Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 188072
October 19, 2011
EMERITA M. DE GUZMAN, Petitioner,
vs.
ANTONIO M. TUMOLVA, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the
February 24, 2009 Decision1 of the Court of Appeals (CA) and its May 26, 2009 Resolution2 in CAG.R. SP. No. 104945 entitled "Antonio M. Tumolva v. Emerita M. De Guzman."
The Facts
On September 6, 2004, petitioner Emerita M. De Guzman (De Guzman), represented by her
attorneys-in-fact, Lourdes Rivera and Dhonna Chan, and respondent Antonio Tumolva, doing
business under the name and style A.M. Tumolva Engineering Works (the Contractor), entered
into a Construction Agreement3 (Agreement) for the construction of an orphanage consisting of
an administration building, directors/guests house, dining and service building, childrens
dormitory, male staff house, and covered walkways in Brgy. Pulong Bunga, Purok 4, Silang,
Cavite, for a contract price of P 15,982,150.39. Incorporated in the Agreement was the plan and
specifications of the perimeter fence. The Contractor, however, made deviations from the agreed
plan4 with respect to the perimeter fence of the orphanage.
On September 6, 2005, after the completion of the project, De Guzman issued a Certificate of
Acceptance. For his part, the Contractor issued a quitclaim acknowledging the termination of the
contract and the full compliance therewith by De Guzman.
In November 2006, during typhoon "Milenyo," a portion of the perimeter fence collapsed and
other portions tilted. In her Letter dated December 5, 2006, De Guzman, through counsel,
demanded the repair of the fence in accordance with the plan. In response, the Contractor
claimed that the destruction of the fence was an act of God and expressed willingness to discuss
the matter to avoid unnecessary litigation. De Guzman, however, reiterated her demand for the
restoration of the wall without additional cost on her part, or in the alternative, for the Contractor
to make an offer of a certain amount by way of compensation for the damages she sustained.
Her demand was not heeded.
On February 14, 2008, De Guzman filed a Request for Arbitration 5 of the dispute before the
Construction Industry Arbitration Commission (CIAC). She alleged that the Contractor
deliberately defrauded her in the construction of the perimeter fence by "under sizing the
required column rebars from 12mm. based on the plan to only 10mm., the required concrete
hollow blocks from #6 to #5, and the distance between columns from 3.0m to 4.3m." 6 Further,
the Contractor neither anchored the lenten beams to the columns nor placed drains or
weepholes along the lower walls. She prayed for an award of actual, moral and exemplary
damages, as well as attorneys fees and expenses of litigation, and for the inspection and
technical assessment of the construction project and the rectification of any defect.
In his Answer with Counterclaim, the Contractor denied liability for the damaged fence claiming,
among others, that its destruction was an act of God. He admitted making deviations from the
plan, but pointed out that the same were made with the knowledge and consent of De Guzman
through her representatives, Architect Quin Baterna and Project Engineer Rodello Santos
(Engineer Santos), who were present during the construction of the fence. He further argued that
pursuant to the Agreement, the claim for damages was already barred by the 12-month period

