, 1991, two months before the filing of nullifying the waiver is the negligence of petitioner’s employees, of
the action in the lower court, Prosecutor Lorna Lee issued a which private respondent purportedly learned only after the
resolution finding that, although there was insufficient evidence prosecutor issued a resolution stating that there may be civil
against petitioner’s employees, the case was "civil in nature." liability. In Floresca, it was the negligence of the mining
These purportedly show that prior to her receipt of death benefits corporation and its violation of government rules and regulations.
from the ECC on January 2, 1991 and every month thereafter, Negligence, or violation of government rules and regulations, for
private respondent also knew of the two choices of remedies that matter, however, is not a fact, but a conclusion of law, over
available to her and yet she chose to claim and receive the benefits which only the courts have the final say. Such a conclusion binds
from the ECC. no one until the courts have decreed so. It appears, therefore, that
the principle that ignorance or mistake of fact nullifies a waiver
When a party having knowledge of the facts makes an election has been misapplied in Floresca and in the case at bar.
between inconsistent remedies, the election is final and bars any
action, suit, or proceeding inconsistent with the elected remedy, in In any event, there is no proof that private respondent knew that
the absence of fraud by the other party. The first act of election her husband died in the elevator crash when on November 15,
acts as a bar.37 Equitable in nature, the doctrine of election of 1990 she accomplished her application for benefits from the ECC.
remedies is designed to mitigate possible unfairness to both The police investigation report is dated November 25, 1990, 10
parties. It rests on the moral premise that it is fair to hold people days after the accomplishment of the form. Petitioner filed the
responsible for their choices. The purpose of the doctrine is not to application in her behalf on November 27, 1990.
prevent any recourse to any remedy, but to prevent a double
redress for a single wrong.38 There is also no showing that private respondent knew of the
remedies available to her when the claim before the ECC was filed.
The choice of a party between inconsistent remedies results in On the contrary, private respondent testified that she was not
a waiver by election. Hence, the rule in Floresca that a claimant aware of her rights.
cannot simultaneously pursue recovery under the Labor Code and
prosecute an ordinary course of action under the Civil Code. The Petitioner, though, argues that under Article 3 of the Civil Code,
claimant, by his choice of one remedy, is deemed to have waived ignorance of the law excuses no one from compliance therewith.
the other. As judicial decisions applying or interpreting the laws or the
Constitution form part of the Philippine legal system (Article 8,
Waiver is the intentional relinquishment of a known right.39 Civil Code), private respondent cannot claim ignorance of this
Court’s ruling in Floresca allowing a choice of remedies.
The argument has no merit. The application of Article 3 is limited
to mandatory and prohibitory laws.42 This may be deduced from
the language of the provision, which, notwithstanding a person’s
ignorance, does not excuse his or her compliance with the laws.
The rule in Floresca allowing private respondent a choice of
remedies is neither mandatory nor prohibitory. Accordingly, her
ignorance thereof cannot be held against her.

Finally, the Court modifies the affirmance of the award of

damages. The records do not indicate the total amount private
respondent ought to receive from the ECC, although it appears
from Exhibit "K"43 that she received P3,581.85 as initial payment
representing the accrued pension from November 1990 to March
1991. Her initial monthly pension, according to the same Exhibit
"K," was P596.97 and present total monthly pension was P716.40.
Whether the total amount she will eventually receive from the ECC
is less than the sum of P644,000.00 in total damages awarded by
the trial court is subject to speculation, and the case is remanded
to the trial court for such determination. Should the trial court
find that its award is greater than that of the ECC, payments
already received by private respondent under the Labor Code shall
be deducted from the trial court'’ award of damages. Consistent
with our ruling in Floresca, this adjudication aims to prevent
double compensation.

WHEREFORE, the case is REMANDED to the Regional Trial Court

of Pasig City to determine whether the award decreed in its
decision is more than that of the ECC. Should the award decreed
by the trial court be greater than that awarded by the ECC,
payments already made to private respondent pursuant to the
Labor Code shall be deducted therefrom. In all other respects, the
Decision of the Court of Appeals is AFFIRMED.

SO ORDERED.
G.R. No. L-30642 April 30, 1985 including those named in the next preceding paragraph,
represented by the plaintiffs herein;
PERFECTO S. FLORESCA, in his own behalf and on behalf of
the minors ROMULO and NESTOR S. FLORESCA; and 10. That out of the 48 mine workers who were then
ERLINDA FLORESCA-GABUYO, PEDRO S. FLORESCA, JR., working at defendant PHILEX's mine on the said date, five
CELSO S. FLORESCA, MELBA S. FLORESCA, JUDITH S. (5) were able to escape from the terrifying holocaust; 22
FLORESCA and CARMEN S. FLORESCA; were rescued within the next 7 days; and the rest, 21 in
number, including those referred to in paragraph 7
LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and hereinabove, were left mercilessly to their fate,
on behalf of her minor children LINDA, ROMEO, ANTONIO notwithstanding the fact that up to then, a great many of
JEAN and ELY, all surnamed Martinez; and DANIEL them were still alive, entombed in the tunnels of the mine,
MARTINEZ and TOMAS MARTINEZ; but were not rescued due to defendant PHILEX's decision
to abandon rescue operations, in utter disregard of its
SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and bounden legal and moral duties in the premises;
on behalf of her minor children JOSE, ESTELA, JULITA
SALUD and DANILO, all surnamed OBRA; xxx xxx xxx

LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on 13. That defendant PHILEX not only violated the law and
behalf of her minor children EDNA, GEORGE and LARRY III, the rules and regulations duly promulgated by the duly
all surnamed VILLAR; constituted authorities as set out by the Special Committee
above referred to, in their Report of investigation, pages 7-
DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf 13, Annex 'B' hereof, but also failed completely to provide
and on behalf of her minor children EDITHA, ELIZABETH, its men working underground the necessary security for
DIVINA, RAYMUNDO, NESTOR and AURELIO, JR. all surnamed the protection of their lives notwithstanding the fact that it
LANUZA; had vast financial resources, it having made, during the
year 1966 alone, a total operating income of P
EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on 38,220,254.00, or net earnings, after taxes of
behalf of her minor children JOSE, LORENZO, JR., MARIA, P19,117,394.00, as per its llth Annual Report for the year
VENUS and FELIX, all surnamed ISLA, petitioners,  ended December 31, 1966, and with aggregate assets
vs. totalling P 45,794,103.00 as of December 31, 1966;
PHILEX MINING CORPORATION and HON. JESUS P. MORFE,
Presiding Judge of Branch XIII, Court of First Instance of xxx xxx xxx
Manila, respondents.
(pp. 42-44, rec.)
MAKASIAR, J.:
A motion to dismiss dated May 14, 1968 was filed by Philex
This is a petition to review the order of the former Court of First alleging that the causes of action of petitioners based on an
Instance of Manila, Branch XIII, dated December 16, 1968 industrial accident are covered by the provisions of the Workmen's
dismissing petitioners' complaint for damages on the ground of Compensation Act (Act 3428, as amended by RA 772) and that the
lack of jurisdiction. former Court of First Instance has no jurisdiction over the case.
Petitioners filed an opposition dated May 27, 1968 to the said
Petitioners are the heirs of the deceased employees of Philex motion to dismiss claiming that the causes of action are not based
Mining Corporation (hereinafter referred to as Philex), who, while on the provisions of the Workmen's Compensation Act but on the
working at its copper mines underground operations at Tuba, provisions of the Civil Code allowing the award of actual, moral
Benguet on June 28, 1967, died as a result of the cave-in that and exemplary damages, particularly:
buried them in the tunnels of the mine. Specifically, the complaint
alleges that Philex, in violation of government rules and Art. 2176. Whoever by act or omission causes damage to
regulations, negligently and deliberately failed to take the required another, there being fault or negligence, is obliged to pay
precautions for the protection of the lives of its men working for the damage done. Such fault or negligence, if there is
underground. Portion of the complaint reads: no pre- existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of
xxx xxx xxx this Chapter.

9. That for sometime prior and up to June 28,1967, the Art. 2178. The provisions of articles 1172 to 1174 are also
defendant PHILEX, with gross and reckless negligence and applicable to a quasi-delict.
imprudence and deliberate failure to take the required
precautions for the due protection of the lives of its men (b) Art. 1173—The fault or negligence of the obligor
working underground at the time, and in utter violation of consists in the omission of that diligence which is required
the laws and the rules and regulations duly promulgated by the nature of the obligation and corresponds with the
by the Government pursuant thereto, allowed great circumstances of the persons, of the time and of the place.
amount of water and mud to accumulate in an open pit When negligence shows bad faith, the provisions of Articles
area at the mine above Block 43-S-1 which seeped through 1171 and 2201, paragraph 2 shall apply.
and saturated the 600 ft. column of broken ore and rock
below it, thereby exerting tremendous pressure on the Art. 2201. x x x x x x x x x
working spaces at its 4300 level, with the result that, on
the said date, at about 4 o'clock in the afternoon, with the In case of fraud, bad faith, malice or wanton attitude, the
collapse of all underground supports due to such obligor shall be responsible for all damages which may be
enormous pressure, approximately 500,000 cubic feet of reasonably attributed to the non-performance of the
broken ores rocks, mud and water, accompanied by obligation.
surface boulders, blasted through the tunnels and flowed
out and filled in, in a matter of approximately five (5) Art. 2231. In quasi-delicts, exemplary damages may be
minutes, the underground workings, ripped timber granted if the defendant acted with gross negligence.
supports and carried off materials, machines and
equipment which blocked all avenues of exit, thereby After a reply and a rejoinder thereto were filed, respondent Judge
trapping within its tunnels of all its men above referred to, issued an order dated June 27, 1968 dismissing the case on the
ground that it falls within the exclusive jurisdiction of the other rights and remedies accruing to the
Workmen's Compensation Commission. On petitioners' motion for employee, his personal representatives,
reconsideration of the said order, respondent Judge, on dependents or nearest of kin against the
September 23, 1968, reconsidered and set aside his order of June employer under the Civil Code and other laws
27, 1968 and allowed Philex to file an answer to the complaint. because of said injury ...
Philex moved to reconsider the aforesaid order which was opposed
by petitioners. SEC. 46. Jurisdiction.— The Workmen's
Compensation Commissioner shall have
On December 16, 1968, respondent Judge dismissed the case for exclusive jurisdiction to hear and decide claims
lack of jurisdiction and ruled that in accordance with the for compensation under the Workmen's
established jurisprudence, the Workmen's Compensation Compensation Act, subject to appeal to the
Commission has exclusive original jurisdiction over damage or Supreme Court, ...
compensation claims for work-connected deaths or injuries of
workmen or employees, irrespective of whether or not the Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855
employer was negligent, adding that if the employer's negligence [1956]) where it was held that "all claims of workmen against their
results in work-connected deaths or injuries, the employer shall, employer for damages due to accident suffered in the course of
pursuant to Section 4-A of the Workmen's Compensation Act, pay employment shall be investigated and adjudicated by the
additional compensation equal to 50% of the compensation fixed Workmen's Compensation Commission," subject to appeal to the
in the Act. Supreme Court.

Petitioners thus filed the present petition. Philex maintains that the fact that an employer was negligent,
does not remove the case from the exclusive character of
In their brief, petitioners raised the following assignment of errors: recoveries under the Workmen's Compensation Act; because
Section 4-A of the Act provides an additional compensation in case
I the employer fails to comply with the requirements of safety as
imposed by law to prevent accidents. In fact, it points out that
THE LOWER COURT ERRED IN DISMISSING Philex voluntarily paid the compensation due the petitioners and
THE PLAINTIFFS- PETITIONERS' COMPLAINT all the payments have been accepted in behalf of the deceased
FOR LACK OF JURISDICTION. miners, except the heirs of Nazarito Floresca who insisted that
they are entitled to a greater amount of damages under the Civil
II Code.

THE LOWER COURT ERRED IN FAILING TO In the hearing of this case, then Undersecretary of Labor Israel
CONSIDER THE CLEAR DISTINCTION Bocobo, then Atty. Edgardo Angara, now President of the
BETWEEN CLAIMS FOR DAMAGES UNDER University of the Philippines, Justice Manuel Lazaro, as corporate
THE CIVIL CODE AND CLAIMS FOR counsel and Assistant General Manager of the GSIS Legal Affairs
COMPENSATION UNDER THE WORKMEN'S Department, and Commissioner on Elections, formerly UP Law
COMPENSATION ACT. Center Director Froilan Bacungan, appeared as amici curiae and
thereafter, submitted their respective memoranda.
A
The issue to be resolved as WE stated in the resolution of
In the first assignment of error, petitioners argue that the lower November 26, 1976, is:
court has jurisdiction over the cause of action since the complaint
is based on the provisions of the Civil Code on damages, Whether the action of an injured employee or
particularly Articles 2176, 2178, 1173, 2201 and 2231, and not worker or that of his heirs in case of his death
on the provisions of the Workmen's Compensation Act. They point under the Workmen's Compensation Act is
out that the complaint alleges gross and brazen negligence on the exclusive, selective or cumulative, that is to say,
part of Philex in failing to take the necessary security for the whether his or his heirs' action is exclusively
protection of the lives of its employees working underground. They restricted to seeking the limited compensation
also assert that since Philex opted to file a motion to dismiss in provided under the Workmen's Compensation
the court a quo, the allegations in their complaint including those Act or whether they have a right of selection or
contained in the annexes are deemed admitted. choice of action between availing of the worker's
right under the Workmen's Compensation Act
In the second assignment of error, petitioners asseverate that and suing in the regular courts under the Civil
respondent Judge failed to see the distinction between the claims Code for higher damages (actual, moral and/or
for compensation under the Workmen's Compensation Act and the exemplary) from the employer by virtue of
claims for damages based on gross negligence of Philex under the negligence (or fault) of the employer or of his
Civil Code. They point out that workmen's compensation refers to other employees or whether they may avail
liability for compensation for loss resulting from injury, disability cumulatively of both actions, i.e., collect the
or death of the working man through industrial accident or limited compensation under the Workmen's
disease, without regard to the fault or negligence of the employer, Compensation Act and sue in addition for
while the claim for damages under the Civil Code which damages in the regular courts.
petitioners pursued in the regular court, refers to the employer's
liability for reckless and wanton negligence resulting in the death There are divergent opinions in this case. Justice Lazaro is of the
of the employees and for which the regular court has jurisdiction opinion that an injured employee or worker, or the heirs in case of
to adjudicate the same. his death, may initiate a complaint to recover damages (not
compensation under the Workmen's Compensation Act) with the
On the other hand, Philex asserts that work-connected injuries regular court on the basis of negligence of an employer pursuant
are compensable exclusively under the provisions of Sections 5 to the Civil Code provisions. Atty. Angara believes otherwise. He
and 46 of the Workmen's Compensation Act, which read: submits that the remedy of an injured employee for work-
connected injury or accident is exclusive in accordance with
SEC. 5. Exclusive right to compensation.—The Section 5 of the Workmen's Compensation Act, while Atty.
rights and remedies granted by this Act to an Bacungan's position is that the action is selective. He opines that
employee by reason of a personal injury the heirs of the employee in case of his death have a right of
entitling him to compensation shall exclude all choice to avail themselves of the benefits provided under the
Workmen's Compensation Act or to sue in the regular court under
the Civil Code for higher damages from the employer by virtue of not based on any theory of actionable wrong on the part of the
negligence of the latter. Atty. Bocobo's stand is the same as that of employer (99 C.J.S. 36).
Atty. Bacungan and adds that once the heirs elect the remedy
provided for under the Act, they are no longer entitled to avail In other words, under the compensation acts, the employer is
themselves of the remedy provided for under the Civil Code by liable to pay compensation benefits for loss of income, as long as
filing an action for higher damages in the regular court, and vice the death, sickness or injury is work-connected or work-
versa. aggravated, even if the death or injury is not due to the fault of the
employer (Murillo vs. Mendoza, 66 Phil. 689). On the other hand,
On August 3, 1978, petitioners-heirs of deceased employee damages are awarded to one as a vindication of the wrongful
Nazarito Floresca filed a motion to dismiss on the ground that invasion of his rights. It is the indemnity recoverable by a person
they have amicably settled their claim with respondent Philex. In who has sustained injury either in his person, property or relative
the resolution of September 7, 1978, WE dismissed the petition rights, through the act or default of another (25 C.J.S. 452).
only insofar as the aforesaid petitioners are connected, it
appearing that there are other petitioners in this case. The claimant for damages under the Civil Code has the burden of
proving the causal relation between the defendant's negligence
WE hold that the former Court of First Instance has jurisdiction to and the resulting injury as well as the damages suffered. While
try the case, under the Workmen's Compensation Act, there is a presumption
in favor of the deceased or injured employee that the death or
It should be underscored that petitioners' complaint is not for injury is work-connected or work-aggravated; and the employer
compensation based on the Workmen's Compensation Act but a has the burden to prove otherwise (De los Angeles vs. GSIS, 94
complaint for damages (actual, exemplary and moral) in the total SCRA 308; Carino vs. WCC, 93 SCRA 551; Maria Cristina
amount of eight hundred twenty-five thousand (P825,000.00) Fertilizer Corp. vs. WCC, 60 SCRA 228).
pesos. Petitioners did not invoke the provisions of the Workmen's
Compensation Act to entitle them to compensation thereunder. In The claim of petitioners that the case is not cognizable by the
fact, no allegation appeared in the complaint that the employees Workmen's Compensation Commission then, now Employees
died from accident arising out of and in the course of their Compensation Commission, is strengthened by the fact that
employments. The complaint instead alleges gross and reckless unlike in the Civil Code, the Workmen's Compensation Act did not
negligence and deliberate failure on the part of Philex to protect contain any provision for an award of actual, moral and exemplary
the lives of its workers as a consequence of which a cave-in damages. What the Act provided was merely the right of the heirs
occurred resulting in the death of the employees working to claim limited compensation for the death in the amount of six
underground. Settled is the rule that in ascertaining whether or thousand (P6,000.00) pesos plus burial expenses of two hundred
not the cause of action is in the nature of workmen's (P200.00) pesos, and medical expenses when incurred (Sections 8,
compensation claim or a claim for damages pursuant to the 12 and 13, Workmen's Compensation Act), and an additional
provisions of the Civil Code, the test is the averments or compensation of only 50% if the complaint alleges failure on the
allegations in the complaint (Belandres vs. Lopez Sugar Mill, Co., part of the employer to "install and maintain safety appliances or
Inc., 97 Phil. 100). to take other precautions for the prevention of accident or
occupational disease" (Section 4-A, Ibid.). In the case at bar, the
In the present case, there exists between Philex and the deceased amount sought to be recovered is over and above that which was
employees a contractual relationship. The alleged gross and provided under the Workmen's Compensation Act and which
reckless negligence and deliberate failure that amount to bad faith cannot be granted by the Commission.
on the part of Philex, constitute a breach of contract for which it
may be held liable for damages. The provisions of the Civil Code Moreover, under the Workmen's Compensation Act, compensation
on cases of breach of contract when there is fraud or bad faith, benefits should be paid to an employee who suffered an accident
read: not due to the facilities or lack of facilities in the industry of his
employer but caused by factors outside the industrial plant of his
Art. 2232. In contracts and quasi-contracts, the employer. Under the Civil Code, the liability of the employer,
court may award exemplary damages if the depends on breach of contract or tort. The Workmen's
defendant acted in a wanton, fraudulent, Compensation Act was specifically enacted to afford protection to
reckless, oppressive or malevolent manner. the employees or workmen. It is a social legislation designed to
give relief to the workman who has been the victim of an accident
Art. 2201. In contracts and quasi-contracts, the causing his death or ailment or injury in the pursuit of his
damages for which the obligor who acted in employment (Abong vs. WCC, 54 SCRA 379).
good faith is able shall be those that are the
natural and probable consequences of the WE now come to the query as to whether or not the injured
breach of the obligation, and which the parties employee or his heirs in case of death have a right of selection or
have foreseen or could have reasonably foreseen choice of action between availing themselves of the worker's right
at the time the obligation was constituted. under the Workmen's Compensation Act and suing in the regular
courts under the Civil Code for higher damages (actual, moral and
In cases of fraud, bad faith, malice or wanton exemplary) from the employers by virtue of that negligence or fault
attitude, the obligor shall be responsible for all of the employers or whether they may avail themselves
damages which may be reasonably attributed to cumulatively of both actions, i.e., collect the limited compensation
the non-performance of the obligation. under the Workmen's Compensation Act and sue in addition for
damages in the regular courts.
Furthermore, Articles 2216 et seq., Civil Code, allow the payment
of all kinds of damages, as assessed by the court. In disposing of a similar issue, this Court in Pacana vs. Cebu
Autobus Company, 32 SCRA 442, ruled that an injured worker
The rationale in awarding compensation under the Workmen's has a choice of either to recover from the employer the fixed
Compensation Act differs from that in giving damages under the amounts set by the Workmen's Compensation Act or to prosecute
Civil Code. The compensation acts are based on a theory of an ordinary civil action against the tortfeasor for higher damages
compensation distinct from the existing theories of damages, but he cannot pursue both courses of action simultaneously.
payments under the acts being made as compensation and not as
damages (99 C.J.S. 53). Compensation is given to mitigate the In Pacaña WE said:
harshness and insecurity of industrial life for the workman and
his family. Hence, an employer is liable whether negligence exists In the analogous case of Esguerra vs. Munoz Palma,
or not since liability is created by law. Recovery under the Act is involving the application of Section 6 of the Workmen's
Compensation Act on the injured workers' right to sue
 third- party tortfeasors in the regular courts, Mr. redress under the Workmen's Compensation Commission which
Justice J.B.L. Reyes, again speaking for the Court, awarded a lesser amount for compensation. The choice of the first
pointed out that the injured worker has the choice of remedy was based on ignorance or a mistake of fact, which
remedies but cannot pursue both courses of action nullifies the choice as it was not an intelligent choice. The case
simultaneously and thus balanced the relative should therefore be remanded to the lower court for further
advantage of recourse under the Workmen's proceedings. However, should the petitioners be successful in
Compensation Act as against an ordinary action. their bid before the lower court, the payments made under the
Workmen's Compensation Act should be deducted from the
As applied to this case, petitioner Esguerra cannot damages that may be decreed in their favor.
maintain his action for damages against the
respondents (defendants below), because he has elected B
to seek compensation under the Workmen's
Compensation Law, and his claim (case No. 44549 of Contrary to the perception of the dissenting opinion, the Court
the Compensation Commission) was being processed at does not legislate in the instant case. The Court merely applies
the time he filed this action in the Court of First and gives effect to the constitutional guarantees of social justice
Instance. It is argued for petitioner that as the damages then secured by Section 5 of Article 11 and Section 6 of Article XIV
recoverable under the Civil Code are much more of the 1935 Constitution, and now by Sections 6, 7, and 9 of
extensive than the amounts that may be awarded Article 11 of the DECLARATION OF PRINCIPLES AND STATE
under the Workmen's Compensation Act, they should POLICIES of the 1973 Constitution, as amended, and as
not be deemed incompatible. As already indicated, the implemented by Articles 2176, 2177, 2178, 1173, 2201, 2216,
injured laborer was initially free to choose either to 2231 and 2232 of the New Civil Code of 1950.
recover from the employer the fixed amounts set by the
Compensation Law or else, to prosecute an ordinary To emphasize, the 1935 Constitution declares that:
civil action against the tortfeasor for higher damages.
While perhaps not as profitable, the smaller indemnity Sec. 5. The promotion of social justice to insure
obtainable by the first course is balanced by the the well-being and economic security of all the
claimant's being relieved of the burden of proving the people should be the concern of the State (Art.
causal connection between the defendant's negligence II).
and the resulting injury, and of having to establish the
extent of the damage suffered; issues that are apt to be Sec. 6. The State shall afford protection to
troublesome to establish satisfactorily. Having staked labor, especially to working women, and minors,
his fortunes on a particular remedy, petitioner is and shall regulate the relations between
precluded from pursuing the alternate course, at least landowner and tenant, and between labor and
until the prior claim is rejected by the Compensation capital in industry and in agriculture. The State
Commission. Anyway, under the proviso of Section 6 may provide for compulsory arbitration (Art.
aforequoted, if the employer Franklin Baker Company XIV).
recovers, by derivative action against the alleged
tortfeasors, a sum greater than the compensation he The 1973 Constitution likewise commands the State to "promote
may have paid the herein petitioner, the excess accrues social justice to insure the dignity, welfare, and security of all the
to the latter. people "... regulate the use ... and disposition of private property
and equitably diffuse property ownership and profits "establish,
Although the doctrine in the case of Esguerra vs. Munoz Palma maintain and ensure adequate social services in, the field
(104 Phil. 582), applies to third-party tortfeasor, said rule should of education, health, housing, employment, welfare and social
likewise apply to the employer-tortfeasor. security to guarantee the enjoyment by the people of a decent
standard of living" (Sections 6 and 7, Art. II, 1973 Constitution);
Insofar as the heirs of Nazarito Floresca are concerned, as already "... afford protection to labor, ... and regulate the relations between
stated, the petition has been dismissed in the resolution of workers and employers ..., and assure the rights of workers to ...
September 7, 1978 in view of the amicable settlement reached by just and humane conditions of work" (Sec. 9, Art. II, 1973
Philex and the said heirs. Constitution, emphasis supplied).

With regard to the other petitioners, it was alleged by Philex in its The foregoing constitutional guarantees in favor of labor
motion to dismiss dated May 14, 1968 before the court a quo, that institutionalized in Section 9 of Article 11 of the 1973 Constitution
the heirs of the deceased employees, namely Emerito Obra, Larry and re-stated as a declaration of basic policy in Article 3 of the
Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino Martinez New Labor Code, thus:
submitted notices and claims for compensation to the Regional
Office No. 1 of the then Department of Labor and all of them have Art. 3. Declaration of basic policy.—The
been paid in full as of August 25, 1967, except Saturnino Martinez State shall afford protection to labor, promote full
whose heirs decided that they be paid in installments (pp. 106- employment, ensure equal work opportunities
107, rec.). Such allegation was admitted by herein petitioners in regardless of sex, race or creed, and regulate the
their opposition to the motion to dismiss dated May 27, 1968 (pp. relations between workers and employers. The
121-122, rec.) in the lower court, but they set up the defense that State shall assure the rights of workers to self-
the claims were filed under the Workmen's Compensation Act organization, collective bargaining, security of
before they learned of the official report of the committee created tenure, and just and humane conditions of work.
to investigate the accident which established the criminal (emphasis supplied).
negligence and violation of law by Philex, and which report was
forwarded by the Director of Mines to the then Executive Secretary The aforestated constitutional principles as implemented by the
Rafael Salas in a letter dated October 19, 1967 only (p. 76, rec.). aforementioned articles of the New Civil Code cannot be impliedly
repealed by the restrictive provisions of Article 173 of the New
WE hold that although the other petitioners had received the Labor Code. Section 5 of the Workmen's Compensation Act (before
benefits under the Workmen's Compensation Act, such may not it was amended by R.A. No. 772 on June 20, 1952), predecessor of
preclude them from bringing an action before the regular court Article 173 of the New Labor Code, has been superseded by the
because they became cognizant of the fact that Philex has been aforestated provisions of the New Civil Code, a subsequent law,
remiss in its contractual obligations with the deceased miners which took effect on August 30, 1950, which obey the
only after receiving compensation under the Act. Had petitioners constitutional mandates of social justice enhancing as they do the
been aware of said violation of government rules and regulations rights of the workers as against their employers. Article 173 of the
by Philex, and of its negligence, they would not have sought New Labor Code seems to diminish the rights of the workers and
therefore collides with the social justice guarantee of the other rights and remedies accruing to the
Constitution and the liberal provisions of the New Civil Code. employee, his personal representatives,
dependents or nearest of kin against the
The guarantees of social justice embodied in Sections 6, 7 and 9 of employer under the Civil Code and other laws,
Article II of the 1973 Constitution are statements of legal because of said injury.
principles to be applied and enforced by the courts. Mr. Justice
Robert Jackson in the case of West Virginia State Board of Employers contracting laborers in the Philippine
Education vs. Barnette, with characteristic eloquence, enunciated: Islands for work outside the same shall
stipulate with such laborers that the remedies
The very purpose of a Bill of Rights was to prescribed by this Act shall apply to injuries
withdraw certain subjects from the vicissitudes received outside the Island through accidents
of political controversy, to place them beyond happening in and during the performance of the
the reach of majorities and officials and to duties of the employment. Such stipulation
establish them as legal principles to be applied shall not prejudice the right of the laborers to
by the courts. One's right to life, liberty, and the benefits of the Workmen's Compensation
property, to free speech, a free press, freedom of Law of the place where the accident occurs,
worship and assembly, and other fundamental should such law be more favorable to them (As
rights may not be submitted to vote; they amended by section 5 of Republic Act No. 772).
depend on the outcome of no elections (319 U.S.
625, 638, 87 L.ed. 1638, emphasis supplied). Article 173 of the New Labor Code does not repeal expressly nor
impliedly the applicable provisions of the New Civil Code, because
In case of any doubt which may be engendered by Article 173 of said Article 173 provides:
the New Labor Code, both the New Labor Code and the Civil Code
direct that the doubts should be resolved in favor of the workers Art. 173. Exclusiveness of liability.- Unless
and employees. otherwise provided, the liability of the State
Insurance Fund under this Title shall be
Thus, Article 4 of the New Labor Code, otherwise known as exclusive and in place of all other liabilities of
Presidential Decree No. 442, as amended, promulgated on May 1, the employer to the employee, his dependents or
1974, but which took effect six months thereafter, provides that anyone otherwise entitled to receive damages on
"all doubts in the implementation and interpretation of the behalf of the employee or his dependents. The
provisions of this Code, including its implementing rules and payment of compensation under this Title shall
regulations, shall be resolved in favor of labor" (Art. 2, Labor bar the recovery of benefits as provided for in
Code). Section 699 of the Revised Administrative Code,
Republic Act Numbered Eleven hundred sixty-
Article 10 of the New Civil Code states: "In case of doubt in the one, as amended, Commonwealth Act
interpretation or application of laws, it is presumed that the law- Numbered One hundred eighty- six, as
making body intended right and justice to prevail. " amended, Commonwealth Act Numbered Six
hundred ten, as amended, Republic Act
More specifically, Article 1702 of the New Civil Code likewise Numbered Forty-eight hundred Sixty-four, as
directs that. "In case of doubt, all labor legislation and all labor amended, and other laws whose benefits are
contracts shall be construed in favor of the safety and decent administered by the System during the period of
living of the laborer." such payment for the same disability or death,
and conversely (emphasis supplied).
Before it was amended by Commonwealth Act No. 772 on June
20, 1952, Section 5 of the Workmen's Compensation Act provided: As above-quoted, Article 173 of the New Labor Code expressly
repealed only Section 699 of the Revised Administrative Code, R.A.
Sec. 5. Exclusive right to compensation.- The No. 1161, as amended, C.A. No. 186, as amended, R.A. No. 610,
rights and remedies granted by this Act to an as amended, R.A. No. 4864, as amended, and all other laws whose
employee by reason of a personal injury benefits are administered by the System (referring to the GSIS or
entitling him to compensation shall exclude all SSS).
other rights and remedies accruing to the
employee, his personal representatives, Unlike Section 5 of the Workmen's Compensation Act as
dependents or nearest of kin against the aforequoted, Article 173 of the New Labor Code does not even
employer under the Civil Code and other laws, remotely, much less expressly, repeal the New Civil Code
because of said injury (emphasis supplied). provisions heretofore quoted.

Employers contracting laborecsrs in the It is patent, therefore, that recovery under the New Civil Code for
Philippine Islands for work outside the same damages arising from negligence, is not barred by Article 173 of
may stipulate with such laborers that the the New Labor Code. And the damages recoverable under the New
remedies prescribed by this Act shall apply Civil Code are not administered by the System provided for by the
exclusively to injuries received outside the New Labor Code, which defines the "System" as referring to the
Islands through accidents happening in and Government Service Insurance System or the Social Security
during the performance of the duties of the System (Art. 167 [c], [d] and [e] of the New Labor Code).
employment; and all service contracts made in
the manner prescribed in this section shall be Furthermore, under Article 8 of the New Civil Code, decisions of
presumed to include such agreement. the Supreme Court form part of the law of the land.

Only the second paragraph of Section 5 of the Workmen's Article 8 of the New Civil Code provides:
Compensation Act No. 3428, was amended by Commonwealth Act
No. 772 on June 20, 1952, thus: Art. 8. Judicial decisions applying or
interpreting the laws or the Constitution shall
Sec. 5. Exclusive right to compensation.- The form a part of the legal system of the
rights and remedies granted by this Act to an Philippines.
employee by reason of a personal injury
entitling him to compensation shall exclude all
The Court, through the late Chief Justice Fred Ruiz Castro, in provide safety measures for the protection of the life, limb and
People vs. Licera ruled: health of his worker. Even from the moral viewpoint alone, such
attitude is un-Christian.
Article 8 of the Civil Code of the Philippines
decrees that judicial decisions applying or It is therefore patent that giving effect to the social justice
interpreting the laws or the Constitution form guarantees of the Constitution, as implemented by the provisions
part of this jurisdiction's legal system. These of the New Civil Code, is not an exercise of the power of law-
decisions, although in themselves not laws, making, but is rendering obedience to the mandates of the
constitute evidence of what the laws mean. The fundamental law and the implementing legislation
application or interpretation placed by the aforementioned.
Court upon a law is part of the law as of the
date of the enactment of the said law since the The Court, to repeat, is not legislating in the instant case.
Court's application or interpretation merely
establishes the contemporaneous legislative It is axiomatic that no ordinary statute can override a
intent that the construed law purports to carry constitutional provision.
into effect" (65 SCRA 270, 272-273 [1975]).
The words of Section 5 of the Workmen's Compensation Act and of
WE ruled that judicial decisions of the Supreme Court assume the Article 173 of the New Labor Code subvert the rights of the
same authority as the statute itself (Caltex vs. Palomer, 18 SCRA petitioners as surviving heirs of the deceased mining employees.
247; 124 Phil. 763). Section 5 of the Workmen's Compensation Act and Article 173 of
the New Labor Code are retrogressive; because they are a
The aforequoted provisions of Section 5 of the Workmen's throwback to the obsolete laissez-faire doctrine of Adam Smith
Compensation Act, before and after it was amended by enunciated in 1776 in his treatise Wealth of Nations (Collier's
Commonwealth Act No. 772 on June 20, 1952, limited the right of Encyclopedia, Vol. 21, p. 93, 1964), which has been discarded
recovery in favor of the deceased, ailing or injured employee to the soon after the close of the 18th century due to the Industrial
compensation provided for therein. Said Section 5 was not Revolution that generated the machines and other mechanical
accorded controlling application by the Supreme Court in the devices (beginning with Eli Whitney's cotton gin of 1793 and
1970 case of Pacana vs. Cebu Autobus Company (32 SCRA 442) Robert Fulton's steamboat of 1807) for production and
when WE ruled that an injured worker has a choice of either to transportation which are dangerous to life, limb and health. The
recover from the employer the fixed amount set by the Workmen's old socio-political-economic philosophy of live-and-let-live is now
Compensation Act or to prosecute an ordinary civil action against superdesed by the benign Christian shibboleth of live-and-help
the tortfeasor for greater damages; but he cannot pursue both others to live. Those who profess to be Christians should not
courses of action simultaneously. Said Pacana case penned by Mr. adhere to Cain's selfish affirmation that he is not his brother's
Justice Teehankee, applied Article 1711 of the Civil Code as keeper. In this our civilization, each one of us is our brother's
against the Workmen's Compensation Act, reiterating the 1969 keeper. No man is an island. To assert otherwise is to be as
ruling in the case of Valencia vs. Manila Yacht Club (28 SCRA atavistic and ante-deluvian as the 1837 case of Prisley vs. Fowler
724, June 30,1969) and the 1958 case of Esguerra vs. Munoz (3 MN 1,150 reprint 1030) invoked by the dissent, The Prisley case
Palma (104 Phil. 582), both penned by Justice J.B.L. Reyes. Said was decided in 1837 during the era of economic royalists and
Pacana case was concurred in by Justices J.B.L. Reyes, Dizon, robber barons of America. Only ruthless, unfeeling capitalistics
Makalintal, Zaldivar, Castro, Fernando and Villamor. and egoistic reactionaries continue to pay obeisance to such un-
Christian doctrine. The Prisley rule humiliates man and debases
Since the first sentence of Article 173 of the New Labor Code is him; because the decision derisively refers to the lowly worker as
merely a re-statement of the first paragraph of Section 5 of the "servant" and utilizes with aristocratic arrogance "master" for
Workmen's Compensation Act, as amended, and does not even "employer." It robs man of his inherent dignity and dehumanizes
refer, neither expressly nor impliedly, to the Civil Code as Section him. To stress this affront to human dignity, WE only have to
5 of the Workmen's Compensation Act did, with greater reason restate the quotation from Prisley, thus: "The mere relation of the
said Article 173 must be subject to the same interpretation master and the servant never can imply an obligation on the part
adopted in the cases of Pacana, Valencia and Esguerra of the master to take more care of the servant than he may
aforementioned as the doctrine in the aforesaid three (3) cases is reasonably be expected to do himself." This is the very selfish
faithful to and advances the social justice guarantees enshrined in doctrine that provoked the American Civil War which generated so
both the 1935 and 1973 Constitutions. much hatred and drew so much precious blood on American
plains and valleys from 1861 to 1864.
It should be stressed likewise that there is no similar provision on
social justice in the American Federal Constitution, nor in the "Idolatrous reverence" for the letter of the law sacrifices the
various state constitutions of the American Union. Consequently, human being. The spirit of the law insures man's survival and
the restrictive nature of the American decisions on the Workmen's ennobles him. In the words of Shakespeare, "the letter of the law
Compensation Act cannot limit the range and compass of OUR killeth; its spirit giveth life."
interpretation of our own laws, especially Article 1711 of the New
Civil Code, vis-a-vis Article 173 of the New Labor Code, in relation C
to Section 5 of Article II and Section 6 of Article XIV of the 1935
Constitution then, and now Sections 6, 7 and 9 of the Declaration It is curious that the dissenting opinion clings to the myth that
of Principles and State Policies of Article II of the 1973 the courts cannot legislate.
Constitution.
That myth had been exploded by Article 9 of the New Civil Code,
The dissent seems to subordinate the life of the laborer to the which provides that "No judge or court shall decline to render
property rights of the employer. The right to life is guaranteed judgment by reason of the silence, obscurity or insufficiency of the
specifically by the due process clause of the Constitution. To laws. "
relieve the employer from liability for the death of his workers
arising from his gross or wanton fault or failure to provide safety Hence, even the legislator himself, through Article 9 of the New
devices for the protection of his employees or workers against the Civil Code, recognizes that in certain instances, the court, in the
dangers which are inherent in underground mining, is to deprive language of Justice Holmes, "do and must legislate" to fill in the
the deceased worker and his heirs of the right to recover gaps in the law; because the mind of the legislator, like all human
indemnity for the loss of the life of the worker and the consequent beings, is finite and therefore cannot envisage all possible cases to
loss to his family without due process of law. The dissent in effect which the law may apply Nor has the human mind the infinite
condones and therefore encourages such gross or wanton neglect capacity to anticipate all situations.
on the part of the employer to comply with his legal obligation to
But about two centuries before Article 9 of the New Civil Code, the To make a rule of conduct applicable to an
founding fathers of the American Constitution foresaw and individual who but for such action would be free
recognized the eventuality that the courts may have to legislate to from it is to legislate yet it is what the judges do
supply the omissions or to clarify the ambiguities in the American whenever they determine which of two
Constitution and the statutes. competing principles of policy shall prevail.

'Thus, Alexander Hamilton pragmatically admits that judicial xxx xxx xxx
legislation may be justified but denies that the power of the
Judiciary to nullify statutes may give rise to Judicial tyranny (The It does not seem to need argument to show that
Federalist, Modern Library, pp. 503-511, 1937 ed.). Thomas however we may disguise it by veiling words we
Jefferson went farther to concede that the court is even do not and cannot carry out the distinction
independent of the Nation itself (A.F.L. vs. American Sash between legislative and executive action with
Company, 1949 335 US 538). mathematical precision and divide the branches
into waterlight compartments, were it ever so
Many of the great expounders of the American Constitution desirable to do so, which I am far from believing
likewise share the same view. Chief Justice Marshall pronounced: that it is, or that the Constitution requires.
"It is emphatically the province and duty of the Judicial
department to say what the law is (Marbury vs. Madison I Cranch True, there are jurists and legal writers who affirm that judges
127 1803), which was re-stated by Chief Justice Hughes when he should not legislate, but grudgingly concede that in certain cases
said that "the Constitution is what the judge says it is (Address on judges do legislate. They criticize the assumption by the courts of
May 3, 1907, quoted by President Franklin Delano Roosevelt on such law-making power as dangerous for it may degenerate into
March 9, 1937). This was reiterated by Justice Cardozo who Judicial tyranny. They include Blackstone, Jeremy Bentham,
pronounced that "No doubt the limits for the judge are narrower. Justice Black, Justice Harlan, Justice Roberts, Justice David
He legislates only between gaps. He fills the open spaces in the Brewer, Ronald Dworkin, Rolf Sartorious, Macklin Fleming and
law. " (The Nature of the Judicial Process, p. 113). In the language Beryl Harold Levy. But said Justices, jurists or legal
of Chief Justice Harlan F. Stone, "The only limit to the judicial commentators, who either deny the power of the courts to legislate
legislation is the restraint of the judge" (U.S. vs. Butler 297 U.S. 1 in-between gaps of the law, or decry the exercise of such power,
Dissenting Opinion, p. 79), which view is also entertained by have not pointed to examples of the exercise by the courts of such
Justice Frankfurter and Justice Robert Jackson. In the rhetoric of law-making authority in the interpretation and application of the
Justice Frankfurter, "the courts breathe life, feeble or strong, into laws in specific cases that gave rise to judicial tyranny or
the inert pages of the Constitution and all statute books." oppression or that such judicial legislation has not protected
public interest or individual welfare, particularly the lowly workers
It should be stressed that the liability of the employer under or the underprivileged.
Section 5 of the Workmen's Compensation Act or Article 173 of the
New Labor Code is limited to death, ailment or injury caused by On the other hand, there are numerous decisions interpreting the
the nature of the work, without any fault on the part of the Bill of Rights and statutory enactments expanding the scope of
employers. It is correctly termed no fault liability. Section 5 of the such provisions to protect human rights. Foremost among them is
Workmen's Compensation Act, as amended, or Article 173 of the the doctrine in the cases of Miranda vs. Arizona (384 US 436
New Labor Code, does not cover the tortious liability of the 1964), Gideon vs. Wainright (372 US 335), Escubedo vs. Illinois
employer occasioned by his fault or culpable negligence in failing (378 US 478), which guaranteed the accused under custodial
to provide the safety devices required by the law for the protection investigation his rights to remain silent and to counsel and to be
of the life, limb and health of the workers. Under either Section 5 informed of such rights as even as it protects him against the use
or Article 173, the employer remains liable to pay compensation of force or intimidation to extort confession from him. These rights
benefits to the employee whose death, ailment or injury is work- are not found in the American Bill of Rights. These rights are now
connected, even if the employer has faithfully and diligently institutionalized in Section 20, Article IV of the 1973 Constitution.
furnished all the safety measures and contrivances decreed by the Only the peace-and-order adherents were critical of the activism of
law to protect the employee. the American Supreme Court led by Chief Justice Earl Warren.

