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G.R. No. 179491, January 14, 2015 - ALEJANDRO C. ALMENDRAS, JR., Petitioner, v. ALEXIS C.

ALMENDRAS,
Respondent.

FIRST DIVISION
G.R. No. 179491, January 14, 2015
ALEJANDRO C. ALMENDRAS, JR., Petitioner, v. ALEXIS C. ALMENDRAS, Respondent.
DECISION
SERENO, C.J.:
We resolve the Petition for Review filed by petitioner Alejandro C. Almendras, Jr., from the 27 January 2006
Decision and 28 August 2007 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 73088. 1The CA affirmed
the Decision and Order of the Regional Trial Court (RTC) in Civil Case No. 33432finding petitioner liable for
damages.
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THE FACTS
As culled from the CA, petitioner sent letters with similar contents on 7 February 1996 to House Speaker Jose de
Venecia, Jr., and on 26 February 1996 to Dr. Nemesio Prudente, President of Oil Carriers, Inc. The controversial
portion of the first and second letters reads as follows:
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This is to notify your good self and your staff that one ALEXIS DODONG C. ALMENDRAS, a brother, is not vested
with any authority to liaison or transact any business with any department, office, or bureau, public or otherwise,
that has bearing or relation with my office, mandates or functions. x x x.
Noteworthy to mention, perhaps, is the fact that Mr. Alexis Dodong C. Almendras, a reknown blackmailer, is a
bitter rival in the just concluded election of 1995 who ran against the wishes of my father, the late Congressman
Alejandro D. Almendras, Sr. He has caused pain to the family when he filed cases against us: his brothers and
sisters, and worst against his own mother.
I deemed that his act of transacting business that affects my person and official functions is malicious in purpose,
done with ill motive and part of a larger plan of harassment activities to perforce realise his egoistic and evil
objectives.
May I therefore request the assistance of your office in circulating the above information to concerned officials and
secretariat employees of the House of Representatives. 3
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xxxx
These letters were allegedly printed, distributed, circulated and published by petitioner, assisted by Atty. Roberto
Layug, in Digos, Davao del Sur and Quezon City, with evident bad faith and manifest malice to destroy respondent
Alexis C. Almendras good name. Hence, the latter filed an action for damages arising from libel and defamation
against petitioner in the Regional Trial Court (RTC), Branch 19, Digos City.
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THE RTC RULING


In the course of trial at the lower court, petitioner failed to present any evidence, except his Answer, despite
several rescheduling of hearings at his instance.4 The trial court thus submitted the case for decision, and
eventually ruled that respondent was libeled and defamed. For the sufferings, social ridicule, defamation and
dishonor caused by petitioners letters, respondent was awarded damages, as follows: P5,000,000.00 as moral
damages; P100,000.00 as exemplary damages; P10,000.00 for litigation expenses; and attorneys fees in the
amount of 25% of whatever amounts actually received by plaintiff for this judgment.5
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Petitioner moved for reconsideration and/or new trial,6 but the same was denied by the trial court.7

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THE CA RULING
On intermediate appellate review, the CA ruled that petitioner was not denied due process. It noted that petitioner
was given full opportunity to present his evidence, but he vehemently disregarded the proceedings by merely
absenting himself from trials without valid excuses. 8
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The appellate court also ruled that the letters were not privileged communications, since petitioner was not acting
as a member of the Congress when he sent them. In fact, his letter stated that he extends his apology for
bringing this personal matter in the open. He was, as maintained by the respondent, sending open libelous and
unsealed letters, duly published and circulated in Digos, Davao del Sur, and Quezon City.9 Consequently, the CA
upheld the damages awarded by the trial court, the amounts being consistent with the social and financial standing
of the parties involved.10
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We now rule on the final review of the case.