from the issuance of the Certificate of Acceptance of the project within which to file the claim.
He, thus, prayed for the dismissal of the action and interposed a counterclaim for actual and
compensatory damages for the additional work/change orders made on the project in the
amount of P 2,046,500.00, attorneys fees and litigation expenses.
After due proceedings, the CIAC issued the Award dated July 17, 2008 in favor of De Guzman, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered and AWARD is made on the monetary claims of
Claimant EMERITA M. DE GUZMAN, directing Respondent Contractor ANTONIO M.
TUMOLVA, to pay her the following amounts:
P 187,509.00 as actual damages for reconstructing the collapsed and damaged perimeter
fence.
Interest is awarded on the foregoing amount at the legal rate of 6% per annum computed
from the date of this Award. After finality thereof, interest at the rate of 12% per annum shall be
paid thereon until full payment of the awarded amount shall have been made, "this interim
period being deemed to be at that time already a forbearance of credit" (Eastern Shipping Lines,
Inc. v. Court of Appeals (243 SCRA 78 [1994])
P 100,000.00 as moral damages.
P 100,000.00 as exemplary damages.
P 50,000.00 for attorneys fees and expenses of litigation.
P 437,509.00 TOTAL AMOUNT DUE THE CLAIMANT
The CIAC staff is hereby directed to make the necessary computation of how much has been paid
by Claimant as its proportionate share of the arbitration costs totaling P 110,910.44, which
computed amount shall be reimbursed by Respondent to the Claimant.
SO ORDERED.7
Aggrieved, the Contractor filed before the CA a Petition for Review with prayer for the issuance of
a temporary restraining order, challenging the CIACs award of damages in favor of De Guzman.
On February 24, 2009, the CA modified the Award rendered by CIAC. The dispositive portion of
the decision states:
WHEREFORE, the instant petition is partly GRANTED. The assailed Award dated July 17, 2008
rendered by the CIAC in CIAC Case No. 03-2008 is hereby MODIFIED, deleting the award of
actual, moral and exemplary damages, but awarding temperate damages in the amount of P
100,000.00 for reconstructing the collapsed and damaged perimeter fence. The rest of the Award
stands.
SO ORDERED.8
The CA held that although the Contractor deviated from the plan, CIACs award of actual
damages was not proper inasmuch as De Guzman failed to establish its extent with reasonable
certainty. The CA, however, found it appropriate to award temperate damages considering that
De Guzman suffered pecuniary loss as a result of the collapse of the perimeter fence due to the
Contractors negligence and violation of his undertakings in the Agreement. It further ruled that
there was no basis for awarding moral damages reasoning out that De Guzmans worry for the
safety of the children in the orphanage was insufficient to justify the award. Likewise, it could not
sustain the award of exemplary damages as there was no showing that the Contractor acted in
wanton, reckless, fraudulent, oppressive, or malevolent manner.
De Guzman filed a motion for reconsideration of the said decision, but it was denied for lack of
merit by the CA in its Resolution dated May 26, 2009.
Hence, De Guzman interposed the present petition before this Court anchored on the following
GROUNDS
(I)

THE COURT OF APPEALS ERRED IN RULING THAT THE EVIDENCE ON RECORD FAILED TO
SUFFICIENTLY ESTABLISH THE AMOUNT OF ACTUAL DAMAGES THAT PETITIONER DE
GUZMAN CAN RECOVER FROM THE RESPONDENT.
(II)
THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER DE GUZMAN IS NOT
ENTITLED TO AWARDS OF MORAL AND EXEMPLARY DAMAGES.9
De Guzman argues inter alia that the Contractor is liable for the actual damages that she
suffered from the collapse of the perimeter fence. He failed to put weep holes on the collapsed
portion of the said fence, which could have relieved the pressure from the wet soil of the
adjoining higher ground.
De Guzman adds that the computation of the cost of rebuilding the collapsed portion of the
perimeter fence by Engineer Santos constituted substantial evidence warranting an award of
actual damages. His affidavit served as his direct testimony in the case even if he did not appear
during the hearing. Having been notarized, it must be admissible in evidence without further
proof of authenticity.
Further, De Guzman questions the CAs deletion of the award for moral and exemplary damages.
She insists that her anxiety and suffering over the safety of the children in the orphanage
entitled her to an award of moral damages. It is likewise her position that the Contractors
wanton acts of deliberately cheating the benefactors of the orphanage by making deviations on
the approved plan through the use of construction materials of inferior quality warranted the
imposition of exemplary damages against the Contractor.
The Courts ruling
There is no doubt that De Guzman incurred damages as a result of the collapse of the perimeter
fence. The Contractor is clearly guilty of negligence and, therefore, liable for the damages
caused. As correctly found by the CA:
Nonetheless, the Court sustains the CIACs conclusion that the CONTRACTOR was negligent in
failing to place weepholes on the collapsed portion of the perimeter fence. Fault or negligence of
the obligor consists in his failure to exercise due care and prudence in the performance of the
obligation as the nature of the obligation so demands, taking into account the particulars of each
case. It should be emphasized that even if not provided for in the plan, the CONTRACTOR himself
admitted the necessity of putting weepholes and claimed to have actually placed them in view of
the higher ground elevation of the adjacent lot vis--vis the level ground of the construction site.
Since he was the one who levelled the ground and was, thus, aware that the lowest portion of the
adjoining land was nearest the perimeter fence, he should have ensured that sufficient
weepholes were placed because water would naturally flow towards the fence.
However, the CONTRACTOR failed to refute Mr. Ramos claim that the collapsed portion of the
perimeter fence lacked weepholes. Records also show that the omission of such weepholes
and/or their being plastered over resulted from his failure to exercise the requisite degree of
supervision over the work, which is the same reason he was unable to discover the deviations
from the plan until the fence collapsed. Hence, the CONTRACTOR cannot be relieved from liability
therefor.10
The Court finds no compelling reason to deviate from this factual finding by the CIAC, as affirmed
by the CA. It is settled that findings of fact of quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only respect,
but also finality, especially when affirmed by the CA. In particular, factual findings of construction
arbitrators are final and conclusive and not reviewable by this Court on appeal. 11
CIACs award of actual damages, however, is indeed not proper under the circumstances as there
is no concrete evidence to support the plea. In determining actual damages, one cannot rely on
mere assertions, speculations, conjectures or guesswork, but must depend on competent proof