The written word is no longer the "sovereign talisman." In the Even the definition of Identical offenses for purposes of the double
epigrammatic language of Mr. Justice Cardozo, "the law has jeopardy provision was developed by American judicial decisions,
outgrown its primitive stage of formalism when the precise word not by amendment to the Bill of Rights on double jeopardy (see
was the sovereign talisman, and every slip was fatal" (Wood vs. Justice Laurel in People vs. Tarok, 73 Phil. 260, 261-268). And
Duff Gordon 222 NW 88; Cardozo, The Nature of the Judicial these judicial decisions have been re-stated in Section 7 of Rule
Process 100). Justice Cardozo warned that: "Sometimes the 117 of the 1985 Rules on Criminal Procedure, as well as in
conservatism of judges has threatened for an interval to rob the Section 9 of Rule 117 of the 1964 Revised Rules of Court. In both
legislation of its efficacy. ... Precedents established in those items provisions, the second offense is the same as the first offense if the
exert an unhappy influence even now" (citing Pound, Common second offense is an attempt to commit the first or frustration
Law and Legislation 21 Harvard Law Review 383, 387). thereof or necessarily includes or is necessarily included in the
first offense.
Finally, Justice Holmes delivered the coup de grace when he
pragmatically admitted, although with a cautionary undertone: The requisites of double jeopardy are not spelled out in the Bill of
"that judges do and must legislate, but they can do so only Rights. They were also developed by judicial decisions in the
interstitially they are confined from molar to molecular motions" United States and in the Philippines even before people vs. Ylagan
(Southern Pacific Company vs. Jensen, 244 US 204 1917). And in (58 Phil. 851-853).
the subsequent case of Springer vs. Government (277 US 188,
210-212, 72 L.ed. 845, 852- 853), Justice Holmes pronounced: Again, the equal protection clause was interpreted in the case of
Plessy vs. Ferguson (163 US 537) as securing to the Negroes equal
The great ordinances of the Constitution do not but separate facilities, which doctrine was revoked in the case of
establish and divide fields of black and white. Brown vs. Maryland Board of Education (349 US 294), holding
Even the more specific of them are found to that the equal protection clause means that the Negroes are
terminate in a penumbra shading gradually entitled to attend the same schools attended by the whites-equal
from one extreme to the other. x x x. When we facilities in the same school-which was extended to public parks
come to the fundamental distinctions it is still and public buses.
more obvious that they must be received with a
certain latitude or our government could not go De-segregation, not segregation, is now the governing principle.
on.
Among other examples, the due process clause was interpreted in
the case of People vs. Pomar (46 Phil. 440) by a conservative,
capitalistic court to invalidate a law granting maternity leave to
working women-according primacy to property rights over human
rights. The case of People vs. Pomar is no longer the rule.

As early as 1904, in the case of Lochner vs. New York (198 US 45,
76, 49 L. ed. 937, 949), Justice Holmes had been railing against
the conservatism of Judges perverting the guarantee of due
process to protect property rights as against human rights or
social justice for the working man. The law fixing maximum hours
of labor was invalidated. Justice Holmes was vindicated finally in
1936 in the case of West Coast Hotel vs. Parish (300 US 377-79;
81 L. ed. 703) where the American Supreme Court upheld the
rights of workers to social justice in the form of guaranteed
minimum wage for women and minors, working hours not
exceeding eight (8) daily, and maternity leave for women
employees.

The power of judicial review and the principle of separation of

powers as well as the rule on political questions have been evolved
and grafted into the American Constitution by judicial decisions
(Marbury vs. Madison, supra Coleman vs. Miller, 307 US 433, 83
L. ed. 1385; Springer vs. Government, 277 US 210-212, 72 L. ed.
852, 853).

It is noteworthy that Justice Black, who seems to be against

judicial legislation, penned a separate concurring opinion in the
case of Coleman vs. Miller, supra, affirming the doctrine of
political question as beyond the ambit of judicial review. There is
nothing in both the American and Philippine Constitutions
expressly providing that the power of the courts is limited by the
principle of separation of powers and the doctrine on political
questions. There are numerous cases in Philippine jurisprudence
applying the doctrines of separation of powers and political
questions and invoking American precedents.

Unlike the American Constitution, both the 1935 and 1973

Philippine Constitutions expressly vest in the Supreme Court the
power to review the validity or constitutionality of any legislative
enactment or executive act.

WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS

HEREBY REVERSED AND SET ASIDE AND THE CASE IS
REMANDED TO IT FOR FURTHER PROCEEDINGS. SHOULD A
GREATER AMOUNT OF DAMAGES BE DECREED IN FAVOR OF
HEREIN PETITIONERS, THE PAYMENTS ALREADY MADE TO
THEM PURSUANT TO THE WORKMEN'S COMPENSATION ACT
SHALL BE DEDUCTED. NO COSTS.

SO ORDERED.
 Under the First Cause of Action

G.R. No. 99301 March 13, 1997 1. In favor of plaintiff Lucia H. Kierulf actual damages in
the amount on ONE HUNDRED SEVENTY FOUR
VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO THOUSAND ONE HUNDRED and 77/100 (P174,100.77)
LEGASPI, petitioners,  PESOS;
vs.
THE COURT OF APPEALS and PANTRANCO NORTH EXPRESS, 2. To pay said plaintiff moral damages in the amount of
INCORPORATED, respondents. ONE HUNDRED THOUSAND and 00/100 (P100,000.00)
PESOS;
G.R. No. 99343 March 13, 1997
3. To pay exemplary damages in the amount of TEN
PANTRANCO NORTH EXPRESS, INCORPORATED, petitioner,  THOUSAND and 00/100 (P10,000.00) PESOS.
vs.
VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO Under the Second Cause of Action
LEGASPI, respondents.
1. To pay plaintiff Victor Kierulf the amount of NINETY SIX
How much moral, exemplary and actual damages are victims of THOUSAND EIGHT HUNDRED TWENTY FIVE and 15/100
vehicular accidents entitled to? (P96,825.15) PESOS by way of indemnification for the
damages to the Isuzu Carry All with plate No. UV PGS 796
In G.R. No. 99301, the victims of the vehicular mishap pray for an registered in his name.
increase in the award of damages, over and above those granted
by the appellate court. In this case, the husband of the victim of Under the Third Cause of Action
the vehicular accident claims compensation/damages for the loss
of his right to marital consortium which, according to him, has 1. To pay the plaintiff spouses by way of reimbursement for
been diminished due to the disfigurement suffered by his wife. In actual damages incurred for the treatment of injuries
G.R. No. 99343, the transport company which owned the bus that sustained by their driver Porfirio Legaspi in the amount of
collided with the victims' pickup truck, asks for exoneration by SIX THOUSAND THREE HUNDRED TWENTY EIGHT and
invoking an alleged fortuitous event as the cause of the mishap. 19/100 (P6,328.19) PESOS; and

Petitioners in both cases assail the Decision, 1 dated March 13, 2. To pay plaintiff Porfirio Legaspi moral damages in the
1991, in CA-GR CV No. 23361 of the Court of Appeals, Sixth amount of TEN THOUSAND and 00/100 (P10,000.00)
Division 2 ordering the following: 3 PESOS.

For reasons indicated and in the light of the law and Defendant is further ordered to pay the amount of
jurisprudence applicable to the case at bar, the judgment P25,000.00 for and as attorney's fees, and to pay costs.
of the trial court is hereby modified as follows:
All other claims and counterclaims are dismissed.
Under the first cause of action, the defendant is hereby
ordered to pay Lucila H. Kierulf the following: The Facts

(1) For actual damages incurred for hospitalization, The following may be culled from the undisputed factual findings
medical case (sic) and doctor's fees, the sum of of the trial court and Respondent Court of Appeals:
P241,861.81;
The initial investigation conducted by Pfc. D.O. Cornelio disclosed
(2) For moral damages the sum of P200,000.00; that at about 7:45 p.m. of 28 February 1987, the Pantranco bus,
bearing plate number AVE-845 (TB PIL 86), was traveling along
(3) For exemplary damages the amount of P100,000.00. Epifanio de los Santos Avenue (EDSA) from Congressional Avenue
towards Clover Leaf, Balintawak. Before it reached the corner of
Under the second cause of action, to pay Victor Kierulf, by Oliveros Drive, the driver lost control of the bus, causing it to
way of indemnification damage to the Isuzu Carry All with swerve to the left, and then to fly over the center island occupying
plate No. UV PGS 798, the amount of P96,825.15. the east-bound lane of EDSA. The front of the bus bumped the
front portion of an Isuzu pickup driven by Legaspi, which was
Under the third cause of action, to pay Porfirio Legaspi the moving along Congressional Avenue heading towards Roosevelt
following: Avenue. As a result, the points of contact of both vehicles were
damaged and physical injuries were inflicted on Legaspi and his
(1) For moral damages in the amount of P25,000.00; passenger Lucila Kierulf, both of whom were treated at the Quezon
City General Hospital. The bus also hit and injured a pedestrian
(2) To reimburse the plaintiff the amount of P6,328.19 for who was then crossing EDSA.
actual damages incurred in the treatment and
hospitalization of the driver Porfirio Legaspi. Despite the impact, said bus continued to move forward and its
front portion rammed against a Caltex gasoline station, damaging
The defendant is further ordered to pay the amount of its building and gasoline dispensing equipment.
P50,000.00 as fair and reasonable attorney's fees.
As a consequence of the incident, Lucila suffered injuries, as
And to pay the costs of suit. stated in the medical report 6 of the examining physician, Dr.
Pedro P. Solis of the Quezon City General Hospital. The injuries
Respondent Court of Appeals modified the decision of the sustained by Lucila required major surgeries like "tracheotomy,
Regional Trial Court of Quezon City, Branch 92, 4rendered open reduction, mandibular fracture, intermaxillary repair of
on May 24, 1989 in Civil Case No. Q-50732 for damages. multiple laceration" and prolonged treatment by specialists. Per
The dispositive portion of the said decision is quoted medical report of Dr. Alex L. Castillo, Legaspi also suffered
below: 5 injuries. 7

WHEREFORE, in view of the foregoing, judgment is hereby

rendered against the defendant, ordering Pantranco to pay:
The front portion of the pickup truck, owned by Spouses Kierulf, First Issue: Negligence and Proximate
bearing plate number UV PGS 798, was smashed to pieces. The Cause Are Factual Issues
cost of repair was estimated at P107,583.50.
Even on appeal, Pantranco insists that its driver was not negligent
Pantranco, in its petition, 8 adds that on said day, the above- and that the mishap was due to a fortuitous event. February 28,
mentioned bus was driven by Jose Malanum. While cruising along 1987, the date of the incident, was a Saturday; hence, driving at
EDSA, a used engine differential accidentally and suddenly the speed of 40-50 kilometers per hour (kph) was prudent. It
dropped from a junk truck in front of the bus. Said differential hit contends that the proximate cause was the accidental dropping of
the under chassis of the bus, throwing Malanum off his seat and a used engine differential by a junk truck immediately ahead of
making him lose control of said bus. The bus swerved to the left, the bus. 12
hit the center island, and bumped the pickup of the spouses.
As to what really caused the bus to careen to the opposite lane of
The Issues EDSA and collide with the pickup truck driven by Legaspi is
a factual issue which this Court cannot pass upon. As a rule, the
Spouses Kierulf and their driver Legaspi raise the following jurisdiction of this Court is limited to the review of errors of
assignment of errors in this appeal: 9 law allegedly committed by the appellate court. This Court is not
bound to analyze and weigh all over again the evidence already
A considered in the proceedings below. 13

The respondent court of appeals erred in Although the Court may review factual issues in some
awarding only P200,000.00 and P25,000.00 as instances, 14 the case at bar does not fall under any one of them.
and for moral damages for the petitioners The fact that there is no conflict between the findings of the trial
Kierulf and Legaspi respectively when it should court and respondent Court bolsters our position that a review of
at least have been P1,000,000.00 and the facts found by respondent Court is not necessary. 15 There
P100,000.00 respectively. being no conflict between the findings of the Court of Appeals and
the trial court that gross negligence was the real cause of the
B collision, we see no reason to digress from the standard rule.

The respondent court of appeals erred in We quote with concurrence the factual findings of the appellate
awarding only P100,000.00 to the petitioners and trial courts, showing that the accident was, contrary to the
Kierulf and nothing to petitioner Legaspi as and belief of Pantranco, the result of the gross negligence of its driver.
for exemplary damages when it should have at To wit: 16
least been P500,000.00 and P50,000.00
respectively. The vehicular accident was certainly not due to
a fortuitous event. We agree with the trial
C court's findings that the proximate cause was
the negligence of the defendant's driver, such
The respondent court of appeals erred in not as: (1) Driving at that part of EDSA at 7:45 P.M.
awarding any amount for the lost income due to from Congressional Avenue towards Clover Leaf
the petitioner Lucila H. Kierulf. overpass in the direction of Balintawak at 40-50
kph is certainly not a manifestation of good
D driving habit of a careful and prudent man
exercising the extraordinary diligence required
The respondent court of appeals erred in not by law. Traffic in that place and at that time of
awarding the amount of P107,583.50 for the the day is always heavy. (2) Losing control of the
damages sustained by the Isuzu carry-all pick- wheel in such a place crowded with moving
up truck. vehicles, jumping over the island which
separates the East bound from the West bound
lane of EDSA indicate that the defendant's bus
E
was traveling at a speed limit beyond what a
prudent and careful driver is expected of, if
The respondent court of appeals erred in not
such driver were exercising due diligence
awarding any legal interest on the sums
required by law. (3) Finally, crossing over the
awarded.
island and traversing the opposite lane and
hitting an oncoming vehicle with such force as
On the other hand, Pantranco raises the following assignment of to smash the front of such vehicle and finally
errors: 10 being forced to stop by bumping against a
Caltex service station — all show not only
4.1 The Honorable Court of Appeals erred in negligence, but recklessness of the defendant's
holding that the driver of Pantranco was driver. (4) If defendant's driver was not driving
negligent. fast, was not recklessly negligent and had
exercised due care and prudence, with due
4.2 The Honorable Court of Appeals erred in respect to human life and to others travelling in
holding that the proximate cause of the accident the same place, the driver could have stopped
was the negligence of Pantranco and not a the bus the moment it crossed the island, and
fortuitous event; and avoided crossing over to the other lane and
bumping against vehicles travelling in opposite
4.2 (sic) The Honorable Court of Appeals erred direction. The defendant's driver did not take
in awarding excessive damages. any evasive action and utterly failed to adopt
any measure to avoid injuries and damage to
In sum, Spouses Kierulf and Legaspi argue that the damages others because he "lost control of the bus",
awarded were inadequate while Pantranco counters that they were which was like a juggernaut, let loose in a big
astronomical, bloated and not duly proved. 11 crowd, smashing everything on its path.

The Court's Ruling Second Issue: Moral Damages

Complainants aver that the moral damages awarded by "menacing attitude," no "supercilious manner," no "abusive
Respondent Court are "clearly and woefully not enough." The language and highly scornful reference" was given her. The social
established guideline in awarding moral damages takes into and financial standing of a claimant of moral damages may be
consideration several factors, some of which are the social and considered in awarding moral damages only if he or she was
financial standing of the injured parties and 17 their wounded subjected to contemptuous conduct despite the offender's
moral feelings and personal pride. 18 The Kierulf spouses add that knowledge of his or her social and financial standing. 24
the Respondent Court should have considered another factor: the
loss of their conjugal fellowship and the impairment or destruction Be that as it may, it is still proper to award moral damages to
of their sexual life. 19 Petitioner Lucila for her physical sufferings, mental anguish,
fright, serious anxiety and wounded feelings. She sustained
The spouses aver that the disfigurement of Lucila's physical multiple injuries on the scalp, limbs and ribs. She lost all her
appearance cannot but affect their marital right to "consortium" teeth. She had to undergo several corrective operations and
which would have remained normal were it not for the accident. treatments. Despite treatment and surgery, her chin was still
Thus, the moral damages awarded in favor of Lucila should be numb and thick. She felt that she has not fully recovered from her
increased to P1,000,000.00, not only for Lucila but also for her injuries. She even had to undergo a second operation on her gums
husband Victor who also suffered "psychologically." A California for her dentures to fit. She suffered sleepless nights and shock as
case, Rodriguez vs. Bethlehem Steel Corporation, 20 is cited as a consequence of the vehicular accident. 25 In this light and
authority for the claim of damages by reason of loss or marital considering further the length of time spent in prosecuting the
consortium, i.e. loss of conjugal fellowship and sexual relations. 21 complaint and this appeal, we find the sum of P400,000.00 as
moral damages for Petitioner Lucila to be fair and just under the
Pantranco rebuts that Victor's claim of moral damages on alleged circumstances.
loss of consortium is without legal basis. Article 2219 of the Civil
Code provides that only the person suffering the injury may claim Fourth Issue: Exemplary Damages
moral damages. Additionally, no evidence was adduced to show
that the consortium had indeed been impaired and the Court Complainants also pray for an increase of exemplary damages to
cannot presume that marital relations disappeared with the P500,000.00 and P50,000 for Spouses Kierulf and Legaspi,
accident. 22 respectively. This prayer is based on the pronouncement of this
Court in Batangas Transportation Company vs. Caguimbal 26 that
The Courts notes that the Rodriguez case clearly reversed "it is high time to impress effectively upon public utility operators
the original common law view first enunciated in the case the nature and extent of their responsibility in respect of the
of Deshotel vs. Atchison, 23 that a wife could not recover for the safety of their passengers and their duty to exercise greater care in
loss of her husband's services by the act of a third the selection of drivers and conductors . . . ."
party. Rodriguez ruled that when a person is injured to the extent
that he/she is no longer capable of giving love, affection, comfort Pantranco opposes this, for under Article 2231 of the Civil Code,
and sexual relations to his or her spouse, that spouse has suffered "exemplary damages may be granted if the defendant acted with
a direct and real personal loss. The loss is immediate and gross negligence." And allegedly, gross negligence is sorely lacking
consequential rather than remote and unforeseeable; it is personal in the instant case.
to the spouse and separate and distinct from that of the injured
person. Exemplary damages are designed to permit the courts to mould
behavior that has socially deleterious consequences, and its
Rodriguez involved a couple in their early 20s, who were married imposition is required by public policy to suppress the wanton
for only 16 months and full of dreams of building a family of their acts of an offender. 27However, it cannot be recovered as a matter
own, when the husband was struck and almost paralyzed by a of right. It is based entirely on the discretion of the
falling 600-pound pipe. The wife testified how her life had Court. 28Jurisprudence sets certain requirements before
deteriorated because her husband became a lifelong invalid, exemplary damages may be awarded, to wit: 29
confined to the home, bedridden and in constant need of
assistance for his bodily functions; and how her social, (1) (T)hey may be imposed by way of example or
recreational and sexual life had been severely restricted. It also correction only in addition, among others, to
deprived her of the chance to bear their children. As a constant compensatory damages, and cannot be
witness to her husband's pain, mental anguish and frustration, recovered as a matter of right, their
she was always nervous, tense, depressed and had trouble determination depending upon the amount of
sleeping, eating and concentrating. Thus, the California court compensatory damages that may be awarded to
awarded her damages for loss of consortium. the claimant;

Whether Rodriguez may be cited as authority to support the award (2) the claimant must first establish his right to
of moral damages to Victor and/or Lucila Kierulf for "loss of moral, temperate, liquidated or compensatory
consortium," however, cannot be properly considered in this case. damages; and

Victor's claim for deprivation of his right to consortium, although (3) the wrongful act must be accompanied by
argued before Respondent Court, is not supported by the evidence bad faith, and the award would be allowed only
on record. His wife might have been badly disfigured, but he had if the guilty party acted in a wanton, fraudulent,
not testified that, in consequence thereof, his right to marital reckless, oppressive or malevolent manner.
consortium was affected. Clearly, Victor (and for that matter,
Lucila) had failed to make out a case for loss of consortium, unlike The claim of Lucila has been favorably considered in view of the
the Rodriguez spouse. Again, we emphasize that this claim is finding of gross negligence by Respondent Court on the part of
factual in origin and must find basis not only in the evidence Pantranco. This is made clear by Respondent Court in granting
presented but also in the findings of the Respondent Court. For Lucila's claim of exemplary damages: 30
lack of factual basis, such claim cannot be ruled upon by this
Court at this time. (P)ublic utility operators like the defendant,
have made a mockery of our laws, rules and
Third Issue: No Consideration of Social and regulations governing operations of motor
Financial Standing in this Case vehicles and have ignored either deliberately or
through negligent disregard of their duties to
The social and financial standing of Lucila cannot be considered exercise extraordinary degree of diligence for the
in awarding moral damages. The factual circumstances prior to
the accident show that no "rude and rough" reception, no
 safety of the travelling public and their judicial notice is made by respondent Court of the propensity of
passengers. . . . . motor repair shops to exaggerate their estimates. 38

To give teeth to this warning, the exemplary damages awarded to An estimate, as it is categorized, is not an actual expense incurred
Petitioner Lucila is increased to P200,000.00. The fact of gross or to be incurred in the repair. The reduction made by respondent
negligence duly proven, we believe that Legaspi, being also a Court is reasonable considering that in this instance such
victim of gross negligence, should also receive exemplary damages. estimate was secured by the complainants themselves.
Under the facts proven, the Court awards him P25,000 as
exemplary damages. Epilogue

Fifth Issue: Loss of Earnings as a Component of Damages This Court cannot remind the bench and the bar often enough
that in order that moral damages may be awarded, there must be
Lost income in the amount of P16,500.00 is also claimed by pleading and proof of moral suffering, mental anguish, fright and
Legaspi stating that his "whole future has been the like. While no proof of pecuniary loss is necessary in order
jeopardized." 31 This, in turn, is not rebutted by Pantranco. that moral damages may be awarded, the amount of indemnity
being left to the discretion of the court, 39 it is nevertheless
It should be noted that Respondent Court already considered this essential that the claimant should satisfactorily show the
when it stated that the award of P25,000.00 included existence of the factual basis of
compensation for "mental anguish and emotional strain of not damages 40 and its causal connection to defendant's acts. This is
earning anything with a family to support." Moral damages, so because moral damages, though incapable of pecuniary
though incapable of pecuniary estimation, are in the category of estimation, are in the category of an award designed to
an award designed to compensate the claimant for actual injury compensate the claimant for actual injury suffered and not to
and are not meant to enrich complainant at the expense of impose a penalty on the wrongdoer. 41 In Francisco vs. GSIS, 42 the
defendant. 32 Court held that there must be clear testimony on the anguish and
other forms of mental suffering. Thus, if the plaintiff fails to take
We find, however, the claim of Legaspi to be duly substantiated. the witness stand and testify as to his/her social humiliation,
Pantranco failed to rebut the claim of Porfirio that he had been wounded feelings and anxiety, moral damages cannot be awarded.
incapacitated for ten (10) months and that during said period he In Cocoland Development Corporation vs. National Labor Relations
did not have any income. Considering that, prior to the accident, Commission, 43 the Court held that "additional facts must be
he was employed as a driver and was earning P1,650.00 a month, pleaded and proven to warrant the grant of moral damages under
his claim for P16,500.00 as compensation for loss of earning the Civil Code, these being, . . . social humiliation, wounded
capacity for said period is amply supported by the records 33 and feelings, grave anxiety, etc., that resulted therefrom."
is demandable under Article 2205 of the Civil Code. 34
Moral damages are awarded to enable the injured party to obtain
Complainants contend that Lucila is also entitled to damages for means, diversions or amusements that will serve to alleviate the
"loss or impairment of earning capacity in cases of temporary or moral suffering he/she has undergone, by reason of the
permanent personal injury" under Article 2205 of the Civil Code. defendant's culpable action. 44 Its award is aimed at restoration,
Notably, both the trial court and public respondent denied this as much as possible, of the spiritual status quo ante; thus, it must
prayer because of her failure to produce her income tax returns be proportionate to the suffering inflicted. 45 Since each case must
for the years 1985 and 1986, notwithstanding the production of be governed by its own peculiar circumstances, there is no hard
her 1983 and 1984 income tax returns. and fast rule in determining the proper amount. The yardstick
should be that the amount awarded should not be so palpably and
Pantranco opposes the above claim for loss of earning capacity on scandalously excessive as to indicate that it was the result of
the ground that there is no proof "that for the two years passion, prejudice or corruption on the part of the trial
immediately preceding the accident Lucila was indeed deriving judge. 46 Neither should it be so little or so paltry that it rubs salt
income from some source which was cut off by the accident. 35 to the injury already inflicted on plaintiffs.

We agree with the findings of Respondent Court that Lucila's claim WHEREFORE, premises considered, the petition for review in G.R.
of loss of earning capacity has not been duly proven. The alleged No. 99301 is PARTIALLY GRANTED, while that of Pantranco North
loss must be established by factual evidence for it partakes of Express, Inc., in G.R. No. 99343 is DISMISSED. The Decision
actual damages. A party is entitled to adequate compensation for appealed from is AFFIRMED with MODIFICATION. The award of
such pecuniary loss actually suffered and duly proved. Such moral damages to Lucila and Legaspi is hereby INCREASED to
damages, to be recoverable, must not only be capable of proof, but P400,000.00 and P50,000.00 respectively; exemplary damages to
must actually be shown with a reasonable degree of certainty. We Lucila is INCREASED to P200,000.00. Legaspi is awarded
have emphasized that these damages cannot be presumed, and exemplary damages of P50,000.00. The amount of P 16,500.00 as
courts in making an award must point out specific facts which actual or compensatory damages is also GRANTED to Legaspi. All
can serve as basis for measuring whatever compensatory or actual other awards of Respondent Court of Appeals are AFFIRMED.
damages are borne. 36 Mere proof of Lucila's earnings consisting of Pantranco shall also PAY legal interest of 6% per annum on all
her 1983 and 1984 income tax returns would not suffice to prove sums awarded from the date of promulgation of the decision of the
earnings for the years 1985 and 1986. The incident happened on trial court, May 24, 1989, until actual payment.
February 28, 1987. If indeed Lucila had been earning P50,000.00
every month prior to the accident, as she alleged, there are SO ORDERED.
evidentiary proofs for such earnings other than income tax returns
such as, bur not limited to, payroll receipts, payments to the SSS,
or withholding tax paid every month. Sad to say, these other
proofs have not been presented, and we cannot presume that they
exist on the strength of the word of Lucila alone.

Sixth Issue: Reduction of Actual Damages on

the Pickup Based on an Estimate

Complainants contend that the reduction of 10% from the written

estimate of the cost of repairs by the trial court is pure
speculation. 37 Pantranco opposes this by pointing out that
 For their part, petitioners capitalized on the issue of ownership of
the bus in question. Respondents argued that although the
registered owner was Lim, the actual owner of the bus was SPO1
Cirilo Enriquez (Enriquez), who had the bus attached with
Mayamy Transportation Company (Mayamy Transport) under the
so-called "kabit system." Respondents then impleaded both Lim
G.R. No. 160110               June 18, 2014 and Enriquez.

MARIANO C. MENDOZA and ELVIRA LIM, Petitioners,  Petitioners, on the other hand, presented Teresita Gutierrez
vs. (Gutierrez), whose testimony was offered to prove that Mayamy
SPOUSES LEONORA J. GOMEZ and GABRIEL V. Bus or Mayamy Transport is a business name registered under
GOMEZ, Respondents. her name, and that such business is a sole proprietorship. Such
was presented by petitioners to rebut the allegation of respondents
DECISION that Mayamy Transport is a corporation;15 and to show, moreover,
that although Gutierrez is the sole proprietor of Mayamy
PEREZ, J.: Transport, she was not impleaded by respondents in the case at
bar.16
Assailed in the present appeal by certiorari is the Decision 1 dated
29 September 2003 of the Special Fourth Division of the Court of After weighing the evidence, the RTC found Mendoza liable for
Appeals (CA) in CA-G.R. CV No. 71877, which affirmed with direct personal negligence under Article 2176 of the Civil Code,
modification the Decision2 dated 31 January 2001 of the Regional and it also found Lim vicariously liable under Article 2180 of the
Trial Court (RTC), Branch 172, Valenzuela City in Civil Case No. same Code.
5352-V-97, and which effectively allowed the award of actual,
moral, and exemplary damages, as well as attorney's fees and As regards Lim, the RTC relied on the Certificate of Registration
costs of the suit in favor of respondent Spouses Leonora and issued by the Land Transportation Office on 9 December 1996 17 in
Gabriel Gomez (respondents). concluding that she is the registered owner of the bus in question.
Although actually owned by Enriquez, following the established
Antecedent Facts principle in transportation law, Lim, as the registered owner, is
the one who can be held liable.
On 7 March 1997, an Isuzu Elf truck (Isuzu truck) with plate
number UAW 582,3 owned by respondent Leonora J. Gomez Thus, the RTC disposed of the case as follows:
(Leonora)4 and driven by Antenojenes Perez (Perez), 5 was hit by a
Mayamy Transportation bus (Mayamy bus) with temporary plate WHEREFORE, judgment is hereby rendered in favor of the
number 1376-1280,6 registered under the name of petitioner [respondents] and against the [petitioners]:
Elvira Lim (Lim)7 and driven by petitioner Mariano C. Mendoza
(Mendoza).8 1. Ordering the [petitioners] except Enriquez to pay
[respondents], jointly and severally, the costs of repair of
Owing to the incident, an Information for reckless imprudence the damaged vehicle in the amount of ₱142,757.40;
resulting in damage to property and multiple physical injuries was
filed against Mendoza. 9 Mendoza, however, eluded arrest, thus, 2. Ordering the defendants except Enriquez to pay
respondents filed a separate complaint for damages against [respondents], jointly and severally, the amount of
Mendoza and Lim, seeking actual damages, compensation for lost ₱1,000.00 per day from March 7, 1997 up to November
income, moral damages, exemplary damages, attorney’s fees and 1997 representing the unrealized income of the
costs of the suit.10 This was docketed as Civil Case No. 5352-V-97. [respondents] when the incident transpired up to the
time the damaged Isuzu truck was repaired;
According to PO1 Melchor F. Rosales (PO1 Rosales), investigating
officer of the case, at around 5:30 a.m., the Isuzu truck, coming 3. Ordering the [petitioners] except Enriquez to pay
from Katipunan Road and heading towards E. Rodriguez, Sr. [respondents], jointly and severally, the amount of
Avenue, was travelling along the downward portion of Boni ₱100,000.00 as moral damages, plus a separate amount
Serrano Avenue when, upon reaching the corner of Riviera Street, of ₱50,000.00 as exemplary damages;
fronting St. Ignatius Village, its left front portion was hit by the
Mayamy bus.11 According to PO1 Rosales, the Mayamy bus, while 4. Ordering the [petitioners] except Enriquez to pay
traversing the opposite lane, intruded on the lane occupied by the [respondents], jointly and severally, the amount of
Isuzu truck.12 ₱50,000.00 as attorney’s fees; 5. Ordering the
[petitioners] except Enriquez to pay [respondents] the
PO1 Rosales also reported that Mendoza tried to escape by costs of suit.18
speeding away, but he was apprehended in Katipunan Road
corner C. P. Garcia Avenue by one Traffic Enforcer Galante and a Displeased, petitioners appealed to the CA, which appeal was
security guard of St. Ignatius Village.13 docketed as CA-G.R. CV No. 71877. After evaluating the damages
awarded by the RTC, such were affirmed by the CA with the
As a result of the incident, Perez,as well as the helpers on board exception of the award of unrealized income which the CA ordered
the Isuzu truck, namely Melchor V. Anla (Anla), Romeo J. Banca deleted, viz:
(Banca), and Jimmy Repisada (Repisada), sustained injuries
necessitating medical treatment amounting to ₱11,267.35,which WHEREFORE, premises considered, the appeal is PARTLY
amount was shouldered by respondents. Moreover, the Isuzu GRANTED. The judgment of the Regional Trial Court of Valenzuela
truck sustained extensive damages on its cowl, chassis, lights and City, Branch 172 dated January 31, 2001, is MODIFIED, in that
steering wheel, amounting to ₱142,757.40.14 the award of ₱1,000.00 per day from March 1997 up to November
1997 representing unrealized income is DELETED. The award of
Additionally, respondents averred that the mishap deprived them ₱142,757.40 for the cost of repair of the damaged vehicle, the
of a daily income of ₱1,000.00. Engaged in the business of buying award of ₱100,000.00 as moral damages, the award of ₱50,000.00
plastic scraps and delivering them to recycling plants, as exemplary damages, the award of ₱50,000.00 as attorney’s fees
respondents claimed that the Isuzu truck was vital in the and the costs of the suit are hereby MAINTAINED. 19
furtherance of their business.
The Present Petition
Unsatisfied with the CA ruling, petitioners filed an appeal by observe for the protection of the interests of another person, that
certiorari before the Court, raising the following issues: 20 degree of care, precaution and vigilance which the circumstances
justly demand, whereby such other person suffers injury. 21
1. The court a quo has decided questions of substance in
a way not in accord with law or with the applicable As found by the RTC, and affirmed by the CA, Mendoza was
decisions of the Supreme Court when it awarded: negligent in driving the subject Mayamy bus, as demonstrated by
the fact that, at the time of the collision, the bus intruded on the
a. Moral damages in spite of the fact that the lane intended for the Isuzu truck. Having encroached on the
[respondents’] cause of action is clearly based opposite lane, Mendoza was clearly in violation of traffic laws.
on quasi-delict and [respondents] did not Article2185 of the Civil Code provides that unless there is proof to
sustain physical injuries to be entitled thereto the contrary, it is presumed that a person driving a motor vehicle
pursuant to Article 2219 (2) of the New Civil has been negligent if at the time of the mishap, he was violating
Code and pertinent decisions of the Supreme any traffic regulation. In the case at bar, Mendoza’s violation of
Court to that effect. The court a quo traffic laws was the proximate cause of the harm.
erroneously concluded that the driver acted in
bad faith and erroneously applied the provision Proximate cause is defined as that cause, which, in natural and
of Article 21 of the same code to justify the continuous sequence, unbroken by any efficient intervening
award for bad faith is not consistent with quasi- cause, produces the injury, and without which the result would
delict which is founded on fault or negligence. not have occurred. And more comprehensively, the proximate legal
cause is that acting first and producing the injury, either
b. Exemplary damages in spite of the fact that immediately or by setting other events in motion, all constituting a
there is no finding that the vehicular accident natural and continuous chain of events, each having a close
was due to petitioner-driver’s gross negligence causal connection with its immediate predecessor, the final event
to be entitled thereto pursuant to Article 2231 in the chain immediately effecting the injury as a natural and
of the New Civil Code and pertinent decisions of probable result of the cause which first acted, under such
the Supreme Court to that effect. The factual circumstances that the person responsible for the first event
basis of the court a quo that "the act of the should, as an ordinary prudent and intelligent person, have
driver of the bus in attempting to escape after reasonable ground to expect at the moment of his act or default
causing the accident in wanton disregard of the that an injury to some person might probably result therefrom. 22
consequences of his negligent act is such gross
negligence that justifies an award of exemplary The evidence on record shows that before the collision, the Isuzu
damages" is an act after the fact which is not truck was in its rightful lane, and was even at a stop, having been
within the contemplation of Article 2231 of the flagged down by a security guard of St. Ignatius Village. 23 The
New Civil Code. mishap occurred when the Mayamy bus, travelling at a fast speed
as shown by the impact of the collision, and going in the opposite
c. Attorney’s fees in spite of the fact that the direction as that of the Isuzu truck, encroached on the lane
assailed decisions of the trial court and the rightfully occupied by said Isuzu truck, and caused the latter to
court a quo are bereft with jurisdictions for the spin, injuring Perez, Anla, Banca, and Repisada, and considerably
award of attorney’s fees pursuant to the damaging the Isuzu truck.
pertinent decisions of the Supreme Court on the
matter and provision Article 2208 of the New Having settled the fact of Mendoza’s negligence, then, the next
Civil Code. The court a quo erroneously applied question that confronts us is who may beheld liable. According to
the decision of the Supreme Court in Bañas, Jr. Manresa, liability for personal acts and omissions is founded on
vs. Court of Appeals, 325 SCRA 259. that indisputable principle of justice recognized by all legislations
that when a person by his act or omission causes damage or
The Court’s Ruling prejudice to another, a juridical relation is created by virtue of
which the injured person acquires a right to be indemnified and
The petition is partially meritorious. the person causing the damage is charged with the corresponding
duty of repairing the damage. The reason for this is found in the
Respondents anchor their claim for damages on Mendoza’s obvious truth that man should subordinate his acts to the
negligence, banking on Article 2176 of the Civil Code, to wit: precepts of prudence and if he fails to observe them and causes
damage to another, he must repair the damage.24 His negligence
Whoever by act or omission causes damage to another, there having caused the damage, Mendoza is certainly liable to repair
being fault or negligence, is obliged to pay for the damage done. said damage.
Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is Additionally, Mendoza’s employer may also be held liable under
governed by the provisions of this Chapter. the doctrine of vicarious liability or imputed negligence. Under
such doctrine, a person who has not committed the act or
In impleading Lim, on the other hand, respondents invoke the omission which caused damage or injury to another may
latter’s vicarious liability as espoused in Article 2180 of the same nevertheless be held civilly liable to the latter either directly or
Code: subsidiarily under certain circumstances. 25 In our jurisdiction,
vicarious liability or imputed negligence is embodied in Article
The obligation imposed by Article 2176 is demandable not only for 2180 of the Civil Code and the basis for damages in the action
one’s own acts or omissions, but also for those of persons for under said article is the direct and primary negligence of the
whom one is responsible. employer in the selection or supervision, or both, of his
employee.26
xxxx
In the case at bar, who is deemed as Mendoza’s employer? Is it
Employers shall be liable for the damages caused by their Enriquez, the actual owner of the bus or Lim, the registered owner
employees and household helpers acting within the scope of their of the bus?
assigned tasks, even though the former are not engaged in any
business of industry. In Filcar Transport Services v. Espinas, 27 we held that the
registered owner is deemed the employer of the negligent driver,
The first question to address, then, is whether or not Mendoza’s and is thus vicariously liable under Article 2176, in relation to
negligence was duly proven. Negligence is defined as the failure to Article 2180, of the Civil Code. Citing Equitable Leasing
Corporation v. Suyom,28 the Court ruled that in so far as third
persons are concerned, the registered owner of the motor vehicle Actual or Compensatory Damages. Actual or compensatory
is the employer of the negligent driver, and the actual employer is damages are those awarded in satisfaction of, or in recompense
considered merely as an agent of such owner. Thus, whether there for, loss or injury sustained. They simply make good or replace the
is an employer-employee relationship between the registered loss caused by the wrong.34
owner and the driver is irrelevant in determining the liability of the
registered owner who the law holds primarily and directly Article 2202 of the Civil Code provides that in crimes and quasi
responsible for any accident, injury or death caused by the delicts, the defendant shall be liable for all damages which are the
operation of the vehicle in the streets and highways. 29 natural and probable consequences of the act or omission
complained of. It is not necessary that such damages have been
As early as Erezo v. Jepte,30 the Court, speaking through Justice foreseen or could have reasonably been foreseen by the defendant.
Alejo Labrador summarized the justification for holding the Article 2199 of the same Code, however, sets the limitation that,
registered owner directly liable, to wit: except as provided by law or by stipulation, one is entitled to an
adequate compensation only for such pecuniary loss suffered by
x x x The main aim of motor vehicle registration is to identify the him as he has duly proved. As such, to warrant an award of actual
owner so that if any accident happens, or that any damage or or compensatory damages, the claimant must prove that the
injury is caused by the vehicles on the public highways, damage sustained is the natural and probable consequences of
responsibility therefore can be fixed on a definite individual, the the negligent act and, moreover, the claimant must adequately
registered owner. Instances are numerous where vehicle running prove the amount of such damage.
on public highways caused accidents or injuries to pedestrians or
other vehicles without positive identification of the owner or In the case at bar, the RTC, basing on the receipts submitted by
drivers, or with very scant means of identification. It is to forestall respondents and which receipts petitioners had the opportunity to
these circumstances, so inconvenient or prejudicial to the public, examine, found that the total repairs on the Isuzu truck amounted
that the motor vehicle registration is primarily ordained, in the to ₱142,757.40, and that the full hospitalization and medical
interest of the determination of persons responsible for damages expenses of Perez, Anla, Banca, and Repisada amounted to
or injuries caused on public highways. ₱11,267.35. As such, these are the amounts that respondents are
entitled to as actual and compensatory damages.
"‘One of the principal purposes of motor vehicles legislation is
identification of the vehicle and of the operator, in case of Although respondents alleged in their complaint that the damage
accident; and another is that the knowledge that means of to their Isuzu truck caused them the loss of a daily income of
detection are always available may act as a deterrent from lax ₱1,000.00, such claim was not duly substantiated by any evidence
observance of the law and of the rules of conservative and safe on record, and thus cannot be awarded in their favor.
operation. Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of rendering it Moral Damages. Moral damages are awarded to enable the injured
certain that the violator of the law or of the rules of safety shall party to obtain means, diversions or amusements that will serve to
not escape because of lack of means to discover him." The purpose alleviate the moral suffering he has undergone, by reason of the
of the statute is thwarted, and the displayed number becomes a defendant's culpable action.35
"snare and delusion," if courts will entertain such defenses as that
put forward by appellee in this case. No responsible person or In prayers for moral damages, however, recovery is more an
corporation could be held liable for the most outrageous acts of exception rather than the rule. Moral damages are not meant to be
negligence, if they should be allowed to place a "middleman" punitive but are designed to compensate and alleviate the physical
between them and the public, and escape liability by the manner suffering, mental anguish, fright, serious anxiety, besmirched
in which they recompense their servants. 31 reputation, wounded feelings, moral shock, social humiliation,
and similar harm unjustly caused to a person. To be entitled to
Generally, when an injury is caused by the negligence of a servant such an award, the claimant must satisfactorily prove that he has
or employee, there instantly arises a presumption of law that there suffered damages and that the injury causing it has sprung from
was negligence on the part of the master or employer either in the any of the cases listed in Articles 2219 and 2220 of the Civil Code.
selection of the servant or employee (culpa in eligiendo) or in the Moreover, the damages must be shown to be the proximate result
supervision over him after the selection (culpa vigilando), or both. of a wrongful act or omission. The claimant must thus establish
The presumption is juris tantum and not juris et de jure; the factual basis of the damages and its causal tie with the acts of
consequently, it may be rebutted. Accordingly, the general rule is the defendant.36
that if the employer shows to the satisfaction of the court that in
the selection and supervision of his employee he has exercised the In fine, an award of moral damages calls for the presentation of 1)
care and diligence of a good father of a family, the presumption is evidence of besmirched reputation or physical, mental or
overcome and he is relieved of liability. 32 However, with the psychological suffering sustained by the claimant; 2)a culpable act
enactment of the motor vehicle registration law, the defenses or omission factually established; 3) proof that the wrongful act or
available under Article 2180 of the Civil Code - that the employee omission of the defendant is the proximate cause of the damages
acts beyond the scope of his assigned task or that it exercised the sustained by the claimant; and 4) the proof that the act is
due diligence of a good father of a family to prevent damage – are predicated on any of the instances expressed or envisioned by
no longer available to the registered owner of the motor vehicle, Article 2219 and Article 2220 of the Civil Code. 37
because the motor vehicle registration law, to a certain extent,
modified Article 2180.33 A review of the complaint and the transcript of stenographic notes
yields the pronouncement that respondents neither alleged nor
As such, there can be no other conclusion but to hold Lim offered any evidence of besmirched reputation or physical, mental
vicariously liable with Mendoza. or psychological suffering incurred by them. All that Leonora and
her counsel had to say on the matter of damages other than
This does not mean, however, that Lim is left without any recourse actual or compensatory damages is this:38
against Enriquez and Mendoza. Under the civil law principle of
unjust enrichment, the registered owner of the motor vehicle has a Q: Did you ever spend covering attorney’s fees?
right to be indemnified by the actual employer of the driver; and
under Article 2181 of the Civil Code, whoever pays for the damage A: Yes, sir. ₱50,000.00.
caused by his dependents or employees may recover from the
latter what he has paid or delivered in satisfaction of the claim. Q: Aside from the actual damage that you have mentioned x x x,
how much more would you like this Court to award you by way of
Having identified the persons liable, our next question is what moral damages?
may be awarded.
A: ₱100,000.00, sir. Gross negligence is the absence of care or diligence as to amount
to a reckless disregard of the safety of persons or property. It
Q: How about exemplary damages? evinces a thoughtless disregard of consequences without exerting
any effort to avoid them.46
A: ₱50,000.00, sir.
In the case at bar, having established respondents’ right to
Q: What happened to you, what did you feel when the defendants compensatory damages, exemplary damages are also in order,
failed to immediately repair your vehicle that was damaged given the fact that Mendoza was grossly negligent in driving the
Madam Witness? Mayamy bus. His act of intruding or encroaching on the lane
rightfully occupied by the Isuzu truck shows his reckless
A: I have incurred expenses and I was forced to apply for a loan, disregard for safety.
sir.
In Baño v. Bachelor Express, Inc., et al., 47 where an erring bus, in
39
In Kierulf v. CA,  we observed that this Court cannot remind the the process of overtaking a jeepney, also encroached on the
bench and the bar often enough that in order that moral damages opposite lane, and consequently collided with a dump truck, the
may be awarded, there must be pleading and proof of moral Court held the driver of the bus grossly negligent and affirmed the
suffering, mental anguish, fright and the like. Citing Francisco v. award of exemplary damages. Attorney’s Fees. Article 2208 of the
GSIS,40 the Court held that there must be clear testimony on the Civil Code enumerates the instances when attorney’s fees may be
anguish and other forms of mental suffering. Thus, if the plaintiff recovered:
fails to take the witness stand and testify as to his social
humiliation, wounded feelings and anxiety, moral damages cannot Art. 2208. In the absence of stipulation, attorney’s fees and
be awarded. expenses of litigation, other than judicial costs, cannot be
recovered, except:
Moreover, respondents were not able to show that their claim
properly falls under Articles 2219 and 2220 of the Civil Code. (1) When exemplary damages are awarded;
Respondents cannot rely on Article 2219 (2) of the Civil Code
which allows moral damages in quasi-delicts causing physical (2) When the defendant’s act or omission has compelled
injuries because in physical injuries, moral damages are the plaintiff to litigate with third persons or to incur
recoverable only by the injured party, 41and in the case at bar, expenses to protect his interest;
herein respondents were not the ones who were actually injured.
(3) In criminal cases of malicious prosecution against the
In B.F. Metal (Corp.) v. Sps. Lomotan, et al., 42 the Court, in a plaintiff;
claim for damages based on quasi-delict causing physical injuries,
similarly disallowed an award of moral damages to the owners of (4) In case of a clearly unfounded civil action or
the damaged vehicle, when neither of them figured in the accident proceeding against the plaintiff;
and sustained injuries.
(5) Where the defendant acted in gross and evident bad
Neither can respondents rely on Article 21 of the Civil Code as the faith in refusing to satisfy the plaintiff’s valid and
RTC erroneously did. Article 21 deals with acts contra bonus demandable claim;
mores, and has the following elements: (1) There is an act which is
legal; (2) but which is contrary to morals, good custom, public (6) In actions for legal support;
order, or public policy; (3) and it is done with intent to injure. 43 In
the present case, it can hardly be said that Mendoza’s negligent (7) In actions for the recovery of wages of household
driving and violation of traffic laws are legal acts. Moreover, it was helpers, laborers and skilled workers;
not proven that Mendoza intended to injure Perez, et al. Thus,
Article 21 finds no application to the case at bar. All in all, we find (8) In actions for indemnity under workmen’s
that the RTC and the CA erred in granting moral damages to compensation and employer’s liability laws;
respondents. Exemplary Damages. Article 2229 of the Civil Code
provides that exemplary or corrective damages are imposed, by (9) In a separate civil action to recover civil liability
way of example or correction for the public good, in addition to arising from a crime;
moral, temperate, liquidated or compensatory damages. Article
2231 of the same Code further states that in quasi-delicts, (10) When at least double judicial costs are awarded;
exemplary damages may be granted if the defendant acted with
gross negligence. (11) In any other case where the court deems it just and
equitable that attorney’s fees and expenses of litigation
Our jurisprudence sets certain conditions when exemplary should be recovered;
damages may be awarded: First, they may be imposed by way of
example or correction only in addition, among others, to In all cases, the attorney’s fees and expenses of litigation must be
compensatory damages, and cannot be recovered as a matter of reasonable.
right, their determination depending upon the amount of
compensatory damages that may be awarded to the claimant.
From the very opening sentence of Article 2208 of the Civil Code, it
Second, the claimant must first establish his right to moral,
is clearly intended to retain the award of attorney’s fees as the
temperate, liquidated or compensatory damages. Third, the
exception in our law, as the general rule remains that attorney’s
wrongful act must be accompanied by bad faith, and the award
fees are not recoverable in the absence of a stipulation thereto, the
would be allowed only if the guilty party acted in a wanton,
reason being that it is not sound policy to set a premium on the
fraudulent, reckless, oppressive or malevolent manner. 44
right to litigate.48
In motor vehicle accident cases, exemplary damages may be
As such, in Spouses Agustin v. CA,49 we held that, the award of
awarded where the defendant’s misconduct is so flagrant as to
attorney’s fees being an exception rather than the general rule, it
transcend simple negligence and be tantamount to positive or
is necessary for the court to make findings of facts and law that
affirmative misconduct rather than passive or negative
would bring the case within the exception and justify the grant of
misconduct. In characterizing the requisite positive misconduct
such award. Thus, the reason for the award of attorney’s fees
which will support a claim for punitive damages, the courts have
must be stated in the text of the court’s decision; otherwise, if it is
used such descriptive terms as willful, wanton, grossly negligent,
stated only in the dispositive portion of the decision, the same
reckless, or malicious, either alone or in combination. 45
must be disallowed on appeal.
In the case at bar, the RTC Decision had nil discussion on the 7) MAINTAIN the award of costs of suit.
propriety of attorney’s fees, and it merely awarded such in the
dispositive. The CA Decision, on the other hand, merely stated SO ORDERED.
that the award of attorney’s fees is merited as such is allowed
when exemplary damages are awarded.50 Following established
jurisprudence,51however, the CA should have disallowed on appeal
said award of attorney’s fees as the RTC failed to substantiate said
award. Costs of suit. The Rules of Court provide that, generally,
costs shall be allowed to the prevailing party as a matter of course,
thus:52