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THE ISSUES
From the foregoing, we reduce the issues to the following:
(1) Whether or not petitioner was deprived due process;
(2) Whether or not the letters are libelous in nature;
(3) Whether or not the letters fall within the purview of privileged communication; and
(4) Whether or not respondent is entitled to moral and exemplary damages, attorneys fees and litigation
expenses.
OUR RULING
We deny the petition.
Petitioner anchors his appeal on the ground that his letters are covered by privileged communications. He insists
that he has the legal, moral, or social duty to make the communication, or at least, had an interest to protect,
being then a Congressman duty-bound to insulate his office and his constituents from the dubious and mistrustful
pursuits of his elder brother.11 Moreover, the letters were also not meant to be circulated or published. They were
sent merely to warn the individuals of respondents nefarious activities, and made in good faith and without any
actual malice. Respondents testimony that he learned the existence of the letter from others cannot be
countenanced, as no witness corroborated this. At best, it is only hearsay.12
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On the denial of his motion for reconsideration and/or new trial, he maintains that his own counsel Atty. Leonardo
D. Suario categorically admitted that he did not know of petitioners ailment and thus did not make the proper
manifestations in Court. His failure to attend the hearing was not of his own volition, but because of his doctors
strict advice since he earlier underwent a quadruple coronary artery bypass at the St. Lukes Medical Center-Heart
Institute in Quezon City on 16 July 2001, just a day before the Motion for Reconsideration and/or New Trial was
filed. While his counsel represents him, the latters mistakes should not deprive him of his day in court to present
his side.13
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As to the damages, petitioner avers that since respondent never testified on any suffering he sustained or why he
is entitled to them, the same must not be awarded.
On the other hand, respondent asserts that petitioners letters do not fall within the purview of privileged
communication because it was published and read by the secretariat of the House of the Representatives, and not
exclusively communicated to persons who have some interest or duty in the matter and who have the power to
furnish the protection sought by the author of the statement. Moreover, he was not acting as a member of congress
when he sent the letters. The writing of a personal matter (which petitioner admitted in the letters), not relating to
the functions of a member of Congress cannot, by any stretch of imagination, be deemed to be privileged and
insulated from suit arising therefrom.14
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Malice has also been sufficiently proven because the language of the letters in fact shows that the writer had some
ill-feeling towards the respondent by using the words such as reknown blackmailer and bitter rival. There is
sufficient showing that petitioner bore a grudge against the respondent and that there was rivalry or ill-feeling
between them.15
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Anent the damages, respondent believes that they were rightly awarded, taking into consideration his testimony in
the lower court,16 and the financial and social standing of the parties herein. 17
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First, we rule that petitioner was not deprived of his right to due process.
Settled is the rule that a client is bound by the mistakes of his counsel. The only exception is when the negligence
of the counsel is so gross, reckless and inexcusable that the client is deprived of his day in court. In such instance,
the remedy is to reopen the case and allow the party who was denied his day in court to adduce evidence.
However, perusing the case at bar, we find no reason to depart from the general rule. 18
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Petitioner was given several opportunities to present his evidence or to clarify his medical constraints in court, but
he did not do so, despite knowing full well that he had a pending case in court. For petitioner to feign and
repeatedly insist upon a lack of awareness of the progress of an important litigation is to unmask a penchant for
the ludicrous. Although he rightfully expected counsel to amply protect his interest, he cannot just sit back, relax
and await the outcome of the case. In keeping with the normal course of events, he should have taken the initiative
of making the proper inquiries from his counsel and the trial court as to the status of his case. For his failure to do
so, he has only himself to blame.19 The Court cannot allow petitioner the exception to the general rule just because
his counsel admitted having no knowledge of his medical condition. To do so will set a dangerous precedent of
never-ending suits, so long as lawyers could allege their own fault or negligence to support the clients case and
obtain remedies and reliefs already lost by the operation of law.20
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Second, we find that petitioners letters are libelous in nature and do not fall within the purview of
privileged communication.
For an imputation to be libelous under Article 353 of the Revised Penal Code, the following requisites must be
present: (a) it must be defamatory; (b) it must be malicious; (c) it must be given publicity; and (d) the victim
must be identifiable.21
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Consequently, under Article 354, every defamatory imputation is presumed to be malicious, even if true, if no good
intention and justifiable motive is shown. As an exception to the rule, the presumption of malice is done away with
when the defamatory imputation qualifies as privileged communication.22In order to qualify as privileged
communication under Article 354, Number 1,23 the following requisites must concur: (1) the person who made the
communication had a legal, moral, or social duty to make the communication, or at least, had an interest to
protect, which interest may either be his own or of the one to whom it is made; (2) the communication is
addressed to an officer or a board, or superior, having some interest or duty in the matter, and who has the power
to furnish the protection sought; and (3) the statements in the communication are made in good faith and without
malice.24
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Were petitioners letters defamatory in nature? We believe so.


In determining whether a statement is defamatory, the words used are to be construed in their entirety and should
be taken in their plain, natural, and ordinary meaning as they would naturally be understood by the persons
reading them, unless it appears that they were used and understood in another sense. 25 In the instant case, the
letters tag respondent as a reknown black mailer, a vengeful family member who filed cases against his mother
and siblings, and with nefarious designs. Even an impartial mind reading these descriptions would be led to
entertain doubts on the persons character, thereby affecting that persons reputation.
Malice can also be presumed inasmuch as the letters are not privileged in nature. Petitioners contention that he
has the legal, moral or social duty to make the communication cannot be countenanced because he failed to
communicate the statements only to the person or persons who have some interest or duty in the matter alleged,
and who have the power to furnish the protection sought by the author of the statement. A written letter
containing libelous matter cannot be classified as privileged when it is published and circulated among the
public.26 Examination of the letters would reveal that petitioner himself intended for the letters to be circulated (and
they were so) when he said that:
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May I therefore request the assistance of your office in circulating the above information to concerned officials and
secretariat employees of the House of Representatives. 27
This lack of selectivity on his part is indicative of malice and is anathema to his claim of privileged communication
because such publication created upon the minds of the readers a circumstance which brought discredit and shame
to respondents reputation.28
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Lastly, having duly proved that all the elements of libel are present in this case, we rule that the damages
awarded by the trial court and affirmed by the appellate court must be modified and equitably reduced.
In awarding damages in libel cases, the court is given ample discretion to determine the amount, depending upon
the facts of the particular case.29 Article 2219 of the Civil Code expressly authorizes the recovery of moral damages
in cases of libel, slander or any other form of defamation. However, while no proof of pecuniary loss is necessary
in order that moral damages may be awarded, x x x it is nevertheless essential that the claimant should
satisfactorily show the existence of the factual basis of damages and its causal connection to defendants acts.30
Considering that respondent sufficiently justified his claim for damages (i.e. he testified that he was embarrassed
by the said letters [and] ashamed to show his face in [sic] government offices 31), we find him entitled to moral
and exemplary damages.
However, we equitably reduce the amounts32 awarded because even though the letters were libellous, respondent
has not suffered such grave or substantial damage to his reputation to warrant receiving P5,000,000 as moral
damages and P100,000.00 as exemplary damages. In fact, he was able to successfully secure an elected position
in recent years. Accordingly, we reduce the award of moral damages from P5,000,000 to P100,000 and exemplary
damages from P100,000 to P20,000.
The award of attorneys fees is not proper because respondent failed to justify satisfactorily his claim, and both the
trial and appellate courts failed to explicitly state in their respective decisions the rationale for the award. 33 It is an
accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and counsels
fees are not to be awarded every time a party wins a suit. The power of the court to award attorneys fees under