and on the best evidence obtainable regarding specific facts that could afford some basis for
measuring compensatory or actual damages. 12 Article 2199 of the New Civil Code defines actual
or compensatory damages as follows:
Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual or compensatory damages.
Unfortunately, De Guzman failed to adduce evidence to satisfactorily prove the amount of actual
damage incurred. Contrary to her assertion, the handwritten calculation of reconstruction costs
made by Engineer Santos and attached to his affidavit cannot be given any probative value
because he never took the witness stand to affirm the veracity of his allegations in his affidavit
and be cross-examined on them. In this regard, it is well to quote the ruling of the Court in the
case of Tating v. Marcella,13 to wit:
There is no issue on the admissibility of the subject sworn statement. However, the admissibility
of evidence should not be equated with weight of evidence. The admissibility of evidence
depends on its relevance and competence while the weight of evidence pertains to evidence
already admitted and its tendency to convince and persuade. Thus, a particular item of evidence
may be admissible, but its evidentiary weight depends on judicial evaluation within the
guidelines provided by the rules of evidence. It is settled that affidavits are classified as hearsay
evidence since they are not generally prepared by the affiant but by another who uses his own
language in writing the affiants statements, which may thus be either omitted or misunderstood
by the one writing them. Moreover, the adverse party is deprived of the opportunity to crossexamine the affiant. For this reason, affidavits are generally rejected for being hearsay, unless
the affiants themselves are placed on the witness stand to testify thereon.
Neither is there any evidence presented to substantiate Engineer Santos computation of the
reconstruction costs. For such computation to be considered, there must be some other relevant
evidence to corroborate the same. 14 Thus, the CA was correct in disregarding the affidavit of
Engineer Santos for being hearsay and in not giving probative weight to it. There being no
tangible document or concrete evidence to support the award of actual damages, the same
cannot be sustained.
Nevertheless, De Guzman is indeed entitled to temperate damages as provided under Article
2224 of the Civil Code for the loss she suffered. When pecuniary loss has been suffered but the
amount cannot, from the nature of the case, be proven with certainty, temperate damages may
be recovered. Temperate damages may be allowed in cases where from the nature of the case,
definite proof of pecuniary loss cannot be adduced, although the court is convinced that the
aggrieved party suffered some pecuniary loss. 15 Undoubtedly, De Guzman suffered pecuniary
loss brought about by the collapse of the perimeter fence by reason of the Contractors
negligence and failure to comply with the specifications. As she failed to prove the exact amount
of damage with certainty as required by law, the CA was correct in awarding temperate
damages, in lieu of actual damages. However, after weighing carefully the attendant
circumstances and taking into account the cost of rebuilding the damaged portions of the
perimeter fence, the amount of P 100,000.00 awarded to De Guzman should be increased. This
Court, in recognition of the pecuniary loss suffered, finds the award of P 150,000.00 by way of
temperate damages as reasonable and just under the premises.
As to the CIACs award of P 100,000.00 as moral damages, this Court is one with the CA that De
Guzman is not entitled to such an award. The record is bereft of any proof that she actually
suffered moral damages as contemplated in Article 2217 of the Code, which provides:
Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendants wrongful act or omission.
Certainly, the award of moral damages must be anchored on a clear showing that she actually
experienced mental anguish, besmirched reputation, sleepless nights, wounded feelings, or
similar injury. There could not have been a better witness to this experience than De Guzman
herself.16 Her testimony, however, did not provide specific details of the suffering she allegedly
went through after the fence collapsed while she was miles away in the United States. As the CA
aptly observed, "the testimony of the OWNER as to her worry for the safety of the children in the
orphanage is insufficient to establish entitlement thereto." 17 Since an award of moral damages is
predicated on a categorical showing by the claimant that she actually experienced emotional and
mental sufferings, it must be disallowed absent any evidence thereon. 18
Moreover, under the aforequoted provision, moral damages cannot be recovered as the
perimeter fence collapsed in the midst of the strong typhoon "Milenyo." It was not clearly
established that the destruction was the proximate result of the Contractors act of making
deviation from the plan. As correctly concluded by the CA, viz:
However, while it cannot be denied that the Contractor deviated from the plan, there was no
clear showing whether the same caused or contributed to the collapse/tilting of the subject
perimeter fence. No competent evidence was presented to establish such fact. As the CIAC itself
acknowledged, "(t)here is no way by which to accurately resolve this issue by the evidence
submitted by the parties." The statement of Edwin B. Ramos, Engineering Aide at the Office of
the Municipal Engineer of Silang, Cavite, who conducted an ocular inspection of the collapsed
perimeter fence, that the observed deviations from the plan "affected the strength of the fence
and made it weaker, such that its chance of withstanding the pressure of water from the other
side thereof was greatly diminished or affected" was merely an expression of opinion. As he
himself admitted, he is not qualified to render an expert opinion. 19
Further, De Guzman was not able to show that her situation fell within any of the cases
enumerated in Article 221920 of the Civil Code upon which to base her demand for the award of
moral damages.
Neither does the breach of contract committed by the Contractor, not being fraudulent or made
in bad faith, warrant the grant of moral damages under Article 2220 which provides that:
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith.
De Guzman cannot be awarded exemplary damages either, in the absence of any evidence
showing that the Contractor acted in a wanton, fraudulent, reckless, oppressive, or malevolent
manner as provided in Article 2232 of the Civil Code. The ruling in the case of Nakpil and Sons v.
Court of Appeals,21 relied upon by De Guzman, where it was emphasized that the wanton
negligence in effecting the plans, designs, specifications, and construction of a building is
equivalent to bad faith in the performance of the assigned task, finds no application in the case
at bench. As already pointed out, there is negligence on the part of Contractor, but it is neither
wanton, fraudulent, reckless, oppressive, nor malevolent.
The award of exemplary damages cannot be made merely on the allegation of De Guzman that
the Contractors deviations from the plans and specifications without her written consent was
deplorable and condemnable. The Court regards the deviations as excusable due to the
unavailability of the approved construction materials. Besides, these were made known to De
Guzmans project manager who was present all the time during the construction. Indeed, no
deliberate intent on the part of the Contractor to defraud the orphanages benefactors was ever
shown, much less proved. As may be gleaned from his testimony:
xxx