Section 1. Costs ordinarily follow results of suit.- Unless otherwise

provided in these rules, costs shall be allowed to the prevailing
party as a matter of course, but the court shall have power, for
special reasons, to adjudge that either party shall pay the costs of
an action, or that the same be divided, as may be equitable. No
costs shall be allowed against the Republic of the Philippines,
unless otherwise provided by law.

In the present case, the award of costs of suit to respondents, as

the prevailing party, is in order. Interests.1âwphi1 Interest by way
of damages has been defined as interest allowed in actions for
breach of contractor tort for the unlawful detention of money
already due. This type of interest is frequently called "moratory
interest." Interest as a part of damage, is allowed, not by
application of arbitrary rules, but as a result of the justice of the
individual case and as compensation to the injured party. 53

The legal provision on interests in quasi-delicts is Article 2211 of

the Civil Code which provides that in crimes and quasi-delicts,
interest as part of the damage, may, in a proper case, be
adjudicated in the discretion of the court.

Generally, interest is allowed as a matter of right for failure to pay

liquidated claims when due.54 For unliquidated claims, however,
Article 2213 of the Civil Code provides that interest cannot be
recovered upon unliquidated claims or damages, except when the
demand can be established with reasonable certainty.

In the case at bar, although the award of exemplary damages is

unliquidated in the sense that petitioners cannot know for sure,
before judgment, the exact amount that they are required to pay
to respondents, the award of actual or compensatory damages,
however, such as the truck repairs and medical expenses, is
arguably liquidated in that they can be measured against a
reasonably certain standard.55 Moreover, justice would seem to
require that the delay in paying for past losses which can be made
reasonably certain should be compensated through an award of
interest.56

WHEREFORE, premises considered, the Court Resolves to

PARTIALLY GRANT the appeal by certiorari, as follows:

1) DECLARE Mariano Mendoza and Elvira Lim solidarily

liable to respondent Spouses Leonora and Gabriel
Gomez;

2) MAINTAIN the award of actual or compensatory

damages in the amount of ₱142,757.40 for the repair of
the Isuzu Elf truck, with legal interest beginning 31
January 2001 until fully paid;

3) GRANT additional actual or compensatory damages in

the amount of ₱11,267.35 for the medical expenses
shouldered by respondent Spouses Leonora and Gabriel
Gomez, with legal interest beginning 31 January 2001
until fully paid;

4) DELETE the award of moral damages;

5) MAINTAIN the award of exemplary damages at

₱50,000.00;

6) DELETE the award of attorney's fees; and

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

6. Costs. (p. 9, Rollo)

G.R. No. 85296 May 14, 1990
Upon motion of Fernandez and before the expiration of the period
ZENITH INSURANCE CORPORATION, petitioner,  to appeal, the trial court, on June 20, 1986, ordered the execution
vs. of the decision pending appeal. The order was assailed by
COURT OF APPEALS and LAWRENCE petitioner in a petition for certiorari with the Court of Appeals on
FERNANDEZ, respondents. October 23, 1986 in C.A. G.R. No. 10420 but which petition was
also dismissed on December 24, 1986 (p. 69, Rollo).
MEDIALDEA, J.:
On June 10, 1986, petitioner filed a notice of appeal before the
Assailed in this petition is the decision of the Court of Appeals in trial court. The notice of appeal was granted in the same order
CA-G.R. C.V. No. 13498 entitled, "Lawrence L. Fernandez, granting private respondent's motion for execution pending
plaintiff-appellee v. Zenith Insurance Corp., defendant-appellant" appeal. The appeal to respondent court assigned the following
which affirmed in toto the decision of the Regional Trial Court of errors:
Cebu, Branch XX in Civil Case No. CEB-1215 and the denial of
petitioner's Motion for Reconsideration. I. The lower court erred in denying defendant
appellant to adduce evidence in its behalf.
The antecedent facts are as follows:
II. The lower court erred in ordering Zenith
On January 25, 1983, private respondent Lawrence Fernandez Insurance Corporation to pay the amount of
insured his car for "own damage" under private car Policy No. P3,640.00 in its decision.
50459 with petitioner Zenith Insurance Corporation. On July 6,
1983, the car figured in an accident and suffered actual damages III. The lower court erred in awarding moral
in the amount of P3,640.00. After allegedly being given a run damages, attorneys fees and exemplary
around by Zenith for two (2) months, Fernandez filed a complaint damages, the worst is that, the court awarded
with the Regional Trial Court of Cebu for sum of money and damages more than what are prayed for in the
damages resulting from the refusal of Zenith to pay the amount complaint. (p. 12, Rollo)
claimed. The complaint was docketed as Civil Case No. CEB-1215.
Aside from actual damages and interests, Fernandez also prayed On August 17, 1988, the Court of Appeals rendered its decision
for moral damages in the amount of P10,000.00, exemplary affirming in toto the decision of the trial court. It also ruled that
damages of P5,000.00, attorney's fees of P3,000.00 and litigation the matter of the trial court's denial of Fernandez's right to adduce
expenses of P3,000.00. evidence is a closed matter in view of its (CA) ruling in AC-G.R.
04644 wherein Zenith's petition questioning the trial court's order
On September 28, 1983, Zenith filed an answer alleging that it submitting the case for decision without Zenith's evidence, was
offered to pay the claim of Fernandez pursuant to the terms and dismissed.
conditions of the contract which, the private respondent rejected.
After the issues had been joined, the pre-trial was scheduled on The Motion for Reconsideration of the decision of the Court of
October 17, 1983 but the same was moved to November 4, 1983 Appeals dated August 17, 1988 was denied on September 29,
upon petitioner's motion, allegedly to explore ways to settle the 1988, for lack of merit. Hence, the instant petition was filed by
case although at an amount lower than private respondent's Zenith on October 18, 1988 on the allegation that respondent
claim. On November 14, 1983, the trial court terminated the pre- Court of Appeals' decision and resolution ran counter to
trial. Subsequently, Fernandez presented his evidence. Petitioner applicable decisions of this Court and that they were rendered
Zenith, however, failed to present its evidence in view of its failure without or in excess of jurisdiction. The issues raised by
to appear in court, without justifiable reason, on the day petitioners in this petition are:
scheduled for the purpose. The trial court issued an order on
August 23, 1984 submitting the case for decision without Zenith's a) The legal basis of respondent Court of
evidence (pp. 10-11, Rollo). Petitioner filed a petition Appeals in awarding moral damages, exemplary
for certiorari with the Court of Appeals assailing the order of the damages and attomey's fees in an amount more
trial court submitting the case for decision without petitioner's than that prayed for in the complaint.
evidence. The petition was docketed as C.A.-G.R. No. 04644.
However, the petition was denied due course on April 29, 1986 (p. b) The award of actual damages of P3,460.00
56, Rollo). instead of only P1,927.50 which was arrived at
after deducting P250.00 and P274.00 as
On June 4, 1986, a decision was rendered by the trial court in deductible franchise and 20% depreciation on
favor of private respondent Fernandez. The dispositive portion of parts as agreed upon in the contract of
the trial court's decision provides: insurance.

WHEREFORE, defendant is hereby ordered to Petitioner contends that while the complaint of private respondent
pay to the plaintiff: prayed for P10,000.00 moral damages, the lower court awarded
twice the amount, or P20,000.00 without factual or legal basis;
1. The amount of P3,640.00 representing the while private respondent prayed for P5,000.00 exemplary
damage incurred plus interest at the rate of damages, the trial court awarded P20,000.00; and while private
twice the prevailing interest rates; respondent prayed for P3,000.00 attorney's fees, the trial court
awarded P5,000.00.
2. The amount of P20,000.00 by way of moral
damages; The propriety of the award of moral damages, exemplary damages
and attorney's fees is the main issue raised herein by petitioner.
3. The amount of P20,000.00 by way of
exemplary damages; The award of damages in case of unreasonable delay in the
payment of insurance claims is governed by the Philippine
4. The amount of P5,000.00 as attorney's fees; Insurance Code, which provides:
 Sec. 244. In case of any litigation for the The amount of P5,000.00 awarded as attomey's fees is justified
enforcement of any policy or contract of under the circumstances of this case considering that there were
insurance, it shall be the duty of the other petitions filed and defended by private respondent in
Commissioner or the Court, as the case may be, connection with this case.
to make a finding as to whether the payment of
the claim of the insured has been unreasonably As regards the actual damages incurred by private respondent,
denied or withheld; and in the affirmative case, the amount of P3,640.00 had been established before the trial
the insurance company shall be adjudged to court and affirmed by the appellate court. Respondent appellate
pay damages which shall consist of attomey's court correctly ruled that the deductions of P250.00 and P274.00
fees and other expenses incurred by the insured as deductible franchise and 20% depreciation on parts,
person by reason of such unreasonable denial respectively claimed by petitioners as agreed upon in the contract,
or withholding of payment plus interest of twice had no basis. Respondent court ruled:
the ceiling prescribed by the Monetary Board of
the amount of the claim due the insured, from Under its second assigned error, defendant-
the date following the time prescribed in section appellant puts forward two arguments, both of
two hundred forty-two or in section two which are entirely without merit. It is contented
hundred forty-three, as the case may be, until that the amount recoverable under the
the claim is fully satisfied; Provided, That the insurance policy defendant-appellant issued
failure to pay any such claim within the time over the car of plaintiff-appellee is subject to
prescribed in said sections shall be deductible franchise, and . . . .
considered prima facie evidence of unreasonable
delay in payment. The policy (Exhibit G, pp. 4-9, Record), does not
mntion any deductible franchise, . . . (p.
It is clear that under the Insurance Code, in case of unreasonable 13, Rollo)
delay in the payment of the proceeds of an insurance policy, the
damages that may be awarded are: 1) attorney's fees; 2) other Therefore, the award of moral damages is reduced to P10,000.00
expenses incurred by the insured person by reason of such and the award of exemplary damages is hereby deleted. The
unreasonable denial or withholding of payment; 3) interest at awards due to private respondent Fernandez are as follows:
twice the ceiling prescribed by the Monetary Board of the amount
of the claim due the injured; and 4) the amount of the claim. 1) P3,640.00 as actual claim plus interest of
twice the ceiling prescribed by the Monetary
As regards the award of moral and exemplary damages, the rules Board computed from the time of submission of
under the Civil Code of the Philippines shall govern. proof of loss;

"The purpose of moral damages is essentially indemnity or 2) P10,000.00 as moral damages;

reparation, not punishment or correction. Moral damages are
emphatically not intended to enrich a complainant at the expense 3) P5,000.00 as attorney's fees;
of a defendant, they are awarded only to enable the injured party
to obtain means, diversions or amusements that will serve to 4) P3,000.00 as litigation expenses; and
alleviate the moral suffering he has undergone by reason of the
defendant's culpable action." (J. Cezar S. Sangco, Philippine Law 5) Costs.
on Torts and Damages, Revised Edition, p. 539) (See also R and B
Surety & Insurance Co., Inc. v. IAC, G.R. No. 64515, June 22,
ACCORDINGLY, the appealed decision is MODIFIED as above
1984; 129 SCRA 745). While it is true that no proof of pecuniary
stated.
loss is necessary in order that moral damages may be adjudicated,
the assessment of which is left to the discretion of the court
SO ORDERED.
according to the circumstances of each case (Art. 2216, New Civil
Code), it is equally true that in awarding moral damages in case of
breach of contract, there must be a showing that the breach was
wanton and deliberately injurious or the one responsible acted
fraudently or in bad faith (Perez v. Court of Appeals, G.R. No. L-
20238, January 30,1965; 13 SCRA 137; Solis v. Salvador, G.R.
No. L-17022, August 14, 1965; 14 SCRA 887). In the instant case,
there was a finding that private respondent was given a "run-
around" for two months, which is the basis for the award of the
damages granted under the Insurance Code for unreasonable
delay in the payment of the claim. However, the act of petitioner of
delaying payment for two months cannot be considered as so
wanton or malevolent to justify an award of P20,000.00 as moral
damages, taking into consideration also the fact that the actual
damage on the car was only P3,460. In the pre-trial of the case, it
was shown that there was no total disclaimer by respondent. The
reason for petitioner's failure to indemnify private respondent
within the two-month period was that the parties could not come
to an agreement as regards the amount of the actual damage on
the car. The amount of P10,000.00 prayed for by private
respondent as moral damages is equitable.

On the other hand, exemplary or corrective damages are imposed

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

Moral damages are not punitive in nature but are designed to

compensate3 and alleviate in some way the physical suffering,
G.R. No. 130030 June 25, 1999 mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar
EXPERTRAVEL & TOURS, INC., petitioner,  injury unjustly caused to a person. Although incapable of
vs. pecuniary computation, moral damages, nevertheless, must
THE HON. COURT OF APPEALS and RICARDO somehow be proportional to and in approximation of the suffering
LO, respondents. inflicted.4 Such damages, to be recoverable, must be the proximate
result of a wrongful act or omission the factual basis for which is
VITUG, J.: satisfactorily established by the aggrieved party. 5 An award of
moral damages would require certain conditions to be met; to wit:
Petitioner, Expertravel and Tours, Inc., seeks in the instant (1) First, there must be an injury, whether physical, mental or
petition for review on certiorari a modification of the decision, psychological, clearly sustained by the claimant; (2) second, there
dated 20 March 1997, of the Court of Appeals affirming in toto the must be a culpable act or omission factually established; (3) third,
07th November 1994 judgment of the Regional Trial Court (Branch the wrongful act or omission of the defendant is the proximate
5) of Manila, the dispositive portion of which reads: cause of the injury sustained by the claimant; and (4) fourth, the
award of damages is predicated on any of the cases stated in
WHEREFORE, in view of all the foregoing, Article 2219.6 Under the provisions of this law, in culpa
judgment is rendered declaring the instant suit contractual or breach of contract, moral damages may be
DISMISSED, and hereby orders the plaintiff to recovered when the defendant acted in bad faith or was guilty of
pay defendant Ricardo Lo moral damages in the gross negligence (amounting to bad faith) or in wanton disregard
amount of P30,000.00; attorney's fees in the of his contractual obligation and, exceptionally, when the act of
amount of P10,000.00, and to pay the costs of breach of contract itself is constitutive of tort resulting in physical
the suit. injuries.7 By special rule in Article 1764, in relation to Article
2206, of the Civil Code, moral damages may also be awarded in
No pronouncement as to other damages for lack case the death of a passenger results from a breach of carriage.
of evidence to warrant the same. 1 In culpa aquiliana, or quasi-delict, (a) when an act or omission
causes physical injuries, or (b) where the defendant is guilty of
intentional tort,8 moral damages may aptly be recovered. This rule
The factual and case settings of the controversy are culled from
also applies, as aforestated, to contracts when breached by tort.
the pleadings on record and the assailed decision of the appellate
In culpa criminal, moral damages could be lawfully due when the
court and that of the court a quo.
accused is found guilty of physical injuries, lascivious acts,
adultery or concubinage, illegal or arbitrary detention, illegal
On 07 October 1987, Expertravel & Tours, Inc., ("Expertravel"), a
arrest, illegal search, or defamation. Malicious prosecution can
domestic corporation engaged in the travel agency business,
also give rise to a claim for moral damages. The term "analogous
issued to private respondent Ricardo Lo four round-trip plane
cases," referred to in Article 2219, following the ejusdem
tickets for Hongkong, together with hotel accommodations and
generis rule, must be held similar to those expressly enumerated
transfers, for a total cost of P39,677.20. Alleging that Lo had failed
by the law. 9
to pay the amount due, Expertravel caused several demands to be
made. Since the demands were ignored by Lo, Expertravel filed a
Although the institution of a clearly unfounded civil suit can at
court complaint for recovery of the amount claimed plus damages.
times be a legal justification for an award of attorney's
fees, 10 such filing, however, has almost invariably been held not
Respondent Lo explained, in his answer, that his account with
to be a ground for an award of moral
Expertravel had already been fully paid. The outstanding account
damages. 11 The rationale for the rule is that the law could not
was remitted to Expertravel through its then Chairperson, Ms. Ma.
have meant to impose a penalty on the right to litigate. The
Rocio de Vega, who was theretofore authorized to deal with the
anguish suffered by a person for having been made a defendant in
clients of Expertravel. The payment was evidenced by a Monte de
a civil suit would be no different from the usual worry and anxiety
Piedad Check No. 291559, dated 06 October 1987, for P42,175.20
suffered by anyone who is haled to court, a situation that cannot
for which Ms. de Vega, in turn, issued City Trust Check No.
by itself be a cogent reason for the award of moral damages. 12 If
417920 in favor of Expertravel for the amount of P50,000.00, with
the rule were otherwise, then moral damages must every time be
the notation "placement advance for Ricardo Lo, etc." Per its own
awarded in favor of the prevailing defendant against an
invoice, Expertravel received the sum on 10 October 1987.
unsuccessful plaintiff.13
The trial court, affirmed by the appellate court, held that the
The Court confirms, once again, the foregoing rules.
payment made by Lo was valid and bidding on petitioner
Expertravel. Even on the assumption that Ms. de Vera had not
WHEREFORE, the petition is GRANTED and the award of moral
been specifically authorized by Expertravel, both courts said, the
damages to respondent Ricardo Lo under the assailed decision is
fact that the amount "delivered to the latter remain(ed) in its
DELETED. In its other aspects, the appealed decision shall remain
possession up to the present, mean(t) that the amount redounded
undisturbed. No costs.1âwphi1.nêt
to the benefit of petitioner Expertravel, in view of the second
paragraph of Article 1241 of the Civil Code to the effect that
payment made to a third person shall also be valid in so far as it SO ORDERED.
has rebounded to the benefit of the creditor."

In this recourse, petitioner confines itself to the following related

legal issues; viz.:

I. Can moral damages be recovered in a clearly

unfounded suit?

II. Can moral damages be awarded for

negligence or quasi-delict that did not result to
physical injury to the offended party? 2
 Although the arrastre and stevedoring contract (Exh. J) was
disadvantageous to the union, it did not terminate the contract
because its members were in dire need of work and work, which
was not adequately compensated, was preferable to having no
G.R. No. L-28999 May 24, 1977 work at all (204, 214-5, 226-7 tsn May 20, 1960).

COMPAÑIA MARITIMA, plaintiff-appellee,  Upon the expiration of the one-month period, the said contract
vs. was verbally renewed. The company allowed the union to continue
ALLIED FREE WORKERS UNION, SALVADOR T. LLUCH, performing arrastre and stevedoring work.
MARIANO LL. BADELLES, individually and in their capacities
as President and Vice-President, respectively of the Allied On July 23, 1954 the union sent a letter to the company
Free Workers Union, NICANOR HALEBAS and LAURENTINO requesting that it be recognized as the exclusive bargaining unit to
LL. BADELLES, individually and officers of Allied Free load and unload the cargo of its vessels at Iligan City. The
Workers Union, defendants-appellants. company ignored that demand. So, the union filed on August 6,
1954 in the Court of Industrial Relations (CIR) a petition praying
AQUINO, J.: that it be certified as the sole collective bargaining unit.

Antecedents. - Since the onset in 1954 of litigation between the Despite that certification case, the company on August 24, 1954
parties herein, this is the fifth case between them that has been served a written notice on the union that, in accordance with
elevated to this Court. The incidents preceding the instant appeal payment of the 1952 contract, the same would be terminated on
are as follows: August 31, 1954. Because of that notice, the union on August 26,
1954 filed in the CIR charges of unfair labor practice against the
On August 11, 1952 the Compañia Maritima and the Allied Free company.
Workers Union entered into a written contract whereby the union
agreed to perform arrastre and stevedoring work for the On August 31, 1954 the company entered into a new stevedoring
consignees. vessels at Iligan City. The contract was to be effective and arrastre contract with the Iligan Stevedoring Association. On
for one month counted from August 12, 1952. the following day, September 1, the union members picketed the
wharf and prevented the Iligan Stevedoring Association from
It was stipulated that the company could revoke the contract performing arrastre and stevedoring work. The picket lasted for
before the expiration of the term if the union failed to render nine days.
proper service. The contract could be renewed by agreement of the
parties (Exh. J). On September 8, 1954 the company sued the union and its
officers in the Court of First Instance of Lanao for the rescission of
At the time the contract was entered into, the union had just been the aforementioned 1952 contract, to enjoin the union from
organized. Its primordial desire was to find work for its members. interfering with the loading and unloading of the cargo, and for
The union agreed to the stipulation that the company the recovery of damages.
would not be liable for the payment of the services of the union
"for the loading, unloading and deliveries of cargoes" and that the On the following day, September 9, the lower court issued ex
compensation for such services would be paid "by the owners and parte a writ of preliminary injunction after the company had
consigness of the cargoes" as "has been the practice in the port of posted a bond in the sum of P20,000. A few hours lateron that
Iligan City" (Par. 2 of Exh. J). same day the union was allowed to file a counterbond. The
injunction was lifted. The union members resumed their arrastre
The union found out later that that stipulation was oppressive and and stevedoring work.
that the company was unduly favored by that arrangement.
Later, the union assailed in a prohibition action in this Court the
Under the contract, the work of the union consisted of arrastre jurisdiction of the trial court to entertain the action for damages,
and stevedoring service. Arrastre, a Spanish word which refers to and injunction.
hauling of cargo, comprehends the handling of cargo on the wharf
or between the establishment of the consignee or shipper and the A majority of this Court held that the lower court had jurisdiction
ship's tackle. The service is usually performed by longshoremen. to issue the injunction and to take cognizance of the damage suit
filed by the company but that the injunction was void because it
On the other hand, stevedoring refers to the handling of the cargo was issued ex parte and the procedure laid down in section 9(d)
in the holds of the vessel or between the ship's tackle and the of Republic Act No. 875 was not followed by the trial court (Allied
holds of the vessel. Free Workers Union vs. Judge Apostol, 102 Phil. 292, 298).

The shippers and consignees paid the union oth for the arrastre After trial, the lower court rendered a decision dated December 5,
work. They refused to pay for the stevedoring service. They 1960, amended on January 11, 1961, (1) declaring the arrastre
claimed that the shipowner was the one obligated to pay for the and stevedoring contract terminated on August $1, 1954; (2)
stevedoring service because the bill of lading provided that the dismissing the union's counterclaim; (3) ordering the union and
unloading of the cargo was at the shipowner's expense (Exh. 1). its officers to pay solidarily to the company P520,000 as damages,
with six percent interest per annum from September 9, 1954,
On the other hand, the company refused to pay for the stevedoring when the complaint. was filed; (4) permanently enjoining the
service because the contract (Exh. J) explicitly provided that the union from performing any arrastre and stevedoring work for the
compensation for both arrastre and stevedoring work should be company at Iligan City, and (5) requiring the union to post a
paid by the shippers and consignees, as was the alleged practice supersedeas bond in the sum of P520,000 to stay execution.
in Iligan City, and that the shipowner would not be liable for the
payment of such services. The union filed a motion for reconsideration. On the other hand,
the company filed a motion for the execution pending appeal of the
Thus, the issue of whether the company should pay for the money judgment. It filed another motion for the immediate
stevedoring service became a sore point of contention between the issuance of a writ of injunction. That second motion was filed in
parties. The union members labored under the impression that the municipal court of Iligan City in view of the absence of the
they were not being compensated for their stevedoring service as District Judge.
distinguished from arrastre service.
The municipal court issued the writ of injunction. However, this
Court set it aside because it was not an interlocutory order and no
special reasons were adduced to justify its issuance (Allied Free performing arrastre and stevedoring work "during the latter part of
Workers Union vs. Judge Estipona, 113 Phil. 748). the existence" of the contract; P50,000 as moral and exemplary
damages, (not supported by any allegation in the body of the
The union on January 6, 1961 had perfected an appeal from the complaint) and P5,000 as attorney's Considering (10-12, Record
lower court's original decision. It did not appeal from the amended on Appeal).
decision. On March 24, 1962 the lower court issued an order
declaring its amended decision final and executory in view of the On September 15, 1954 the company added a fourth cause
union's failure to appeal therefrom. The court directed the clerk of ofaction to its complaint. It alleged that by reason of the acts of
court to issue a writ of execution. That order was assailed by the harassment and obstruction perpetrated by the union in the
union in a certiorari action filed in this Court. A preliminary loading and unloading ofcargo the company suffered additional
injunction was issued by this Court to restrain the execution of damage in the form of lost and unrealized freight and passenger
the judgment. charges in the amount of P10,000 for September 9 and 10, 1954
(66, Record on Appeal).
On May 16, 1962 this Court dissolved the injunction at the
instance of the company which had filed a counterbond. On November 2, 1954 the company attached to its motion for the
Thereupon, the 225 members of the union yielded their ten-year revival of the injunction against the union an auditor's report
old jobs to the new set of workers contracted by the company. dated September 15, 1954 wherein it was indicated that the
company lost freight revenues amounting to P178,579.20 during
The certiorari incident was decided on June 30, 1966. This Court the period from January 1 to September 7, 1954 (121-143, Record
noted that the lower court amended its decision for the purpose of on Appeal).
correcting certain errors and omissions which were not
substantial in character and that its amended decision was served On November 27, 1954 the company filed another motion for the
upon the parties after the union had perfected its appeal from the restoration of the injunction. In support of that motion the
original decision. company attached a trip operation report showing the unloaded
cargoes on the consignees. vessels, when they docked at Iligan
Under those circumstances, this Court held that the union's City on September 14, 19, 22 and 26 and October 3 and 5, 1954,
appeal should be given due coarse, subject to the amendment of as well as the delays in their departure (157-162, Record on
its record on appeal. This Court reserved to the members of the Appeal).
union the right to secure restitution under sections 2 and 5, Rule
39 of the Rules of Court (Allied Free Workers Union vs. Estipona, On March 5, 1955 the company added a fifth cause ofaction too
L-19651, June 30, 1966,17 SCRA 513, 64 O.G. 2701). its complaint. It alleged that during the period from September 12
to December 28, 1954 it lost freight charges on unloaded cargoes
Pursuant to that reservation, the union on December 16, 1966 in the sum of P62,680.12, as shown in a detailed statement, and
filed a motion for restitution, praying that its 225 members be that it incurred an estimated amount of P20,000 for overhead
restored to their jobs and that the company be ordered to pay P expenses. for the delay in the dismissal of its vessels attributable
1,620,000 as damages, consisting of the lost earnings during the to the union's unsatisfactory stevedoring and arrastre work (225-
four-years period from May 8, 1962 to May 8, 1966. 229, 237-8, Record on Appeal).

On the other hand, the company in its motion of January 18, Also on March 5, 1955 the union answered the original and
1967 reiterated its 1960 motion for the execution of the lower supplemental complaints. It denied that its members had
court's judgment as to the damages, of P520,000 and the rendered inefficient service. It averred that the termination of the
permanent injunction. contract was prompted by the consignees. desire to give the work
to the Iligan Stevedoring Association which the company had
Later, the company called the lower court's attention to this allegedly organized and subsidized. The union filed a counterclaim
Court's decision dated January 31, 1967. In that decision, this for P200,000 as compensation for its services to the company and
Court affirmed the CIR's decision holding that the company did P500,000 as other damages, (239-252, Record on Appeal).
not commit any unfair labor practice and reversed the CIR's
directive that a certification election be held to determine whether On March 9, 1960 the company filed a third supplemental
the union should be the exonemtod bargaining unit. This Court complaint, It alleged that the continuation of the stevedoring and
held that the union could not act as a collective bargaining unit arrastre work by the union for the company from 1955 to date had
because the union was an independent contractor and its caused losses to the company at the rate of P25,000 annually in
members were not employees of the company (Allied Free Workers the form of lost freight on shutout cargoes and the expenses. for
Union vs. Compañia Maritima, L-22951-2 and L-22971, 19 SCRA the equipment used to assist the union members in performing
258). their work (320-3, Record on Appeal).

The lower court in its order of April 25, 1967 (1) denied the Plaintiff company's evidence. - Jose C. Teves, the consignees.
union's motion for restitution and to stay execution of its amended branch manager at Iligan City, testified that on August 24, 1954
decision on January 11, 1961 and (2) required the union to file a he terminated the arrastre and stevedoring contract with the
supersedeas bond in the sum of P100,000 within thirty days from union (Exh. J) upon instruction of the head office. The contract
notice. The bond was reduced to P50,000 in the lower court's was terminated in order to avoid further losses to the company
order of August 16, 1967. The union posted the bond on August caused by the union's inefficient service (85-86 tsn March 11,
24,1967. 1960).

The lower court approved the union's amended record on appeal After the termination of the contract, the members of the union
in its order of October 6, 1967. allegedly harassed the company with the help of goons. The
cargoes could not be unloaded in spite of the fact that the
The union appealed directly to this Court because the amount company had sought the protection of the law-enforcing
involved exceeds P200,000. The appeal was perfected before authorities (88). The consignees. last recourse was to go to court.
Republic Act No. 5440 took effect on September 9,1968. (89).