Article 2208 of the Civil Code demands factual, legal and equitable justification, without which the award is a
conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court
must explicitly state in the text of the decision, and not only in the decretal portion thereof, the legal reason for the
award of attorneys fees.34 The same is true for the award of litigation expenses because respondent failed to
satisfactorily justify his claim.
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WHEREFORE, we DENY the instant petition. The 27 January 2006 Decision and 28 August 2007 Resolution of the
Court of Appeals in CA-G.R. CV No. 73088 are hereby MODIFIED, in that: (1) the award of moral damages is
reduced from P5,000,000 to P100,000; (2) the award of exemplary damages is reduced from P100,000 to
P20,000; and (3) litigation expenses and attorneys fees are deleted.
SO ORDERED.

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G.R. No. 204702, January 14, 2015 - RICARDO C. HONRADO, Petitioner, v. GMA NETWORK FILMS, INC.,
Respondent.

SECOND DIVISION
G.R. No. 204702, January 14, 2015
RICARDO C. HONRADO, Petitioner, v. GMA NETWORK FILMS, INC., Respondent.
DECISION
CARPIO, J.:
The Case
We review the Decision of the Court of Appeals (CA) ordering petitioner Ricardo C. Honrado (petitioner) to pay a
sum of money to respondent GMA Network Films, Inc. for breach of contract and breach of trust.
1

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The Facts
On 11 December 1998, respondent GMA Network Films, Inc. (GMA Films) entered into a TV Rights Agreement
(Agreement) with petitioner under which petitioner, as licensor of 36 films, granted to GMA Films, for a fee of
P60.75 million, the exclusive right to telecast the 36 films for a period of three years. Under Paragraph 3 of the
Agreement, the parties agreed that all betacam copies of the [films] should pass through broadcast quality test
conducted by GMA-7, the TV station operated by GMA Network, Inc. (GMA Network), an affiliate of GMA Films. The
parties also agreed to submit the films for review by the Movie and Television Review and Classification Board
(MTRCB) and stipulated on the remedies in the event that MTRCB bans the telecasting of any of the films
(Paragraph 4):
The PROGRAMME TITLES listed above shall be subject to approval by the Movie and Television Review and
Classification Board (MTRCB) and, in the event of disapproval, LICENSOR [Petitioner] will either replace the
censored PROGRAMME TITLES with another title which is mutually acceptable to both parties or, failure to do such,
a proportionate reduction from the total price shall either be deducted or refunded whichever is the case by the
LICENSOR OR LICENSEE [GMA Films].3 (Emphasis supplied)
Two of the films covered by the Agreement were Evangeline Katorse and Bubot for which GMA Films paid P1.5
million each.
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In 2003, GMA Films sued petitioner in the Regional Trial Court of Quezon City (trial court) to collect P1.6 million
representing the fee it paid for Evangeline Katorse (P1.5 million) and a portion of the fee it paid
for Bubot (P350,0004). GMA Films alleged that it rejected Evangeline Katorse because its running time was too
short for telecast5 and petitioner only remitted P900,000 to the owner of Bubot (Juanita Alano [Alano]), keeping
for himself the balance of P350,000. GMA Films prayed for the return of such amount on the theory that an implied
trust arose between the parties as petitioner fraudulently kept it for himself.6
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Petitioner denied liability, counter-alleging that after GMA Films rejected Evangeline Katorse, he replaced it with
another film, Winasak na Pangarap, which GMA Films accepted. As proof of such acceptance, petitioner invoked a
certification of GMA Network, dated 30 March 1999, attesting that such film is of good broadcast quality 7 (Film

Certification). Regarding the fee GMA Films paid forBubot, petitioner alleged that he had settled his obligation to
Alano. Alternatively, petitioner alleged that GMA Films, being a stranger to the contracts he entered into with the
owners of the films in question, has no personality to question his compliance with the terms of such contracts.
Petitioner counterclaimed for attorneys fees.
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The Ruling of the Trial Court


The trial court dismissed GMA Films complaint and, finding merit in petitioners counterclaim, ordered GMA Films to
pay attorneys fees (P100,000). The trial court gave credence to petitioners defense that he replaced Evangeline
Katorse with Winasak na Pangarap. On the disposal of the fee GMA Films paid for Bubot, the trial court rejected
GMA Films theory of implied trust, finding insufficient GMA Films proof that petitioner pocketed any portion of the
fee in question.
GMA Films appealed to the CA.

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The Ruling of the Court of Appeals


The CA granted GMA Films appeal, set aside the trial courts ruling, and ordered respondent to pay GMA Films P2
million8 as principal obligation with 12% annual interest, exemplary damages (P100,000), attorneys fees
(P200,000), litigation expenses (P100,000) and the costs. Brushing aside the trial courts appreciation of the
evidence, the CA found that (1) GMA Films was authorized under Paragraph 4 of the Agreement to
reject Evangeline Katorse, and (2) GMA Films never acceptedWinasak na Pangarap as replacement because it was
a bold film.9
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On petitioners liability for the fee GMA Films paid for Bubot, the CA sustained GMA Films contention that petitioner
was under obligation to turn over to the film owners the full amount GMA Films paid for the films as nowhere in
the TV Rights Agreement does it provide that the licensor is entitled to any commission x x x [hence] x x x
[petitioner] Honrado cannot claim any portion of the purchase price paid for by x x x GMA Films.10 The CA
concluded that petitioners retention of a portion of the fee forBubot gave rise to an implied trust between him and
GMA Films, obligating petitioner, as trustee, to return to GMA Films, as beneficiary, the amount claimed by the
latter.
Hence, this petition. Petitioner prays for the reinstatement of the trial courts ruling while GMA Films attacks the
petition for lack of merit.
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The Issue
The question is whether the CA erred in finding petitioner liable for breach of the Agreement and breach of trust.