2.2.0 : What can you say to the claim that the column rebars were reduced in size from 12mm to
10mm?
A : That is untrue.
2.2.1 : Why did you say that it was untrue?
A : Because the column rebars that we used is 12mm and not 10mm contrary to the claim of the
claimant. The column rebars that claimant and his engineers claimed to have been undersized
[were] those already subjected to stretching. Due to the lateral load on the perimeter fence
coming from the water that accumulated thereon, the strength of the column bars was subjected
to such kind of force beyond its capacity thereby resulting them to yield or "mapatid." As a result
of such stretching, the column rebars were deformed thereby causing it [to] change its width but
the length was extended. You can compare it to a candy like "tira-tira" which if you stretch it
becomes longer but its width is reduced. The other column rebars on the perimeter fence which
[were] not subjected to stretching will prove what I am stating.
2.2.2 : Also, in the said request for arbitration, it was claimed that the required hollow blocks
(CHB) was reduced also from #6 to #5, how would you explain this?
A : It is true but such deviation was known to them in view of the fact that there was no available
CHB #6 in Silang, Cavite and so to save on the travel cost in bringing materials from Manila to
the site, it was agreed that such CHB #5 shall be used instead.
2.2.3 : What was the effect of such deviation in using CHB #5 instead of CHB #6?
A : No effect, madam.
2.2.4 : Why did you state so, Mr. Witness?
A : Because the entire area of the land which is being secured by the perimeter fence was fully
covered with the fence which is made of CHB. This simply implies that even though we used a
much lesser size of CHB, but we increased the compressive strength of the mortar and filler used
in the premises. This has really no effect because we cover the entire place with fence.
2.2.5 : It was also claimed that the distance between columns was deviated from 3.0 m. to 4.0 m,
will you please explain this matter.
A : The computation of the distance between the columns of the perimeter fence as appearing on
the plan was 3.0 m inside to inside. However, the computation made by the engineer of the
claimant as alleged in their Request for Arbitration was 4.0 m. outside to outside which should be
3.6 m. outside to outside as correct distance.
2.2.6 : It now appears from your statement that there was a deviation as between the 3.0 m.
inside to inside computation in the plan and the actual 3.6 m. outside to outside computation
made by the engineers of the claimant. My question Mr. Witness is, what would be the effect of
such deviation on the columns?
A : It is true that there was such a deviation on the distance of the column but it will have no
effect because still the factor of safety was well provided for. Even the existing law on building
construction supports this matter. I even sought Engineer Rommel Amante on the matter and his
report supports my allegation.
2.2.7 : Was such deviation approved by the claimant or the representatives of the claimant?
A : Yes because during all the time the construction of the perimeter fence was done, the project
manager of the claimant was present and observing the works. Further, they have executed a
Certificate of Final Acceptance of the project. 22
xxx
As regards the award of attorneys fees, the Court upholds De Guzmans entitlement to
reasonable attorneys fees, although it recognizes that it is a sound policy not to set a premium
on the right to litigate.23 It must be recalled that De Guzmans repeated demands for the repair
of the fence or the payment of damages by way of compensation, were not heeded by the
Contractor. The latters unjust refusal to satisfy De Guzmans valid, just and demandable claim