Other proceedings. - The company in its original complaint prayed The company supposedly suffered losses as a result of the union's
that the union and its officials be ordered to pay actual damages, inefficient service since September 1, 1954 (91). Teves hired
amounting to P15,000 for the union's failure to load and unload auditors to ascertain the losses suffered by the company during
cargo in and from the consignees. vessels from September 1 to 8, the period from January 1 to September 11, 1954.
1954; P50,000 as damages, due to the union's inefficiency in
The trial court awarded actual damages, amounting to P450,000 (20) Lost freight revenue for 1959, Exh. I-2 7,959.83
on the basis of the auditor's reports, Exhibits A to I. It did not T OT A L - P349,245.3
carefully examine the said exhibits. Contrary to the trial court's 7
impression, Exhibits B, C and D are not auditors' reports. We tabulated the alleged damages, to show that the trial court's
award to the company of P450,000 as damages, is not supported
The trial court did not bother to make a breakdown of the alleged by the evidence. On the other hand, the statement of the
damages, totalling P450,000. The reports of the two hired consignees. counsel that the damages, totalled P412,663.17 (162-
accountants, Demetrio S. Jayme and M. J. Siojo, show the 164 tsn March 11, 1960) is wrong.
following alleged damages, in the aggregate amount of
P349,245.37 (not P412,663.17, as erroneously added by the Teves, the consignees. branch manager, submitted a statement
consignees. counsel, 161,163-4 tsn March 11, 1960): (Exh. K) showing the alleged cost of three forklifts, 200 pieces of
pallet boards, 530 pieces of wire rope slings and two pieces of
TABULATION OF ALLEGED tarpaulins in the total sum of P27,215. In that statement, he
claims that the damages, to the company by reason of the
DAMAGES CLAIMED BY COMPAÑIA MARITIMA depreciation of the said items of equipment amounted to P38,835
or more than the cost thereof.
(1) Freight for 74,751 bags of fertilizer  
allegedly booked for shipment in the   The company's counsel, in his summary of the damages, ignored
company's vessels but loaded in other vessels   the alleged damages, of P38,835 indicated by Teves in Exhibit K.
during the period from Jan. 1 to August 31,   The consignees. counsel relied oth on the auditors' reports,
1954, Statement A in Exh. A, CPA Jayme's   Exhibits A and E to I and on Exhibit B, the chief clerk's statement.
report......................................................... P29,900.40 As already noted, those documents show that the total damages,
(2) Lost freight on other shutout cargoes   claimed by the company amounted to P349,245.37.
for January 1 to August 31, 1954, Statement A  
in Exh. A, of CPA Jayme ......................... 4,339.64 The best evidence on the cost of the said equipment would have
been the sales invoices instead of the oral testimony of Teves. He
(3) Lost freight on shutout cargoes for  
did not produce the sales invoices.
September 2 to 7, 1954 booked for shipment in  
M. V. Mindoro, Panay and Masterhead Knot,  
Teves further testified that Salvador T. Lluch was the president of
Statement B in Exh. A, CPA Jayme's report... 6,167.16
the union; Nicanor Halibas, the treasurer; Mariano Badelles, the
(4) Losses sustained in voyages of M.V.   general manager, and Luarentino Badelles, a vice president.
Panay and Mindoro in four voyages from  
September 4 to 11, 1954, with estimates,   Appellants' statement of facts. - To sustain their appeal, the
Statement B, Exh. A............................... 3,764.50 appellants made the following exceedingly short and deficient
(5) Other estimated losses for the said   recital of the facts:
voyages of M.V. Panay and Mindoro for the  
same period, based on interviews of parties at   Sometime in the month of August, 1954,
the wharf, Statement B, Exh. A............... 10,000.00 defendant, Allied Free Workers Union filed an
(6) Additional subsistence expenses. for the   unfair labor practice case against defendant
M.V. Mindoro and Panay due to the delays in   (should be plaintiff) and its branch manager,
their dismissal from January 1 to August 31,   Mr. Jose Teves, with the Court of Industrial
1954 as certified by the pursers of the two   Relations, Manila, and docketed as Case No.
vessels, Statement C, Exh. A..................... 4,407.50 426-UPL: defendant union also filed a petition
(7) Estimated loss in freight and passenger   for certification election docketed as Case No,
revenue for the period from January 1 to   175-MC against plaintiff; defendant union also
August 31, 1954, based on 1953 freight revenue   filed a notice of strike dated August 27, 1954;
for the same period Statement D, Exh. A..... 100,000.00 the Secretary of Labor wired the public
(8) Estimated loss in passenger fares for   defender, Iligan City, on August 27, 1954 (see
the period from September to December 31,   annexes 1-4, motion to dismiss, Record on
Appeal, pp. 54-65).
1954, Statement D, Exh. A....................... 20,000.00
(9) Lost freight charges from September  
To counteract these legitimate moves of labor,
12 to December 28, 1954, as certified by the  
plaintiff filed the complaint docketed as Civil
chief clerk of the consignees. Iligan office. Exh.  
Case No. 577 in the Court of First Instance of
B............................................................. 62,680.12 Lanao (now Lanao del Norte) for damages,
(10) Estimated overhead expenses for   and/or resolution of contract with writ of
delay of vessels in port, Exh. B................. 20,000.00 preliminary injunction, On a decision adverse to
(11) Forklift operating expenses. for 1955,   their interests, defendants take this appeal.
consisting of salaries and maintenance  
expenses, Exh. E- 1.................................... 5,677.54 On the question of jurisdiction taken before this
(12) Lost freight revenue for 1955, Exh. E-   Honorable Tribunal in G.R. No. L-8876, it was
2............................................................... 17,838.78 held:
(13) Forklift operating expenses. for 1956,  
Exh. F- 1................................................... 3,520.90 ... for the instant case merely refers to the
(14) Lost freight revenue for 1956, Exh. F-2 3,849.56 recovery of damages, occasioned by the
(15) Forklift operating expenses. for 1957,   picketing undertaken by the members of the
Exh. G- 1................................................... 8,259.08 union and the rescission of the arrastre and
(16) Lost freight revenue for 1957, Exh. G-   stevedoring contract previously entered into
2.................................................................... 14,538.10 between the parties.
(17) Forklift operating expenses. for 1958,  
Exh. H-1................................................... 7,503.45 The appellants did not discuss their oral and documentary
(18) Lost freight revenue for 1958, Exh. H-   evidence. *
2............................................................. 10,193.46
(19) Forklift operating expenses. for 1959,   First assignment of error. - The appellants contend that the trial
court erred in awarding to the company actual damages,
Exh. I-1.................................................... 8,745.35
amounting to P450,000, moral damages, of P50,000 and Jayme was not only the friend of Teves but was also his co-
attorney's Considering of P20,000, and in holding that the four employee. Jayme was the consignees. branch manager at Ozamis
officers of the union are solidarily liable for the said damages. City and later at Cagayan de Oro City (217-8 tsn May 20, 1960;
Exh. 12). He suppressed that fact in his report of examination.
Appellants' counsel assailed the award of actual damages, on the Apparently, the practice of accounting was his sideline or he
ground that the auditors' reports, on which they were based, were practised accounting and, as the saying goes, he moonlighted as
hearsay. the consignees. branch manager. Obviously, Jayme would be
biased for the company. He violated a rule of the accountants'
After analyzing the nature of the damages, awarded, how the same code of ethics by not disclosing in his report of examination that
were computed, and the trustworthiness of the company's he was an employee of the company (84 tsn June 2, 1960).
evidence, we find the first assignment of error meritorious.
Accountant Jayme allegedly found from the consignees. records at
We have already stress that, on the basis of the reports of the two Iligan City that its freight and passenger revenue for the eight-
accountants, the damages, claimed by the complaint as a matter month period from January 1 to August 31, 1953 amounted to
of simple addition, does not reach the sum of P 450,000 fixed by P373,333.14 and that for the same period in 1954, that revenue
the trial court. The damages, shown in the accountants' reports amounted to P470,716.29, or an increase of P97,383.12
and in the statement made by the consignees. chief clerk (who did (Statement D of Exh. A, 145, Record on Appeal).
not testify) amount to P349,245.37, or much less than P450,000.
Jayme interpreted those figures as signifying that the company
The company argues that the accountants' reports are admissible would have realized more revenue if the union had rendered better
in evidence because of the rule that "when the original consists of service. He reasoned out that there was a big volume of business
numerous accounts or other documents which cannot be in Iligan City due to the Maria Cristina Fertilizer Plant, Iligan Steel
examined in court without great loss-of time and the fact sought Mill and NPC Hydroelectric Plant. He imagined that the
to be established from them is oth the general result of the whole", consignees. freight revenue during the first eight months of 1954
the original writings need not be produced (Sec. 2[e], Rule 130, could have amounted to at least P600,000 and that since it
Rules of Court). actually realized oth P 470,716.29, its loss of freight revenue for
that period could be "conservatively" estimated at least P100,000
That rule cannot be applied in this case because the voluminous (item 7 of the tabulation of damages).
character of the records, on which the accountants' reports were
based, was not duly established (U. S. vs. Razon and Tayag, 37 He stated that he attached to his report on the comparative
Phil. 856, 861; 29 Am Jur 2nd 529). statement of gross revenue a certificate of the captain of the vessel
Panay showing the delays in its dismissal in Iligan City as
It is also a requisite for the application of the rule that the records indicated in its logbook. No such document was attached to
and accounts should be made accessible to the adverse party so Jayme's report.
that the company, of the summary may be tested on cross-
examination (29 Am Jur 2nd 517-8; 32A C.J.S. 111). And from the fact that the total fares received by the company
during the eight-month period were reduced in the sum of
What applies to this case is the general rule "that an audit made P3,951.58 (Jayme fixed the reduction at the round figure of
by, or the testimony of, a private auditor, is inadmissible in P4,000), he calculated that the company suffered a loss of at least
evidence as proof of the original records, books of accounts, P20,000 in passenger revenue up to December 31, 1954 (Item 8 of
reports or the like" (Anno 52 ALR 1266). the tabulation of damages).

That general rule cannot be relaxed in this case because the Jayme also included in his report (a) damages, amounting to
company failed to make a preliminary showing as to the difficulty P10,000 as his estimate of losses supposedly "based on interviews
or impossibility attending the production of the records in court with disinterested parties at the wharf and city proper customers";
and their examination and analysis as evidence by the court (29 (b) damages, amounting to P3,764.50 allegedly suffered in the
Am Jur 2nd 529). operation of the vessels Mindoro and Panay from September 4 to
11, 1954, consisting of extra meals, expenses. for unloading cargo,
A close scrutiny of the accountants' reports reveals their lack of estimated loss in passage revenue for four voyages, and estimated
probative value. The propriety of allowing the different items of loss from 14 re-routed freights to competing vessels" (consisting of
damages, is discussed below. rice, corn and bananas), and (e) the sum of P4,407.50 as alleged
additional subsistence incurred for the crew of
Unrealized freight and passenger revenue for 1954 ascertained by the Panay and Mindoro from January 1 to August 31, 1954 (items
Accountant Demetrio S. Jayme. - In his report (Exh. A, pp. 134 to 4, 5 and 6 of the tabulation of damages). The records of the purser
147, Record on Appeal), Jayme used the pronouns "we" and "our" and chief steward were allegedly examined in ascertaining those
and made reference to the examination made by the "auditors" damages.
and his accounting office.
It would not be proper to allow Jayme's estimates as recoverable
He did not disclose the names of other "auditors" who assisted damages. They are not supported by reliable evidence. They can
him in making the examination of the consignees. records. hardly be sanctioned by the "generally accepted auditing
standards" alluded to in Jayme's report. The pertinent records of
He gave the impression that he was an independent accountant the company should have been produced in court. The purser and
hired by the company to make a "special investigation" of the steward did not testify.
consignees. losses for the period from January 1 to September 7,
1954. The rule is that the auditor's summary should not include his
conclusions or inferences (29 Am Jur 2d 519). His opinion is not
The truth is that Jayme was a "personal friend" of Teves, the evidence.
consignees. branch manager at Iligan City. Teves was the
consignees. principal witness in this case. He verified the The trial court unreservedly gave credence to the conjectures of
complaint. herein. He signed for the company the stevedoring and Jayme. Obviously, his inflated guesses are inherently speculative
arrastre contract which he later rescinded. In fact, Teves and devoid of probative value. Furthermore, his estimate of the
intervened in the drafting of the contract. It was his Idea that the unrealized freight revenue for January 1 to August 31, 1954
company should not pay the arrastre and stevedoring Considering overlapped with his computation of the lost freight for the
and that those charges should be borne by the shippers and unloaded 74,751 bags of fertilizer and other cargoes covering the
consignees. same period (Statement A of Exh. A).
The foregoing discussion shows Jayme's unreliable modus But as to the damages, of P20,000, Jayme said that he could not
operandi in ascertaining the 1954 losses which the company certify as to their company, because he had not finished his
claimed to have suffered in consequence of the union's alleged investigation (33 tsn March 9, 1955). In spite of that admission,
inefficiency or poor service. It is noteworthy that those losses were the trial court allowed that item of damages.
not averred with particularity and certitude in the consignees.
complaint. The trial court erred in allowing the damages, totalling P82,680.12
because Magante's statement, Exhibit B, is hearsay. Magante
The same observations apply with equal cogency to the damages, should have been proforma. as a witness. Jayme was not
amounting to P40,407.20 as lost freight revenue also for the year competent to take his place since the statement was prepared by
1954 (items 1 to 3 of the tabulation of damages) which were Magante, not by Jayme. More appropriate still, the documents and
computed by Accountant Jayme. records on which the statement was based should have been
proforma. as evidence or at least brought to the court for
Those items refer to (1) the sum of P29,900.40 as lost freight examination by the union's counsel and its accountant. The trial
revenue on 74,751 bags of fertilizer, already mentioned, which court required the production of the manifests supporting
were booked for shipment in the consignees. vessels from January Magante's statement (85-86 tsn march 9, 1955). Only one such
1 to August 31, 1954 but which were allegedly loaded in other manifest, Exhibit C, was produced. The nonproduction of the
vessels; (2) P4,339.64 as unrealized freight revenue for other other records was not explained.
cargoes booked in the consignees. vessels but not loaded therein
during the same eight-month period, and (3) P6,167,16 as Lost freight revenue and operating expenses for the forklifts. - The
unrealized freight revenue on shutout cargoes not loaded in the company claimed as damages, the sum of P87,986.05
consignees. vessels during the six-day period from September 2 to (P151,403.85 as erroneously computed by the consignees.
7, 1954. counsel, 163 tsn March 11, 1950) consisting of supposed
unrealized freight charges for shutout or unloaded cargoes for the
Jayme allegedly based his computations on the records of the year 1955 to 1959 (Exh. E to I, Items 11 to 20 of the tabulation of
company which were not produced in court. The union objected to damages).
Jayme's report as inadmissible under the hearsay rule or as not
being the best evidence. The claim is covered by the company's third supplemental
complaint dated March 9, 1960 wherein it was alleged that due to
Even if the presentation of the records themselves as exhibits the acts of the union and its officers the company had suffered
should have been dispensed with, yet the complaint to show good damages, of not less than P25,000 annually since 1955 (320-3,
faith and fair dealing, could have brought the records in court Record on Appeal). That supplemental complaint was hurriedly
(manifests, bills of lading, receipts for the freights, if any, etc.) and filed during the trial as directed by the trial court.
enabled the court and the union's counsel and its expert
accountant to verify the accuracy of Jayme's summaries. The said damages, were computed in the reports of Miguel J.
Siojo, an accountant who, for two days and nights, March 8 to 10,
Photostatic copies of some manifests and bills of lading proving 1960, or shortly before and during the trial, allegedly examined
that the company was not able to collect the stipulated freight on the consignees. record at Iligan City, such as its cash book, cash
the alleged shutout cargoes should have been proforma. in vouchers, reports to the head office, shipping manifests, and
evidence as supporting papers for Jayme's report. No such liquidation reports. Those records were not produced in court.
exhibits were presented. Their nonproduction was not explained. If the accountant was
able to summarize the contents of those records in two days, they
The flaw or error in relying merely on Jayme's summaries is that, could not have been very voluminous. They should have been
as pointed out by witness Mariano LL. Badelles, cargoes might be offered in evidence.
shutout due to causes other than the supposed inefficiency of the
union. He testified that cargoes were shutout deliberately by the The alleged expenses. in the operation of the forklifts consisted of
company because they could not be loaded in one vessel (for (a) the wates of the operators hired by the company and (b) the
example, 50,000 bags of fertilizer), or a shipper had no allotment, cost of gasoline and oil and expenses. for repair.
or because the company did not want to load cargoes like bananas
(189-194 tsn May 20, 1960). Jayme's summaries did not take into The company's theory is that under the 1952 contract (Exh. J) the
account the probability that a part of the cargo booked in the union was obligated to provide for forklifts in the loading and
consignees. vessel for a certain date might not have been loaded unloading of cargo. Inasmuch as the union allegedly did not have
on that date but was loaded in another vessel of the company forklifts, the complaint to expedite the arrastre and stevedoring
which docked at the port a few days later, In that case, there work, purchase forklifts, hired laborers to operate the same, and
would be no loss of freight revenue. The mere shutting out of paid for the maintenance expenses. The company treated those
cargo in a particular voyage did not ipso facto produce loss of expenses as losses or damages.
freight revenue.
Those alleged damages, amounting to P87,986.05 are in the same
Our conclusion is that an injustice would be perpetrated if the category as the depreciation allowances amounting to P38,835
damages, aggregating P178,579 computed and estimated in the which the company claimed for the forklifts, pallet boards,
report of Jayme, a biased witness, should be accepted at their face tarpaulins and wire rope slings that it purchased for oth P27,215,
value. We have stated that the consignees. counsel ignored that
depreciation in his recapitulation of the damages, claimed by the
Damages computed by Salvador M. Magante. - The company also plaintiff.
claims as damages, for the period from September 12 to December
28, 1954 lost freight charges on shutout cargoes in the sum of The union contends that Siojo's reports (Exh. E to I) were
P62,680.12, and the sum of P20,000 as "overhead expenses. for inadmissible evidence because they were hearsay, meaning that
delay of vessels in port", as set forth by Salvador M. Magante, the the original documents, on which the reports were based, were not
consignees. chief clerk at Iligan City, in his statement, Exhibit B presented in evidence and, therefore, appellants' counsel and the
(items 9 and 10 of the tabulation of damages). court itself were not able to gauge the correctness of the figures or
data contained in the said reports. The person who had personal
Magante did not testify on his statement. Instead, accountant knowledge of the operating expenses. was not examined in court.
Jayme, substituting for Magante, testified on that statement.
Jayme said that he verified the consignees. records on which We are of the opinion that, to avoid fraud or fabrication, the
Magante based his statement. Jayme assured the court that the documents evidencing the alleged expenses. should have been
figures in Magante's statement were supported by the consignees. proforma. in evidence. Siojo's reports were not the best evidence
records. on the said operating expenses. The explanation of Badelles with
respect to shutout cargoes and our observations on Jayme's P500,000 as stevedoring charges for the period from March 4,
summaries are applicable to accountant Siojo's reports. 1955 to March 4, 1960 and additional damages, of P10,000 (308-
10, Record on Appeal). The trial court dismissed the said
A more substantial ground for rejecting Siojo's reports is that the counterclaims.
said expenses, if really incurred, cannot be properly treated as
darn ages to the company. The appellants in their three-sentence argument in support of
their counterclaims alleged that the company's bill of lading
The union's witness, Mariano LI. Badelles, testified that the provided that the unloading of the cargoes was at the consignees.
consignees. forklifts were not used exclusively on the wharf. They expense (Exh. 1); that the company had not paid the sum of
were used in the fertilizer and carbide plants. Sometimes, the P500,000 as compensation for the stevedoring services rendered
union supplied the driver and the gasoline for the operation of the by the laborers up to 1960, and that the stipulation in the arrastre
forklifts (174-177 tsn May 20, 1960). contract, "that the Compañia Maritima shall not be liable for the
payment of the services rendered by the Allied Free Workers Union
Moreover, as stated earlier, the company was not paying the union for the loading and deliveries of cargoes as same is payable by the
a single centavo for arrastre and stevedoring work. The shippers owners and consignees of cargoes, as it has been the practice in
and consignees paid for the arrastre service rendered by the the port of Iligan City" (Exh. J, pp. 14, 334, 359, 500 Record on
union. The union did not receive any compensation for stevedoring Appeal), was 'non- operative" and void, "being contrary to morals
work. and public policy".

The company complained that the union had been rendering That superficial argument is not well-taken. The printed
unsatisfactory arrastre and stevedoring services. That grievance stipulation in the bill of lading was superseded by the contractual
was controverted by the union. stipulation. The contract was prepared by the union officials. As
already noted, it was stipulated in the contract that the
The use of the forklifts, tarpaulins pallet boards and wire rope stevedoring and arrastre charges should be paid by the shippers
slings immeasurably benefitted the company. It is not proper nor and consignees in consonance with the practice in Iligan City.
just that the consignees. investment in those pieces of equipment That stipulation was binding and enforceable.
should be considered damages, just because it was able to bind
the union to a one-sided contract which exempted it from the The supposed illegality of that stipulation was not squarely raised
payment of arrastre and stevedoring Considering and which by the union and its officials in their answer. They merely averred
impliedly obligated the union to purchase the said equipment. that the contract did not express the true agreement of the
parties. They did not sue for reformation of the instrument
If the service rendered by the union members was unsatisfactory, evidencing the contract. The lower court did not err in dismissing
it must be because the poor stevedores were underfed and defendants' counterclaims.
underpaid. They were underfed and underpaid because the
company was astute enough to insure that it would obtain The other two errors assigned by the appellants, namely, that the
stevedoring service without paying for it. lower court erred in issuing a permanent injunction against them
and in executing its decision pending appeal, are devoid of merit.
If to improve the arrastre and stevedoring service, the company
had to incur expenses. for the purchase of forklifts, pallet boards, The appellants invoke section 9(d) of the Magna Carta of Labor
tarpaulins and wire rope slings and for the operation of the regarding the issuance of injunctions. That section has no
forklifts, the union should not be required to reimburse the application to this case because it was definitively ruled by this
company for those expenses. The company should bear those Court in the certification and unfair labor practice cases that there
expenses. because the same redounded to its benefit. is no employer-employee relationship between the company and
the stevedores. (They work under the cabo system).
The trial court erred in ordering the union and its officials to pay
the amount of the said expenses. as damages, to the company. The lower court did not execute the money aspect of its judgment.
It merely required the defendants to file a supersedeas bond of
Moral damages and attorney's fees. - Considering that the P50,000.
consignees. claim for moral damages, was based on the same facts
on which it predicated its claim for actual deduction which we As to the injunction, it should be recalled that it was this Court
have found to be groundless, it follows that the company, a which, in its resolution of May 16, 1962 in the execution and
juridical person, is not entitled to moral damages. appeal incident (L-19651, 17 SCRA 513), allowed the company to
terminate the stevedoring and arrastre work of the union and to
Anyway, the company did not plead and prove moral damages. It use another union to perform that work.
merely claimed moral damages, in the prayer of its complaint.
That is not sufficient (Darang vs. Ty Belizar, L-19487, January 31, The company had the contractual right to terminate the 1952
1967, 19 SCRA 214, 222). contract (Taylor vs. Uy Teng Piao, 43 Phil. 873). The lower court
did not err in sustaining the consignees. rescission of the contract
Under the facts of this case, we do not find any justification for and in enjoining the union from performing arrastre and
awarding attorney's Considering to the company. Hence, the trial stevedoring work.
court's award of P20,000 as attorney's Considering is set aside.
WHEREFORE, that portion of the trial court's judgment declaring
Appellants' first assignment of error, although not properly argued the arrastre and stevedoring contract terminated, permanently
by their counsel, should be sustained. enjoining the union and its officials from performing arrastre and
stevedoring work for the vessels of the Compañia Maritima, and
Other assignments of error. - The union and its officers contend dismissing defendants' counterclaim is affirmed.
that the lower court erred in dismissing their counterclaims. Their
counsel did not even bother to state in their brief the amount of The lower court's award of damages, is reversed and set aside. No
the counterclaims. costs.

The union filed counterclaims for P200,000 as compensation for SO ORDERED.

stevedoring services from August, 1952 to March 4, 1955;
P500,000 as deduction P10,000 as attorney's Considering and
P5,000 as premium on the counterbond (251-2, Record on
Appeal). In their supplemental counterclaim, they demanded
 delivered Account Nos. 8113 for P34.000.00 and
8114 for P12.000.00 to Miss. Gosioco. Mrs.
G.R. No. L-49390 January 28, 1980 Ribaya kept for herself checks Nos. 8115 and
8112 for the sum of P64,000.00. The four (4)
NICETA MIRANDA-RIBAYA and LUIS CARBONELL were a ed by Mrs. Ribaya in the debit-credit
RIBAYA, petitioners,  memo form of the Bautista Logging Company
vs. Inc. (Annex F of the complaint).
MARINO BAUTISTA, ENCARNACION BAUTISTA and the COURT
OF APPEALS, respondents. On the same day, April 24, 1968, Mrs. Ribaya
again sold to the defendants four, (4) pieces of
TEEHANKEE, J.:p worth P94,000.00. The pieces of jewelry sold are
described in paragraph 3 of the complaint and
The Court modifies the decisions of the trial court and of the the delivery of said pieces of jewelry was
Court of Appeals insofar as they denied petitioner's claim for acknowledged by defendant Bautista under
damages and awards to petitioners moral and exemplary damages receipt marked Annex G of the complaint. While
in the amount of 25% of the principal sum adjudged in their favor defendant Bautista issued Bank of America
for the mental anguish and suffering undergone by them as a Checks Nos. DD-8106 forP12,000.00, DD-8111
result of the defraudation wantonly, oppressively and malevolently for P12,000.00, DD-8110 for P35,000.00, and
committed by private respondents and by way of example and DD-8107 for P35,000.00, all post dated June
correction for the public good. 23, 1968, plaintiff Ribaya in turn was made to
sign another voucher dated April 24, 1968
In the decision of the Court of Appeals, 1 the facts of the case as covering the said payment amounting to
lifted from the decision of the Court of First Instance are stated, as P94,000.00 (Annex F of the complaint). This
follows: transaction took place at the office of defendant
Bautista at the Bank of Philippine Islands
Mrs. Niceta Miranda-Ribaya was engaged Building in Manila. During the transaction,
sometime in 1968 in the pawnshop business Gloria Duque, secretary of Mr. Bautista, and
and in the buying and selling of jewelry. Mr. Bautista himself were present aside from
the plaintiff Mrs. Ribaya, Mrs. Bautista was not
Sometime prior to April 23, 1968 one of her present on this occasion.
agents, Mrs. Josefina Roco-Robles, informed her
that a millionaire logger by the name of Marino As some of the owners of the jewelry sold to the
Bautista was interested to buy big diamond defendants by Mrs. Ribaya on April 23, 1968
stones. Acting upon this information, Mrs. and April 24, 1968 wanted to get back their
Ribaya accompanied by her agent, Mrs. Robles, jewelry, Mrs. Ribaya on May 15, 1968 went
decided to drop by the house of Mr. and Mrs. back to the house of the Bautistas accompanied
Marino Bautista on April 23, 1968 at La Salle by Gloria Duque bringing with her three (3)
Street, Greenhills Mandaluyong, Rizal. Mrs. pieces of jewelry more particularly described in
Ribaya was impress by the residence of the Annex L of the complaint which she showed to
Bautista and included within herself that the Mr. Bautista for the purpose of giving said three
Bautistas were millionaires as represented by (3) pieces of jewelry in exchange for some pieces
her agent, Josefina. On that occasion both Mr. previously sold to defendant Bautista. As Mrs.
and Mrs. Bautista were present together with Bautista and her daughter, however, were not
Gloria Duque, the secretary of Mr. Bautista, at home, she was requested by Mr. Bautista to
and the couple's daughter, Teresita Mrs. Ribaya leave said jewelry so that he can show them to
then offered to sell to the Bautistas ten (10) his wife and daughter. Instead of returning the
pieces of jewelry described in paragraph 2 of the jewelry with which she offered to exchange for
complaint for the total amount of P224,000.00. others previously sold, defendant Bautista sent
After some haggling, the Bautista were able to Mrs. Ribaya two (2) days later another Bank of
convince Mrs. Ribaya to sell to them the America check No. DD-8130 for P45,000.00
aforesaid pi of jewelry for the price of postdated July 17, 1968 issued by defendant
P222,000.00. Mr. Bautista acknowledged the Bautista. She was informed by Josefina Robles
receipt of the jewelry as well as the agreed that the said check was in payment of the three
purchase price the f by signing the receipt (3) pieces of jewelry which plaintiff had left in
marked as Annex A and A-1 of the complaint the possession of the defendant Marino
Mrs. Ribaya in turn was paid in the form of the Bautista. She was further informed that the
two (2) Equitable Banking Corporation checks three (3) pieces of jewelry had been given away
Nos. 10767485-A for P112,000.00 (Annex B of by Bautista as presents to some bank officials.
the complaint) and No. 10755100-A for
P110,000.00, both checks postdated June 23, When the maturity dates of the various
1968. Mrs. Ribaya then executed a voucher postdated checks given to Mrs. Ribaya in
evidencing said payment (Annex C of the payment of the different pieces of jewelry
complaint). The next day, plaintiff, accompanied arrived, Mrs. Ribaya tried several times to
by Miss Narcisa Gosioco, went back to see contact defendant Marino Bautista pursuant to
defendant Marino Bautista for the purpose of their agreement but all her efforts were in vain
requesting the latter to break up the Equitable as she was informed that the Bautistas were in
Banking Corporation Check No. 107561,00-A the mountains atten ding to their logging
for P110,000.00 into separate check inasmuch concession.
as part of the jewelry sold to Bautista the
previous day belonged to Mrs. Gosioco Bautista Unable to contact the defendants, Mrs. Ribaya
may accommodated the t of Mm Ribaya by g then deposited to her account at the
said chink with four (4) Bank of Amerca DD- Continental Bank the checks in her possession.
8112 for P14,000.00, DD-8113 for P34,000.00, All the checks paid by the defendant Bautista
DD- 8114 for P12,000.90 and DD-9115 for were dishonored by the bank for the reason that
P50,000.00 P110,000.00, all postdated June the accounts of the defendant were closed.
23, 1968. On the four (4) checks Mrs. Ribaya
 As a former pawnshop operator, she know that Herein petitioners interposed an appeal to the Court of Appeals
Pawnshop owners were required to report their insofar as the trial court failed to grant their claim for moral and
daily transactions with the Manila Police exemplary damages, but respondent appellate court rejected their
Department. Suspecting that the Bautistas appeal and affirmed the appealed decision, finding that (1) as to
might have pawned the pieces of jewelry moral damages, petitioner (therein appellant) Niceta Ribaya had
purchased from her, she went to the pawnshop not mentioned in her testimony in the trial court that she has
section of the Manila Police Department to suffered "mental anguish, serious anxiety, wounded feelings and
verify her suspicion and to her chagrin she moral shock"; and (2) as to exemplary damages, these damages
discovered that most of the jewelry she had sold cannot be recovered as a matter of right and it was not prepared
to the defendants were pledged to various to disturb the lower court's exercise of discretion in this regard.
pawnshops in Manila.
Hence this petition for review, which we find to be meritorious.
Armed with this discovery she was finally able
to comfort the defendant Marino Bautista with Parenthetically, the petition has been submitted without a
her findings. Defendant assured Mrs. Ribaya comment or answer from respondents-spouses despite the fact
that he would pay her their obligation in that on December 8, 1978, they were given through counsel ten
connection with the jewelry transactions. After (10) days from notice thereof to comment. On March 27, 1979,
failing to keep these promises from week to Zosimo T. Fama, a brother of Atty. Bienvenido T. Fama who was
week, Mrs. Ribaya demanded from the the counsel of record for herein respondents-spouses, explained in
defendant Marino Bautista the surrender of the a letter that his brother, the counsel, could not file the required
pawnshop tickets covering the pledge of the comment since he had immigrated to the United states in 1972
different pieces of jewelry he had obtained from and that he could not despite diligent efforts ascertain the
her. Mrs. Ribaya was able to secure these whereabouts of his brother's clients and that their house had long
tickets from the defendant Bautista one by one. been foreclosed by their creditors and the family had been long
The pawnshop tickets were issued in the names ejected therefrom. Per resolution of May 91 1979, this Court, at
of the driver of the Bautista family, their petitioner's instance, ordered that copy of its resolution of
secretary Gloria Duque, Mrs. Bautista, and a December 8, 1978 requiring comment be sent directly to
certain Balagot. With these pawnshop tickets in respondents at their last known address of record at 599 La Salle
her possession, Mrs. Ribaya was able to redeem St., Greenhills Subdivision, Mandaluyong Metro Manila, but the
part of the jewelry she had delivered to the papers were returned unserved. Petitioners were further required
Bautistas after spending P52,900.00 for the to ascertain the correct address of respondents to no avail. It is
redemption price of said jewelry plus interest in noted further that in the trial court, the case was submitted for
the amount of P760.79. decision on the basis of petitioners-plaintiffs' evidence, since
respondents-defendants failed to appear on the date set for the
There were, however, three (3) pawnshop tickets continuation of the hearing and reception of their evidence. It thus
covering jewelry which did not belong to Mrs. clearly appears that respondents have either absconded or have
Ribaya included among the tickets delivered to entirely given up their fdefence. Their failure to answer or to
Mrs. Ribaya and (for) which defendant Bautista comment or to be reached by court processes are declared a
wanted to value at P11,000.00 (Exhibits p. 4 waiver on their part and cannot deter the Court from rendering
and p. 5). These were pawnshop tickets Nos. judgment on the issue properly raised by petitioners, since they
95716, 95719 and 95851, all issued in the had been duly summoned at the commencement of the case and
name of his driver Narciso Amaya and placed under the jurisdiction of our courts in this case.
pertaining to the Aguirre Pawnshop. Mrs.
Ribaya assessed the jewelry covered by these Respondent court quoted in its appealed decision petitioner
three (3) tickets at P25,000.00 and after paying Niceta's testimony, as follows:
P17,000.00 for the redemption of said pieces of
jewelry she credited the Bautistas with Q Now, because of Mr. Bautista's default and your looking
P8,000.00. around in the pawnshops for those pieces of jewelries,
what was the effect on you and your business?
xxx xxx xxx
A I had to close my pawnshop and I had to sell some of my
After computing the value of the pieces of personal jewelries and to borrow money.
jewelry recovered by Mrs. Ribaya and the
disbursements made by her for the redemption Q Why do you have to do that?
of said jewelry and the unrecovered pieces, Mrs.
Ribaya concluded that the balance of the A Because I have also to pay the persons from whom I got
account of the Bautistas for the purchase price the jewelries Mr. Bautista got from me.
of the various pieces of jewelry amounts to
P125,460.79. She added that this amount does Q And you have all paid them now?
not include the amount of the checks delivered
by her to Miss Gosioco. She also testified that A Yes, air.
she has agreed to pay her lawyers an amount
equivalent to 25% of the obligation unpaid by Q And how about you, yourself, what happened?
the Bautistas.
A We are in debt now, up to our head.
In the light of the above factual findings, the trial court rendered
judgment sentencing respondents-defendants to pay petitioners-
Q And what is the effect of your indebtedness to yourself
plaintiffs the sum of P125,460.79 with interest and 25% thereof
for attorney's fees and expenses of litigation. On petitioners' claim
A Extreme. For three months I could not sleep. (t.s.n., pp.
for moral and exemplary damages, respondents had pleaded that
26-28, on Nov. 25, 1969).
respondent Marino Bautista had acted "in utmost good faith" and
that damages in any concept could not be assessed against them,
and then erroneously "noted that it was her indebtedness that
and the trial court upheld them ruling that "the evidence adduced
caused her to have sleepless nights for three months. She did not
by the plaintiffs [was] insufficient to warrant its grant.
mention in her testimony that she suffered mental anguish,
serious anxiety or wounded feelings."
Respondent court, from its wrong premise, then as erroneously We do not share respondent court's narrow view that petitioner
concluded that "(I)n order that moral damages may be awarded, Niceta's failure to use in her testimony the precise legal terms or
there must be pleading and proof of moral suffering, mental "sacramental phrases" of "mental anguish, fright, serious anxiety,
anguish, fright and the like (San Miguel Brewery, Inc. vs. Magno, wounded feelings or moral shock" and the like justifies the denial
21 SCRA 292). While in the complaint of plaintiffs-appellants there of the claim for damages. It is sufficient that these exact terms
is an allegation of mental anguish, serious anxiety, wounded have been pleaded in the complaint 3 and evidence has been
feelings and moral shock, there is no proof of the alleged mental adduced, as cited above, amply supporting the averments of the
anguish, serious anxiety, wounded feelings and moral shock. complaint. Indeed, petitioner Niceta vividly portrayed in simple
There must be clear testimony on the mental anguish, serious terms the moral shock and suffering she underwent as a result of
anxiety, wounded feelings and similar injuries. Plaintiff must respondents' wanton abuse of her good faith and confidence.
testify to his said injury (Francisco vs. Government Service
Insurance System, 7 SCRA 577). It would seem that 'physical Thus, petitioners' testimonial evidence to the effect that petitioner
suffering, mental anguish, fright, serious anxiety, wounded Niceta suffered "extremely" and that for three months she could
feelings, moral shock, and similar injury must be testified to by not sleep was a clear demonstration of her physical suffering,
the plaintiff, and not merely inferred from certain proven facts, mental anguish and serious anxiety and similar injury, resulting
like having sleepless nights. Having sleepness nights is not from respondents' malevolent acts that show her to be clearly
necessarily due to mental anguish, serious anxiety and the like. entitled to moral damages. 4

In denying petitioner's claim for damages because of petitioner Petitioners having established the more damages, are entitled in
Niceta's failure to "mention in her testimony that she suffered addition thereto, to exemplary damages.The wantonness and
mental anguish, serious anxiety or wounded feelings" respondent malevolence through which respondents defrauded petitioners,
court misread the case of Francisco vs. Government Service deceitfully incurring and then evading settlement of their just
Insurance System cited by it. There, this Court had sustained the liability certainly justifies the award of exemplary damages by way
trial court's appealed decision denying the therein prevailing of example and correction for the public good and also to serve as
plaintiff's claim for moral and exemplary damages "not only on a deterrent to the commission of similar misdeeds by others, 5even
account of the plaintiff's failure to take the witness stand and if the transaction were viewed as a breach of civil contract.
testify to her social humiliation, wounded feelings, anxiety, etc.,
but primarily because a breach of contract like that of In Pan Pacific Company (Phil.) vs. Phil. Advertising
defendant, not being malicious or fraudulent, does not warrant the Corporation,  6 this Court awarded moral and exemplary damages,
award of moral damages. 2 in addition to other kinds of damages, to the plaintiff upon ample
demonstration that the defendant therein, in utter disregard of the
Here, the facts and circumstances are totally different. In that contractual rights of therein plaintiff, had refused deliberately and
case, therein plaintiff failed to take the witness stand and wantonly to pay the latter what was justly due under their
defendant's breach of contract was held to be not malicious and contract for installation of bowling alleys and for taking advantage
fraudulent. In the present case, petitioner Niceta took the witness of the plaintiff's good faith, "notwithstanding that the defendant
stand and established by uncontradicted testimony that due to had promised to pay the balance of the price of the bowling alleys.
respondents' deceitful and malevolent acts of defraudation, she Defendant, taking advantage of the plaintiff's good faith, requested
had suffered "extreme" anguish (without using the word anguish) a deferment of the payment until the installation shall have been
and "could not sleep for three months," since she was forced to completed; but the installation having been completed, defendants
close her pawnshop, sell some of her personal jewelries and under one pretext or another, refused without just cause to pay
borrow money in order to pay off the owners of the j ewelries what is due the plaintiff." Here, of course, there was more than
wrongfully gotten by respondents from her. The evidence of record wanton refusal to pay a plainly valid and just contractual debt,
shows the magnitude of respondents' wanton, fraudulent and but a malicious defraudation and gross abuse of petitioners' good
malevolent acts of defraudation. faith, whereby petitioners were wantonly "paid" with bouncing
postdated checks and besides not being paid what was due them,
Thus, we find from the appealed decision that petitioner Niceta had to undergo trauma and travail to redeem with their own and
was misled into believing that respondent Marino Bautista was a borrowed funds from the pawnshops some of the jewelries in order
millionaire when she saw their residence and was told that he was to return them to their owners.
in the logging business and that he could easily pay for the jewelry
because he had log shipments every two months; that all the ACCORDINGLY, the decision of respondent court insofar as it
checks issued by him is in payment of the jewelries bounced with denies petitioners' claim for damages is hereby set aside. In
a note "Account Closed" or were dishonored; that some of the addition to the amounts awarded in the affirmed judgment of the
pieces of jewelry were pawned on the very same day that he got lower court, petitioners are further awarded moral and exemplary
them from petitioners; that after discovering that the jewelries had damages equivalent to twenty-five per cent (25%) of the principal
been pawned with different pawnshops, petitioner Niceta "pleaded" sum of P125,460.79 adjudged in their favor by the lower court.
with respondents to give her the pawnshop tickets so that she With costs.
could redeem them and after weeks of anguished waiting and
pleading, Bautista gave her the pawnshop tickets "one by one", SO ORDERED.
which were issued in the names of the driver of the Bautista
family, their secretary Gloria Duque, Mrs. Bautista and a certain
Balagot; that petitioners, besides not having been paid, had to
raise P82,800.00 plus interest in redeeming the jewelries covered
by the pawnshop tickets, and were now in debt up to their heads;
as a result of which petitioner Niceta suffered "extremely" and she
"could not sleep for three months."