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The Ruling of the Court


We grant the petition. We find GMA Films complaint without merit and accordingly reinstate the trial courts ruling
dismissing it with the modification that the award of attorneys fees is deleted.
Petitioner Committed No Breach of Contract or Trust
MTRCB Disapproval the Stipulated Basis for Film Replacement
The parties do not quarrel on the meaning of Paragraph 4 of the Agreement which states:
The PROGRAMME TITLES listed [in the Agreement] x x x shall be subject to approval by the Movie and Television
Review and Classification Board (MTRCB) and, in the event of disapproval, LICENSOR [Petitioner] will either replace
the censored PROGRAMME TITLES with another title which is mutually acceptable to both parties or, failure to do
such, a proportionate reduction from the total price shall either be deducted or refunded whichever is the case by
the LICENSOR OR LICENSEE [GMA Films].11 (Emphasis supplied)
Under this stipulation, what triggers the rejection and replacement of any film listed in the Agreement is the
disapproval of its telecasting by MTRCB.
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Nor is there any dispute that GMA Films rejected Evangeline Katorse not because it was disapproved by MTRCB but
because the films total running time was too short for telecast (undertime). Instead of rejecting GMA Films
demand for falling outside of the terms of Paragraph 4, petitioner voluntarily acceded to it and replaced such film
with Winasak na Pangarap. What is disputed is whether GMA Films accepted the replacement film offered by
petitioner.
Petitioner maintains that the Film Certification issued by GMA Network attesting to the good broadcast quality
of Winasak na Pangarap amounted to GMA Films acceptance of such film. On the other hand, GMA Films insists
that such clearance pertained only to the technical quality of the film but not to its content which it rejected
because it found the film as bomba (bold).12 The CA, working under the assumption that the ground GMA Films
invoked to reject Winasak na Pangarap was sanctioned under the Agreement, found merit in the latters claim. We
hold that regardless of the import of the Film Certification, GMA Films rejection of Winasak na Pangarap finds no
basis in the Agreement.
In terms devoid of any ambiguity, Paragraph 4 of the Agreement requires the intervention of MTRCB, the state
censor, before GMA Films can reject a film and require its replacement. Specifically, Paragraph 4 requires that
MTRCB, after reviewing a film listed in the Agreement, disapprove or X-rate it for telecasting. GMA Films does not

allege, and we find no proof on record indicating, that MTRCB reviewed Winasak na Pangarap and X-rated it.
Indeed, GMA Films own witness, Jose Marie Abacan (Abacan), then Vice-President for Program Management of
GMA Network, testified during trial that it was GMA Network which rejected Winasak na Pangarap because the
latter considered the film bomba.13 In doing so, GMA Network went beyond its assigned role under the Agreement
of screening films to test their broadcast quality and assumed the function of MTRCB to evaluate the films for the
propriety of their content. This runs counter to the clear terms of Paragraphs 3 and 4 of the Agreement.
Disposal of the Fees Paid to Petitioner Outside of the Terms of the Agreement
GMA Films also seeks refund for the balance of the fees it paid to petitioner for Bubot which petitioner allegedly
failed to turn-over to the films owner, Alano.14 Implicit in GMA Films claim is the theory that the Agreement obliges
petitioner to give to the film owners the entire amount he received from GMA Films and that his failure to do so
gave rise to an implied trust, obliging petitioner to hold whatever amount he kept in trust for GMA Films. The CA
sustained GMA Films interpretation, noting that the Agreement does not provide that the licensor is entitled to
any commission.15
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This is error.
The Agreement, as its full title denotes (TV Rights Agreement), is a licensing contract, the essence of which is the
transfer by the licensor (petitioner) to the licensee (GMA Films), for a fee, of the exclusive right to telecast the films
listed in the Agreement. Stipulations for payment of commission to the licensor is incongruous to the nature of
such contracts unless the licensor merely acted as agent of the film owners. Nowhere in the Agreement, however,
did the parties stipulate that petitioner signed the contract in such capacity. On the contrary, the Agreement
repeatedly refers to petitioner as licensor and GMA Films as licensee. Nor did the parties stipulate that the fees
paid by GMA Films for the films listed in the Agreement will be turned over by petitioner to the film owners.
Instead, the Agreement merely provided that the total fees will be paid in three installments (Paragraph 3). 16
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We entertain no doubt that petitioner forged separate contractual arrangements with the owners of the films listed
in the Agreement, spelling out the terms of payment to the latter. Whether or not petitioner complied with these
terms, however, is a matter to which GMA Films holds absolutely no interest. Being a stranger to such
arrangements, GMA Films is no more entitled to complain of any breach by petitioner of his contracts with the film
owners than the film owners are for any breach by GMA Films of its Agreement with petitioner.
We find it unnecessary to pass upon the question whether an implied trust arose between the parties, as held by
the CA. Such conclusion was grounded on the erroneous assumption that GMA Films holds an interest in the
disposition of the licensing fees it paid to petitioner.
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Award of Attorneys Fees to Petitioner Improper