constrained her to litigate and incur expenses to protect her interest. Article 2208 of the Civil
Code, thus, provides:
Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:
xxx
(2) When the defendants act or omission has compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interest;
xxx
Finally, the dismissal of the Contractors counterclaim is sustained for lack of merit.1avvphi1 In
his Comment24 and Memorandum,25 the Contractor pleaded that damages should have been
awarded to him. This deserves scant consideration. A perusal of the record reveals that the
matter as regards the return of what he had donated by reason of De Guzmans ingratitude was
not among the issues raised in this petition. Thus, the same cannot be taken cognizance by the
Court.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated February 24,
2009 and its Resolution dated May 26, 2009 are AFFIRMED with the MODIFICATION that the
award of P 100,000.00 as temperate damages is increased to P 150,000.00. The award shall earn
interest at the rate of 12% per annum reckoned from the finality of this judgment until fully paid.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 170813
April 16, 2008
B.F. METAL (CORPORATION), petitioners,
vs.
SPS. ROLANDO M. LOMOTAN and LINAFLOR LOMOTAN and RICO UMUYON, respondents.
DECISION
TINGA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the award of damages against petitioner in the Decision 1 and Resolution2 of
the Court of Appeals in CA-G.R. CV No. 58655. The Court of Appeals affirmed with modification
the Decision of the Regional Trial Court (RTC), Branch 72, Antipolo, Rizal in Civil Case No. 1567-A,
which found petitioner corporation and its driver, Onofre V. Rivera, solidarily liable to respondents
for damages.
The following factual antecedents are not disputed.
In the morning of 03 May 1989, respondent Rico Umuyon ("Umuyon") was driving the owner-type
jeep owned by respondents, Spouses Rolando and Linaflor Lomotan ("Spouses Lomotan"). The
jeep was cruising along Felix Avenue in Cainta, Rizal at a moderate speed of 20 to 30 kilometers
per hour. Suddenly, at the opposite lane, the speeding ten-wheeler truck driven by Onofre Rivera
overtook a car by invading the lane being traversed by the jeep and rammed into the jeep. The
jeep was a total wreck while Umuyon suffered "blunt thoracic injury with multiple rib fracture,
fractured scapula (L), with pneumohemothorax," which entailed his hospitalization for 19 days.
Also in view of the injuries he sustained, Umuyon could no longer drive, reducing his daily
income from P150.00 to P100.00.
On 27 October 1989, respondents instituted a separate and independent civil action for damages
against petitioner BF Metal Corporation ("petitioner") and Rivera before the Regional Trial Court