All this was preceded by a long period of serious anxiety: before

respondent Bautista returned to her the pawnshop tickets one by
one, petitioner Niceta had tried to see respondents in vain; they
were always out and did not answer or return her calls; she was
given the run-around at the maturity dates of the various
postdated checks give a her in payment of the different pieces of
jewelry, she tried several times to contact them pursuant to their
agreement, but an her efforts ended in frustration, as she was
informed that respondents were in the mountains attending to
their logging concession.
G.R. No. 118325 January 29, 1997 negligence in failing to deliver the necessary
accessories for the proper installation of the
VIRGILIO M. DEL ROSARIO and CORAZON PAREDES-DEL structure. . . and actually installed inferior
ROSARIO, petitioners,  roofing materials at (private respondents')
vs. residence, in violation of the proper installation
COURT OF APPEALS and METAL FORMING procedure expressly specified in the former's
CORPORATION, respondents. brochures and advertisements for
installation, i.e., the metal tile attached to the
NARVASA, C.J.: roof panels should be by two (2) self-drilling
screws for one [1] metal cleat. However, instead
On August 28, 1995, the Court En Banc promulgated judgment in of conforming with this procedure, (petitioner)
the case of Metal Forming Corporation v. Office of the President, attached some of the metal cleats with only one
etc., et al.,1 dismissing the petitioner's appeal and affirming the (1)-inch ordinary nail each and others were
decision of the Office of the President dated April 30, 1993. The fastened with only one (1) wood screw each.. . ."
latter decision in turn affirmed that of the Department of Trade
and Industry rendered on May 29, 1991 in an administrative case It appears that MFC replaced and repaired the roof free of charge,
initiated against Metal Forming Corporation (hereafter, MFC) by evidently acknowledging that the damage was covered by its one-
complaint of the "spouses Virgillo M. del Rosario and Corazon year warranty on the materials and the installation. The repair
Paredes-del Rosario." work was observed and analyzed by the Esteban Adjusters and
Valuers, Inc., which was engaged by the Del Rosarios to determine
The Del Rosarios' complaint, filed on November 21, 1990, charged the cause of the destruction.3 The repair; work was begun on
MFC with a violation of Section 3 of Act No. 3740, "An Act to October 23, 1989, with the delivery of replacement tiles, and
Penalize Fraudulent Advertising, Mislabeling or Misbranding of Any completed on November 7, 1989. Thereafter the Esteban Adjusters
Product, Stocks, Bonds, etc." It alleged that:2 and Valuers, Inc. submitted its report to the Del Rosarios, dated
November 8, 1989,4 in which it made the following conclusion:
1) "in selling to the public roofing materials
known as "Banawe" shingles, . . . (MFC) made The "Banawe" metal tiles which were detached
representations on the durability of the product from the roof trusses were not fastened with two
and the sturdiness of its installation" through (2) wood screws on each metal cleat as required
massive advertisements in print media and but only with a single wood screw or a
television. . . (and) brochures :" combination of a single wood screw and a 1-
inch nail which is contrary to the design and
2) these representations — particularly those specification. We have observed during the
characterizing the shingles as "STRUCTURALLY course of repai(r) works that some "Banawe"
SAFE AND STRONG" and that the "BANAWE metal tiles installed were no longer than the roof
METAL TILE structure acts as a single unit span, hence there is overlapping on the ridge
against wind and storm pressure due to the roll/hip. It is very evident that the original
strong hook action on its overlaps" — "prompted. subcontractor (which we were not able to
. . (the Del Rosarios) to buy the "Banawe" identify) were in haste to complete the
shingles and. . . (have) them installed at their project. . . .
residence;" but
MFC however declined to concede liability for the other damages
3) "(b)arely two (2) months after completion of claimed by the Del Rosario Spouses to have been caused to the
the installation, portions of the roof of. . . (the interior of their home. This prompted the latter to commence a
Del Rosarios) were blown away by strong wind civil action against MFC on April 16, 1990 in the Regional Trial
brought about by typhoon "Ruping." Court of Manila.5 In this suit, docketed as Civil Case No. 90-
52734, the spouses sought to recover from MFC, damages
After due proceedings, the DTI rendered judgment declaring that resulting from the events just narrated, contending that aside
MFC had indeed misrepresented its product because "as the from the destruction of the roof of their house, injury was also
records showed," strong winds actually blew off part of the caused to its electrical wiring, ceiling, furtures, walls, wall paper,
structure/roof of the Del Rosario Spouses and the same acted in wood parquet flooring and furniture.6 The plaintiff spouses
parts (instead of as a single unit) when strong winds blew, a part reckoned their actual damages at P1,008,003.00 — "representing
remaining while another part was blown off. MFC was accordingly the estimated cost of the repair, restoration and/or replacement of
sentenced to pay an "administrative fine of P10,000.00" (within the damaged areas and items in plaintiffs' house and the .cost of
ten [10] days from finality of the decision), otherwise its "business the inspection conducted by the independent adjuster (engaged by
name and registration. . . would be deemed suspended and its them), with legal interests thereon from 21 February 1990 when
establishment closed until the fine was fully paid." defendant (MFL) received the formal demand from plaintiffs until
fully paid."7 They also prayed for an award to them of moral
As already stated, the decision of the DTI (of May 29, 1991) was, damages in the sum of P3,000,000,00, exemplary damages in the
on appeal, affirmed in toto by the Office of the President on April amount of P1,000,000.00, and attorney's fees in the sum of
30, 1993; and the latter judgment was in turn affirmed by this P1,000,000.00.
Court on August 28, 1995 with a modification solely as to the fine,
which was reduced to P5,000.00. In said judgment of August 28, MFC moved to dismiss the complaint for lack of cause of action. If
1995, this Court, stressing that the factual findings of such stated that it had no contractual relationship with the Del
administrative bodies as the Office of the President are generally Rosarios since the contract for the purchase and installation of
to be accorded respect, if not indeed invested with finality, the roofing, upon which the latter's claims were based, was
pronounced as correct that Office's ruling, among others, that: actually entered into between it and another person, Jesus M.
Puno (an engineer identified as the Del Rosarios' contractor). The
(A)lthough the occurrence of a typhoon is a Trial Court denied the motion. MFC assailed that denial in the
fortuitous event which by itself might have Court of Appeals, but was rebuffed; and its recourse to this Court
exempted petitioner from liability to private (G.R. No. 95514) was also unsuccessful. 8
respondents —
Trial then ensued after which judgment was rendered on
". . . it cannot efface the fundamental fact that November 18, 1991 by the Regional Trial Court in favor of the Del
(petitioner) acted in bad faith and/or with gross Rosarios,9 the dispositive portion of which reads as follows: 10
 WHEREFORE, judgment is hereby rendered in Court's judgment, It ruled that there was no privity of contract
favor of the plaintiff and against the defendant, between the Del Rosarios and MFC, for the following reasons: 15
to pay: —
a. The contracts for the supply of materials and
"a) Actual Damages in the amount of ONE installation of the roof were signed by Engr.
MILLION EIGHT THOUSAND THREE Puno. On the face of the contracts, it does not
(P1,008,003.00) PESOS, with legal interest appear that the Del Rosarios were parties to it
thereon, from June 31, 1990 until fully paid; or that it was entered into for their benefit. It
does not also appear that Engr. Puno acted as
"b) Moral Damages in the amount of FIVE agent of the Del Rosarios nor of the corporation.
HUNDRED THOUSAND (P500,000.00) PESOS;
b. The holding of the trial court that Engr. Puno
"c) Exemplary Damages in the amount of was an agent of the corporation is not borne out
THREE HUNDRED THOUSAND (P300,000.00) by the records. There is no evidence, apart from
PESOS; and Engr. Puno's testimony, to show that any
agency exists.
"d) Attorney's fees and expenses of litigation in
the amount of ONE HUNDRED FIFTY c. The nature of the relationship between the
THOUSAND (P150,000.00) PESOS. Del Rosarios and Engr. Puno is also not clear
from the records of the case.
Counter claims filed by the defendant are
dismissed. d. While it may be implicit in the complaint of
the Del Rosarios that there was a contract
SO ORDERED. between them and the corporation, this is not
supported by the evidence presented.
The Trial Court held the corporation liable for breach of its
contract for the supply and installation of the roofing materials in There being no such privity, according to the Court of Appeals, the
the Del Rosarios' residence. According to the Court: 11 Del Rosarios had no cause of action against MFC for breach of
warranties, there being no law allowing them to proceed directly
The following facts were duly established from against those whom their contractor had subcontracted to furnish
the evidence supporting plaintiffs' claim for materials and do part of the work that the latter was engaged to
damages: perform.16

"1 There was actually serious damages caused The Del Rosarios appealed, and in this Court expectedly present
on plaintiffs' house on account of faulty or for resolution,17 the issue of "'WHETHER OR NOT THERE IS A
inferior installation; PRIVITY OF CONTRACT BETWEEN THE PARTIES,'"

"2. Defendant himself admitted its liability by There is merit in the petition. The essential issue is whether or not
making partial repairs of the roofing of upon the facts established by the evidence, MFC is answerable to
"Banawe" shingles, free of charge, after the the Del Rosarios for the damage caused to the latter's residence
typhoon. . . (Ruping); when its roof, made of shingles purchased from and installed by
the former, was blown away by a typhoon. The Court rules that it
"3. There was an expressed warranty specified is.
in the brochure that there should be two (2)
metal screws for one (1) cleat but the same was The facts on record — including those set forth in the final
violated by the defendant who only used one (1) judgment of the Court En Banc involving the same parties,
1-inch nail or a combination of one (1) metal adverted to in the opening paragraph of this opinion, supra.18 of
screw to one (1) cleat; which judgment official cognizance may properly be, as it is
hereby, taken — constitute adequate basis for a verdict against
"4. There is ample evidence including the MFC. These are the following:
testimony of Engr. Puno that it was defendant
Metal Forming Corporation who. . . (had) a 1. MFC was engaged in the business of selling
contract with the plaintiffs for the supply and to the public roofing materials known as
installation of roofing materials in plaintiffs' "Banawe" shingles or metal tiles, and through
residential house located at No. 17 Tabuena extensive advertisements in media and in its
Street, Corinthian Gardens, Quezon City; and brochures, made representations respecting the
durability of its tiles and the sturdiness of
"5. There was a declared warranty by the roofing installed in accordance with its
defendants relied upon by the plaintiffs and particularly described method, These
that the defendant was guilty of fraud and/or representations included statements that the
breach of warranty." shingles are "STRUCTURALLY SAFE AND
STRONG" and that the "BANAWE METAL
Parenthetically, these conclusions are substantially the same as TILE structure acts as a single unit against wind
those made by the Department of Trade and Industry in its own and storm pressure due to the strong hook action
judgment rendered on May 29, 1991 — affirmed by the Office of on its overlaps."
the President in a decision dated April 30, 1993, and ultimately by
this Court En Banc in its decision promulgated on August 28, 2. After reading MFC's brochures and
1995.12 The Trial Court ruled that there was privity of contract advertisements, the Del Rosario Spouses
between the Del Rosarios and MFC; Engineer Puno acted as MFC's instructed their contractor, Engineer Puno, to
agent in the signing of the contracts for the supply and use the "Banawe" shingles or metal tiles in the
installation of the "Banawe'' shingles; hence, the contract was roofing of their house then under
really between the Del Rosarios and that company. 13 construction.19

MFC appealed to the Court of Appeals. In its Decision 3. In other words, paraphrasing Article 1546 of
promulgated on June 29, 1994.14 said Court reversed the Trial the Civil Code, MFC, as seller to the general
 public had made a affirmations of fact and and asked the latter to make such delivery and installation is of
promises relating to its advertised product, the little moment.
"Banawe" tiles, the natural tendency of which
was to induce the buyers, as infact it did induce Turning now to the matter of damages, it is the Del Rosarios'
the Del Rosarios, to purchase the same, relying contention that the pecuniary detriment to their home amounted
thereon. to P1,008,003.00, covering not only the destruction of the roof,
but also substantial harm to the electrical wiring, ceiling, fixtures,
4. Pursuant to the Del Rosarios' instructions. walls, wallpaper, wood parquet flooring and furniture. 23 They rely
Puno placed orders with MFC and signed the on the Report of the Esteban Adjusters and Valuers, Inc., 24 to
pertinent contracts for the purchase of the which the Regional Trial Court accorded full credit. But that
shingles, accepted deliveries thereof and signed report contains no statement whatever of the amount of the
corresponding invoices, and made payments damage. Indeed, the testimony of Engineer Abril, the
thereon with the spouses funds.20 representative of the Esteban Adjusters and Valuers, Inc., is that
his firm had been retained only to determine the cause of the
5. Deliveries of the "Banawe" metal tiles or damage, not to estimate and assess it.25 A similar aridity as to the
shingles were made by MFC's employees to the amount of the damage, unfortunately characterizes the testimony
construction site of the Del Rosarios' residence; of Atty. Virgilio Del Rosario and the rest of the spouses' proofs.
and installation of the metal tiles in the roof of There is therefore no evidentiary foundation upon which to lay an
the Del Rosario's house was made by MFC's award of actual damages. The Trial Court's grant thereof must be
workers. struck down. Lufthansa German Airlines vs. CA, et al.,
promulgated on April 21, 1995,26 inter alia ruled that:
6. MFC "acted in bad faith and/or with gross
negligence in failing to deliver the necessary Actual or compensatory damages cannot be
accessories for the proper installation of the presumed, but must be duly proved and proved
structure. . . and actually installed inferior with reasonable degree of certainty. A court
roofing materials at (private respondents') cannot rely on speculations, conjectures or
residence, in violation of the proper installation guesswork as to the fact and amount of
procedure expressly specified in the former's damages, but must depend upon competent
brochures and advertisements for installation, proof that they have (been) suffered and on
i.e., the metal tile attached to the roof panels evidence of the actual amount thereof.
should be by two (2) self-drilling screws for one
(1) metal cleat. . . (but) instead of conforming Its grant of moral and exemplary damages was justified by the
with this procedure, (petitioner) attached some Trial Court as follows:27
of the metal cleats with only one (l)-inch
ordinary nail each and others were fastened Form the evidence presented, plaintiffs'
with only one (1) wood screw each. . ."21 sufferings have been duly and substantially
proven by the defendant's fraudulent actuation
7. As a result, barely two (2) months after and breach of warranty, and thereby entitled for
completion of the installation of the roof by the claim of damages and litigation costs as
MFC's workers, portions thereof were blown enunciated by the testimony of the plaintiff...
away by the winds of typhoon "Ruping," that the damages to his house caused
sufferings and feelings of shock. helplessness,
8. MFC replaced the roof free of charge, in fears, embarrassment and anger, thereby
acknowledgment of its one-year warranty on the entitling him to Moral Damages which should
materials and their installation. be assessed at P500,000.00.

All the quibbling about whether Engineer Puno acted as agent of "The moral damages. . . . (are awarded) for
MFC or of the spouses, is pointless. The matter is not a factor in indemnity or reparation not punishment or
determining MFC's liability for its workers' use of inferior correction, that is, an award to entitle the
materials and their defective installation of the "Banawe" metal injured party to obtain means (of) diversions
tiles in the roof of the latter's residence, Prescinding from the and amusement that will serve to alleviate the
persuasive proof on record that at all times material and with moral sufferings he has undergone by reason of
regard to the acquisition and installation of the metal tiles or defendant's culpable action. (RNB Surety and
shingles, Puno was in truth acting as contractor of the Del Ins. Co. v. IAC, G.R No. 64515, June 22, 1984,
Rosarios and on their instructions,22 ascertainment of the definite 129 SCRA 745)."
identity of the person who actually ordered the shingles from MFC
is utterly inconsequential — it might just as well have been a That MFC did in truth act with bad faith, in flagrant breach of its
construction foreman, a trusted domestic, or any friend or express warranties made to the general public and in wanton
acquaintance of the Del Rosarios — in view of the indisputable disregard of the rights of the Del Rosarios who relied on those
fact not only (1) that the tiles were delivered to the Del Rosarios warranties, is adequately demonstrated by the recorded proofs.
and used in fabricating the roof of their home, but also (2) that it The law explicitly authorizes the award of moral damages "in
was the employees and workers of MFC who (a) delivered the breaches of contract where the defendant acted fraudulently or in
shingles or metal tiles to the construction site of the Del Rosarios' bad faith."28 There being, moreover, satisfactory evidence of the
home, and (b) undertook and completed the installation thereof psychological and mental trauma actually suffered by the Del
These they did in bad faith, using inferior materials and Rosarios, the grant to them of moral damages is warranted. Over a
assembling them in a manner contrary to MFC's express period of about a month. they experienced "feelings of shock,
representations in its brochures and advertisements circulated helplessness, fear, embarrassment and anger." 29 As declared by
and broadcast to the general public — which representations had, this Court in Makabili v. Court of Appeals,30 among other
in the first place, induced the Del Rosarios to choose the metal precedents:
tiles in question for their roofing. In fine, since MFC, in bad faith
and with gross negligence, infringed the express warranty made by It is essential. . . . in the award of damages that
it to the general public in connection with the "Banawe" tiles the claimant must have satisfactorily proven
brought to and set up in the house of the Del Rosarios who had during the trial the existence of the factual
relied on the warranty, and thereby caused them considerable basis of the damages and its causal connection
injury, the identity of the individual who actually dealt with MFC to defendant's acts. This is so because moral
damages though incapable of pecuniary
 estimation, are in the category of an award In the same case (PNB v. CA), this Court 35 found the amount of
designed to compensate the claimant for actual exemplary damages required to be paid (P1,000,000.00) "too
injury suffered and not to impose a penalty on excessive" and reduced it to an "equitable level" (P25,000.00).
the wrongdoer (Enervida v. De la Torre, 55
SCRA 340 [1974.] and are allowable only when . . . (T)he award of P1,000,000.00 exemplary
specifically prayed for in the complaint. (San damages is also far too excessive and should
Miguel Brewery, Inc. v. Magno, 21 SCRA 292 likewise be reduced to an equitable level.
[1968]) Exemplary damages are imposed not to enrich
one party or impoverish another but to serve as
As reflected in the records of the case, the Court a deterrent against or as a negative incentive to
of Appeals was in agreement with the findings of curb socially deleterious actions.
the trial court that petitioners suffered anguish,
embarrassment and mental sufferings due to In another case involving strikingly analogous facts decided in
the failure of private respondent to perform its 1994, Geraldez vs. CA.,36 where no actual damages were
obligation to petitioners. According to the Court adjudicated but moral and exemplary damages in similar amounts
of Appeals, private respondent acted in wanton (P500.000.00 and P300,000.00, respectively) were awarded by the
disregard of the rights of petitioners. These Trial Court, as in this case, this Court reduced the amount of
pronouncements lay the basis and justification moral damages to P100,000.00 and of exemplary damages to
for this Court to award petitioners moral and P50,000.00. The Court sees no reason to adopt a different
exemplary damages." treatment in the case at bar, and accordingly reduces the moral
damages from P500,000.00 to P100,000.00, and the exemplary
This Court also agrees with the Trial Court that exemplary damages from P300,000.00 to P50,000.00.
damages are properly exigible of MFC, "Article 2229 of the Civil
Code provides that such damages may be imposed by way of Finally, like the adjudication of actual or compensatory damages,
example or correction for the public good, While exemplary the award of attorney's fees must be deleted. The matter was dealt
damages cannot be recovered as a matter of right, they need not with only in the dispositive portion of the Trial Court's decision.
be proved, although plaintiff must show that he is entitled to Since the judgment does not say why attorney's fees are awarded,
moral, temperate or compensatory damages before the court may there is no basis for such award, which should consequently be
consider the question of whether or not exemplary damages removed. So did this Court rule, for instance, in Scott Consultants
should be awarded."31 "Exemplary damages are imposed not to and Resource Development Corp., Inc. vs. CA, et al.:37
enrich one party or impoverish another but to serve as a deterrent
against or as a negative incentive to curb socially deleterious It is settled that the award of attorney's fees is
actions."32 the exception rather than the rule and counsel's
fees are not to be awarded every time a party
However, the same statutory and jurisprudential standards just wins. The power of the court to award attorney's
mentioned dictate reduction of the amounts of moral and fees under Article 2208 of the Civil Code
exemplary damages fixed by the Trial Court. There is, to be sure, demands factual, legal, and equitable
no hard and fast rule for determining what would be a fair amount justification; its basis cannot be left to
of moral (or exemplary) damages, each case having to be governed speculation or conjecture. Where granted. the
by its attendant particulars, Generally, the amount of moral court must explicitly state in the body of the
damages should be commensurate with the actual loss or injury decision, and not only in the dispositive portion
suffered. In the case of PNB v. C.A, just cited,33 this Court quoted thereof, the legal reason for the award of
with approval the following observation from RCPI attorney's fees.
v. Rodriguez, 34 viz.:
WHEREFORE, the challenged Decision of the Court of Appeals of
. . . Nevertheless, we find the award of June 29, 1994 is REVERSED and SET ASIDE; and the Decision of
P100,000.00 as moral damages in favor of the Regional Trial Court of November 18, 1991 is REINSTATED
respondent Rodriguez excessive and AND AFFIRMED, with the modification that the award of actual
unconscionable. In the case of Prudenciado damages and attorney's fees is deleted, and the moral and
v. Alliance Transport System, Inc. (148 SCRA exemplary damages awarded are reduced from P500,000.00 to
440 [1987]) we said: ". . . [I]t is undisputed that P100,000.00, and from P300,000.00 to P50,000.00, respectively.
the trial courts are given discretion to determine
the amount of moral damages (Alcantara v. IT IS SO ORDERED.
Surro, 93 Phil. 472) and that the Court of
Appeals can only modify or change the amount
awarded when they are palpably and
scandalously excessive "so as to indicate that it
was the result of passion, prejudice or
corruption on the part of the trial court"
(Gellada v. Warner Barnes & Co., Inc., 57 O.G.
[4] 7347, 7358; Sadie v. Bacharach Motors Co.,
Inc., 57 O.G. [4] 636 and Adone v. Bacharach
Motor Co., Inc., 57 O.G. 656). But in more
recent cases where the awards of moral and
exemplary damages are far too excessive
compared to the actual loses sustained by the
aggrieved party, this Court ruled that they
should be reduced to more reasonable amounts.
. . . (Emphasis ours.)

In other words, the moral damages awarded

must be commensurate with the loss or injury
suffered.
G.R. No. 157009               March 17, 2010 administrative liability; and that the respondents failed to prove
their claim for damages.
SULPICIO LINES, INC., Petitioner, 
vs. Ruling of the CA
DOMINGO E. CURSO, LUCIA E. CURSO, MELECIO E. CURSO,
SEGUNDO E. CURSO, VIRGILIO E. CURSO, DIOSDADA E. The respondents appealed to the CA, contending that the RTC
CURSO, and CECILIA E. CURSO, Respondents. erred: (a) in considering itself barred from entertaining the case by
the findings of fact of the SBMI in SBMI-ADM Case No. 08-88; (b)
DECISION in not holding that the petitioner was negligent and did not
exercise the required diligence and care in conducting Dr. Curso
BERSAMIN, J.: to his destination; (c) in not finding that the MV Doña
Marilyn was unseaworthy at the time of its sinking; and (d) in not
Are the surviving brothers and sisters of a passenger of a vessel awarding damages to them.2
that sinks during a voyage entitled to recover moral damages from
the vessel owner as common carrier? In its decision dated September 16, 2002, 3 the CA held and
disposed:
This is the question presented in the appeal taken by the common
carrier from the reversal by the Court of Appeals (CA) of the Based on the events described by the appellee’s witness, the Court
decision of the Regional Trial Court (RTC) dismissing the found inadequate proof to show that Sulpicio Lines, Inc., or its
complaint for various damages filed by the surviving brothers and officers and crew, had exercised the required degree of diligence to
sisters of the late Dr. Cenon E. Curso upon a finding that force acquit the appellee of liability.
majeure had caused the sinking. The CA awarded moral and other
damages to the surviving brothers and sisters. In the first place, the court finds inadequate explanation why the
officers of the M.V. Doña Marilyn had not apprised themselves of
Antecedents the weather reports on the approach of typhoon "Unsang" which
had the power of a signal no. 3 cyclone, bearing upon the general
On October 23, 1988, Dr. Curso boarded at the port of Manila the direction of the path of the M.V. Doña Marilyn. If the officers and
MV Doña Marilyn, an inter-island vessel owned and operated by crew of the Doña Marilyn had indeed been adequately monitoring
petitioner Sulpicio Lines, Inc., bound for Tacloban City. the strength and direction of the typhoon, and had acted promptly
Unfortunately, the MV Doña Marilyn sank in the afternoon of and competently to avoid the same, then such a mishap would not
October 24, 1988 while at sea due to the inclement sea and have occurred.
weather conditions brought about by Typhoon Unsang. The body
of Dr. Curso was not recovered, along with hundreds of other Furthermore, there was no account of the acts and decision of the
passengers of the ill-fated vessel. At the time of his death, Dr. crew of the ill-fated ship from 8:00 PM on October 23, 1988 when
Curso was 48 years old, and employed as a resident physician at the Chief Mate left his post until 4:00 AM the next day when he
the Naval District Hospital in Naval, Biliran. He had a basic resumed duty. It does not appear what occurred during that time,
monthly salary of ₱3,940.00, and would have retired from or what weather reports were received and acted upon by the ship
government service by December 20, 2004 at the age of 65. captain. What happened during such time is important in
determining what information about the typhoon was gathered
On January 21, 1993, the respondents, allegedly the surviving and how the ship officers reached their decision to just change
brothers and sisters of Dr. Curso, sued the petitioner in the RTC course, and not take shelter while a strong typhoon was
in Naval, Biliran to claim damages based on breach of contract of approaching.
carriage by sea, averring that the petitioner had acted negligently
in transporting Dr. Curso and the other passengers. They stated, Furthermore, the Court doubts the fitness of the ship for the
among others, that their parents had predeceased Dr. Curso, who voyage, since at the first sign of bad weather, the ship’s hydraulic
died single and without issue; and that, as such, they were Dr. system failed and had to be repaired mid-voyage, making the
Curso’s surviving heirs and successors in interest entitled to vessel a virtual derelict amidst a raging storm at sea. It is part of
recover moral and other damages.1 They prayed for judgment, as the appellee’s extraordinary diligence as a common carrier to
follows: (a) compensatory damages of ₱1,924,809.00; (b) moral make sure that its ships can withstand the forces that bear upon
damages of ₱100,000.00; (c) exemplary or corrective damages in them during a voyage, whether they be the ordinary stress of the
the amount deemed proper and just; (d) expenses of litigation of at sea during a calm voyage or the rage of a storm. The fact that the
least ₱50,000.00; (e) attorney’s fees of ₱50,000.00; and (f) costs of stud bolts in the ships hydraulic system gave way while the ship
suit. was at sea discredits the theory that the appellee exercised due
diligence in maintaining the seaworthy condition of the M.V. Doña
The petitioner denied liability, insisting that the sinking of the Marilyn. xxx.4
vessel was due to force majeure (i.e., Typhoon Unsang), which
exempted a common carrier from liability. It averred that the xxx
MV Doña Marilyn was seaworthy in all respects, and was in fact
cleared by the Philippine Coast Guard for the voyage; and that Aside from these, the defendant must compensate the plaintiffs for
after the accident it conducted intensive search and rescue moral damages that they suffered as a result of the negligence
operations and extended assistance and aid to the victims and attending the loss of the M.V. Doña Marilyn. Plaintiffs, have
their families. established that they took great pains to recover, in vain, the body
of their brother, at their own cost, while suffering great grief due
Ruling of the RTC to the loss of a loved one. Furthermore, Plaintiffs were unable to
recover the body of their brother. Moral damages worth
On July 28, 1995, the RTC dismissed the complaint upon its ₱100,000.00 is proper.
finding that the sinking of the vessel was due to force majeure. The
RTC concluded that the officers of the MV Doña Marilyn had WHEREFORE, premises considered, the appealed decision of the
acted with the diligence required of a common carrier; that the RTC of Naval, Biliran, Branch 16, rendered in Civil Case No. B-
sinking of the vessel and the death of its passengers, including Dr. 0851, is hereby SET ASIDE. In lieu thereof, judgment is hereby
Curso, could not have been avoided; that there was no basis to rendered, finding the defendant-appellee Sulpicio Lines, Inc, to
consider the MV Doña Marilyn not seaworthy at the time of the have been negligent in transporting the deceased Cenon E. Curso
voyage; that the findings of the Special Board of Marine Inquiry who was on board the ill-fated M.V. Doña Marilyn, resulting in his
(SBMI) constituted to investigate the disaster absolved the untimely death. Defendant-appellee is hereby ordered to pay the
petitioner, its officers, and crew of any negligence and plaintiffs heirs of Cenon E. Curso the following:
 (1) Death indemnity in the amount of ₱50,000.00; The foregoing legal provisions set forth the persons entitled to
moral damages. The omission from Article 2206 (3) of the brothers
(2) Loss of Earning Capacity in the amount of and sisters of the deceased passenger reveals the legislative intent
₱504,241.20; to exclude them from the recovery of moral damages for mental
anguish by reason of the death of the deceased. Inclusio unius est
(3) Moral Damages in the amount of ₱100,000.00. exclusio alterius.10 The solemn power and duty of the courts to
interpret and apply the law do not include the power to correct the
(4) Costs of the suit.5 law by reading into it what is not written therein. 11 Thus, the CA
erred in awarding moral damages to the respondents.
Hence, this appeal, in which the petitioner insists that the CA
committed grievous errors in holding that the respondents were The petitioner has correctly relied on the holding in Receiver for
entitled to moral damages as the brothers and sisters of the late North Negros Sugar Company, Inc. v. Ybañez, 12 to the effect that in
Dr. Curso; that the CA thereby disregarded Article 1764 and case of death caused by quasi-delict, the brother of the deceased
Article 2206 of the Civil Code, and the ruling in Receiver for North was not entitled to the award of moral damages based on Article
Negros Sugar Co., Inc. v. Ybañez,6 whereby the Supreme Court 2206 of the Civil Code.
disallowed the award of moral damages in favor of the brothers
and sisters of a deceased passenger in an action upon breach of a Essentially, the purpose of moral damages is indemnity or
contract of carriage.7 reparation, that is, to enable the injured party to obtain the
means, diversions, or amusements that will serve to alleviate the
Issues moral suffering he has undergone by reason of the tragic event.
According to Villanueva v. Salvador,13 the conditions for awarding
The petitioner raises the following issues: moral damages are: (a) there must be an injury, whether physical,
mental, or psychological, clearly substantiated by the claimant; (b)
ARE THE BROTHERS AND SISTERS OF A DECEASED there must be a culpable act or omission factually established; (c)
PASSENGER IN A CASE OF BREACH OF CONTRACT OF the wrongful act or omission of the defendant must be the
CARRIAGE ENTITLED TO AN AWARD OF MORAL DAMAGES proximate cause of the injury sustained by the claimant; and (d)
AGAINST THE CARRIER? the award of damages is predicated on any of the cases stated in
Article 2219 of the Civil Code.
ASSUMING (THAT) THEY ARE ENTITLED TO CLAIM MORAL
DAMAGES, SHOULD THE AWARD BE GRANTED OR GIVEN TO To be entitled to moral damages, the respondents must have a
THE BROTHER OR SISTER NOTWITHSTANDING (THE) LACK OF right based upon law. It is true that under Article 100314 of the
EVIDENCE AS REGARDS HIS OR HER PERSONAL SUFFERING? Civil Code they succeeded to the entire estate of the late Dr. Curso
in the absence of the latter’s descendants, ascendants, illegitimate
Ruling children, and surviving spouse. However, they were not included
among the persons entitled to recover moral damages, as
enumerated in Article 2219 of the Civil Code, viz:
The petition is meritorious.
Article 2219. Moral damages may be recovered in the following
As a general rule, moral damages are not recoverable in actions
and analogous cases:
for damages predicated on a breach of contract, unless there is
fraud or bad faith.8 As an exception, moral damages may be
awarded in case of breach of contract of carriage that results in (1) A criminal offense resulting in physical injuries;
the death of a passenger,9 in accordance with Article 1764, in
relation to Article 2206 (3), of the Civil Code, which provide: (2) Quasi-delicts causing physical injuries;

Article 1764. Damages in cases comprised in this Section shall be (3) Seduction, abduction, rape or other lascivious acts;
awarded in accordance with Title XVIII of this Book, concerning
Damages. Article 2206 shall also apply to the death of a passenger (4) Adultery or concubinage;
caused by the breach of contract by a common carrier.
(5) Illegal or arbitrary detention or arrest;
Article 2206. The amount of damages for death caused by a crime
or quasi-delict shall be at least three thousand pesos, even though (6) Illegal search;
there may have been mitigating circumstances. In addition:
(7) Libel, slander or any other form of defamation;
(1) The defendant shall be liable for the loss of the
earning capacity of the deceased, and the indemnity shall (8) Malicious prosecution;
be paid to the heirs of the latter; such indemnity shall in
every case be assessed and awarded by the court, unless (9) Acts mentioned in article 309;
the deceased on account of permanent physical disability
not caused by the defendant, had no earning capacity at (10) Acts and actions referred to in articles 21, 26, 27,
the time of his death; 28, 29, 30, 32, 34 and 35.

(2) If the deceased was obliged to give support according The parents of the female seduced, abducted, raped or abused
to the provisions of article 291, the recipient who is not referred to in No. 3 of this article, may also recover moral
an heir called to the decedent's inheritance by the law of damages.
testate or intestate succession, may demand support
from the person causing the death, for a period not The spouse, descendants, ascendants and brothers and sisters
exceeding five years, the exact duration to be fixed by the may bring the action mentioned in No. 9 of this article, in the
court; order named.1avvphi1

(3) The spouse, legitimate and illegitimate descendants Article 2219 circumscribes the instances in which moral damages
and ascendants of the deceased may demand moral may be awarded. The provision does not include succession in the
damages for mental anguish by reason of the death of collateral line as a source of the right to recover moral damages.
the deceased. The usage of the phrase analogous cases in the provision means
simply that the situation must be held similar to those expressly
enumerated in the law in question15 following the ejusdem
generis rule. Hence, Article 1003 of the Civil Code is not
concerned with recovery of moral damages.

In fine, moral damages may be recovered in an action upon breach

of contract of carriage only when: (a) where death of a passenger
results, or (b) it is proved that the carrier was guilty of fraud and
bad faith, even if death does not result. 16 Article 2206 of the Civil
Code entitles the descendants, ascendants, illegitimate children,
and surviving spouse of the deceased passenger to demand moral
damages for mental anguish by reason of the death of the
deceased.17

WHEREFORE, the petition for review on certiorari is granted, and

the award made to the respondents in the decision dated
September 16, 2002 of the Court of Appeals of moral damages
amounting to ₱100,000.00 is deleted and set aside.

SO ORDERED.
 G.R. No. 128690 January 21, 1999 I am trying to say as Viva produces only big
action pictures.
ABS-CBN BROADCASTING CORPORATION, petitioner, 
vs. In fact, I would like to request two (2) additional
HONORABLE COURT OF APPEALS, REPUBLIC runs for these movies as I can only schedule
BROADCASTING CORP, VIVA PRODUCTION, INC., and them in our non-primetime slots. We have to
VICENTE DEL ROSARIO, respondents. cover the amount that was paid for these
movies because as you very well know that non-
DAVIDE, JR., CJ.: primetime advertising rates are very low. These
are the unaired titles in the first contract.
In this petition for review on certiorari, petitioner ABS-CBN
Broadcasting Corp. (hereafter ABS-CBN) seeks to reverse and set 1. Kontra Persa [sic].
aside the decision 1 of 31 October 1996 and the resolution 2 of 10
March 1997 of the Court of Appeals in CA-G.R. CV No. 44125. The 2. Raider Platoon.
former affirmed with modification the decision 3 of 28 April 1993 of
the Regional Trial Court (RTC) of Quezon City, Branch 80, in Civil 3. Underground guerillas
Case No. Q-92-12309. The latter denied the motion to reconsider
the decision of 31 October 1996. 4. Tiger Command

The antecedents, as found by the RTC and adopted by the Court 5. Boy de Sabog
of Appeals, are as follows:
6. Lady Commando
In 1990, ABS-CBN and Viva executed a Film
Exhibition Agreement (Exh. "A") whereby Viva 7. Batang Matadero
gave ABS-CBN an exclusive right to exhibit
some Viva films. Sometime in December 1991, 8. Rebelyon
in accordance with paragraph 2.4 [sic] of said
agreement stating that —. I hope you will consider this request of mine.

1.4 ABS-CBN shall have the right of first refusal The other dramatic films have been offered to us
to the next twenty-four (24) Viva films for TV before and have been rejected because of the
telecast under such terms as may be agreed ruling of MTRCB to have them aired at 9:00
upon by the parties hereto, provided, however, p.m. due to their very adult themes.
that such right shall be exercised by ABS-CBN
from the actual offer in writing. As for the 10 titles I have choosen [sic] from the
3 packages please consider including all the
Viva, through defendant Del Rosario, offered other Viva movies produced last year. I have
ABS-CBN, through its vice-president Charo quite an attractive offer to make.
Santos-Concio, a list of three(3) film packages
(36 title) from which ABS-CBN may exercise its Thanking you and with my warmest regards.
right of first refusal under the afore-said (Signed) Charo Santos-Concio
agreement (Exhs. "1" par, 2, "2," "2-A'' and "2-
B"-Viva). ABS-CBN, however through Mrs.
On February 27, 1992, defendant Del Rosario
Concio, "can tick off only ten (10) titles" (from
approached ABS-CBN's Ms. Concio, with a list
the list) "we can purchase" (Exh. "3" - Viva) and
consisting of 52 original movie titles (i.e. not yet
therefore did not accept said list (TSN, June 8,
aired on television) including the 14 titles
1992, pp. 9-10). The titles ticked off by Mrs.
subject of the present case, as well as 104 re-
Concio are not the subject of the case at bar
runs (previously aired on television) from which
except the film ''Maging Sino Ka Man."
ABS-CBN may choose another 52 titles, as a
total of 156 titles, proposing to sell to ABS-CBN
For further enlightenment, this rejection letter airing rights over this package of 52 originals
dated January 06, 1992 (Exh "3" - Viva) is and 52 re-runs for P60,000,000.00 of which
hereby quoted: P30,000,000.00 will be in cash and
P30,000,000.00 worth of television spots (Exh.
6 January 1992 "4" to "4-C" Viva; "9" -Viva).

Dear Vic, On April 2, 1992, defendant Del Rosario and

ABS-CBN general manager, Eugenio Lopez III,
This is not a very formal business letter I am met at the Tamarind Grill Restaurant in Quezon
writing to you as I would like to express my City to discuss the package proposal of Viva.
difficulty in recommending the purchase of the What transpired in that lunch meeting is the
three film packages you are offering ABS-CBN. subject of conflicting versions. Mr. Lopez
testified that he and Mr. Del Rosario allegedly
From among the three packages I can only tick agreed that ABS-CRN was granted exclusive
off 10 titles we can purchase. Please see film rights to fourteen (14) films for a total
attached. I hope you will understand my consideration of P36 million; that he allegedly
position. Most of the action pictures in the list put this agreement as to the price and number
do not have big action stars in the cast. They of films in a "napkin'' and signed it and gave it
are not for primetime. In line with this I wish to to Mr. Del Rosario (Exh. D; TSN, pp. 24-26, 77-
mention that I have not scheduled for telecast 78, June 8, 1992). On the other hand, Del
several action pictures in out very first contract Rosario denied having made any agreement
because of the cheap production value of these with Lopez regarding the 14 Viva films; denied
movies as well as the lack of big action stars. As the existence of a napkin in which Lopez wrote
a film producer, I am sure you understand what something; and insisted that what he and Lopez
discussed at the lunch meeting was Viva's film
 package offer of 104 films (52 originals and 52 injunction should private respondents be unable to post a
re-runs) for a total price of P60 million. Mr. counterbond.
Lopez promising [sic]to make a counter proposal
which came in the form of a proposal contract At the pre-trial 12 on 6 August 1992, the parties, upon suggestion
Annex "C" of the complaint (Exh. "1"·- Viva; of the court, agreed to explore the possibility of an amicable
Exh. "C" - ABS-CBN). settlement. In the meantime, RBS prayed for and was granted
reasonable time within which to put up a P30 million counterbond
On April 06, 1992, Del Rosario and Mr. in the event that no settlement would be reached.
Graciano Gozon of RBS Senior vice-president
for Finance discussed the terms and conditions As the parties failed to enter into an amicable settlement RBS
of Viva's offer to sell the 104 films, after the posted on 1 October 1992 a counterbond, which the RTC
rejection of the same package by ABS-CBN. approved in its Order of 15 October 1992. 13

On April 07, 1992, defendant Del Rosario On 19 October 1992, ABS-CBN filed a motion for
received through his secretary, a handwritten reconsideration 14 of the 3 August and 15 October 1992 Orders,
note from Ms. Concio, (Exh. "5" - Viva), which which RBS opposed. 15
reads: "Here's the draft of the contract. I hope
you find everything in order," to which was On 29 October 1992, the RTC conducted a pre-trial. 16
attached a draft exhibition agreement (Exh. "C''-
ABS-CBN; Exh. "9" - Viva, p. 3) a counter- Pending resolution of its motion for reconsideration, ABS-CBN
proposal covering 53 films, 52 of which came filed with the Court of Appeals a petition17challenging the RTC's
from the list sent by defendant Del Rosario and Orders of 3 August and 15 October 1992 and praying for the
one film was added by Ms. Concio, for a issuance of a writ of preliminary injunction to enjoin the RTC from
consideration of P35 million. Exhibit "C" enforcing said orders. The case was docketed as CA-G.R. SP No.
provides that ABS-CBN is granted films right to 29300.
53 films and contains a right of first refusal to
"1992 Viva Films." The said counter proposal On 3 November 1992, the Court of Appeals issued a temporary
was however rejected by Viva's Board of restraining order18 to enjoin the airing, broadcasting, and
Directors [in the] evening of the same day, April televising of any or all of the films involved in the controversy.
7, 1992, as Viva would not sell anything less
than the package of 104 films for P60 million On 18 December 1992, the Court of Appeals promulgated a
pesos (Exh. "9" - Viva), and such rejection was decision 19 dismissing the petition in CA -G.R. No. 29300 for being
relayed to Ms. Concio. premature. ABS-CBN challenged the dismissal in a petition for
review filed with this Court on 19 January 1993, which was
On April 29, 1992, after the rejection of ABS- docketed as G.R. No. 108363.
CBN and following several negotiations and
meetings defendant Del Rosario and Viva's In the meantime the RTC received the evidence for the parties in
President Teresita Cruz, in consideration of P60 Civil Case No. Q-192-1209. Thereafter, on 28 April 1993, it
million, signed a letter of agreement dated April rendered a decision 20 in favor of RBS and VIVA and against ABS-
24, 1992. granting RBS the exclusive right to CBN disposing as follows:
air 104 Viva-produced and/or acquired films
(Exh. "7-A" - RBS; Exh. "4" - RBS) including the WHEREFORE, under cool reflection and
fourteen (14) films subject of the present case. 4 prescinding from the foregoing, judgments is
rendered in favor of defendants and against the
On 27 May 1992, ABS-CBN filed before the RTC a complaint for plaintiff.
specific performance with a prayer for a writ of preliminary
injunction and/or temporary restraining order against private (1) The complaint is hereby dismissed;
respondents Republic Broadcasting Corporation 5 (hereafter RBS ),
Viva Production (hereafter VIVA), and Vicente Del Rosario. The
(2) Plaintiff ABS-CBN is ordered to pay defendant
complaint was docketed as Civil Case No. Q-92-12309.
RBS the following:
On 27 May 1992, RTC issued a temporary restraining
a) P107,727.00, the amount of premium paid by
order 6 enjoining private respondents from proceeding with the
RBS to the surety which issued defendant RBS's
airing, broadcasting, and televising of the fourteen VIVA films
bond to lift the injunction;
subject of the controversy, starting with the film Maging Sino Ka
Man, which was scheduled to be shown on private respondents
b) P191,843.00 for the amount of print
RBS' channel 7 at seven o'clock in the evening of said date.
advertisement for "Maging Sino Ka Man" in various
newspapers;
On 17 June 1992, after appropriate proceedings, the RTC issued
an 
c) Attorney's fees in the amount of P1 million;
order 7 directing the issuance of a writ of preliminary injunction
upon ABS-CBN's posting of P35 million bond. ABS-CBN moved for
d) P5 million as and by way of moral damages;
the reduction of the bond, 8 while private respondents moved for
reconsideration of the order and offered to put up a
counterbound. 9 e) P5 million as and by way of exemplary damages;

In the meantime, private respondents filed separate answers with (3) For defendant VIVA, plaintiff ABS-CBN is
counterclaim. 10 RBS also set up a cross-claim against VIVA.. ordered to pay P212,000.00 by way of reasonable
attorney's fees.
On 3 August 1992, the RTC issued an order 11 dissolving the writ
of preliminary injunction upon the posting by RBS of a P30 million (4) The cross-claim of defendant RBS against
counterbond to answer for whatever damages ABS-CBN might defendant VIVA is dismissed.
suffer by virtue of such dissolution. However, it reduced
petitioner's injunction bond to P15 million as a condition (5) Plaintiff to pay the costs.
precedent for the reinstatement of the writ of preliminary
According to the RTC, there was no meeting of minds on the price refusal. And even if We reckon the fifteen (15) day
and terms of the offer. The alleged agreement between Lopez III period from February 27, 1992 (Exhibit 4 to 4-C) when
and Del Rosario was subject to the approval of the VIVA Board of another list was sent to ABS-CBN after the letter of
Directors, and said agreement was disapproved during the Mrs. Concio, still the fifteen (15) day period within
meeting of the Board on 7 April 1992. Hence, there was no basis which ABS-CBN shall exercise its right of first refusal
for ABS-CBN's demand that VIVA signed the 1992 Film Exhibition has already expired.22
Agreement. Furthermore, the right of first refusal under the 1990
Film Exhibition Agreement had previously been exercised per Ms. Accordingly, respondent court sustained the award of actual
Concio's letter to Del Rosario ticking off ten titles acceptable to damages consisting in the cost of print advertisements and the
them, which would have made the 1992 agreement an entirely premium payments for the counterbond, there being adequate
new contract. proof of the pecuniary loss which RBS had suffered as a result of
the filing of the complaint by ABS-CBN. As to the award of moral
On 21 June 1993, this Court denied21 ABS-CBN's petition for damages, the Court of Appeals found reasonable basis therefor,
review in G.R. No. 108363, as no reversible error was committed holding that RBS's reputation was debased by the filing of the
by the Court of Appeals in its challenged decision and the case complaint in Civil Case No. Q-92-12309 and by the non-showing
had "become moot and academic in view of the dismissal of the of the film "Maging Sino Ka Man." Respondent court also held that
main action by the court a quo in its decision" of 28 April 1993. exemplary damages were correctly imposed by way of example or
correction for the public good in view of the filing of the complaint
Aggrieved by the RTC's decision, ABS-CBN appealed to the Court despite petitioner's knowledge that the contract with VIVA had not
of Appeals claiming that there was a perfected contract between been perfected, It also upheld the award of attorney's fees,
ABS-CBN and VIVA granting ABS-CBN the exclusive right to reasoning that with ABS-CBN's act of instituting Civil Case No, Q-
exhibit the subject films. Private respondents VIVA and Del 92-1209, RBS was "unnecessarily forced to litigate." The appellate
Rosario also appealed seeking moral and exemplary damages and court, however, reduced the awards of moral damages to P2
additional attorney's fees. million, exemplary damages to P2 million, and attorney's fees to
P500, 000.00.
In its decision of 31 October 1996, the Court of Appeals agreed
with the RTC that the contract between ABS-CBN and VIVA had On the other hand, respondent Court of Appeals denied VIVA and
not been perfected, absent the approval by the VIVA Board of Del Rosario's appeal because it was "RBS and not VIVA which was
Directors of whatever Del Rosario, it's agent, might have agreed actually prejudiced when the complaint was filed by ABS-CBN."
with Lopez III. The appellate court did not even believe ABS-CBN's
evidence that Lopez III actually wrote down such an agreement on Its motion for reconsideration having been denied, ABS-CBN filed
a "napkin," as the same was never produced in court. It likewise the petition in this case, contending that the Court of Appeals
rejected ABS-CBN's insistence on its right of first refusal and gravely erred in
ratiocinated as follows:
I
As regards the matter of right of first refusal, it may be
true that a Film Exhibition Agreement was entered into . . . RULING THAT THERE WAS NO
between Appellant ABS-CBN and appellant VIVA under PERFECTED CONTRACT BETWEEN
Exhibit "A" in 1990, and that parag. 1.4 thereof PETITIONER AND PRIVATE RESPONDENT VIVA
provides: NOTWITHSTANDING PREPONDERANCE OF
EVIDENCE ADDUCED BY PETITIONER TO THE
1.4 ABS-CBN shall have the right of first refusal to the CONTRARY.
next twenty-four (24) VIVA films for TV telecast under
such terms as may be agreed upon by the parties II
hereto, provided, however, that such right shall be
exercised by ABS-CBN within a period of fifteen (15) . . . IN AWARDING ACTUAL AND
days from the actual offer in writing (Records, p. 14). COMPENSATORY DAMAGES IN FAVOR OF
PRIVATE RESPONDENT RBS.
[H]owever, it is very clear that said right of first refusal
in favor of ABS-CBN shall still be subject to such terms III
as may be agreed upon by the parties thereto, and that
the said right shall be exercised by ABS-CBN within . . . IN AWARDING MORAL AND EXEMPLARY
fifteen (15) days from the actual offer in writing. DAMAGES IN FAVOR OF PRIVATE
RESPONDENT RBS.
Said parag. 1.4 of the agreement Exhibit "A" on the
right of first refusal did not fix the price of the film right IV
to the twenty-four (24) films, nor did it specify the
terms thereof. The same are still left to be agreed upon . . . IN AWARDING ATTORNEY'S FEES IN
by the parties. FAVOR OF RBS.