The trial court awarded attorneys fees to petitioner as it deemed it just and reasonable 17 to do so, using the
amount provided by petitioner on the witness stand (P100,000). Undoubtedly, attorneys fees may be awarded if
the trial court deems it just and equitable.18 Such ground, however, must be fully elaborated in the body of the
ruling.19 Its mere invocation, without more, negates the nature of attorneys fees as a form of actual damages.
WHEREFORE, we GRANT the petition. The Decision, dated 30 April 2012 and Resolution, dated 19 November
2012, of the Court of Appeals are SET ASIDE. The Decision, dated 5 December 2008, of the Regional Trial Court of
Quezon City (Branch 223) is REINSTATED with the MODIFICATION that the award of attorneys fees
is DELETED.
SO ORDERED.

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G.R. No. 209605, January 12, 2015 - NEIL B. AGUILAR AND RUBEN CALIMBAS, Petitioners, v. LIGHTBRINGERS
CREDIT COOPERATIVE, Respondent.

SECOND DIVISION

G.R. No. 209605, January 12, 2015


NEIL B. AGUILAR AND RUBEN CALIMBAS, Petitioners, v. LIGHTBRINGERS CREDIT
COOPERATIVE, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari filed by petitioners Neil B. Aguilar (Aguilar) and Ruben Calimbas
(Calimbas), seeking to reverse and set aside the April 5, 2013 1 and October 9, 20132Resolutions of the Court of
Appeals (CA) in CA-G.R. SP No. 128914, which denied the petition for review outright, assailing the January 2,
2013 Decision3 of the Regional Trial Court, Branch 5, Dinalupihan, Bataan (RTC) and the May 9, 2012 Decision4 of
the First Municipal Circuit Trial Court, Dinalupihan, Bataan (MCTC).
In the lower courts, one of the issues involved was the proper application of the rules when a party does not
appear in the scheduled pre-trial conference despite due notice. In this petition, the dismissal by the CA of the
petition filed under Rule 42 for failure to attach the entire records has also been put to question, aside from the
veracity of indebtedness issue.
The Facts
This case stemmed from the three (3) complaints for sum of money separately filed by respondent Lightbringers
Credit Cooperative (respondent) on July 14, 2008 against petitioners Aguilar and Calimbas, and one Perlita
Tantiangco (Tantiangco) which were consolidated before the First Municipal Circuit Trial Court, Dinalupihan,
Bataan (MCTC). The complaints alleged that Tantiangco, Aguilar and Calimbas were members of the cooperative
who borrowed the following funds:
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1.

In Civil Case No. 1428, Tantiangco allegedly borrowed P206,315.71 as evidenced by Cash Disbursement
Voucher No. 4010 but the net loan was only P45,862.00 as supported by PNB Check No.
0000005133.5
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2.

In Civil Case No. 1429, petitioner Calimbas allegedly borrowed P202,800.18 as evidenced by Cash
Disbursement Voucher No. 3962 but the net loan was only P60,024.00 as supported by PNB Check No.
0000005088;6
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3.

In Civil Case No. 1430, petitioner Aguilar allegedly borrowed P126,849.00 as evidenced by Cash
Disbursement Voucher No. 3902 but the net loan was only P76,152.00 as supported by PNB Check No.
0000005026;7

Tantiangco, Aguilar and Calimbas filed their respective answers. They uniformly claimed that the discrepancy
between the principal amount of the loan evidenced by the cash disbursement voucher and the net amount of loan
reflected in the PNB checks showed that they never borrowed the amounts being collected. They also asserted that
no interest could be claimed because there was no written agreement as to its imposition.
On the scheduled pre-trial conference, only respondent and its counsel appeared. The MCTC then issued the
Order,8 dated August 25, 2009, allowing respondent to present evidence ex parte.Respondent later presented
Fernando Manalili (Manalili), its incumbent General Manager, as its sole witness. In his testimony, Manalili explained
that the discrepancy between the amounts of the loan reflected in the checks and those in the cash disbursement
vouchers were due to the accumulated interests from previous outstanding obligations, withheld share capital, as
well as the service and miscellaneous fees. He stated, however, that it was their bookkeeper who could best explain
the details.
Aguilar and Calimbas insisted that they should have the right to cross-examine the witness of respondent,
notwithstanding the fact that these cases were being heard ex parte. In the interest of justice, the MCTC directed
the counsels of the parties to submit their respective position papers on the issue of whether or not a party who
had been declared as in default might still participate in the trial of the case. Only respondent, however, complied
with the directive. In its Order,9 dated April 27, 2011, the MCTC held that since the proceedings were being
heard ex parte, the petitioners who had been declared as in default had no right to participate therein and to
cross-examine the witnesses. Thereafter, respondent filed its formal offer of evidence. 10
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MCTC Ruling
On May 9, 2012, the MCTC resolved the consolidated cases in three separate decisions. In Civil Case No.
1428,11 the MCTC dismissed the complaint against Tantiangco because there was no showing that she received the
amount being claimed. Moreover, the PNB check was made payable to cash and was encashed by a certain
Violeta Aguilar. There was, however, no evidence that she gave the proceeds to Tantiangco. Further, the dates
indicated in the cash disbursement voucher and the PNB check varied from each other and suggested that the

voucher could refer to a different loan.