(RTC) of Antipolo, Rizal. The complaint essentially alleged that defendant Riveras gross
negligence and recklessness was the immediate and proximate cause of the vehicular accident
and that petitioner failed to exercise the required diligence in the selection and supervision of
Rivera. The complaint prayed for the award of actual, exemplary and moral damages and
attorneys fees in favor of respondents.
In the Answer, petitioner and Rivera denied the allegations in the complaint and averred that
respondents were not the proper parties-in-interest to prosecute the action, not being the
registered owner of the jeep; that the sole and proximate cause of the accident was the fault and
negligence of Umuyon; and that petitioner exercised due diligence in the selection and
supervision of its employees.
During the trial, respondents offered the testimonies of Umuyon, SPO1 Rico Canaria, SPO4
Theodore Cadaweg and Nicanor Fajardo, the auto-repair shop owner who gave a cost estimate
for the repair of the wrecked jeep. Among the documentary evidence presented were the 1989
cost estimate of Pagawaan Motors, Inc.,3 which pegged the repair cost of the jeep at P96,000.00,
and the cost estimate of Fajardo Motor Works 4 done in 1993, which reflected an increased repair
cost at P130,655.00. They also presented in evidence a copy of the Decision of the RTC, Assisting
Branch 74, Cainta, Rizal in Criminal Case No. 4742, entitled People of the Philippines v. Onofre V.
Rivera, finding Rivera guilty of reckless imprudence resulting in damage to property with physical
injuries.
For its part, petitioner presented at the hearing Rivera himself and Habner Revarez, petitioners
production control superintendent. Included in its documentary evidence were written guidelines
in preventive maintenance of vehicles and safety driving rules for drivers.
On 21 April 1997, the trial court rendered its Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants to
pay jointly and severally to herein plaintiffs the following sums:
(a) Actual Damages