In the instant case, ABS-CBN's letter of rejection ABS-CBN claims that it had yet to fully exercise its right of first
Exhibit 3 (Records, p. 89) stated that it can only tick off refusal over twenty-four titles under the 1990 Film Exhibition
ten (10) films, and the draft contract Exhibit "C" Agreement, as it had chosen only ten titles from the first list. It
accepted only fourteen (14) films, while parag. 1.4 of insists that we give credence to Lopez's testimony that he and Del
Exhibit "A'' speaks of the next twenty-four (24) films. Rosario met at the Tamarind Grill Restaurant, discussed the
terms and conditions of the second list (the 1992 Film Exhibition
The offer of V1VA was sometime in December 1991 Agreement) and upon agreement thereon, wrote the same on a
(Exhibits 2, 2-A. 2-B; Records, pp. 86-88; Decision, p. paper napkin. It also asserts that the contract has already been
11, Records, p. 1150), when the first list of VIVA films effective, as the elements thereof, namely, consent, object, and
was sent by Mr. Del Rosario to ABS-CBN. The Vice consideration were established. It then concludes that the Court of
President of ABS-CBN, Ms. Charo Santos-Concio, sent Appeals' pronouncements were not supported by law and
a letter dated January 6, 1992 (Exhibit 3, Records, p. jurisprudence, as per our decision of 1 December 1995
89) where ABS-CBN exercised its right of refusal by in Limketkai Sons Milling, Inc. v. Court of Appeals, 23 which
rejecting the offer of VIVA.. As aptly observed by the cited Toyota Shaw, Inc. v. Court of Appeals, 24 Ang Yu Asuncion v.
trial court, with the said letter of Mrs. Concio of
January 6, 1992, ABS-CBN had lost its right of first
Court of Appeals, 25 and Villonco Realty Company v. Bormaheco. Ka Man" because the print advertisements were put out to
Inc.26 announce the showing on a particular day and hour on Channel
7, i.e., in its entirety at one time, not a series to be shown on a
Anent the actual damages awarded to RBS, ABS-CBN disavows periodic basis. Hence, the print advertisement were good and
liability therefor. RBS spent for the premium on the counterbond relevant for the particular date showing, and since the film could
of its own volition in order to negate the injunction issued by the not be shown on that particular date and hour because of the
trial court after the parties had ventilated their respective injunction, the expenses for the advertisements had gone to waste.
positions during the hearings for the purpose. The filing of the
counterbond was an option available to RBS, but it can hardly be As regards moral and exemplary damages, RBS asserts that ABS-
argued that ABS-CBN compelled RBS to incur such expense. CBN filed the case and secured injunctions purely for the purpose
Besides, RBS had another available option, i.e., move for the of harassing and prejudicing RBS. Pursuant then to Article 19 and
dissolution or the injunction; or if it was determined to put up a 21 of the Civil Code, ABS-CBN must be held liable for such
counterbond, it could have presented a cash bond. Furthermore damages. Citing Tolentino,34 damages may be awarded in cases of
under Article 2203 of the Civil Code, the party suffering loss or abuse of rights even if the act done is not illicit and there is abuse
injury is also required to exercise the diligence of a good father of of rights were plaintiff institutes and action purely for the purpose
a family to minimize the damages resulting from the act or of harassing or prejudicing the defendant.
omission. As regards the cost of print advertisements, RBS had
not convincingly established that this was a loss attributable to In support of its stand that a juridical entity can recover moral
the non showing "Maging Sino Ka Man"; on the contrary, it was and exemplary damages, private respondents RBS cited People
brought out during trial that with or without the case or the v. Manero,35 where it was stated that such entity may recover
injunction, RBS would have spent such an amount to generate moral and exemplary damages if it has a good reputation that is
interest in the film. debased resulting in social humiliation. it then ratiocinates; thus:

ABS-CBN further contends that there was no clear basis for the There can be no doubt that RBS' reputation has
awards of moral and exemplary damages. The controversy been debased by ABS-CBN's acts in this case.
involving ABS-CBN and RBS did not in any way originate from When RBS was not able to fulfill its
business transaction between them. The claims for such damages commitment to the viewing public to show the
did not arise from any contractual dealings or from specific acts film "Maging Sino Ka Man" on the scheduled
committed by ABS-CBN against RBS that may be characterized as dates and times (and on two occasions that RBS
wanton, fraudulent, or reckless; they arose by virtue only of the advertised), it suffered serious embarrassment
filing of the complaint, An award of moral and exemplary damages and social humiliation. When the showing was
is not warranted where the record is bereft of any proof that a canceled, late viewers called up RBS' offices and
party acted maliciously or in bad faith in filing an action. 27 In any subjected RBS to verbal abuse ("Announce kayo
case, free resort to courts for redress of wrongs is a matter of nang announce, hindi ninyo naman ilalabas,"
public policy. The law recognizes the right of every one to sue for "nanloloko yata kayo") (Exh. 3-RBS, par. 3).
that which he honestly believes to be his right without fear of This alone was not something RBS brought
standing trial for damages where by lack of sufficient evidence, upon itself. it was exactly what ABS-CBN had
legal technicalities, or a different interpretation of the laws on the planned to happen.
matter, the case would lose ground. 28 One who makes use of his
own legal right does no injury. 29 If damage results front the filing The amount of moral and exemplary damages
of the complaint, it is damnum absque injuria. 30 Besides, moral cannot be said to be excessive. Two reasons
damages are generally not awarded in favor of a juridical person, justify the amount of the award.
unless it enjoys a good reputation that was debased by the
offending party resulting in social humiliation. 31 The first is that the humiliation suffered by RBS
is national extent. RBS operations as a
As regards the award of attorney's fees, ABS-CBN maintains that broadcasting company is [sic] nationwide. Its
the same had no factual, legal, or equitable justification. In clientele, like that of ABS-CBN, consists of
sustaining the trial court's award, the Court of Appeals acted in those who own and watch television. It is not an
clear disregard of the doctrines laid down in Buan exaggeration to state, and it is a matter of
v. Camaganacan  32 that the text of the decision should state the judicial notice that almost every other person in
reason why attorney's fees are being awarded; otherwise, the the country watches television. The humiliation
award should be disallowed. Besides, no bad faith has been suffered by RBS is multiplied by the number of
imputed on, much less proved as having been committed by, ABS- televiewers who had anticipated the showing of
CBN. It has been held that "where no sufficient showing of bad the film "Maging Sino Ka Man" on May 28 and
faith would be reflected in a party' s persistence in a case other November 3, 1992 but did not see it owing to
than an erroneous conviction of the righteousness of his cause, the cancellation. Added to this are the
attorney's fees shall not be recovered as cost." 33 advertisers who had placed commercial spots
for the telecast and to whom RBS had a
On the other hand, RBS asserts that there was no perfected commitment in consideration of the placement
contract between ABS-CBN and VIVA absent any meeting of to show the film in the dates and times
minds between them regarding the object and consideration of the specified.
alleged contract. It affirms that the ABS-CBN's claim of a right of
first refusal was correctly rejected by the trial court. RBS insist The second is that it is a competitor that caused
the premium it had paid for the counterbond constituted a RBS to suffer the humiliation. The humiliation
pecuniary loss upon which it may recover. It was obliged to put up and injury are far greater in degree when
the counterbound due to the injunction procured by ABS-CBN. caused by an entity whose ultimate business
Since the trial court found that ABS-CBN had no cause of action objective is to lure customers (viewers in this
or valid claim against RBS and, therefore not entitled to the writ of case) away from the competition. 36
injunction, RBS could recover from ABS-CBN the premium paid
on the counterbond. Contrary to the claim of ABS-CBN, the cash For their part, VIVA and Vicente del Rosario contend that the
bond would prove to be more expensive, as the loss would be findings of fact of the trial court and the Court of Appeals do not
equivalent to the cost of money RBS would forego in case the P30 support ABS-CBN's claim that there was a perfected contract.
million came from its funds or was borrowed from banks. Such factual findings can no longer be disturbed in this petition
for review under Rule 45, as only questions of law can be raised,
RBS likewise asserts that it was entitled to the cost of not questions of fact. On the issue of damages and attorneys fees,
advertisements for the cancelled showing of the film "Maging Sino they adopted the arguments of RBS.
The key issues for our consideration are (1) whether there was a modified upon acceptance, such alteration amounts to a counter-
perfected contract between VIVA and ABS-CBN, and (2) whether offer.
RBS is entitled to damages and attorney's fees. It may be noted
that the award of attorney's fees of P212,000 in favor of VIVA is In the case at bar, ABS-CBN made no unqualified acceptance of
not assigned as another error. VIVA's offer. Hence, they underwent a period of bargaining. ABS-
CBN then formalized its counter-proposals or counter-offer in a
I. draft contract, VIVA through its Board of Directors, rejected such
counter-offer, Even if it be conceded arguendo that Del Rosario
The first issue should be resolved against ABS-CBN. A contract is had accepted the counter-offer, the acceptance did not bind VIVA,
a meeting of minds between two persons whereby one binds as there was no proof whatsoever that Del Rosario had the specific
himself to give something or to render some service to authority to do so.
another 37 for a consideration. there is no contract unless the
following requisites concur: (1) consent of the contracting parties; Under Corporation Code,46 unless otherwise provided by said
(2) object certain which is the subject of the contract; and (3) Code, corporate powers, such as the power; to enter into
cause of the obligation, which is established. 38 A contract contracts; are exercised by the Board of Directors. However, the
undergoes three stages: Board may delegate such powers to either an executive committee
or officials or contracted managers. The delegation, except for the
(a) preparation, conception, or generation, executive committee, must be for specific purposes, 47 Delegation
which is the period of negotiation and to officers makes the latter agents of the corporation; accordingly,
bargaining, ending at the moment of agreement the general rules of agency as to the bindings effects of their acts
of the parties; would 
apply. 48 For such officers to be deemed fully clothed by the
(b) perfection or birth of the contract, which is corporation to exercise a power of the Board, the latter must
the moment when the parties come to agree on specially authorize them to do so. That Del Rosario did not have
the terms of the contract; and the authority to accept ABS-CBN's counter-offer was best
evidenced by his submission of the draft contract to VIVA's Board
(c) consummation or death, which is the of Directors for the latter's approval. In any event, there was
fulfillment or performance of the terms agreed between Del Rosario and Lopez III no meeting of minds. The
upon in the contract. 39 following findings of the trial court are instructive:

Contracts that are consensual in nature are perfected upon mere A number of considerations militate against
meeting of the minds, Once there is concurrence between the offer ABS-CBN's claim that a contract was perfected
and the acceptance upon the subject matter, consideration, and at that lunch meeting on April 02, 1992 at the
terms of payment a contract is produced. The offer must be Tamarind Grill.
certain. To convert the offer into a contract, the acceptance must
be absolute and must not qualify the terms of the offer; it must be FIRST, Mr. Lopez claimed that what was agreed
plain, unequivocal, unconditional, and without variance of any upon at the Tamarind Grill referred to the price
sort from the proposal. A qualified acceptance, or one that involves and the number of films, which he wrote on a
a new proposal, constitutes a counter-offer and is a rejection of napkin. However, Exhibit "C"
the original offer. Consequently, when something is desired which contains numerous provisions which, were not
is not exactly what is proposed in the offer, such acceptance is not discussed at the Tamarind Grill, if Lopez
sufficient to generate consent because any modification or testimony was to be believed nor could they
variation from the terms of the offer annuls the offer. 40 have been physically written on a napkin. There
was even doubt as to whether it was a paper
When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at napkin or a cloth napkin. In short what were
the Tamarind Grill on 2 April 1992 to discuss the package of films, written in Exhibit "C'' were not discussed, and
said package of 104 VIVA films was VIVA's offer to ABS-CBN to therefore could not have been agreed upon, by
enter into a new Film Exhibition Agreement. But ABS-CBN, sent, the parties. How then could this court compel
through Ms. Concio, a counter-proposal in the form of a draft the parties to sign Exhibit "C" when the
contract proposing exhibition of 53 films for a consideration of P35 provisions thereof were not previously agreed
million. This counter-proposal could be nothing less than the upon?
counter-offer of Mr. Lopez during his conference with Del Rosario
at Tamarind Grill Restaurant. Clearly, there was no acceptance of SECOND, Mr. Lopez claimed that what was
VIVA's offer, for it was met by a counter-offer which substantially agreed upon as the subject matter of the
varied the terms of the offer. contract was 14 films. The complaint in fact
prays for delivery of 14 films. But Exhibit "C"
ABS-CBN's reliance in Limketkai Sons Milling, Inc. v. Court of mentions 53 films as its subject matter. Which
Appeals 41 and Villonco Realty Company v. Bormaheco, Inc., 42 is is which If Exhibits "C" reflected the true intent
misplaced. In these cases, it was held that an acceptance may of the parties, then ABS-CBN's claim for 14
contain a request for certain changes in the terms of the offer and films in its complaint is false or if what it
yet be a binding acceptance as long as "it is clear that the meaning alleged in the complaint is true, then Exhibit
of the acceptance is positively and unequivocally to accept the "C" did not reflect what was agreed upon by the
offer, whether such request is granted or not." This ruling was, parties. This underscores the fact that there
however, reversed in the resolution of 29 March 1996, 43 which was no meeting of the minds as to the subject
ruled that the acceptance of all offer must be unqualified and matter of the contracts, so as to preclude
absolute, i.e., it "must be identical in all respects with that of the perfection thereof. For settled is the rule that
offer so as to produce consent or meeting of the minds." there can be no contract where there is no
object which is its subject matter (Art. 1318,
On the other hand, in Villonco, cited in Limketkai, the alleged NCC).
changes in the revised counter-offer were not material but merely
clarificatory of what had previously been agreed upon. It cited the THIRD, Mr. Lopez [sic] answer to question 29 of
statement in Stuart v. Franklin Life Insurance Co.44 that "a his affidavit testimony (Exh. "D") states:
vendor's change in a phrase of the offer to purchase, which
change does not essentially change the terms of the offer, does not We were able to reach an agreement. VIVA gave
amount to a rejection of the offer and the tender of a counter- us the exclusive license to show these fourteen
offer." 45However, when any of the elements of the contract is (14) films, and we agreed to pay Viva the
amount of P16,050,000.00 as well as grant Viva Q. So, he was going to forward that to the board
commercial slots worth P19,950,000.00. We had of Directors for approval?
already earmarked this P16, 050,000.00.
A. Yes, sir. (Tsn, pp. 42-43, June 8, 1992)
which gives a total consideration of P36 million
(P19,950,000.00 plus P16,050,000.00. equals Q. Did Mr. Del Rosario tell you that he will
P36,000,000.00). submit it to his Board for approval?

On cross-examination Mr. Lopez testified: A. Yes, sir. (Tsn, p. 69, June 8, 1992).

Q. What was written in this napkin? The above testimony of Mr. Lopez shows beyond
doubt that he knew Mr. Del Rosario had no
A. The total price, the breakdown the known authority to bind Viva to a contract with ABS-
Viva movies, the 7 blockbuster movies and the CBN until and unless its Board of Directors
other 7 Viva movies because the price was approved it. The complaint, in fact, alleges that
broken down accordingly. The none [sic] Viva Mr. Del Rosario "is the Executive Producer of
and the seven other Viva movies and the defendant Viva" which "is a corporation." (par.
sharing between the cash portion and the 2, complaint). As a mere agent of Viva, Del
concerned spot portion in the total amount of Rosario could not bind Viva unless what he did
P35 million pesos. is ratified by its Board of Directors. (Vicente
vs. Geraldez, 52 SCRA 210; Arnold
Now, which is which? P36 million or P35 vs. Willets and Paterson, 44 Phil. 634). As a
million? This weakens ABS-CBN's claim. mere agent, recognized as such by plaintiff, Del
Rosario could not be held liable jointly and
FOURTH. Mrs. Concio, testifying for ABS-CBN severally with Viva and his inclusion as party
stated that she transmitted Exhibit "C" to Mr. defendant has no legal basis. (Salonga
Del Rosario with a handwritten note, describing vs. Warner Barner [sic] , COLTA , 88 Phil. 125;
said Exhibit "C" as a "draft." (Exh. "5" - Viva; tsn Salmon vs. Tan, 36 Phil. 556).
pp. 23-24 June 08, 1992). The said draft has a
well defined meaning. The testimony of Mr. Lopez and the allegations
in the complaint are clear admissions that what
Since Exhibit "C" is only a draft, or a tentative, was supposed to have been agreed upon at the
provisional or preparatory writing prepared for Tamarind Grill between Mr. Lopez and Del
discussion, the terms and conditions thereof Rosario was not a binding agreement. It is as it
could not have been previously agreed upon by should be because corporate power to enter into
ABS-CBN and Viva Exhibit "C'' could not a contract is lodged in the Board of Directors.
therefore legally bind Viva, not having agreed (Sec. 23, Corporation Code). Without such
thereto. In fact, Ms. Concio admitted that the board approval by the Viva board, whatever
terms and conditions embodied in Exhibit "C" agreement Lopez and Del Rosario arrived at
were prepared by ABS-CBN's lawyers and there could not ripen into a valid contract binding
was no discussion on said terms and conditions. upon Viva (Yao Ka Sin Trading vs. Court of
... Appeals, 209 SCRA 763). The evidence adduced
shows that the Board of Directors of Viva
As the parties had not yet discussed the rejected Exhibit "C" and insisted that the film
proposed terms and conditions in Exhibit "C," package for 140 films be maintained (Exh. "7-1"
and there was no evidence whatsoever that Viva - Viva ). 49
agreed to the terms and conditions thereof, said
document cannot be a binding contract. The The contention that ABS-CBN had yet to fully exercise its right of
fact that Viva refused to sign Exhibit "C" reveals first refusal over twenty-four films under the 1990 Film Exhibition
only two [sic] well that it did not agree on its Agreement and that the meeting between Lopez and Del Rosario
terms and conditions, and this court has no was a continuation of said previous contract is untenable. As
authority to compel Viva to agree thereto. observed by the trial court, ABS-CBN right of first refusal had
already been exercised when Ms. Concio wrote to VIVA ticking off
FIFTH. Mr. Lopez understand [sic] that what he ten films, Thus:
and Mr. Del Rosario agreed upon at the
Tamarind Grill was only provisional, in the [T]he subsequent negotiation with ABS-CBN two
sense that it was subject to approval by the (2) months after this letter was sent, was for an
Board of Directors of Viva. He testified: entirely different package. Ms. Concio herself
admitted on cross-examination to having used
Q. Now, Mr. Witness, and after that Tamarind or exercised the right of first refusal. She stated
meeting ... the second meeting wherein you that the list was not acceptable and was indeed
claimed that you have the meeting of the minds not accepted by ABS-CBN, (TSN, June 8, 1992,
between you and Mr. Vic del Rosario, what pp. 8-10). Even Mr. Lopez himself admitted that
happened? the right of the first refusal may have been
already exercised by Ms. Concio (as she had).
A. Vic Del Rosario was supposed to call us up (TSN, June 8, 1992, pp. 71-75). Del Rosario
and tell us specifically the result of the himself knew and understand [sic] that ABS-
discussion with the Board of Directors. CBN has lost its rights of the first refusal when
his list of 36 titles were rejected (Tsn, June 9,
Q. And you are referring to the so-called 1992, pp. 10-11) 50
agreement which you wrote in [sic] a piece of
paper? II

A. Yes, sir. However, we find for ABS-CBN on the issue of damages. We shall
first take up actual damages. Chapter 2, Title XVIII, Book IV of the
Civil Code is the specific law on actual or compensatory damages.
Except as provided by law or by stipulation, one is entitled to As regards attorney's fees, the law is clear that in the absence of
compensation for actual damages only for such pecuniary loss stipulation, attorney's fees may be recovered as actual or
suffered by him as he has duly proved. 51 The indemnification compensatory damages under any of the circumstances provided
shall comprehend not only the value of the loss suffered, but also for in Article 2208 of the Civil Code. 58
that of the profits that the obligee failed to obtain. 52 In contracts
and quasi-contracts the damages which may be awarded are The general rule is that attorney's fees cannot be recovered as part
dependent on whether the obligor acted with good faith or of damages because of the policy that no premium should be
otherwise, It case of good faith, the damages recoverable are those placed on the right to litigate. 59 They are not to be awarded every
which are the natural and probable consequences of the breach of time a party wins a suit. The power of the court to award
the obligation and which the parties have foreseen or could have attorney's fees under Article 2208 demands factual, legal, and
reasonably foreseen at the time of the constitution of the equitable justification.60Even when claimant is compelled to
obligation. If the obligor acted with fraud, bad faith, malice, or litigate with third persons or to incur expenses to protect his
wanton attitude, he shall be responsible for all damages which rights, still attorney's fees may not be awarded where no sufficient
may be reasonably attributed to the non-performance of the showing of bad faith could be reflected in a party's persistence in a
obligation. 53 In crimes and quasi-delicts, the defendant shall be case other than erroneous conviction of the righteousness of his
liable for all damages which are the natural and probable cause. 61
consequences of the act or omission complained of, whether or not
such damages has been foreseen or could have reasonably been As to moral damages the law is Section 1, Chapter 3, Title XVIII,
foreseen by the defendant.54 Book IV of the Civil Code. Article 2217 thereof defines what are
included in moral damages, while Article 2219 enumerates the
Actual damages may likewise be recovered for loss or impairment cases where they may be recovered, Article 2220 provides that
of earning capacity in cases of temporary or permanent personal moral damages may be recovered in breaches of contract where
injury, or for injury to the plaintiff's business standing or the defendant acted fraudulently or in bad faith. RBS's claim for
commercial credit.55 moral damages could possibly fall only under item (10) of Article
2219, thereof which reads:
The claim of RBS for actual damages did not arise from contract,
quasi-contract, delict, or quasi-delict. It arose from the fact of (10) Acts and actions referred to in Articles 21,
filing of the complaint despite ABS-CBN's alleged knowledge of 26, 27, 28, 29, 30, 32, 34, and 35.
lack of cause of action. Thus paragraph 12 of RBS's Answer with
Counterclaim and Cross-claim under the heading Moral damages are in the category of an award designed to
COUNTERCLAIM specifically alleges: compensate the claimant for actual injury suffered. and not to
impose a penalty on the wrongdoer.62 The award is not meant to
12. ABS-CBN filed the complaint knowing fully enrich the complainant at the expense of the defendant, but to
well that it has no cause of action RBS. As a enable the injured party to obtain means, diversion, or
result thereof, RBS suffered actual damages in amusements that will serve to obviate then moral suffering he has
the amount of P6,621,195.32. 56 undergone. It is aimed at the restoration, within the limits of the
possible, of the spiritual status quo ante, and should be
Needless to state the award of actual damages cannot be proportionate to the suffering inflicted. 63 Trial courts must then
comprehended under the above law on actual damages. RBS could guard against the award of exorbitant damages; they should
only probably take refuge under Articles 19, 20, and 21 of the Civil exercise balanced restrained and measured objectivity to avoid
Code, which read as follows: suspicion that it was due to passion, prejudice, or corruption on
the part of the trial court. 64
Art. 19. Every person must, in the exercise of
his rights and in the performance of his duties, The award of moral damages cannot be granted in favor of a
act with justice, give everyone his due, and corporation because, being an artificial person and having
observe honesty and good faith. existence only in legal contemplation, it has no feelings, no
emotions, no senses, It cannot, therefore, experience physical
Art. 20. Every person who, contrary to law, suffering and mental anguish, which call be experienced only by
wilfully or negligently causes damage to one having a nervous system. 65 The statement in People
another, shall indemnify the latter for tile same. v. Manero 66 and Mambulao Lumber Co. v. PNB  67 that a
corporation may recover moral damages if it "has a good
Art. 21. Any person who wilfully causes loss or reputation that is debased, resulting in social humiliation" is
injury to another in a manner that is contrary an obiter dictum. On this score alone the award for damages must
to morals, good customs or public policy shall be set aside, since RBS is a corporation.
compensate the latter for the damage.
The basic law on exemplary damages is Section 5, Chapter 3, Title
It may further be observed that in cases where a writ of XVIII, Book IV of the Civil Code. These are imposed by way of
preliminary injunction is issued, the damages which the example or correction for the public good, in addition to moral,
defendant may suffer by reason of the writ are recoverable from temperate, liquidated or compensatory damages. 68 They are
the injunctive bond. 57 In this case, ABS-CBN had not yet filed the recoverable in criminal cases as part of the civil liability when the
required bond; as a matter of fact, it asked for reduction of the crime was committed with one or more aggravating
bond and even went to the Court of Appeals to challenge the order circumstances; 69 in quasi-contracts, if the defendant acted with
on the matter, Clearly then, it was not necessary for RBS to file a gross negligence; 70 and in contracts and quasi-contracts, if the
counterbond. Hence, ABS-CBN cannot be held responsible for the defendant acted in a wanton, fraudulent, reckless, oppressive, or
premium RBS paid for the counterbond. malevolent manner.71

Neither could ABS-CBN be liable for the print advertisements for It may be reiterated that the claim of RBS against ABS-CBN is not
"Maging Sino Ka Man" for lack of sufficient legal basis. The RTC based on contract, quasi-contract, delict, or quasi-delict, Hence,
issued a temporary restraining order and later, a writ of the claims for moral and exemplary damages can only be based on
preliminary injunction on the basis of its determination that there Articles 19, 20, and 21 of the Civil Code.
existed sufficient ground for the issuance thereof. Notably, the
RTC did not dissolve the injunction on the ground of lack of legal The elements of abuse of right under Article 19 are the following:
and factual basis, but because of the plea of RBS that it be (1) the existence of a legal right or duty, (2) which is exercised in
allowed to put up a counterbond. bad faith, and (3) for the sole intent of prejudicing or injuring
another. Article 20 speaks of the general sanction for all other
provisions of law which do not especially provide for their own
sanction; while Article 21 deals with acts contra bonus mores, and
has the following elements; (1) there is an act which is legal, (2)
but which is contrary to morals, good custom, public order, or
public policy, and (3) and it is done with intent to injure. 72

Verily then, malice or bad faith is at the core of Articles 19, 20,
and 21. Malice or bad faith implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or moral
obliquity. 73 Such must be substantiated by evidence. 74

There is no adequate proof that ABS-CBN was inspired by malice

or bad faith. It was honestly convinced of the merits of its cause
after it had undergone serious negotiations culminating in its
formal submission of a draft contract. Settled is the rule that the
adverse result of an action does not per se make the action
wrongful and subject the actor to damages, for the law could not
have meant to impose a penalty on the right to litigate. If damages
result from a person's exercise of a right, it is damnum absque
injuria.75

WHEREFORE, the instant petition is GRANTED. The challenged

decision of the Court of Appeals in CA-G.R. CV No, 44125 is
hereby REVERSED except as to unappealed award of attorney's
fees in favor of VIVA Productions, Inc.1âwphi1.nêt

No pronouncement as to costs.

SO ORDERED.
G.R. No. 141994             January 17, 2005 soundings. There is a McDonald Hall. Why not Jose Rizal or
Bonifacio Hall? That is a very concrete and undeniable evidence
FILIPINAS BROADCASTING NETWORK, INC., petitioner,  that the support of foreign foundations for AMEC is substantial,
vs. isn’t it? With the report which is the basis of the expose in DZRC
AGO MEDICAL AND EDUCATIONAL CENTER-BICOL today, it would be very easy for detractors and enemies of the Ago
CHRISTIAN COLLEGE OF MEDICINE, (AMEC-BCCM) and family to stop the flow of support of foreign foundations who assist
ANGELITA F. AGO, respondents. the medical school on the basis of the latter’s purpose. But if the
purpose of the institution (AMEC) is to deceive students at cross
DECISION purpose with its reason for being it is possible for these foreign
foundations to lift or suspend their donations temporarily. 8
CARPIO, J.:
xxx
The Case
On the other hand, the administrators of AMEC-BCCM, AMEC
This petition for review1 assails the 4 January 1999 Decision2 and Science High School and the AMEC-Institute of Mass
26 January 2000 Resolution of the Court of Appeals in CA-G.R. Communication in their effort to minimize expenses in terms of
CV No. 40151. The Court of Appeals affirmed with modification salary are absorbing or continues to accept "rejects". For example
the 14 December 1992 Decision3 of the Regional Trial Court of how many teachers in AMEC are former teachers of Aquinas
Legazpi City, Branch 10, in Civil Case No. 8236. The Court of University but were removed because of immorality? Does it mean
Appeals held Filipinas Broadcasting Network, Inc. and its that the present administration of AMEC have the total definite
broadcasters Hermogenes Alegre and Carmelo Rima liable for libel moral foundation from catholic administrator of Aquinas
and ordered them to solidarily pay Ago Medical and Educational University. I will prove to you my friends, that AMEC is a dumping
Center-Bicol Christian College of Medicine moral damages, ground, garbage, not merely of moral and physical misfits.
attorney’s fees and costs of suit. Probably they only qualify in terms of intellect. The Dean of
Student Affairs of AMEC is Justita Lola, as the family name
The Antecedents implies. She is too old to work, being an old woman. Is the AMEC
administration exploiting the very [e]nterprising or compromising
"Exposé" is a radio documentary 4 program hosted by Carmelo ‘Mel’ and undemanding Lola? Could it be that AMEC is just patiently
Rima ("Rima") and Hermogenes ‘Jun’ Alegre ("Alegre"). 5 Exposé is making use of Dean Justita Lola were if she is very old. As in
aired every morning over DZRC-AM which is owned by Filipinas atmospheric situation – zero visibility – the plane cannot land,
Broadcasting Network, Inc. ("FBNI"). "Exposé" is heard over meaning she is very old, low pay follows. By the way, Dean Justita
Legazpi City, the Albay municipalities and other Bicol areas. 6 Lola is also the chairman of the committee on scholarship in
AMEC. She had retired from Bicol University a long time ago but
In the morning of 14 and 15 December 1989, Rima and Alegre AMEC has patiently made use of her.
exposed various alleged complaints from students, teachers and
parents against Ago Medical and Educational Center-Bicol xxx
Christian College of Medicine ("AMEC") and its administrators.
Claiming that the broadcasts were defamatory, AMEC and MEL RIMA:
Angelita Ago ("Ago"), as Dean of AMEC’s College of Medicine, filed
a complaint for damages7 against FBNI, Rima and Alegre on 27 xxx My friends based on the expose, AMEC is a dumping ground
February 1990. Quoted are portions of the allegedly libelous for moral and physically misfit people. What does this mean?
broadcasts: Immoral and physically misfits as teachers.

JUN ALEGRE: May I say I’m sorry to Dean Justita Lola. But this is the truth. The
truth is this, that your are no longer fit to teach. You are too old.
Let us begin with the less burdensome: if you have children taking As an aviation, your case is zero visibility. Don’t insist.
medical course at AMEC-BCCM, advise them to pass all subjects
because if they fail in any subject they will repeat their year level, xxx Why did AMEC still absorb her as a teacher, a dean, and
taking up all subjects including those they have passed already. chairman of the scholarship committee at that. The reason is
Several students had approached me stating that they had practical cost saving in salaries, because an old person is not
consulted with the DECS which told them that there is no such fastidious, so long as she has money to buy the ingredient of
regulation. If [there] is no such regulation why is AMEC doing the beetle juice. The elderly can get by – that’s why she (Lola) was
same? taken in as Dean.

xxx xxx

Second: Earlier AMEC students in Physical Therapy had xxx On our end our task is to attend to the interests of students.
complained that the course is not recognized by DECS. xxx It is likely that the students would be influenced by evil. When
they become members of society outside of campus will be
Third: Students are required to take and pay for the subject even liabilities rather than assets. What do you expect from a doctor
if the subject does not have an instructor - such greed for money who while studying at AMEC is so much burdened with
on the part of AMEC’s administration. Take the subject Anatomy: unreasonable imposition? What do you expect from a student who
students would pay for the subject upon enrolment because it is aside from peculiar problems – because not all students are rich –
offered by the school. However there would be no instructor for in their struggle to improve their social status are even more
such subject. Students would be informed that course would be burdened with false regulations. xxx9 (Emphasis supplied)
moved to a later date because the school is still searching for the
appropriate instructor. The complaint further alleged that AMEC is a reputable learning
institution. With the supposed exposés, FBNI, Rima and Alegre
xxx "transmitted malicious imputations, and as such, destroyed
plaintiffs’ (AMEC and Ago) reputation." AMEC and Ago included
It is a public knowledge that the Ago Medical and Educational FBNI as defendant for allegedly failing to exercise due diligence in
Center has survived and has been surviving for the past few years the selection and supervision of its employees, particularly Rima
since its inception because of funds support from foreign and Alegre.
foundations. If you will take a look at the AMEC premises you’ll
find out that the names of the buildings there are foreign
On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil The Court of Appeals upheld the trial court’s ruling that the
Lozares, filed an Answer10 alleging that the broadcasts against questioned broadcasts are libelous per se and that FBNI, Rima
AMEC were fair and true. FBNI, Rima and Alegre claimed that and Alegre failed to overcome the legal presumption of malice. The
they were plainly impelled by a sense of public duty to report the Court of Appeals found Rima and Alegre’s claim that they were
"goings-on in AMEC, [which is] an institution imbued with public actuated by their moral and social duty to inform the public of the
interest." students’ gripes as insufficient to justify the utterance of the
defamatory remarks.
Thereafter, trial ensued. During the presentation of the evidence
for the defense, Atty. Edmundo Cea, collaborating counsel of Atty. Finding no factual basis for the imputations against AMEC’s
Lozares, filed a Motion to Dismiss11 on FBNI’s behalf. The trial administrators, the Court of Appeals ruled that the broadcasts
court denied the motion to dismiss. Consequently, FBNI filed a were made "with reckless disregard as to whether they were true
separate Answer claiming that it exercised due diligence in the or false." The appellate court pointed out that FBNI, Rima and
selection and supervision of Rima and Alegre. FBNI claimed that Alegre failed to present in court any of the students who allegedly
before hiring a broadcaster, the broadcaster should (1) file an complained against AMEC. Rima and Alegre merely gave a single
application; (2) be interviewed; and (3) undergo an apprenticeship name when asked to identify the students. According to the Court
and training program after passing the interview. FBNI likewise of Appeals, these circumstances cast doubt on the veracity of the
claimed that it always reminds its broadcasters to "observe truth, broadcasters’ claim that they were "impelled by their moral and
fairness and objectivity in their broadcasts and to refrain from social duty to inform the public about the students’ gripes."
using libelous and indecent language." Moreover, FBNI requires all
broadcasters to pass the Kapisanan ng mga Brodkaster sa The Court of Appeals found Rima also liable for libel since he
Pilipinas ("KBP") accreditation test and to secure a KBP permit. remarked that "(1) AMEC-BCCM is a dumping ground for morally
and physically misfit teachers; (2) AMEC obtained the services of
On 14 December 1992, the trial court rendered a Dean Justita Lola to minimize expenses on its employees’ salaries;
Decision12 finding FBNI and Alegre liable for libel except Rima. The and (3) AMEC burdened the students with unreasonable
trial court held that the broadcasts are libelous per se. The trial imposition and false regulations."16
court rejected the broadcasters’ claim that their utterances were
the result of straight reporting because it had no factual basis. The Court of Appeals held that FBNI failed to exercise due
The broadcasters did not even verify their reports before airing diligence in the selection and supervision of its employees for
them to show good faith. In holding FBNI liable for libel, the trial allowing Rima and Alegre to make the radio broadcasts without
court found that FBNI failed to exercise diligence in the selection the proper KBP accreditation. The Court of Appeals denied Ago’s
and supervision of its employees. claim for damages and attorney’s fees because the libelous
remarks were directed against AMEC, and not against her. The
In absolving Rima from the charge, the trial court ruled that Court of Appeals adjudged FBNI, Rima and Alegre solidarily liable
Rima’s only participation was when he agreed with Alegre’s to pay AMEC moral damages, attorney’s fees and costs of
exposé. The trial court found Rima’s statement within the "bounds suit.1awphi1.nét
of freedom of speech, expression, and of the press." The dispositive
portion of the decision reads: Issues

WHEREFORE, premises considered, this court finds for the FBNI raises the following issues for resolution:
plaintiff. Considering the degree of damages caused by the
controversial utterances, which are not found by this court to be I. WHETHER THE BROADCASTS ARE LIBELOUS;
really very serious and damaging, and there being no showing that
indeed the enrollment of plaintiff school dropped, defendants II. WHETHER AMEC IS ENTITLED TO MORAL
Hermogenes "Jun" Alegre, Jr. and Filipinas Broadcasting Network DAMAGES;
(owner of the radio station DZRC), are hereby jointly and severally
ordered to pay plaintiff Ago Medical and Educational Center-Bicol III. WHETHER THE AWARD OF ATTORNEY’S FEES IS
Christian College of Medicine (AMEC-BCCM) the amount of PROPER; and
₱300,000.00 moral damages, plus ₱30,000.00 reimbursement of
attorney’s fees, and to pay the costs of suit. IV. WHETHER FBNI IS SOLIDARILY LIABLE WITH RIMA
AND ALEGRE FOR PAYMENT OF MORAL DAMAGES,
13
SO ORDERED.   (Emphasis supplied) ATTORNEY’S FEES AND COSTS OF SUIT.