The decisions in Civil Case No. 142912 and 1430,13 however, found both Calimbas and Aguilar liable to respondent
for their respective debts. The PNB checks issued to the petitioners proved the existence of the loan transactions.
Their receipts of the loan were proven by their signatures appearing on the dorsal portions of the checks as well as
on the cash disbursement vouchers. As a matter of practice, banks would allow the encashment of checks only by
the named payee and subject to the presentation of proper identification. Nonetheless, the MCTC ruled that only
the amount shown in the PNB check must be awarded because respondent failed to present its bookkeeper to
justify the higher amounts being claimed. The court also awarded attorneys fees in favor of respondent. The
dispositive portion of the decision in Civil Case No. 1429 reads:
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WHEREFORE, premises considered, judgment is hereby rendered in plaintiffs favor and against the defendant,
ordering the latter to pay plaintiff the amount of P60,024.00 with interest at the rate of 12% per annum from April
4, 2007 until fully paid, plus P15,000.00 as attorneys fees.
Costs against the defendant.
SO ORDERED.14
And in Civil Case No. 1430, the dispositive portion states:

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WHEREFORE, premises considered, judgment is hereby rendered in plaintiffs favor and against the defendant,
ordering the latter to pay the plaintiff the amount of ?76,152.00 with interest at the rate of 12% per annum from
February 28, 2007 until fully paid.
Defendant is further directed to pay attorneys fees equivalent to 25% of the adjudged amount.
Costs against the defendant.
SO ORDERED.15
On July 12, 2012, a notice of appeal16 was filed by the petitioners, and on August 15, 2012, they filed their joint
memorandum for appeal17 before the Regional Trial Court, Branch 5, Bataan (RTC). Aguilar and Calimbas argued
out that had they been allowed to present evidence, they would have established that the loan documents were
bogus. Respondent produced documents to appear that it had new borrowers but did not lend any amount to them.
Attached to the joint memorandum were photocopies of the dorsal portions of the PNB checks which showed that
these checks were to be deposited back to respondents bank account.
RTC Ruling
On January 2, 2013, the RTC rendered separate decisions in Civil Case No. DH-1300-1218 and Civil Case No. DH1299-1219 which affirmed the MCTC decisions. It held that the PNB checks were concrete evidence of the
indebtedness of the petitioners to respondent. The RTC relied on the findings of the MCTC that the checks bore no
endorsement to another person or entity. The checks were issued in the name of the petitioners and, thus, they
had the right to encash the same and appropriate the proceeds. The decretal portions of the RTC decision in both
cases similarly read:
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WHEREFORE, premises considered, the appeal is hereby DENIED. The Decision dated May 9, 2012 of the First
Municipal Circuit Trial Court (1st MCTC), Dinalupihan-Hermosa, Bataan is hereby affirmed in toto.
SO ORDERED.
On January 18, 2013, the petitioners filed their joint motion for reconsideration/new trial 20 before the RTC. Aguilar
and Calimbas reiterated their position that they did not receive the proceeds of the checks. As an alternative
prayer, petitioners moved that the RTC remand the case to the MCTC for a new trial on account of the Sinumpaang
Salaysay of Arcenit Dela Torre, the bookkeeper of respondent.
On February 11, 2013, the RTC issued separate orders21 denying the motion of the petitioners. It explained that all
the issues were already passed upon and the supposed newly discovered evidence was already available during
appeal, but the petitioners failed to present the same in time.
CA Ruling
Aggrieved, Aguilar and Calimbas filed a petition for review22 before the CA on March 11, 2013. It was dismissed,
however, in the questioned resolution,23 dated April 5, 2013, stating that the petition was formally defective
because the verification and disclaimer of forum shopping and the affidavit of service had a defective jurat for
failure of the notary public to indicate his notarial commission number and office address. Moreover, the entire
records of the case, inclusive of the oral and documents evidence, were not attached to the petition in
contravention of Section 2, Rule 42 of the Rules of Court.
A motion for reconsideration24 was filed by the petitioners which sought the leniency of the CA. They attached a
corrected verification and disclaimer of forum shopping and affidavit of service. They asked the CA to simply order
the RTC to elevate the records of the case pursuant to Section 7, Rule 42 of the Rules of Court. Moreover, the
petitioners could not attach the records of the case because the flooding caused by Habagat in August 2012
soaked the said records in water.

In the other questioned resolution, dated October 9, 2013, the CA denied the motion because the petitioners still
failed to attach the entire records of the case which was a mandatory requirement under Section 2, Rule 42.
Hence, this petition.
SOLE ASSIGNMENT OF ERROR
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION WHEN IT DISMISSED THE PETITION FOR REVIEW FILED BEFORE IT BY THE
PETITIONERS UNDER RULE 42 OF THE RULES OF COURT CITING THAT THE SAID PETITION IS
FORMALLY DEFECTIVE FOR FAILURE OF THE PETITIONERS TO SUBMIT WITH THE SAID PETITION THE
ENTIRE RECORDS OF THE APPEALED CIVIL CASE NOS. DH-1300-12 AND DH-1299-12. 25
The petitioners argue that contrary to the findings of the CA, they substantially complied with the required form
and contents of a petition for review under Section 2, Rule 42 of the Rules of Court. There is nothing in the
provision which requires that the entire records of the appealed case should be endorsed to the CA. Such
requirement would definitely be cumbersome to poor litigants like them.
They assert that they submitted the following pleadings and material portions of the court records in their petition
for review: (1) certified copies of the decisions, orders or resolutions of the RTC and the MCTC; (2) complaints
against the petitioners attached with documents used by respondent in its formal offer of evidence; (3) answer of
the petitioners; (4) order of the MCTC declaring the petitioners in default; (5) respondents formal offer of
evidence; (6) notice of appeal; (7) joint memorandum of appeal; and (8) joint motion for reconsideration/new trial.
According to the petitioners, these pleadings and records were sufficient to support their petition for review.
Assuming that there was a reason to dismiss the petition on account of technicalities, the petitioners argue that the
CA should not have strictly applied the rules of procedure and provided leniency to the petitioners. They also ask
the Court to give a glance on the merits of their case brought before the CA.
On February 7, 2014, respondent filed its comment26 contending that the petitioners had no excuse in their noncompliance with Section 2, Rule 42. They claim that the court records were not attached because these were
soaked in flood water in August 2012, but the RTC rendered its decision in January 2013. The petitioners failed to
secure a certification from the RTC that these records were indeed unavailable.
On May 21, 2014, the petitioners filed their reply before this Court, 27 adding that the elevation of the entire records
of the case was not a mandatory requirement, and the CA could exercise its discretion that it furnished with the
entire records of the case by invoking Section 7, Rule 42 of the Rules of Court.
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The Courts Ruling