---

i. P96,700.00 for cost of the owner-type jeep

ii. P15,000.00 medical expenses
iii. P50,000.00 for loss of earnings

(b) Moral Damages

---

P100,000.00

(c) Exemplary
Damages

---

P100,000.00

(d) Attorneys Fees

---

P25,000.00 plus P1,000.00 for every Court

appearance

Costs of Suit.
SO ORDERED.5
The trial court declared Rivera negligent when he failed to determine with certainty that the
opposite lane was clear before overtaking the vehicle in front of the truck he was driving. It also
found petitioner negligent in the selection and supervision of its employees when it failed to
prove the proper dissemination of safety driving instructions to its drivers.
Petitioner and Rivera appealed the decision to the Court of Appeals.
On 13 April 2005, the Court of Appeals rendered the assailed Decision. It affirmed the trial courts
finding that Riveras negligence was the proximate cause of the accident and that petitioner was
liable under Article 21806 of the Civil Code for its negligence in the selection and supervision of
its employees. However, the appellate court modified the amount of damages awarded to
respondents. The dispositive portion of the Decision reads:
WHEREFORE, the decision appealed from is AFFIRMED with MODIFICATION to read as
follows:

"WHEREFORE, premises considered, judgment is hereby rendered ordering

defendants to pay jointly and severally to herein plaintiffs the following sums:
(a) Actual Damages

---

i. P130,655.00, for cost of repairing the ownertype jeep.

ii. P10,167.99 in medical expenses.
iii. P2,850.00 for lost earnings during medical
treatment.

(b) Moral Damages

---

P100,000.00

(c) Exemplary
Damages

---

P100,000.00

(d) Attorneys Fees

--P25,000.00
Costs of suit."
SO ORDERED.7
On 12 December 2005, the Court of Appeals denied the motion for reconsideration of its
Decision. Only petitioner filed the instant petition, expressly stating that it is assailing only the
damages awarded by the appellate court.
The instant petition raises the following issues: (1) whether the amount of actual damages based
only on a job estimate should be lowered; (2) whether Spouses Lomotan are also entitled to
moral damages; and (3) whether the award of exemplary damages and attorneys is warranted.
For their part, respondents contend that the aforementioned issues are factual in nature and
therefore beyond the province of a petitioner for review under Rule 45.
This is not the first instance where the Court has given due course to a Rule 45 petition seeking
solely the review of the award of damages. 8 A partys entitlement to damages is ultimately a
question of law because not only must it be proved factually but also its legal justification must
be shown. In any case, the trial court and the appellate court have different findings as to the
amount of damages to which respondents are entitled. When the factual findings of the trial and
appellate courts are conflicting, the Court is constrained to look into the evidence presented
before the trial court so as to resolve the herein appeal. 9
The trial court split the award of actual damages into three items, namely, the cost of the
wrecked jeep, the medical expenses incurred by respondent Umuyon and the monetary value of
his earning capacity. On appeal, the Court of Appeals reduced the amount of medical expenses
and loss of earning capacity to which respondent Umuyon is entitled but increased from
P96,700.00 to P130,655.00 the award in favor of Spouses Lomotan for the cost of repairing the
wrecked jeep.
The instant petition assails only the modified valuation of the wrecked jeep. Petitioner points out
that the alleged cost of repairing the jeep pegged at P130,655.00 has not been incurred but is
only a job estimate or a sum total of the expenses yet to be incurred for its repair. It argues that
the best evidence obtainable to prove with a reasonable degree of certainty the value of the jeep
is the acquisition cost or the purchase price of the jeep minus depreciation for one year of use
equivalent to 10% of the purchase price.
Petitioners argument is partly meritorious.
Except as provided by law or by stipulation, one is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as
actual or compensatory damages.10 Actual damages are such compensation or damages for an
injury that will put the injured party in the position in which he had been before he was injured.
They pertain to such injuries or losses that are actually sustained and susceptible of
measurement. To justify an award of actual damages, there must be competent proof of the