Both parties, namely, FBNI, Rima and Alegre, on one hand, and The Court’s Ruling
AMEC and Ago, on the other, appealed the decision to the Court of
Appeals. The Court of Appeals affirmed the trial court’s judgment We deny the petition.
with modification. The appellate court made Rima solidarily liable
with FBNI and Alegre. The appellate court denied Ago’s claim for This is a civil action for damages as a result of the allegedly
damages and attorney’s fees because the broadcasts were directed defamatory remarks of Rima and Alegre against AMEC. 17 While
against AMEC, and not against her. The dispositive portion of the AMEC did not point out clearly the legal basis for its complaint, a
Court of Appeals’ decision reads: reading of the complaint reveals that AMEC’s cause of action is
based on Articles 30 and 33 of the Civil Code. Article
WHEREFORE, the decision appealed from is hereby AFFIRMED, 3018 authorizes a separate civil action to recover civil liability
subject to the modification that broadcaster Mel Rima arising from a criminal offense. On the other hand, Article
is SOLIDARILY ADJUDGED liable with FBN[I] and Hermo[g]enes 3319 particularly provides that the injured party may bring a
Alegre. separate civil action for damages in cases of defamation, fraud,
and physical injuries. AMEC also invokes Article 1920 of the Civil
SO ORDERED.14 Code to justify its claim for damages. AMEC cites Articles
217621 and 218022 of the Civil Code to hold FBNI solidarily liable
FBNI, Rima and Alegre filed a motion for reconsideration which with Rima and Alegre.
the Court of Appeals denied in its 26 January 2000 Resolution.
I.
Hence, FBNI filed this petition.15
Whether the broadcasts are libelous
The Ruling of the Court of Appeals
A libel23 is a public and malicious imputation of a crime, or of a every man is presumed innocent until his guilt is judicially
vice or defect, real or imaginary, or any act or omission, condition, proved, and every false imputation is deemed malicious,
status, or circumstance tending to cause the dishonor, discredit, nevertheless, when the discreditable imputation is directed
or contempt of a natural or juridical person, or to blacken the against a public person in his public capacity, it is not necessarily
memory of one who is dead.24 actionable. In order that such discreditable imputation to a public
official may be actionable, it must either be a false allegation of
There is no question that the broadcasts were made public and fact or a comment based on a false supposition. If the comment is
imputed to AMEC defects or circumstances tending to cause it an expression of opinion, based on established facts, then it is
dishonor, discredit and contempt. Rima and Alegre’s remarks immaterial that the opinion happens to be mistaken, as long as it
such as "greed for money on the part of AMEC’s administrators"; might reasonably be inferred from the facts. 32 (Emphasis supplied)
"AMEC is a dumping ground, garbage of xxx moral and physical
misfits"; and AMEC students who graduate "will be liabilities True, AMEC is a private learning institution whose business of
rather than assets" of the society are libelous per se. Taken as a educating students is "genuinely imbued with public interest." The
whole, the broadcasts suggest that AMEC is a money-making welfare of the youth in general and AMEC’s students in particular
institution where physically and morally unfit teachers abound. is a matter which the public has the right to know. Thus, similar
to the newspaper articles in Borjal, the subject broadcasts dealt
However, FBNI contends that the broadcasts are not malicious. with matters of public interest. However, unlike in Borjal, the
FBNI claims that Rima and Alegre were plainly impelled by their questioned broadcasts are not based on established facts. The
civic duty to air the students’ gripes. FBNI alleges that there is no record supports the following findings of the trial court:
evidence that ill will or spite motivated Rima and Alegre in making
the broadcasts. FBNI further points out that Rima and Alegre xxx Although defendants claim that they were motivated by
exerted efforts to obtain AMEC’s side and gave Ago the consistent reports of students and parents against plaintiff, yet,
opportunity to defend AMEC and its administrators. FBNI defendants have not presented in court, nor even gave name of a
concludes that since there is no malice, there is no libel. single student who made the complaint to them, much less
present written complaint or petition to that effect. To accept this
FBNI’s contentions are untenable. defense of defendants is too dangerous because it could easily give
license to the media to malign people and establishments based
Every defamatory imputation is presumed malicious. 25 Rima and on flimsy excuses that there were reports to them although they
Alegre failed to show adequately their good intention and could not satisfactorily establish it. Such laxity would encourage
justifiable motive in airing the supposed gripes of the students. As careless and irresponsible broadcasting which is inimical to public
hosts of a documentary or public affairs program, Rima and Alegre interests.
should have presented the public issues "free from inaccurate and
misleading information."26 Hearing the students’ alleged Secondly, there is reason to believe that defendant radio
complaints a month before the exposé,27 they had sufficient time broadcasters, contrary to the mandates of their duties, did not
to verify their sources and information. However, Rima and Alegre verify and analyze the truth of the reports before they aired it, in
hardly made a thorough investigation of the students’ alleged order to prove that they are in good faith.
gripes. Neither did they inquire about nor confirm the purported
irregularities in AMEC from the Department of Education, Culture Alegre contended that plaintiff school had no permit and is not
and Sports. Alegre testified that he merely went to AMEC to verify accredited to offer Physical Therapy courses. Yet, plaintiff
his report from an alleged AMEC official who refused to disclose produced a certificate coming from DECS that as of Sept. 22, 1987
any information. Alegre simply relied on the words of the students or more than 2 years before the controversial broadcast,
"because they were many and not because there is proof that what accreditation to offer Physical Therapy course had already been
they are saying is true."28 This plainly shows Rima and Alegre’s given the plaintiff, which certificate is signed by no less than the
reckless disregard of whether their report was true or not. Secretary of Education and Culture herself, Lourdes R.
Quisumbing (Exh. C-rebuttal). Defendants could have easily
Contrary to FBNI’s claim, the broadcasts were not "the result of known this were they careful enough to verify. And yet, defendants
straight reporting." Significantly, some courts in the United States were very categorical and sounded too positive when they made
apply the privilege of "neutral reportage" in libel cases involving the erroneous report that plaintiff had no permit to offer Physical
matters of public interest or public figures. Under this privilege, a Therapy courses which they were offering.
republisher who accurately and disinterestedly reports certain
defamatory statements made against public figures is shielded The allegation that plaintiff was getting tremendous aids from
from liability, regardless of the republisher’s subjective awareness foreign foundations like Mcdonald Foundation prove not to be true
of the truth or falsity of the accusation.29 Rima and Alegre cannot also. The truth is there is no Mcdonald Foundation existing.
invoke the privilege of neutral reportage because unfounded Although a big building of plaintiff school was given the name
comments abound in the broadcasts. Moreover, there is no Mcdonald building, that was only in order to honor the first
existing controversy involving AMEC when the broadcasts were missionary in Bicol of plaintiffs’ religion, as explained by Dr. Lita
made. The privilege of neutral reportage applies where the Ago. Contrary to the claim of defendants over the air, not a single
defamed person is a public figure who is involved in an existing centavo appears to be received by plaintiff school from the
controversy, and a party to that controversy makes the defamatory aforementioned McDonald Foundation which does not exist.
statement.30
Defendants did not even also bother to prove their claim, though
However, FBNI argues vigorously that malice in law does not apply denied by Dra. Ago, that when medical students fail in one
to this case. Citing Borjal v. Court of Appeals,31 FBNI contends that subject, they are made to repeat all the other subject[s], even
the broadcasts "fall within the coverage of qualifiedly privileged those they have already passed, nor their claim that the school
communications" for being commentaries on matters of public charges laboratory fees even if there are no laboratories in the
interest. Such being the case, AMEC should prove malice in fact school. No evidence was presented to prove the bases for these
or actual malice. Since AMEC allegedly failed to prove actual claims, at least in order to give semblance of good faith.
malice, there is no libel.

FBNI’s reliance on Borjal is misplaced. In Borjal, the Court

elucidated on the "doctrine of fair comment," thus:

[F]air commentaries on matters of public interest are privileged

and constitute a valid defense in an action for libel or slander. The
doctrine of fair comment means that while in general every
discreditable imputation publicly made is deemed false, because
As for the allegation that plaintiff is the dumping ground for Whether AMEC is entitled to moral damages
misfits, and immoral teachers, defendant[s] singled out Dean
Justita Lola who is said to be so old, with zero visibility already. FBNI contends that AMEC is not entitled to moral damages
Dean Lola testified in court last Jan. 21, 1991, and was found to because it is a corporation.39
be 75 years old. xxx Even older people prove to be effective
teachers like Supreme Court Justices who are still very much in A juridical person is generally not entitled to moral damages
demand as law professors in their late years. Counsel for because, unlike a natural person, it cannot experience physical
defendants is past 75 but is found by this court to be still very suffering or such sentiments as wounded feelings, serious anxiety,
sharp and effective.l^vvphi1.net So is plaintiffs’ counsel. mental anguish or moral shock.40 The Court of Appeals
cites Mambulao Lumber Co. v. PNB, et al.41 to justify the award of
Dr. Lola was observed by this court not to be physically decrepit moral damages. However, the Court’s statement in Mambulao that
yet, nor mentally infirmed, but is still alert and docile. "a corporation may have a good reputation which, if besmirched,
may also be a ground for the award of moral damages" is an obiter
The contention that plaintiffs’ graduates become liabilities rather dictum.42
than assets of our society is a mere conclusion. Being from the
place himself, this court is aware that majority of the medical Nevertheless, AMEC’s claim for moral damages falls under item 7
graduates of plaintiffs pass the board examination easily and of Article 221943 of the Civil Code. This provision expressly
become prosperous and responsible professionals. 33 authorizes the recovery of moral damages in cases of libel, slander
or any other form of defamation. Article 2219(7) does not qualify
Had the comments been an expression of opinion based on whether the plaintiff is a natural or juridical person. Therefore, a
established facts, it is immaterial that the opinion happens to be juridical person such as a corporation can validly complain for
mistaken, as long as it might reasonably be inferred from the libel or any other form of defamation and claim for moral
facts.34 However, the comments of Rima and Alegre were not damages.44
backed up by facts. Therefore, the broadcasts are not privileged
and remain libelous per se. Moreover, where the broadcast is libelous per se, the law implies
damages.45 In such a case, evidence of an honest mistake or the
The broadcasts also violate the Radio Code 35 of the Kapisanan ng want of character or reputation of the party libeled goes only in
mga Brodkaster sa Pilipinas, Ink. ("Radio Code"). Item I(B) of the mitigation of damages.46 Neither in such a case is the plaintiff
Radio Code provides: required to introduce evidence of actual damages as a condition
precedent to the recovery of some damages. 47 In this case, the
B. PUBLIC AFFAIRS, PUBLIC ISSUES AND COMMENTARIES broadcasts are libelous per se. Thus, AMEC is entitled to moral
damages.
1. x x x
However, we find the award of ₱300,000 moral damages
4. Public affairs program shall present public issues free unreasonable. The record shows that even though the broadcasts
from personal bias, prejudice and inaccurate and were libelous per se, AMEC has not suffered any substantial or
misleading information. x x x Furthermore, the station material damage to its reputation. Therefore, we reduce the award
shall strive to present balanced discussion of issues. x x of moral damages from ₱300,000 to ₱150,000.
x.
III.
xxx
Whether the award of attorney’s fees is proper
7. The station shall be responsible at all times in the
supervision of public affairs, public issues and FBNI contends that since AMEC is not entitled to moral damages,
commentary programs so that they conform to the there is no basis for the award of attorney’s fees. FBNI adds that
provisions and standards of this code. the instant case does not fall under the enumeration in Article
220848 of the Civil Code.
8. It shall be the responsibility of the newscaster,
commentator, host and announcer to protect public The award of attorney’s fees is not proper because AMEC failed to
interest, general welfare and good order in the justify satisfactorily its claim for attorney’s fees. AMEC did not
presentation of public affairs and public adduce evidence to warrant the award of attorney’s fees. Moreover,
issues.36 (Emphasis supplied) both the trial and appellate courts failed to explicitly state in their
respective decisions the rationale for the award of attorney’s
The broadcasts fail to meet the standards prescribed in the Radio fees.49 In Inter-Asia Investment Industries, Inc. v. Court of
Code, which lays down the code of ethical conduct governing Appeals ,50 we held that:
practitioners in the radio broadcast industry. The Radio Code is a
voluntary code of conduct imposed by the radio broadcast [I]t is an accepted doctrine that the award thereof as an item of
industry on its own members. The Radio Code is a public damages is the exception rather than the rule, and counsel’s fees
warranty by the radio broadcast industry that radio broadcast are not to be awarded every time a party wins a suit. The power of
practitioners are subject to a code by which their conduct are the court to award attorney’s fees under Article 2208 of the Civil
measured for lapses, liability and sanctions. Code demands factual, legal and equitable justification, without
which the award is a conclusion without a premise, its basis being
The public has a right to expect and demand that radio broadcast improperly left to speculation and conjecture. In all events, the
practitioners live up to the code of conduct of their profession, just court must explicitly state in the text of the decision, and not only
like other professionals. A professional code of conduct provides in the decretal portion thereof, the legal reason for the award of
the standards for determining whether a person has acted justly, attorney’s fees.51 (Emphasis supplied)
honestly and with good faith in the exercise of his rights and
performance of his duties as required by Article 19 37 of the Civil While it mentioned about the award of attorney’s fees by stating
Code. A professional code of conduct also provides the standards that it "lies within the discretion of the court and depends upon
for determining whether a person who willfully causes loss or the circumstances of each case," the Court of Appeals failed to
injury to another has acted in a manner contrary to morals or point out any circumstance to justify the award.
good customs under Article 2138 of the Civil Code.
IV.
II.
Whether FBNI is solidarily liable with Rima and Alegre for moral industry’s rules and regulations. Clearly, these circumstances
damages, attorney’s fees and costs of suit show FBNI’s lack of diligence in selecting and supervising Rima
and Alegre. Hence, FBNI is solidarily liable to pay damages
FBNI contends that it is not solidarily liable with Rima and Alegre together with Rima and Alegre.
for the payment of damages and attorney’s fees because it
exercised due diligence in the selection and supervision of its WHEREFORE, we DENY the instant petition. We AFFIRM the
employees, particularly Rima and Alegre. FBNI maintains that its Decision of 4 January 1999 and Resolution of 26 January 2000 of
broadcasters, including Rima and Alegre, undergo a "very the Court of Appeals in CA-G.R. CV No. 40151 with the
regimented process" before they are allowed to go on air. "Those MODIFICATION that the award of moral damages is reduced from
who apply for broadcaster are subjected to interviews, ₱300,000 to ₱150,000 and the award of attorney’s fees is deleted.
examinations and an apprenticeship program." Costs against petitioner.

FBNI further argues that Alegre’s age and lack of training are SO ORDERED.
irrelevant to his competence as a broadcaster. FBNI points out
that the "minor deficiencies in the KBP accreditation of Rima and
Alegre do not in any way prove that FBNI did not exercise the
diligence of a good father of a family in selecting and supervising
them." Rima’s accreditation lapsed due to his non-payment of the
KBP annual fees while Alegre’s accreditation card was delayed
allegedly for reasons attributable to the KBP Manila Office. FBNI
claims that membership in the KBP is merely voluntary and not
required by any law or government regulation.

FBNI’s arguments do not persuade us.

The basis of the present action is a tort. Joint tort feasors are
jointly and severally liable for the tort which they commit. 52 Joint
tort feasors are all the persons who command, instigate, promote,
encourage, advise, countenance, cooperate in, aid or abet the
commission of a tort, or who approve of it after it is done, if done
for their benefit.53Thus, AMEC correctly anchored its cause of
action against FBNI on Articles 2176 and 2180 of the Civil
Code.1a\^/phi1.net

As operator of DZRC-AM and employer of Rima and Alegre, FBNI

is solidarily liable to pay for damages arising from the libelous
broadcasts. As stated by the Court of Appeals, "recovery for
defamatory statements published by radio or television may be
had from the owner of the station, a licensee, the operator of the
station, or a person who procures, or participates in, the making
of the defamatory statements."54 An employer and employee are
solidarily liable for a defamatory statement by the employee within
the course and scope of his or her employment, at least when the
employer authorizes or ratifies the defamation. 55 In this case,
Rima and Alegre were clearly performing their official duties as
hosts of FBNI’s radio program Exposé when they aired the
broadcasts. FBNI neither alleged nor proved that Rima and Alegre
went beyond the scope of their work at that time. There was
likewise no showing that FBNI did not authorize and ratify the
defamatory broadcasts.

Moreover, there is insufficient evidence on record that FBNI

exercised due diligence in the selection and supervision of its
employees, particularly Rima and Alegre. FBNI merely showed that
it exercised diligence in the selection of its broadcasters without
introducing any evidence to prove that it observed the same
diligence in the supervision of Rima and Alegre. FBNI did not show
how it exercised diligence in supervising its broadcasters. FBNI’s
alleged constant reminder to its broadcasters to "observe truth,
fairness and objectivity and to refrain from using libelous and
indecent language" is not enough to prove due diligence in the
supervision of its broadcasters. Adequate training of the
broadcasters on the industry’s code of conduct, sufficient
information on libel laws, and continuous evaluation of the
broadcasters’ performance are but a few of the many ways of
showing diligence in the supervision of broadcasters.

FBNI claims that it "has taken all the precaution in

the selection of Rima and Alegre as broadcasters, bearing in mind
their qualifications." However, no clear and convincing evidence
shows that Rima and Alegre underwent FBNI’s "regimented
process" of application. Furthermore, FBNI admits that Rima and
Alegre had deficiencies in their KBP accreditation, 56 which is one
of FBNI’s requirements before it hires a broadcaster. Significantly,
membership in the KBP, while voluntary, indicates the
broadcaster’s strong commitment to observe the broadcast
 WHEREFORE, considering that the [respondent] was able to
provide by preponderance of evidence her cause of action against
the defendants, judgment is hereby rendered ordering defendants
JIMMY BAUTISTA and CARAVAN TRAVEL and TOURS[,] INC., to
jointly and solidarity pay the plaintiff, the following, to wit:
chanRoblesvirtualLawlibrary

1. The amount of P35,000.00 representing actual damages;

G.R. No. 170631, February 10, 2016
2. The amount of P300,000.00 as moral damages;
CARAVAN TRAVEL AND TOURS INTERNATIONAL,
INC., Petitioner, v. ERMILINDA R. ABEJAR, Respondent. 3. The amount of P30,000.00 as exemplary damages;

DECISION 4. The amount of P50,000.00 as and by way of attorney's fees; and

LEONEN, J.: 5. The cost of suit.

The plaintiff may first prove the employer's ownership of the SO ORDERED.31ChanRoblesVirtualawlibrary
vehicle involved in a mishap by presenting the vehicle's
registration in evidence. Thereafter, a disputable presumption that Caravan's Motion for Reconsideration 32 was denied through the
the requirements for an employer's liability under Article 2180 1 of October 20, 2003 Order33 of the Regional Trial Court.
the Civil Code have been satisfied will arise. The burden of
evidence then shifts to the defendant to show that no liability The Court of Appeals affirmed with modification the Regional Trial
under Article 2180 has ensued. This case, thus, harmonizes the Court's July 31, 2003 Decision and October 20, 2003 Order, as
requirements of Article 2180, in relation to Article 2176 2 of the follows:
Civil Code, and the so-called registered-owner rule as established chanRoblesvirtualLawlibrary
in this court's rulings in Aguilar, Sr. v. Commercial Savings
Bank,3Del Carmen, Jr. v. Bacoy,4Filcar Transport Services v. WHEREFORE, premises considered, the instant appeal
Espinas,5 and Mendoza v. Spouses Gomez.6 is DENIED for lack of merit. The assailed Decision dated 31 July
2003 and Order dated 20 October 2003 of the Regional Trial
Through this Petition for Review on Certiorari, 7 Caravel Travel and Court, City of Para[ñ]aque, Branch 258, in Civil Case No. 00-0447
Tours International, Inc. (Caravan) prays that the Decision 8 dated are AFFIRMED with the following MODIFICATIONS:
October 3, 2005 and the Resolution 9 dated November 29, 2005 of
the Court of Appeals Twelfth Division be reversed and set aside. 10 1. Moral Damages is REDUCED to Php 200,000.00;

On July 13, 2000, Jesmariane R. Reyes (Reyes) was walking along 2. Death Indemnity of Php 50,000.00 is awarded;
the west-bound lane of Sampaguita Street, United Parañaque
Subdivision IV, Parañaque City. 11 A Mitsubishi L-300 van with 3. The Php 35,000.00 actual damages, Php 200,000.00
plate number PKM 19512 was travelling along the east-bound lane, moral damages, Php 30,000.00 exemplary damages and
opposite Reyes.13 To avoid an incoming vehicle, the van swerved to Php 50,000.00 attorney's fees shall earn interest at the
its left and hit Reyes.14 Alex Espinosa (Espinosa), a witness to the rate of 6% per annum computed from 31 July 2003, the
accident, went to her aid and loaded her in the back of the date of the [Regional Trial Court's] decision; and upon
van.15 Espinosa told the driver of the van, Jimmy Bautista finality of this Decision, all the amounts due shall earn
(Bautista), to bring Reyes to the hospital. 16 Instead of doing so, interest at the rate of 12% per annum, in lieu of 6% per
Bautista appeared to have left the van parked inside a nearby annum, until full payment; and
subdivision with Reyes still in the van. 17 Fortunately for Reyes, an
unidentified civilian came to help and drove Reyes to the 4. The Php 50,000.00 death indemnity shall earn interest at
hospital.18 the rate of 6% per annum computed from the date of
promulgation of this Decision; and upon finality of this
Upon investigation, it was found that the registered owner of the Decision, the amount due shall earn interest at the rate
van was Caravan.19 Caravan is a corporation engaged in the of 12% per annum, in lieu of 6% per annum, until full
business of organizing travels and tours.20 Bautista was Caravan's payment.
employee assigned to drive the van as its service driver. 21
Costs against [Caravan]. 
Caravan shouldered the hospitalization expenses of
Reyes.22 Despite medical attendance, Reyes died two (2) days after SO ORDERED.34ChanRoblesVirtualawlibrary
the accident.23
Caravan filed a Motion for Reconsideration, but it was denied in
Respondent Ermilinda R. Abejar (Abejar), Reyes' paternal aunt the Court of Appeals' assailed November 29, 2005 Resolution. 35
and the person who raised her since she was nine (9) years
old,24 filed before the Regional Trial Court of Parañaque a Hence, this Petition was filed.
Complaint25 for damages against Bautista and Caravan. In her
Complaint, Abejar alleged that Bautista was an employee of Caravan argues that Abejar has no personality to bring this suit
Caravan and that Caravan is the registered owner of the van that because she is not a real party in interest. According to Caravan,
hit Reyes.26 Abejar does not exercise legal or substitute parental authority.
She is also not the judicially appointed guardian or the only living
Summons could not be served on Bautista. 27 Thus, Abejar moved relative of the deceased.36 She is also not "the executor or
to drop Bautista as a defendant.28 The Regional Trial Court administrator of the estate of the deceased." 37 According to
granted her Motion.29 Caravan, only the victim herself or her heirs can enforce an action
based on culpa aquiliana such as Abejar's action for damages.38
After trial, the Regional Trial Court found that Bautista was
grossly negligent in driving the vehicle. 30 It awarded damages in Caravan adds that Abejar offered no documentary or testimonial
favor of Abejar, as follows: evidence to prove that Bautista, the driver, acted "within the scope
chanRoblesvirtualLawlibrary of his assigned tasks"39 when the accident occurred.40 According to
Caravan, Bautista's tasks only pertained to the transport of
company personnel or products, and when the accident occurred, "To qualify a person to be a real party in interest in whose name
he had not been transporting personnel or delivering products of an action must be prosecuted, he [or she] must appear to be the
and for the company.41 present real owner of the right sought to be
enforced."55 Respondent's capacity to file a complaint against
Caravan also argues that "it exercised the diligence of a good petitioner stems from her having exercised substitute parental
father of a family in the selection and supervision of its authority over Reyes.
employees."42
Article 216 of the Family Code identifies the persons who exercise
Caravan further claims that Abejar should not have been awarded substitute parental authority:
moral damages, actual damages, death indemnity, exemplary chanRoblesvirtualLawlibrary
damages, and attorney's fees.43 It questions the Certificate
provided by Abejar as proof of expenses since its signatory, a Art. 216. In default of parents or a judicially appointed guardian,
certain Julian Peñaloza (Peñaloza), was not presented in court, the following persons shall exercise substitute parental authority
and Caravan was denied the right to cross-examine over the child in the order indicated:
him.44 Caravan argues that the statements in the Certification
constitute hearsay.45 It also contends that based on Article (1) The surviving grandparent, as provided in Art. 214; 56
2206(3)46 of the Civil Code, Abejar is not entitled to moral
damages.47 It insists that moral and exemplary damages should (2) The oldest brother or sister, over twenty-one years of age,
not have been awarded to Abejar because Caravan acted in good unless unfit or disqualified; and
faith.48 Considering that moral and exemplary damages are
unwarranted, Caravan claims that the award of attorney's fees (3) The child's actual custodian, over twenty-one years of age,
should have also been removed.49 unless unfit or disqualified.

Lastly, Caravan argues that it should not be held solidarily liable Whenever the appointment or a judicial guardian over the
with Bautista since Bautista was already dropped as a party. 50 property of the child becomes necessary, the same order of
preference shall be observed. (Emphasis supplied)
Abejar counters that Caravan failed to provide proof that it
exercised the requisite diligence in the selection and supervision of Article 233 of the Family Code provides for the extent of authority
Bautista.51 She adds that the Court of Appeals' ruling that of persons exercising substitute parental authority, that is, the
Caravan is solidarily liable with Bautista for moral damages, same as those of actual parents:
exemplary damages, civil indemnity ex delicto, and attorney's fees chanRoblesvirtualLawlibrary
should be upheld.52 Abejar argues that since Caravan is the
registered owner of the van, it is directly, primarily, and solidarity Art. 233. The person exercising substitute parental authority shall
liable for the tortious acts of its driver. 53 have the same authority over the person of the child as the
parents. (Emphasis supplied)
For resolution are the following issues:
Both of Reyes' parents are already deceased. 57 Reyes' paternal
First, whether respondent Ermilinda R. Abejar is a real party in grandparents are also both deceased.58The whereabouts of Reyes'
interest who may bring an action for damages against petitioner maternal grandparents are unknown.59 There is also no record
Caravan Travel and Tours International, Inc. on account of that Reyes has brothers or sisters. It was under these
Jesmariane R. Reyes' death; and circumstances that respondent took custody of Reyes when she
was a child, assumed the role of Reyes' parents, and thus,
Second, whether petitioner should be held liable as an employer, exercised substitute parental authority over her. 60 As Reyes'
pursuant to Article 2180 of the Civil Code. custodian, respondent exercised the full extent of the statutorily
recognized rights and duties of a parent. Consistent with Article
We deny the Petition. 22061 of the Family Code, respondent supported Reyes'
education62 and provided for her personal needs.63 To echo
I respondent's words in her Complaint, she treated Reyes as if she
were her own daughter.64

Having exercised substitute parental authority, respondent Respondent's right to proceed against petitioner, therefore, is
suffered actual loss and is, thus, a real party in interest in this based on two grounds.
case.
First, respondent suffered actual personal loss. With her affinity
In her Complaint, respondent made allegations that would sustain for Reyes, it stands to reason that when Reyes died, respondent
her action for damages: that she exercised substitute parental suffered the same anguish that a natural parent would have felt
authority over Reyes; that Reyes' death was caused by the upon the loss of one's child. It is for this injury — as authentic
negligence of petitioner and its driver; and that Reyes' death and personal as that of a natural parent — that respondent seeks
caused her damage.54 Respondent properly filed an action based to be indemnified.
on quasi-delict. She is a real party in interest.
Second, respondent is capacitated to do what Reyes' actual
Rule 3, Section 2 of the 1997 Rules of Civil Procedure defines a parents would have been capacitated to do.
real party in interest:
chanRoblesvirtualLawlibrary In Metro Manila Transit Corporation v. Court of
Appeals,65Tapdasan, Jr. v. People,66 and Aguilar, Sr. v. Commercial
RULE 3. Parties to Civil Actions Savings Bank,67 this court allowed natural parents of victims to
recover damages for the death of their children. Inasmuch as
persons exercising substitute parental authority have the full
.... range of competencies of a child's actual parents, nothing prevents
persons exercising substitute parental authority from similarly
SECTION 2. Parties in Interest. — A real party in interest is the possessing the right to be indemnified for their ward's death.
party who stands to be benefited or injured by the judgment in the
suit, or the party entitled to the avails of the suit. Unless We note that Reyes was already 18 years old when she died.
otherwise authorized by law or these Rules, every action must be Having reached the age of majority, she was already emancipated
prosecuted or defended in the name of the real party in interest. upon her death. While parental authority is terminated upon
emancipation,68respondent continued to support and care for
Reyes even after she turned 18.69 Except for the legal technicality employees and household helpers acting within the scope of their
of Reyes' emancipation, her relationship with respondent assigned tasks, even though the former are not engaged in any
remained the same. The anguish and damage caused to business or industry.
respondent by Reyes' death was no different because of Reyes'
emancipation. The State is responsible in like manner when it acts through a
special agent; but not when the damage has been caused by the
In any case, the termination of respondent's parental authority is official to whom the task done properly pertains, in which case
not an insurmountable legal bar that precludes the filing of her what is provided in article 2176 shall be applicable.
Complaint. In interpreting Article 190270 of the old Civil Code,
which is substantially similar to the first sentence of Article Lastly, teachers or heads of establishments of arts and trades
217671 of the Civil Code, this court in The Receiver For North shall be liable for damages caused by their pupils and students or
Negros Sugar Company, Inc. v. Ybañez, et al. 72 ruled that brothers apprentices, so long as they remain in their custody.
and sisters may recover damages, except moral damages, for the
death of their sibling.73 This court declared that Article 1902 of the The responsibility treated of in this article shall cease when the
old Civil Code (now Article 2176) is broad enough to accommodate persons herein mentioned prove that they observed all the
even plaintiffs who are not relatives of the deceased, thus: 74 diligence of a good father of a family to prevent damage.
(Emphasis supplied)
This Court said: "Article 1902 of the Civil Code declares that any
person who by an act or omission, characterized by fault or Contrary to petitioner's position, it was not fatal to respondent's
negligence, causes damage to another shall be liable for the cause that she herself did not adduce proof that Bautista acted
damage done ... a person is liable for damage done to another by within the scope of his authority. It was sufficient that Abejar
any culpable act; and by any culpable act is meant any act which proved that petitioner was the registered owner of the van that hit
is blameworthy when judged by accepted legal standards. The idea Reyes.
thus expressed is undoubtedly broad enough to include any
rational conception of liability for the tortious acts likely to be The resolution of this case must consider two (2) rules. First,
developed in any society." The word "damage" in said article, Article 2180's specification that "[e]mployers shall be liable for the
comprehending as it does all that are embraced in its meaning, damages caused by their employees . . . acting within the scope of
includes any and all damages that a human being may suffer in their assigned tasks[.]" Second, the operation of the registered-
any and all the manifestations of his life: physical or material, owner rule that registered owners are liable for death or injuries
moral or psychological, mental or spiritual, financial, economic, caused by the operation of their vehicles. 76
social, political, and religious.
These rules appear to be in conflict when it comes to cases in
It is particularly noticeable that Article 1902 stresses the passive which the employer is also the registered owner of a vehicle.
subject of the obligation to pay damages caused by his fault or Article 2180 requires proof of two things: first, an employment
negligence. The article does not limit or specify the active subjects, relationship between the driver and the owner; and second, that
much less the relation that must exist between the victim of the the driver acted within the scope of his or her assigned tasks. On
culpa aquiliana and the person who may recover damages, thus the other hand, applying the registered-owner rule only requires
warranting the inference that, in principle, anybody who suffers the plaintiff to prove that the defendant-employer is the registered
any damage from culpa aquiliana, whether a relative or not of the owner of the vehicle.
victim, may recover damages from the person responsible
therefor[.]75(Emphasis supplied, citations omitted) The registered-owner rule was articulated as early as 1957
in Erezo, et al. v. Jepte,77 where this court explained that the
II registration of motor vehicles, as required by Section 5(a) 78 of
Republic Act No. 4136, the Land Transportation and Traffic Code,
was necessary "not to make said registration the operative act by
Respondent's Complaint is anchored on an employer's liability for which ownership in vehicles is transferred, . . . but to permit the
quasi-delict provided in Article 2180, in relation to Article 2176 of use and operation of the vehicle upon any public highway[.]" 79 Its
the Civil Code. Articles 2176 and 2180 read: "main aim . . . is to identify the owner so that if any accident
chanRoblesvirtualLawlibrary happens, or that any damage or injury is caused by the vehicle on
the public highways, responsibility therefor can be fixed on a
ARTICLE 2176. Whoever by act or omission causes damage to definite individual, the registered owner." 80
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing Erezo notwithstanding, Castilex Industrial Corporation v. Vasquez,
contractual relation between the parties, is called a quasi-delict Jr.81 relied on Article 2180 of the Civil Code even though the
and is governed by the provisions of this Chapter. employer was also the registered owner of the vehicle. 82 The
registered-owner rule was not mentioned.
.....
In Castilex, Benjamin Abad (Abad) was a manager of Castilex
ARTICLE 2180. The obligation imposed by article 2176 is Industrial Corporation (Castilex). Castilex was also the registered
demandable not only for one's own acts or omissions, but also for owner of a Toyota Hi-Lux pick-up truck. While Abad was driving
those of persons for whom one is responsible. the pick-up truck, it collided with a motorcycle driven by Romeo
Vasquez (Vasquez). Vasquez died a few days after. Vasquez's
The father and, in case of his death or incapacity, the mother, are parents filed a case for damages against Abad and
responsible for the damages caused by the minor children who live Castilex.83 Castilex denied liability, arguing that Abad was acting
in their company. in his private capacity at the time of the accident. 84

Guardians are liable for damages caused by the minors or This court absolved Castilex of liability, reasoning that it was
incapacitated persons who are under their authority and live in incumbent upon the plaintiff to prove that the negligent employee
their company. was acting within the scope of his assigned tasks.85 Vasquez's
parents failed to prove this.86 This court outlined the process
The owners and managers of an establishment or enterprise are necessary for an employer to be held liable for the acts of its
likewise responsible for damages caused by their employees in the employees and applied the process to the case:
service of the branches in which the latter are employed or on the chanRoblesvirtualLawlibrary
occasion of their functions.
Under the fifth paragraph of Article 2180, whether or not engaged
Employers shall be liable for the damages caused by their in any business or industry, an employer is liable for the torts
committed by employees within the scope of his assigned tasks. Preference for the registered-owner rule became more pronounced
But it is necessary to establish the employer-employee in Del Carmen, Jr. v. Bacoy:95
relationship; once this is done, the plaintiff must show, to hold the
employer liable, that the employee was acting within the scope of Without disputing the factual finding of the [Court of Appeals] that
his assigned task when the tort complained of was committed. It is Allan was still his employee at the time of the accident, a finding
only then that the employer may find it necessary to interpose the which we see no reason to disturb, Oscar Jr. contends that Allan
defense of due diligence in the selection and supervision of the drove the jeep in his private capacity and thus, an employer's
employee. vicarious liability for the employee's fault under Article 2180 of the
Civil Code cannot apply to him.
....
The contention is no longer novel. In Aguilar Sr. v. Commercial
Since there is paucity of evidence that ABAD was acting within the Savings Bank, the car of therein respondent bank caused the
scope of the functions entrusted to him, petitioner CASTILEX had death of Conrado Aguilar, Jr. while being driven by its assistant
no duty to show that it exercised the diligence of a good father of a vice president. Despite Article 2180, we still held the bank liable for
family in providing ABAD with a service vehicle. Thus, justice and damages for the accident as said provision should defer to the
equity require that petitioner be relieved of vicarious liability for settled doctrine concerning accidents involving registered motor
the consequences of the negligence of ABAD in driving its vehicle. vehicles, i.e., that the registered owner of any vehicle, even if not
(Emphasis supplied, citations used for public service, would primarily be responsible to the
omitted)87ChanRoblesVirtualawlibrary public or to third persons for injuries caused the latter while the
vehicle was being driven on the highways or streets. We have
Aguilar, Sr. v. Commercial Savings Bank recognized the seeming already ratiocinated that:
conflict between Article 2180 and the registered-owner rule and chanRoblesvirtualLawlibrary
applied the latter.88
The main aim of motor vehicle registration is to identify the owner
In Aguilar, Sr., a Mitsubishi Lancer, registered in the name of so that if any accident happens, or that any damage or injury is
Commercial Savings Bank and driven by the bank's assistant vice- caused by the vehicle on the public highways, responsibility
president Ferdinand Borja, hit Conrado Aguilar, Jr. The impact therefor can be fixed on a definite individual, the registered owner.
killed Conrado Aguilar, Jr. His father, Conrado Aguilar, Sr. filed a Instances are numerous where vehicles running on public
case for damages against Ferdinand Borja and Commercial highways caused accidents or injuries to pedestrians or other
Savings Bank. The Regional Trial Court found Commercial vehicles without positive identification of the owner or drivers, or
Savings Bank solidarity liable with Ferdinand Borja. 89 with very scant means of identification. It is to forestall these
circumstances, so inconvenient or prejudicial to the public, that
However, the Court of Appeals disagreed with the trial court's the motor vehicle registration is primarily ordained, in the interest
Decision and dismissed the complaint against the bank. The Court of the determination of persons responsible for damages or
of Appeals reasoned that Article 2180 requires the plaintiff to prove injuries caused on public highways.96 (Emphasis supplied,
that at the time of the accident, the employee was acting within the citations omitted)
scope of his or her assigned tasks. The Court of Appeals found no
evidence that Ferdinand Borja was acting as the bank's assistant Filcar Transport Services v. Espinas 97 stated that the registered
vice-president at the time of the accident. 90 owner of a vehicle can no longer use the defenses found in Article
2180:98
The Court of Appeals' ruling was reversed by this court. 91Aguilar,
Sr. reiterated the following pronouncements made in Erezo in Neither can Filcar use the defenses available under Article 2180 of
ruling that the bank, as the registered owner of the vehicle, was the Civil Code - that the employee acts beyond the scope of his
primarily liable to the plaintiff:92 assigned task or that it exercised the due diligence of a good father
of a family to prevent damage - because the motor vehicle
The main aim of motor vehicle registration is to identify the owner registration law, to a certain extent, modified Article 2180 of the
so that if any accident happens, or that any damage or injury is Civil Code by making these defenses unavailable to the registered
caused by the vehicle on the public highways, responsibility owner of the motor vehicle. Thus, for as long as Filcar is the
therefor can be fixed on a definite individual, the registered registered owner of the car involved in the vehicular accident, it
owner.... could not escape primary liability for the damages caused to
Espinas.99ChanRoblesVirtualawlibrary
....
Mendoza v. Spouses Gomez100 reiterated this doctrine.
A victim of recklessness on the public highways is usually without
means to discover or identify the person actually causing the However, Aguilar, Sr., Del Carmen, Filcar, and Mendoza should not
injury or damage. He has no means other than by a recourse to be taken to mean that Article 2180 of the Civil Code should be
the registration in the Motor Vehicles Office to determine who is completely discarded in cases where the registered-owner rule
the owner. The protection that the law aims to extend to him finds application.
would become illusory were the registered owner given the
opportunity to escape liability by disproving his As acknowledged in Filcar, there is no categorical statutory
ownership.93ChanRoblesVirtualawlibrary pronouncement in the Land Transportation and Traffic Code
stipulating the liability of a registered owner. 101 The source of a
Thus, Aguilar, Sr. concluded: registered owner's liability is not a distinct statutory provision, but
chanRoblesvirtualLawlibrary remains to be Articles 2176 and 2180 of the Civil Code:
chanRoblesvirtualLawlibrary
In our view, respondent bank, as the registered owner of the
vehicle, is primarily liable for Aguilar, Jr.'s death. The Court of While Republic Act No. 4136 or the Land Transportation and
Appeals erred when it concluded that the bank was not liable Traffic Code does not contain any provision on the liability of
simply because (a) petitioner did not prove that Borja was acting as registered owners in case of motor vehicle mishaps, Article 2176,
the bank's vice president at the time of the accident; and (b) Borja in relation with Article 2180, of the Civil Code imposes an
had, according to respondent bank, already bought the car at the obligation upon Filcar, as registered owner, to answer for the
time of the mishap. For as long as the respondent bank remained damages caused to Espinas' car.102ChanRoblesVirtualawlibrary
the registered owner of the car involved in the vehicular accident, it
could not escape primary liability for the death of petitioner's Thus, it is imperative to apply the registered-owner rule in a
son.94 (Emphasis supplied) manner that harmonizes it with Articles 2176 and 2180 of the
Civil Code. Rules must be construed in a manner that will
harmonize them with other rules so as to form a uniform and In its selection of Bautista as a service driver, petitioner contented
consistent system of jurisprudence.103 In light of this, the words itself with Bautista's submission of a non-professional driver's
used in Del Carmen are particularly notable. There, this court license.112 Hence, in Sally Balledo's cross-examination:
stated that Article 2180 "should defer to"104 the registered-owner chanRoblesvirtualLawlibrary
rule. It never stated that Article 2180 should be totally
abandoned. Q : . . . when he was promoted as service driver, of
course, there were certain requirements and
Therefore, the appropriate approach is that in cases where both among other else, you made mention about a
the registered-owner rule and Article 2180 apply, the plaintiff driver's license.
must first establish that the employer is the registered owner of A : Yes, Sir.
the vehicle in question. Once the plaintiff successfully proves Q : Would you be able to show to this Honorable
ownership, there arises a disputable presumption that the Court whether indeed this person did submit a
requirements of Article 2180 have been proven. As a consequence, driver's license to your company?
the burden of proof shifts to the defendant to show that no liability A : Yes, Sir.
under Article 2180 has arisen. ....
Q : Do you recall what kind of driver's license is this?
This disputable presumption, insofar as the registered owner of
A : The Land Transportation Office.
the vehicle in relation to the actual driver is concerned, recognizes
Q : Is it a professional driver's license or non-
that between the owner and the victim, it is the former that should
proffesional [sic] driver's license?
carry the costs of moving forward with the evidence. The victim is,
A : Non-professional.
in many cases, a hapless pedestrian or motorist with hardly any
means to uncover the employment relationship of the owner and Q : You are not sure?
the driver, or any act that the owner may have done in relation to COUR : Non professional, professional?
that employment. T
A : It's a non-professional.113 (Emphasis supplied)
The registration of the vehicle, on the other hand, is accessible to
the public.
Employing a person holding a non-professional driver's license to
Here, respondent presented a copy of the Certificate of operate another's motor vehicle violates Section 24 of the Land
Registration105 of the van that hit Reyes.106 The Certificate attests Transportation and Traffic Code, which provides:
to petitioner's ownership of the van. Petitioner itself did not chanRoblesvirtualLawlibrary
dispute its ownership of the van. Consistent with the rule we have
just stated, a presumption that the requirements of Article 2180 SEC. 24. Use of driver's license and badge. — ...
have been satisfied arises. It is now up to petitioner to establish
that it incurred no liability under Article 2180. This it can do by ....
presenting proof of any of the following: first, that it had no
employment relationship with Bautista; second, that Bautista No owner of a motor vehicle shall engage, employ, or hire any
acted outside the scope of his assigned tasks; or third, that it person to operate such motor vehicle, unless the person sought to
exercised the diligence of a good father of a family in the selection be employed is a duly licensed professional driver.
and supervision of Bautista. 107
Evidently, petitioner did not only fail to exercise due diligence
On the first, petitioner admitted that Bautista was its employee at when it selected Bautista as service driver; it also committed an
the time of the accident.108 actual violation of law.