First Procedural Issue
On the sole assignment of error, the Court agrees with the petitioners that Section 2, Rule 42 does not require that
the entire records of the case be attached to the petition for review. The provision states:
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Sec. 2. Form and contents. - The petition shall be filed in seven (7) legible copies, with the original copy intended
for the court being indicated as such by the petitioner, and shall (a) state the full names of the parties to the case,
without impleading the lower courts or judges thereof either as petitioners or respondents; (b) indicate the specific
material dates showing that it was filed on time; (c) set forth concisely a statement of the matters involved, the
issues raised, the specification of errors of fact or law, or both, allegedly committed by the Regional Trial Court, and
the reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied by clearly legible
duplicate originals or true copies of the judgments or final orders of both lower courts, certified correct
by the clerk of court of the Regional Trial Court, the requisite number of plain copies thereof and of the
pleadings and other material portions of the record as would support the allegations of the petition.
[Emphasis and underscoring supplied]
The abovequoted provision enumerates the required documents that must be attached to a petition for review, to
wit: (1) clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts,
certified correct by the clerk of court of the Regional Trial Court; (2) the requisite number of plain copies thereof;
and (3) of the pleadings and other material portions of the record as would support the allegations of the petition.
Clearly, the Rules do not require that the entire records of the case be attached to the petition for review. Only
when these specified documents are not attached in the petition will it suffer infirmities under Section 3, Rule 42,
which states:
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Sec. 3. Effect of failure to comply with requirements. - The failure of the petitioner to comply with any of the
foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs, proof of
service of the petition, and the contents of and the documents which should accompany the petition shall be
sufficient ground for the dismissal thereof.
In Canton v. City of Cebu,28 the Court discussed the importance of attaching the pleadings or material portions of
the records to the petition for review. [P]etitioners discretion in choosing the documents to be attached to the
petition is however not unbridled. The CA has the duty to check the exercise of this discretion, to see to it that the

submission of supporting documents is not merely perfunctory. The practical aspect of this duty is to enable the CA
to determine at the earliest possible time the existence of prima facie merit in the petition.29 In that case, the
petition was denied because the petitioner failed to attach the complaint, answer and appeal memorandum to
support their allegation.
In Cusi-Hernandez v. Diaz,30 a case where the petitioner did not attach to her petition for review a copy of the
contract to sell that was at the center of controversy, the Court nonetheless found that there was a substantial
compliance with the rule, considering that the petitioner had appended to the petition for review a certified copy of
the decision of the MTC that contained a verbatim reproduction of the omitted contract.
Recently, in Galvez, v. CA,31 it was held that attaching the other records of the MTC and the RTC were not
necessary based on the circumstances of the case. The petitioner therein was not assailing the propriety of the
findings of fact by the MTC and the RTC, but only the conclusions reached by the said lower courts after their
appreciation of the facts. In dealing with the questions of law, the CA could simply refer to the attached decisions
of the MTC and the RTC.
Thus, the question in the case at bench is whether or not the petitioners attached the sufficient pleadings and
material portions of the records in their petition for review. The Court rules that the petition was in substantial
compliance with the requirements.
The assignment of error32 in the petition for review clearly raises questions of fact as the petitioners assail the
appreciation of evidence by the MCTC and the RTC. Thus, aside from the decisions and orders of the MCTC and the
RTC, the petitioners should attach pertinent portions of the records such as the testimony of the sole witness of
respondent, the copies of the cash disbursement vouchers and the PNB checks presented by respondent in the
MCTC. In the petition for review, the petitioners attached respondents complaints before the MCTC which
contained the photocopies of the cash disbursement vouchers and PNB checks. These should be considered as
ample compliance with Section 2, Rule 42 of the Rules of Court.
Second Procedural Issue
Nevertheless, instead of remanding the case to the CA, this Court deems it fit to rule on the merits of the case to
once and for all settle the dispute of the parties.
The rule is that a court can only consider the evidence presented by respondent in the MCTC because the
petitioners failed to attend the pre-trial conference on August 25, 2009 pursuant to Section 5, Rule 18 of the Rules
of Court.33 The Court, however, clarifies that failure to attend the pre-trial does not result in the default of the
defendant. Instead, the failure of the defendant to attend shall be cause to allow the plaintiff to present his
evidence ex parte and the court to render judgment on the basis thereof.
The case of Philippine American Life & General Insurance Company v. Joseph Enario 34 discussed the difference
between non-appearance of a defendant in a pre-trial conference and the declaration of a defendant in default in
the present Rules of Civil Procedure. The decision states:
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Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default" was initially included in Rule 20 of the
old rules, and which read as follows:
Sec. 2. A party who fails to appear at a pre-trial conference may be non-suited or considered as in default.
It was however amended in the 1997 Revised Rules of Civil Procedure. Justice Regalado, in his book REMEDIAL
LAW COMPENDIUM, explained the rationale for the deletion of the phrase "as in default" in the amended provision,
to wit:
1. This is a substantial reproduction of Section 2 of the former Rule 20 with the change that, instead of defendant
being declared "as in default" by reason of his non-appearance, this section now spells out that the procedure will
be to allow the ex parte presentation of plaintiffs evidence and the rendition of judgment on the basis thereof.
While actually the procedure remains the same, the purpose is one of semantical propriety or terminological
accuracy as there were criticisms on the use of the word "default" in the former provision since that term is
identified with the failure to file a required answer, not appearance in court.
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If the absent party is the plaintiff, then his case shall be dismissed. If it is the defendant who fails to appear, then
the plaintiff is allowed to present his evidence ex parte and the court shall render judgment on the basis thereof.
Thus, the plaintiff is given the privilege to present his evidence without objection from the defendant, the likelihood
being that the court will decide in favor of the plaintiff, the defendant having forfeited the opportunity to rebut or
present his own evidence.35
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The pre-trial cannot be taken for granted. It is not a mere technicality in court proceedings for it serves a vital
objective: the simplification, abbreviation and expedition of the trial, if not indeed its dispensation. 36 More
significantly, the pre-trial has been institutionalized as the answer to the clarion call for the speedy disposition of
cases. Hailed as the most important procedural innovation in Anglo-Saxon justice in the nineteenth century, it
paved the way for a less cluttered trial and resolution of the case. It is, thus, mandatory for the trial court to
conduct pre-trial in civil cases in order to realize the paramount objective of simplifying, abbreviating and
expediting trial.37
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In the case at bench, the petitioners failed to attend the pre-trial conference set on August 25, 2009. They did not
even give any excuse for their non-appearance, manifestly ignoring the importance of the pre-trial stage. Thus, the
MCTC properly issued the August 25, 2009 Order,38 allowing respondent to present evidence ex parte.
The MCTC even showed leniency when it directed the counsels of the parties to submit their respective position