On the second, petitioner was unable to prove that Bautista was To prove that it exercised the required diligence in supervising
not acting within the scope of his assigned tasks at the time of the Bautista, petitioner presented copies of several memoranda and
accident. When asked by the court why Bautista was at the place company rules.114 These, however, are insufficient because
of the accident when it occurred, Sally Bellido, petitioner's petitioner failed to prove actual compliance. Metro Manila Transit
accountant and supervisor,109 testified that she did not "have the Corporation v. Court of Appeals115 emphasized that to establish
personal capacity to answer [the question]" 110 and that she had no diligence in the supervision of employees, the issuance of
knowledge to answer it: company policies must be coupled with proof of compliance:
chanRoblesvirtualLawlibrary chanRoblesvirtualLawlibrary

COURT : Madam Witness, do you know the reason why Due diligence in the supervision of employees, on the other hand,
your driver, Jimmy Bautista, at around 10:00 o' includes the formulation of suitable rules and regulations for the
clock in the morning of July 13, 2000 was in the guidance of employees and the issuance of proper instructions
vicinity of Barangay Marcelo Green, United intended for the protection of the public and persons with whom the
Parañaque Subdivision 4? employer has relations through his or its employees and the
imposition of necessary disciplinary measures upon employees in
WITNESS : I don't have the personal capacity to answer that, case of breach or as may be warranted to ensure the performance
Sir. of acts indispensable to the business of and beneficial to their
employer. To this, we add that actual implementation and
Q : So you don't have any knowledge why he was monitoring of consistent compliance with said rules should be the
there? constant concern of the employer, acting through dependable
A : Yes, Sir.111 (Emphasis supplied) supervisors who should regularly report on their supervisory
functions.
Sally Bellido's testimony does not affect the presumption that
Article 2180's requirements have been satisfied. Mere disavowals In order that the defense of due diligence in the selection and
are not proof that suffice to overturn a presumption. To this end, supervision of employees may be deemed sufficient and
evidence must be adduced. However, petitioner presented no plausible, it is not enough to emptily invoke the existence of said
positive evidence to show that Bautista was acting in his private company guidelines and policies on hiring and supervision. As the
capacity at the time of the incident. negligence of the employee gives rise to the presumption of
negligence on the part of the employer, the latter has the burden
On the third, petitioner likewise failed to prove that it exercised of proving that it has been diligent not only in the selection of
the requisite diligence in the selection and supervision of Bautista. employees but also in the actual supervision of their work. The
mere allegation of the existence of hiring procedures and
supervisory policies, without anything more, is decidedly not
sufficient to overcome presumption. A person is not an indispensable party, however, if his interest in
the controversy or subject matter is separable from the interest of
We emphatically reiterate our holding, as a warning to all the other parties, so that it will not necessarily be directly or
employers, that "(t)he mere formulation of various company injuriously affected by a decree which does complete justice
policies on safety without showing that they were being complied between them. Also, a person is not an indispensable party if his
with is not sufficient to exempt petitioner from liability arising presence would merely permit complete relief between him and
from negligence of its employees. It is incumbent upon petitioner those already parties to the action, or if he has no interest in the
to show that in recruiting and employing the erring driver the subject matter of the action. It is not a sufficient reason to declare
recruitment procedures and company policies on efficiency and a person to be an indispensable party that his presence will avoid
safety were followed." Paying lip-service to these injunctions or multiple litigation. 123ChanRoblesVirtualawlibrary
merely going through the motions of compliance therewith will
warrant stern sanctions from the Court. 116(Emphasis supplied, Petitioner's interest and liability is distinct from that of its driver.
citations omitted) Regardless of petitioner's employer-employee relationship with
Bautista, liability attaches to petitioner on account of its being the
For failing to overturn the presumption that the requirements of registered owner of a vehicle that figures in a mishap. This alone
Article 2180 have been satisfied, petitioner must be held liable. suffices. A determination of its liability as owner can proceed
independently of a consideration of how Bautista conducted
III himself as a driver. While certainly it is desirable that a
determination of Bautista's liability be made alongside that of the
owner of the van he was driving, his non-inclusion in these
Petitioner's argument that it should be excused from liability proceedings does not absolutely hamper a judicious resolution of
because Bautista was already dropped as a party is equally respondent's plea for relief.
unmeritorious. The liability imposed on the registered owner is
direct and primary.117 It does not depend on the inclusion of the IV
negligent driver in the action. Agreeing to petitioner's assertion
would render impotent the rationale of the motor registration law
in fixing liability on a definite person. The Court of Appeals committed no reversible error when it
awarded actual damages to respondent. Respondent's claim for
Bautista, the driver, was not an indispensable party under Rule 3, actual damages was based on the Certificate 124 issued and signed
Section 7118 of the 1997 Rules of Civil Procedure. Rather, he was a by a certain Peñaloza showing that respondent paid Peñaloza
necessary party under Rule 3, Section 8. 119 Instead of insisting P35,000.00 for funeral expenses.
that Bautista — who was nothing more than a necessary party —
should not have been dropped as a defendant, or that petitioner, Contrary to petitioner's claim, this Certificate is not hearsay.
along with Bautista, should have been dropped, petitioner (as a Evidence is hearsay when its probative value is based on the
co-defendant insisting that the action must proceed with Bautista personal knowledge of a person other than the person actually
as party) could have opted to file a cross-claim against Bautista as testifying.125 Here, the Certificate sought to establish that
its remedy. respondent herself paid Peñaloza P35,000.00 as funeral expenses
for Reyes' death:126
The 1997 Rules of Civil Procedure spell out the rules on joinder of
indispensable and necessary parties. These are intended to afford 3. Na ang aking kontrata ay nagkakahalaga ng P35,000-00
"a complete determination of all possible issues, not only between [sic] sa lahat ng nagamit na materiales at labor nito
the parties themselves but also as regards to other persons who kasama ang lote na ibinayad sa akin ni Gng. ERMILINDA
may be affected by the judgment."120 REYES ABEJAR na siyang aking kakontrata sa
pagsasagawa ng naturang paglilibingan.127 (Emphasis
However, while an exhaustive resolution of disputes is desired in supplied)
every case, the distinction between indispensable parties and
necessary parties delineates a court's capacity to render effective It was respondent herself who identified the Certificate. She
judgment. As defined by Rule 3, Section 7, indispensable parties testified that she incurred funeral expenses amounting to
are "[p]arties in interest without whom no final determination can P35,000.00, that she paid this amount to Peñaloza, and that she
be had of an action[.]" Thus, their non-inclusion is debilitating: was present when Peñaloza signed the Certificate:
"the presence of indispensable parties is a condition for the chanRoblesvirtualLawlibrary
exercise of juridical power and when an indispensable party is not
before the court, the action should be dismissed." 121
[ATTY. Did you incur any expenses?
LIM] :
In contrast, a necessary party's presence is not imperative, and
his or her absence is not debilitating. Nevertheless, it is preferred A: Meron po.
that they be included in order that relief may be complete.
Q: How much did you spend for the death of Jesmarian
The concept of indispensable parties, as against parties whose [sic] Reyes?
inclusion only allows complete relief, was explained in Arcelona v. A: 'Yun pong P35,000.00 na pagpapalibing at saka...
Court of Appeals:122
Q: You said that you spent P35,000.00. Do you have any
An indispensable party is a party who has such an interest in the evidence or proof that you spent that amount?
controversy or subject matter that a final adjudication cannot be
made, in his absence, without injuring or affecting that interest, a A: Meron po.
party who has not only an interest in the subject matter of the Q: Showing to you this sort of certification. What relation
controversy, but also has an interest of such nature that a final has this...
decree cannot be made without affecting his interest or leaving the
controversy in such a condition that its final determination may A: 'Yan po' yung contractor nagumawa.
be wholly inconsistent with equity and good conscience. It has
Q: Contractor of what?
also been considered that an indispensable party is a person in
whose absence there cannot be a determination between the A: 'Yan po' yung mismong binilhan ko ng lupa at nitso.
parties already before the court which is effective, complete, or
equitable. Further, an indispensable party is one who must be ....
included in an action before it may properly go forward.
ATTY. LIM There is a signature at the top of the printed name persons exercising substitute parental authority are required to,
: Julian Penalosa [sic]. Whose signature is this? among others, keep their wards in their company, 135 provide for
their upbringing,136 show them love and affection,137 give them
A: 'Yan po' yung mismong contractor. advice and counsel,138 and provide them with companionship and
understanding.139 For their part, wards shall always observe
.... respect and obedience towards the person exercising parental
Q: Did you see him sign this? authority. 140 The law forges a relationship between the ward and
the person exercising substitute parental authority such that the
A: Opo.128 (Emphasis supplied) death or injury of one results in the damage or prejudice of the
Respondent had personal knowledge of the facts sought to be other.
proved by the Certificate, i.e. that she spent P35,000.00 for the
funeral expenses of Reyes. Thus, the Certificate that she identified Moral damages are awarded to compensate the claimant for his or
and testified to is not hearsay. It was not an error to admit this her actual injury, and not to penalize the wrongdoer. 141 Moral
Certificate as evidence and basis for awarding P35,000.00 as damages enable the injured party to alleviate the moral suffering
actual damages to respondent. resulting from the defendant's actions.142 It aims to restore — to
the extent possible — "the spiritual status quo ante[.]" 143
The Court of Appeals likewise did not err in awarding civil
indemnity and exemplary damages. Given the policy underlying Articles 216 and 220 of the Family
Code as well as the purposes for awarding moral damages, a
Article 2206 of the Civil Code provides: person exercising substitute parental authority is rightly
chanRoblesvirtualLawlibrary considered an ascendant of the deceased, within the meaning of
Article 2206(3) of the Civil Code. Hence, respondent is entitled to
ARTICLE 2206. The amount of damages for death caused by a moral damages.
crime or quasi-delict shall be at least three thousand pesos, even
though there may have been mitigating circumstances[.] As exemplary damages have been awarded and as respondent was
compelled to litigate in order to protect her interests, she is rightly
Further, Article 2231 of the Civil Code provides: entitled to attorney's fees.144
chanRoblesvirtualLawlibrary
However, the award of interest should be modified. This
ARTICLE 2231. In quasi-delicts, exemplary damages may be modification must be consistent with Nacar v. Gallery
granted if the defendant acted with gross negligence. Frames,145 in which we ruled:
chanRoblesvirtualLawlibrary
Both the Court of Appeals and the Regional Trial Court found
Bautista grossly negligent in driving the van and concluded that 2. When an obligation, not constituting a loan or
Bautista's gross negligence was the proximate cause of Reyes' forbearance of money, is breached, an interest on the
death. Negligence and causation are factual issues. 129 Findings of amount of damages awarded may be imposed at the
fact, when established by the trial court and affirmed by the Court discretion of the court at the rate of 6% per annum. No
of Appeals, are binding on this court unless they are patently interest, however, shall be adjudged on unliquidated
unsupported by evidence or unless the judgment is grounded on a claims or damages, except when or until the demand can
misapprehension of facts.130 Considering that petitioner has not be established with reasonable certainty.
presented any evidence disputing the findings of the lower courts Accordingly, where the demand is established with
regarding Bautista's negligence, these findings cannot be reasonable certainty, the interest shall begin to run from
disturbed in this appeal. The evidentiary bases for the award of the time the claim is made judicially or extrajudicially
civil indemnity and exemplary damages stand. As such, petitioner (Art. 1169, Civil Code), but when such certainty cannot
must pay the exemplary damages arising from the negligence of its be so reasonably established at the time the demand is
driver.131 For the same reasons, the award of P50,000.00 by way of made, the interest shall begin to run only from the date
civil indemnity is justified.132 the judgment of the court is made (at which time the
quantification of damages may be deemed to have been
The award of moral damages is likewise proper.  reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the
Article 2206(3) of the Civil Code provides: amount finally adjudged.
chanRoblesvirtualLawlibrary
3. When the judgment of the court awarding a sum of
ARTICLE 2206. The amount of damages for death caused by a money becomes final and executory, the rate of legal
crime or quasi-delict shall be at least three thousand pesos, even interest, whether the case falls under paragraph 1 or
though there may have been mitigating circumstances. In paragraph 2, above, shall be 6% per annum from such
addition: finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of
. . . .  credit.146 (Emphasis supplied)
 
WHEREFORE, the Decision of the Court of Appeals dated October
3, 2005 is AFFIRMED with the following MODIFICATIONS: (a)
(3) The spouse, legitimate and illegitimate descendants and actual damages in the amount of P35,000.00 shall earn interest at
ascendants of the deceased may demand moral damages for the rate of 6% per annum from the time it was judicially or
mental anguish by reason of the death of the deceased. extrajudicially demanded from petitioner Caravan Travel and
(Emphasis supplied) Tours International, Inc. until full satisfaction; (b) moral damages,
exemplary damages, and attorney's fees shall earn interest at the
For deaths caused by quasi-delict, the recovery of moral damages rate of 6% per annum from the date of the Regional Trial Court
is limited to the spouse, legitimate and illegitimate descendants, Decision until full satisfaction; and (c) civil indemnity shall earn
and ascendants of the deceased.133 interest at the rate of 6% per annum from the date of the Court of
Appeals Decision until full satisfaction.
Persons exercising substitute parental authority are to be
considered ascendants for the purpose of awarding moral SO ORDERED.cralawlawlibrary
damages. Persons exercising substitute parental authority are
intended to stand in place of a child's parents in order to ensure
the well-being and welfare of a child. 134 Like natural parents,
G.R. No. 88561               April 20, 1990

DR. HERMAN ARMOVIT, DORA ARMOVIT and JACQUELINE

ARMOVIT, petitioners, 
vs.
COURT OF APPEALS, and NORTHWEST AIRLINES,
INC., respondents.

GANGAYCO, J.:

This is a case which involves a Filipino physician and his family

residing in the United States who came home to the Philippines on
a Christmas visit. They were bumped off at the Manila e) Attorney's fees of 5% of the total awards
International Airport on their return flight to the U.S. because of under the above paragraphs.
an erroneous entry in their plane tickets relating to their time of
departure. plus costs of suit. 5

In October 1981, the petitioners decided to spend their Christmas Not satisfied therewith, private respondent interposed an appeal to
holidays with relatives and friends in the Philippines, so they the Court of Appeals wherein in due course a decision was
purchased from private respondent, (Northwest Airlines, Inc.) rendered on June 20, 1989, the relevant portion and dispositive
three (3) round trip airline tickets from the U.S. to Manila and part of which read as follows:
back, plus three (3) tickets for the rest of the children, though not
involved in the suit. Each ticket of the petitioners which was in Plaintiffs-appellees had complied with the "72-hour
the handwriting of private respondent's tickets sales agent reconfirmation rule." They had obtained reconfirmation
contains the following entry on the Manila to Tokyo portion of the from defendant-appellant of the time and date of their
return flight: flight, as indicated in their tickets. The trial court said so
and We find nothing significance to warrant a
from Manila to Tokyo, NW flight 002, date 17 January, disturbance of such finding.
time 10:30 A.M. Status, OK. 1
On the allowance of damages, the trial court has
On their return trip from Manila to the U.S. scheduled on January discretion to grant and fix the amounts to be paid the
17, 1982, petitioner arrived at the check-in counter of private prevailing party. In this case, there was gross negligence
respondent at the Manila International Airport at 9:15 in the on the part of defendant-appellant in reconfirming the
morning, which is a good one (1) hour and fifteen (15) minutes time and date of departure of Flight No. 002 as indicated
ahead of the 10:30 A.M. scheduled flight time recited in their in the three (3) tickets (Exhibits A, A-1 and A-2). And, as
tickets. Petitioners were rudely informed that they cannot be admitted by defendant-appellant, plaintiffs-appellees had
accommodated inasmuch as Flight 002 scheduled at 9:15 a.m. arrived at the airport at 9:15 A.M. or one (1) hour before
was already taking off and the 10:30 A.M. flight time entered in departure time of 10:30 A.M.
their plane tickets was erroneous.
Appellees' actual damages in the amount of P1,300.00 is
Previous to the said date of departure petitioners re-confirmed maintained for being unrebutted by the Appellant.
their reservations through their representative Ernesto Madriaga
who personally presented the three (3) tickets at the private However, We modify the allowance of the other awards
respondent's Roxas Boulevard office. 2 The departure time in the made by the trial court.
three (3) tickets of petitioners was not changed when re-confirmed.
The names of petitioners appeared in the passenger manifest and The moral damages of P900,000.00 awarded to Appellees
confirmed as Passenger Nos. 306, 307, and 308, Flight 002. 3 must be eliminated considering the following:

Herein petitioner Dr. Armovit protested in extreme agitation that 1. That the appellees did not take the witness stand to
because of the bump-off he will not be able to keep his testify on their "social humiliation, wounded feelings and
appointments with his patients in the U.S. Petitioners suffered anxiety" and the breach of contract was not malicious or
anguish, wounded feelings, and serious anxiety day and night of fraudulent. (Art. 2220, Civil Code). It has been held that:
January 17th until the morning of January 18th when they were
finally informed that seats will be available for them on the flight Nor was there error in the appealed decision in denying
that day. moral damages, not only on account of the plaintiffs
failure to take the witness stand and testify to her social
Because of the refusal of the private respondent to heed the humiliation, wounded feelings, anxiety, etc., as the
repeated demands of the petitioners for compensatory damages decision holds, but primarily because a breach of
arising from the aforesaid breach of their air-transport contract like that of defendant not being malicious or
contracts, 4 petitioners were compelled to file an action for fraudulent, does not warrant the award of moral
damages in the Regional Trial Court of Manila. damages under Article 2220 of the Civil Code (Ventilla vs.
Centeno, L-14333, 28 Jan. 1961; Fores vs. Miranda, L-
After trial on the merits, a decision was rendered on July 2, 1985, 12163; 4 March 1959 Francisco vs. GSIS, 7 SCRA 577).
the dispositive part of which reads as follows:
2. Furthermore, moral damages, though incapable of
WHEREFORE, in view of the foregoing considerations, pecuniary estimation, are in the category of an award
judgment is hereby rendered ordering defendant to pay designed to compensate the claimant for actual injury
plaintiffs actual, moral, exemplary and nominal suffered and not to impose a penalty on the wrongdoer
damages, plus attorney's fees, as follows: (San Andres vs. Court of Appeals, 116 SCRA 85). In a
later case, the Supreme Court held that moral damages
a) Actual damages in favor of Dr. Herman are emphatically not intended to enrich a complainant at
Armovit in the sum of P1,300.00, with interest the expense of the defendant (R & B Surety vs. IAC, 129
at the legal rate from January 17, 1982; SCRA 745) citing Grand Union Supermarket, Inc. vs.
Espino, Jr. 94 SCRA 966).
b) Moral damages of P500,000.00, exemplary
damages of P500,000.00, and nominal damages However, there is no question that appellant acted with
of P100,000.00 in favor of Dr. Herman Armovit; negligence in not informing appellees about the change of
hour of departure. To provide an example or correction
c) Moral damages of P300,000.00, exemplary for the public good, therefore, the award of exemplary
damages of P300,000.00, and nominal damages damages is proper (Art. 2229 & 2231 Civil Code; Lopez v.
of P50,000.00 in favor of Mrs. Dora Armovit; Pan American World Airways, 16 SCRA 431; Prudenciado
vs. Alliance Transport, 148 SCRA 440). Nonetheless, the
d) Moral damages of P300,000.00, exemplary awards granted by the trial court are far too exhorbitant
damages of P300,000.00, and nominal damages and excessive compared to the actual loss of P1,300.00.
of P50,000.00 in favor of Miss Jacqueline The authority of the Court of Appeals to modify or change
Armovit; and the amounts of awards has been upheld in a long line of
decisions. We reduce the award of exemplary damages
 from P500,000.00 to P100,000.00 in favor of Dr. Herman personal misconduct, injurious language, indignities and
Armovit, from P500,000.00 to P50,000.00 in favor of Mrs. abuses from such employees. So it is, that any rude or
Dora Armovit; and from P300,000.00 to P20,000.00 in discourteous conduct on the part of employees towards a
favor of Miss Jacqueline Armovit. (Gellada vs. Warner passenger gives the latter an action for damages against
Barnes, 57 O.G. (4) 7347, Sadie vs. Bachrach, 57 O.G. the carrier.12
(4) 636, Prudenciado vs. Alliance Transport, supra). The
award of nominal damages has to be eliminated since we The gross negligence committed by private respondent in the
are already awarding actual loss. Nominal damages issuance of the tickets with entries as to the time of the flight, the
cannot co-exist with actual or compensatory damages failure to correct such erroneous entries and the manner by which
(Vda. de Medina, et al. v. Cresencia, et al., 99 Phil. 506). petitioners were rudely informed that they were bumped off are
clear indicia of such malice and bad faith and establish that
The award of 5% of the total damages as attorney's fees private respondent committed a breach of contract which entitles
is reasonable. petitioners to moral damages.

3. WHEREFORE, with the above modifications, the The appellate court observed that the petitioners failed to take the
decision appealed from is hereby AFFIRMED in all other witness stand and testify on the matter.1âwphi1 It overlooked
respects. 6 however, that the failure of the petitioner to appear in court to
testify was explained by them. The assassination of Senator
A motion for reconsideration thereof filed by the petitioners was Benigno Aquino, Jr. on August 21, 1983 following the year they
denied in a resolution dated May 29, 1989. 7 were bumped off caused a turmoil in the country. This turmoil
spilled over to the year 1984 when they were scheduled to testify.
Both petitioners and private respondent elevated the matter to this However, the violent demonstrations in the country were
Court for review by certiorari. sensationalized in the U.S. media so petitioners were advised to
refrain from returning to the Philippines at the time.
The petition of private respondent was docketed as G.R. No.
86776. It was denied in a resolution of this Court dated July 10, Nevertheless, Atty. Raymund Armovit, brother of petitioner Dr.
1989, and the motion for reconsideration thereof was denied in a Armovit, took the witness stand as he was with the petitioners
resolution dated September 6, 1989. On October 12, 1989 this from the time they checked in up to the time of their ultimate
Court ordered the entry of judgment in this case and for the departure. He was a witness when the check-in officer rudely
records to be remanded to the court of origin for prompt execution informed the petitioners that their flight had already taken off,
of the judgment. while petitioner Dr. Armovit remonstrated that their tickets
reflected their flight time to be 10:30 A.M.; that in anger and
In the herein petition for review on certiorari filed by petitioner frustration, Dr. Armovit told the said check-in-officer that he had
they claim that the questioned decision and resolution of the to be accommodated that morning so that he could attend to all
Court of Appeals should be struck down as an unlawful, unjust his appointments in the U.S.; that petitioner Jacqueline Armovit
and reasonless departure from the decisions of this Court as far also complained about not being able to report for work at the
as the award for moral damages and the drastic reduction of the expiration of her leave of absence; that while petitioner had to
exemplary damages are concerned. accept private respondent's offer for hotel accommodations at the
Philippine Village Hotel so that they could follow up and wait for
The petition is impressed with merit. their flight out of Manila the following day, petitioners did not use
their meal coupons supplied because of the limitations thereon so
The appellate court observed that private respondent was guilty of they had to spend for lunch, dinner, and breakfast in the sum of
gross negligence not only in the issuance of the tickets by the P1,300.00 while waiting to be flown out of Manila; that Dr.
erroneous entry of the date of departure and without changing or Armovit had to forego the professional fees for the medical
correcting the error when the said three (3) tickets were presented appointments he missed due to his inability to take the January
for re-confirmation. Nevertheless it deleted the award of moral 17 flight; that the petitioners were finally able to fly out of Manila
damages on the ground that petitioners did not take the witness on January 18, 1982, but were assured of this flight only on the
stand to testify on "their social humiliation, wounded feelings and very morning of that day, so that they experienced anxiety until
anxiety, and that the breach of contract was not malicious or they were assured seats for that flight. 13
fraudulent." 8
No doubt Atty. Raymund Armovit's testimony adequately and
We disagree. sufficiently established the serious anxiety, wounded feelings and
social humiliation that petitioners suffered upon having been
In Air France vs. Carrascoso, 9 Lopez vs. Pan American World bumped off. However, considering the circumstances of this case
Airways, 10 and Zulueta vs. Pan American World Airways, 11 this whereby the private respondent attended to the plight of the
Court awarded damages for the gross negligence of the airline petitioners, taking care of their accommodations while waiting and
which amounted to malice and bad faith and which tainted the boarding them in the flight back to the U.S. the following day, the
breach of air transportation contract. Court finds that the petitioners are entitled to moral damages in
the amount of P100,000.00 each.
Thus in Air France, this Court observed:
By the same token to provide an example for the public good, an
award of exemplary damages is also proper. 14The award of the
A contract to transport passengers is quite different in
appellate court is adequate.
kind and degree from any other contractual relation. And
this, because of the relation which an air carrier sustains
with the public. Its business is mainly with the traveling Nevertheless, the deletion of the nominal damages by the appellate
public. It invites people to avail of the comforts and court is well-taken since there is an award of actual damages.
advantages it offers. The contract of air carriage, Nominal damages cannot co-exist with actual or compensatory
therefore, generates a relation attended with a public damages. 15
duty. Neglect or malfeasance of the carrier's employees,
naturally, could give ground for an action for damages. WHEREFORE, the petition is GRANTED. The questioned judgment
of the Court of Appeals is hereby modified such that private
Passengers do not contract merely for transportation. respondent shall pay the following:
They have the right to be treated by the carrier's
employees with kindness, respect, courtesy and due (a) actual damages in favor of Dr. Armovit in the sum of
consideration. They are entitled to be protected against P1,300.00 with interest at the legal rate from January
17, 1982;
 (b) moral damages at P100,000.00 and exemplary
damages and P100,000.00 in favor of Dr. Armovit;

(c) moral damages of P100,000.00 and exemplary

damages of P50,000.00 in favor of Mrs. Dora Armovit;

(d) moral damages of P100,000.00 and exemplary

damages in the amount of P20,000.00 in favor of Miss
Jacqueline Armovit; and

(e) attorney's fees at 5% of the total awards under the

above paragraphs, plus the cost of suit.

SO ORDERED.

G.R. No. 137842            August 23, 2001

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, 

vs.
DANILO CATUBIG y HORIO, accused-appellant.

VITUG, J.:

In an information, dated 29 January 1998, the accused, Danilo

Catubig y Horio, was charged with the crime of rape before the
Regional Trial Court, Branch 78, of Malolos, Bulacan; viz:

"The undersigned Asst. Provincial Prosecutor on

complaint of the offended party Dannilyn Catubig y
 Lazaro accuses Danilo Catubig y Horio of the crime of private complainant Dannilyn Catubig the amount of
rape, penalized under the provisions of Art. 335 of the Fifty Thousand Pesos (P50,000.00) as moral damages." 3
Revised Penal Code, committed as follows:
With the imposition of the death penalty by the trial court, the
"That on or about the 27th day of November, 1997, in the records were elevated to this Court for automatic review.
municipality of San Jose del Monte, province of Bulacan,
Philippines, and within the jurisdiction of this Honorable In his brief, appellant submitted thusly:
Court, the above-named accused, did then and there
wilfully, unlawfully and feloniously, by means of force, "1. The lower court erred in finding the accused guilty of
threats and intimidation and with lewd design have the crime of rape in violation of Article 335 of the Revised
carnal knowledge of the said offended party against her Penal Code as amended by Republic Act 7659.
will."1
"2. The lower court erred in not taking into consideration
When arraigned on 16 July 1998, accused Catubig, represented the fact that the information was defective for failure to
by counsel de oficio, pleaded "not guilty" to the offense charged; state that the accused is the father of the victim and that
forthwith, trial ensued. the victim was under 18 years [of] age at the time of the
commission of the alleged rape."4
The case for the prosecution was laid bare in Appellee's Brief
submitted by the Office of the Solicitor General. Private complainant Dannilyn Catubig narrated how she was
repeatedly abused by her own father; she testified:
"On November 27, 1997, at around 4:00 o'clock in the
afternoon, private complainant Dannilyn Catubig, who "Q         Now, after your sisters and brother [went] to the
was born on August 9, 1985, and her four (4) younger house of your aunt, what did your father do?
siblings were watching television in the sala of their "A         He instructed me to go inside the room.
house located at Sunlife Subdivision, San Jose del "Q         How many rooms were there in your house?
Monte, Bulacan. "A         Only one.
"Q         Did you go to the room per instruction?
"After an hour, Dannilyn's father, herein appellant Danilo "A         Yes, sir.
Catubig, arrived and told Dannilyn's siblings to proceed, "Q         And what happened inside the room?
as in fact they did proceed, to her aunt's house which is "A         My father entered the room.
just located nearby. Thereafter, appellant told Dannilyn "Q         And when your father entered the room, what
to go inside a room and to lie down on the bed. After did he do next?
Dannilyn had complied, appellant removed Dannilyn's "A         He removed my short [pants] and my panty.
shorts and panty, while appellant, after removing his "Q         What was your position at that time when your
brief and t-shirt, [laid] on top of Dannilyn. Afraid of father removed your short pants and panty?
appellant who beat and raped her in the past, Dannilyn "A         I was lying.
was not able to resist appellant who succeeded in "Q         When you entered the room, did you lie
inserting his penis into Dannilyn's vagina. immediately?
"A         No, I just sat.
"However, Dannilyn's aunt, who got suspicious of what "Q         How come as you claimed a while ago, you were
appellant was doing to Dannilyn, informed the latter's lying when your father removed your short pants and
mother, Jocelyn Catubig, about the said suspicion. Thus, panty?
when confronted by her mother, Dannilyn was forced to "A         Once I entered the room, I was sitting then he
reveal that she was indeed raped by appellant. The removed my short [pants] and panty.
sexual assault was reported to the San Jose del Monte "Q         You said upon entering the room, you sat and
Police Station where Dannilyn's sworn statement was while sitting, all of a sudden your father removed your
subsequently taken on December 3, 1997. short pants and panty while already lying at that time,
how come you were lying when according to you, you
"Upon the request of the police authorities, Dannilyn was were sitting inside the room?
examined on December 1, 1997 by Dr. Wilfredo E. Tiera, "A         I was sitting first and he instructed me to lie
Medico-Legal Officer of the National Bureau of down.
Investigation, who found out that Dannilyn's healed "Q         While you were sitting inside the room and you
laceration in the hymen was caused by sexual were instructed by your father to lie, what comes to your
intercourse."2 mind?
"A         That he will rape me.
The accused denied the accusation against him. He claimed that "Q         How did you come to know that?
the rape charge was brought about only because of the ill-will "A         He was raping me before, doing that before.
between him, on the one hand, and his wife and daughter "Q         In other words, that was not the first time your
Dannilyn, on the other hand, following a quarrel. On 27 November father raped you on that particular date?
1997, he asseverated, he had fought with his wife, hitting her and "A         No, sir.
his daughter. His wife then threatened him that it was the last "Q         When was the first time, if you remember?
time that she would allow him to harm her and that he would "A         When I was still in grade 1.
regret what he did. True to her foreboding, the next day, he was "Q         How many times were you raped by your father?
arrested and a complaint for rape was filed against him. "A         I can no longer remember how many it was —
several.
On 11 December 1998, the Regional Trial Court rendered a "Q         When was the last time your father raped you?
decision holding the accused guilty of the crime of rape; it "A         November 27.
adjudged: "Q         Now, when your father removed your short pants
and panty, what did he do next?
"WHEREFORE, in view of the foregoing, the Court hereby "A         He removed his brief and shirt.
finds accused DANILO CATUBIG Y HORIO GUILTY "Q         After removing his brief and shirt, what did he
beyond reasonable doubt of the crime of Rape defined do?
and penalized under Article 335 of the Revised Penal "A         He [laid] on top me.
Code, as amended by Republic Act No. 7659, and hereby "Q         When your father [laid] on top of you, what did
sentences him to suffer the penalty of DEATH, and to pay he do?
"A         He was inserting his penis to my vagina.
 "Q         At this juncture, may we make of record that course of the testimony in open court. There is no valid reason to
witness starts to cry. now ignore this long accepted jurisprudence in this instance.
"Q         How did you know your father inserted his penis
to your vagina? This Court, however, finds the second assignment of error
"A         I can feel it and it is painful. impressed with merit.
"Q         That was the time when your father was already
lying on top of you? Article 335 of the Revised Penal Code, as amended by Section 11
"A         Yes, sir. of Republic Act No. 7659, at times also referred to as the Death
"Q         And what was the movement of the body of your Penalty Law, states in part:
father while he was lying on top of you?
"A         Push and pull movement. "ARTICLE 335. When and how rape is committed. x x x .
"Q         For how long did your father stay on top of you
doing that push and pull movement? "xxx           xxx           xxx
"A         That must be about 1 hour, but my aunt arrived.
"Q         Aside from the pain, what else did you feel? "The death penalty shall also be imposed if the crime of
"A         Mahapdi at parang may pumipitik sa loob ng ari rape is committed with any of the following attendant
ko. circumstances:
"Q         Did you not try to resist?
"A         No, because I am afraid of him. "1. When the victim is under eighteen (18) years of age
"Q         You are afraid of your father? and the offender is a parent, ascendant, step-parent,
"A         Yes, sir. guardian, relative by consanguinity or affinity within the
"Q         Afraid of what? third civil degree, or the common-law spouse of the
"A         Because he was beating us, hitting us. parent of the victim."
"Q         Why, what was the reason why your father was
hitting you?
The concurrence of the minority of the victim and her relationship
"A         To threaten us.
to the offender are special qualifying circumstances that are
"Q         For what purpose?
needed to be alleged in the complaint or information for the
"A         Whenever my mother sided with us, my father
penalty of death to be decreed.7The Constitution guarantees to be
and mother engaged in a fight.
inviolable the right of an accused to be informed of the nature and
"Q         In this case, you were raped and sexually
cause of the accusation against him.8 It is a requirement that
abused by your father, what made you afraid of him?
renders it essential for every element of the offense with which he
"A         Because we were afraid of my father since
is charged to be properly alleged in the complaint or information.
childhood."5
Here, the information failed to state the minority of the victim and
her relationship with the offender, both special qualifying
Dannilyn has given her testimony in a plain, categorical,
circumstances under Republic Act No. 7659, and for want of such
spontaneous and frank manner, remaining consistent throughout,
allegations, the trial court erred in imposing the death penalty on
and there is hardly anything on record that can cast doubt on her
the accused.9 Appellant could only thus be convicted under Article
sincerity. The revelations of an innocent child whose chastity has
335 of the Revised Penal Code, as amended, of simple rape
been abused, coupled with her willingness to face police
punishable by reclusion perpetua.
investigation and to undergo the trouble and humiliation of a
public trial, should merit credence unless strong justifications
Anent the award of damages, the trial court has correctly awarded
dictate otherwise. Indeed, it would take a most senseless kind of
P50,000.00 moral damages, an award that rests on the jural
depravity for a young daughter to just make up a story which
foundation that the crime of rape necessarily brings with it shame,
could put her own father to an undeserved indictment and to even
mental anguish, besmirched reputation, moral shock and social
possibly face death in the hands of the law. 6
humiliation to the offended party.10 In addition, the offended party
deserves to receive the amount of P50,000.00 civil indemnity, 11 the
When rape is committed against one's own daughter, the moral
equivalent of compensatory damages, and exemplary damages in
ascendancy and influence of the father, that necessarily flows
the amount of P25,000.00.
from his parental authority, can sufficiently cow the child to
submission and can rightly be held to substitute for the requisite
An apparent discord in the award of exemplary damages in simple
"violence or intimidation" that, normally, would be characterized
and qualified rape cases perhaps deserves more than just a
by physical acts and uttered threats made on the victim.
passing remark.
The trite defenses of alibi and denial proferred by appellant cannot
The Civil Code of the Philippines provides, in respect to exemplary
prevail over the positive and categorical statements of private
or corrective damages, thusly:
complainant. Alibi is often viewed with suspicion and received
with caution not only because it is inherently weak and unreliable
"ARTICLE 2229. Exemplary or corrective damages are
but also because it is easy to fabricate. In order that this defense
imposed, by way of example or correction for the public
can prosper, it must be convincing to preclude any doubt on the
good, in addition to the moral, temperate, liquidated or
physical impossibility of the presence of the accused at the locus
compensatory damages.
criminis at the time of the incident. These conditions have not
been met in the case at bar.
"ARTICLE 2230. In criminal offenses, exemplary damages
as a part of the civil liability may be imposed when the
The contention of appellant that his wife and daughter Dannilyn
crime was committed with one or more aggravating
have accused him merely because of his violent ways is much too
circumstances. Such damages are separate and distinct
flimsy to be believed. The mere resentment of a wife and daughter
from fines and shall be paid to the offended party.
is not so compelling as to have motivated them to wrongly lodge a
complaint for a crime much more serious than might, if at all, be
expected. "ARTICLE 2231. In quasi-delicts, exemplary damages
may be granted if the defendant acted with gross
negligence.
It is likewise a settled doctrine that the assessment made by the
trial court on the credibility of witnesses deserves great regard and
weight on appeal. The rule is not without reason; the trial judge "ARTICLE 2232. In contracts and quasi-contracts, the
has a unique position of hearing first hand the witnesses and court may award exemplary damages if the defendant
observing their deportment, conduct and attitude during the
 acted in a wanton, fraudulent, reckless, oppressive, or invariably appreciated relationship as an ordinary aggravating
malevolent manner. circumstance in simple rape and thereby imposed exemplary
damages upon the offender whether or not the offense has been
"ARTICLE 2233. Exemplary damages cannot be recovered committed prior to or after the effectivity of Republic Act No. 7659.
as a matter of right; the court will decide whether or not Exceptionally, as in People vs. Decena,24 People vs. Perez,25 People
they should be adjudicated. vs. Perez,26 and People vs. Ambray,27 the Court has denied the
award of exemplary damages following the effectivity of that law.
"ARTICLE 2234. While the amount of the exemplary In qualified rape cases, such as in People vs. Magdato, 28 People vs.
damages need not be proved, the plaintiff must show Arizapa,29 and People vs. Alicante,30the Court decreed the payment
that he is entitled to moral, temperate or compensatory of exemplary damages to the offended party but it did not do so as
damages before the court may consider the question of in People vs. Alba,31 People vs. Mengote,32 and People vs.
whether or not exemplary damages should be awarded. Maglente.33
In case liquidated damages have been agreed upon,
although no proof of loss is necessary in order that such It may be time for the Court to abandon its pro hac vice stance
liquidated damages may be recovered, nevertheless, and provide, for the guidance of the bar and the bench, a kind of
before the court may consider the question of granting standard on the matter.
exemplary in addition to the liquidated damages, the
plaintiff must show that he would be entitled to moral, Also known as "punitive" or "vindictive" damages, exemplary or
temperate or compensatory damages were it not for the corrective damages are intended to serve as a deterrent to serious
stipulation for liquidated damages. wrongdoings and as a vindication of undue sufferings and wanton
invasion of the rights of an injured or a punishment for those
"ARTICLE 2235. A stipulation whereby exemplary guilty of outrageous conduct. These terms are generally, but not
damages are renounced in advance shall be null and always, used interchangeably. In common law, there is preference
void." in the use of exemplary damages when the award is to account for
injury to feelings and for the sense of indignity and humiliation
The attendance of aggravating circumstances in the perpetration suffered by a person as a result of an injury that has been
of the crime serves to increase the penalty (the criminal liability maliciously and wantonly inflicted,34 the theory being that there
aspect),12 as well as to justify an award of exemplary or corrective should be compensation for the hurt caused by the highly
damages (the civil liability aspect), 13 moored on the greater reprehensible conduct of the defendant — associated with such
perversity of the offender manifested in the commission of the circumstances as willfulness, wantonness, malice, gross
felony such as may be shown by (1) the motivating power itself, (2) negligence or recklessness, oppression, insult or fraud or gross
the place of commission, (3) the means and ways employed, (4) the fraud35 — that intensifies the injury. The terms punitive or
time, or (5) the personal circumstances of the offender or the vindictive damages are often used to refer to those species of
offended party or both. There are various types of aggravating damages that may be awarded against a person to punish him for
circumstances, among them, the ordinary and the qualifying. his outrageous conduct. In either case, these damages are
Relationship is an alternative circumstance under Article 15 of the intended in good measure to deter the wrongdoer and others like
Revised Penal Code. him from similar conduct in the future.36

"ARTICLE 15. Their concept. — Alternative circumstances The term "aggravating circumstances" used by the Civil Code, the
are those which must be taken into consideration as law not having specified otherwise, is to be understood in its
aggravating or mitigating according to the nature and broad or generic sense. The commission of an offense has a two-
effects of the crime and other conditions attending its pronged effect, one on the public as it breaches the social order
commission. They are relationship, intoxication, and and the other upon the private victim as it causes personal
degree of instruction and education of the offender. sufferings, each of which is addressed by, respectively, the
prescription of heavier punishment for the accused and by an
"The alternative circumstance of relationship shall be award of additional damages to the victim. The increase of the
taken into consideration when the offended party is the penalty or a shift to a graver felony underscores the exacerbation
spouse, ascendant, descendant, legitimate, natural, or of the offense by the attendance of aggravating circumstances,
adopted brother or sister, or relative by affinity in the whether ordinary or qualifying, in its commission. Unlike the
same degree of the offender." criminal which is basically a State concern, the award of damages,
however, is likewise, if not primarily, intended for the offended
As a rule, relationship is held to be aggravating in crimes against party who suffers thereby. It would make little sense for an award
chastity, such as rape and acts of lasciviousness, whether the of exemplary damages to be due the private offended party when
offender is a higher or a lower degree relative of the offended the aggravating circumstance is ordinary but to be withheld when
party.14 it is qualifying. Withal, the ordinary or qualifying nature of an
aggravating circumstance is a distinction that should only be of
Under Section 11 of Republic Act No. 7659, amending Article 335 consequence to the criminal, rather than to the civil, liability of
of the Revised Penal Code, the death penalty is to be imposed in the offender. In fine, relative to the civil aspect of the case, an
rape cases "when the victim is under eighteen (18) years of age aggravating circumstance, whether ordinary or qualifying, should
and the offender is a parent, ascendant, step-parent, guardian, entitle the offended party to an award of exemplary damages
relative by consanguinity or affinity within the third civil degree, or within the unbridled meaning of Article 2230 of the Civil Code.
the common-law spouse of the parent of the victim." The Court
has since held that the circumstances enumerated by the Relevantly, the Revised Rules on Criminal Procedure, made
amendatory law are to be regarded as special qualifying effective on 01 December 2000, requires aggravating
(aggravating) circumstances. Somehow doubts linger on whether circumstances, whether ordinary or qualifying, to be stated in the
relationship may then be considered to warrant an award for complaint or information. Sections 8 and 9 of Rule 110 of the
exemplary damages where it is used to qualify rape as a heinous Rules of Court now provide:
crime, thereby becoming an element thereof, as would subject the
offender to the penalty of death. Heretofore, the Court has not "SECTION 8. Designation of the offense. — The complaint
categorically laid down a specific rule, preferring instead to treat or information shall state the designation of the offense
the issue on a case to case basis. given by the statute, aver the acts or omissions
constituting the offense, and specify its qualifying and
In People vs. Fundano,15 People vs. Ramos,16 People vs. aggravating circumstances. If there is no designation of
Medina,17 People vs. Dimapilis,18 People vs. Calayca,19People vs. the offense, reference shall be made to the section or
Tabion,20 People vs. Bayona,21 People vs. Bayya,22 and People vs. subsection of the statute punishing it.
Nuñez,23 along with still other cases, the Court has almost
 "SECTION 9. Cause of the accusation. — The acts or
omissions complained of as constituting the offense and
the qualifying and aggravating circumstances must be
stated in ordinary and concise language and not
necessarily in the language used in the statute but in
terms sufficient to enable a person of common
understanding to know what offense is being charged as
well as its qualifying and aggravating circumstances and
for the court to pronounce judgment."

A court would thus be precluded from considering in its judgment

the attendance of "qualifying or aggravating circumstances" if the
complaint or information is bereft of any allegation on the
presence of such circumstances.

The retroactive application of procedural rules, nevertheless,

cannot adversely affect the rights of the private offended party that
have become vested prior to the effectivity of said rules. Thus, in
the case at bar, although relationship has not been alleged in the
information, the offense having been committed, however, prior to
the effectivity of the new rules, the civil liability already incurred
by appellant remains unaffected thereby.

WHEREFORE, the decision of the court a quo is AFFIRMED with

MODIFICATION in that appellant Danilo Catubig y Horio is found
guilty only of simple rape and not in its qualified form, and he is
hereby sentenced to suffer the penalty of reclusion perpetua and
to pay complainant Dannilyn Catubig P50,000.00 civil indemnity,
P50,000.00 moral damages and P25,000.00 exemplary damages.
Costs de oficio.

SO ORDERED.