papers on whether or not Aguilar and Calimbas could still participate in the trial of the case despite their absence in
the pre-trial conference. This gave Aguilar and Calimbas a second chance to explain their non-attendance and, yet,
only respondent complied with the directive to file a position paper. The MCTC, in its Order,39 dated April 27, 2011,
properly held that since the proceedings were being heard ex parte, Aguilar and Calimbas had no right to
participate therein and to cross-examine the witness.
Thus, as it stands, the Court can only consider the evidence on record offered by respondent. The petitioners lost
their right to present their evidence during the trial and, a fortiori, on appeal due to their disregard of the
mandatory attendance in the pre-trial conference.
Substantive Issue
And on the merits of the case, the Court holds that there was indeed a contract of loan between the petitioners and
respondent. The Court agrees with the findings of fact of the MCTC and the RTC that a check was a sufficient
evidence of a loan transaction. The findings of fact of the trial court, its calibration of the testimonies of the
witnesses and its assessment of the probative weight thereof, as well as its conclusions anchored on the findings
are accorded high respect, if not conclusive effect.40
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The case of Pua v. Spouses Lo Bun Tiong41 discussed the weight of a check as an evidence of a loan:

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In Pacheco v. Court of Appeals, this Court has expressly recognized that a check constitutes an evidence of
indebtedness and is a veritable proof of an obligation. Hence, it can be used in lieu of and for the same purpose as
a promissory note. In fact, in the seminal case of Lozano v. Martinez, We pointed out that a check functions more
than a promissory note since it not only contains an undertaking to pay an amount of money but is an "order
addressed to a bank and partakes of a representation that the drawer has funds on deposit against which the check
is drawn, sufficient to ensure payment upon its presentation to the bank." This Court reiterated this rule in the
relatively recentLim v. Mindanao Wines and Liquour Galleria stating that a check, the entries of which are in
writing, could prove a loan transaction.42
There is no dispute that the signatures of the petitioners were present on both the PNB checks and the cash
disbursement vouchers. The checks were also made payable to the order of the petitioners. Hence, respondent can
properly demand that they pay the amounts borrowed. If the petitioners believe that there is some other bogus
scheme afoot, then they must institute a separate action against the responsible personalities. Otherwise, the
Court can only rule on the evidence on record in the case at bench, applying the appropriate laws and
jurisprudence.
As to the award of attorneys fees, the Court is of the view that the same must be removed. Attorney's fees are in
the concept of actual or compensatory damages allowed under the circumstances provided for in Article 2208 of
the Civil Code, and absent any evidence supporting its grant, the same must be deleted for lack of factual
basis.43 In this case, the MCTC merely stated that respondent was constrained to file the present suit on account of
the petitioners obstinate failure to settle their obligation. Without any other basis on record to support the award,
such cannot be upheld in favor of respondent. The settled rule is that no premium should be placed on the right to
litigate and that not every winning party is entitled to an automatic grant of attorneys fees. 44
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WHEREFORE, the petition is PARTIALLY GRANTED.


In accord with the discourse on the substantive issue, the January 2, 2013 decision of the Regional Trial Court,
Branch 5, Dinalupihan, Bataan, is AFFIRMED. The award of attorney's fees is, however,DELETED.
SO ORDERED.

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