actual amount of loss. Credence can be given only to claims which are duly supported by
receipts.11
In People v. Gopio,12 the Court allowed the reimbursement of only the laboratory fee that was
duly receipted as "the rest of the documents, which the prosecution presented to prove the
actual expenses incurred by the victim, were merely a doctors prescription and a handwritten
list of food expenses."13 In Viron Transportation Co., Inc. v. Delos Santos,14 the Court particularly
disallowed the award of actual damages, considering that the actual damages suffered by
private respondents therein were based only on a job estimate and a photo showing the damage
to the truck and no competent proof on the specific amounts of actual damages suffered was
presented.
In the instant case, no evidence was submitted to show the amount actually spent for the repair
or replacement of the wrecked jeep. Spouses Lomotan presented two different cost estimates to
prove the alleged actual damage of the wrecked jeep. Exhibit "B," is a job estimate by Pagawaan
Motors, Inc., which pegged the repair cost of the jeep at P96,000.00, while Exhibit "M," estimated
the cost of repair at P130,655.00. Following Viron, neither estimate is competent to prove actual
damages. Courts cannot simply rely on speculation, conjecture or guesswork in determining the
fact and amount of damages.15
As correctly pointed out by petitioner, the best evidence to prove the value of the wrecked jeep
is reflected in Exhibit "I," the Deed of Sale showing the jeeps acquisition cost at P72,000.00.
However, the depreciation value of equivalent to 10% of the acquisition cost cannot be deducted
from it in the absence of proof in support thereof.
Petitioner also questions the award of moral and exemplary damages in favor of Spouses
Lomotan. It argues that the award of moral damages was premised on the resulting physical
injuries arising from the quasi-delict; since only respondent Umuyon suffered physical injuries,
the award should pertain solely to him. Correspondingly, the award of exemplary damages
should pertain only to respondent Umuyon since only the latter is entitled to moral damages,
petitioner adds.
In the case of moral damages, recovery is more an exception rather than the rule. Moral
damages are not punitive in nature but are designed to compensate and alleviate the physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar harm unjustly caused to a person. In order that an
award of moral damages can be aptly justified, the claimant must be able to satisfactorily prove
that he has suffered such damages and that the injury causing it has sprung from any of the
cases listed in Articles 221916 and 222017 of the Civil Code. Then, too, the damages must be
shown to be the proximate result of a wrongful act or omission. The claimant must establish the
factual basis of the damages and its causal tie with the acts of the defendant. In fine, an award
of moral damages would require, firstly, evidence of besmirched reputation or physical, mental
or psychological suffering sustained by the claimant; secondly, a culpable act or omission
factually established; thirdly, proof that the wrongful act or omission of the defendant is the
proximate cause of the damages sustained by the claimant; and fourthly, that the case is
predicated on any of the instances expressed or envisioned by Article 2219 and Article 2220 of
the Civil Code.18
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, moral damages may aptly be recovered. This
rule also applies, as aforestated, to breaches of contract where the defendant acted fraudulently
or in bad faith. In culpa criminal, moral damages could be lawfully due when the accused is
found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary
detention, illegal arrest, illegal search, or defamation. 19

Undoubtedly, petitioner is liable for the moral damages suffered by respondent Umuyon. Its
liability is based on a quasi-delict or on its negligence in the supervision and selection of its
driver, causing the vehicular accident and physical injuries to respondent Umuyon. Rivera is also
liable for moral damages to respondent Umuyon based on either culpa criminal or quasi-delict.
Since the decision in the criminal case, which found Rivera guilty of criminal negligence, did not
award moral damages, the same may be awarded in the instant civil action for damages.
Jurisprudence show that in criminal offenses resulting to the death of the victim, an award within
the range of P50,000.00 to P100,000.00 as moral damages has become the trend. 20 Under the
circumstances, because respondent Umuyon did not die but had become permanently
incapacitated to drive as a result of the accident, the award of P30,000.00 for moral damages in
his favor is justified.21
However, there is no legal basis in awarding moral damages to Spouses Lomotan whether arising
from the criminal negligence committed by Rivera or based on the negligence of petitioner under
Article 2180.22 Article 221923 speaks of recovery of moral damages in case of a criminal offense
resulting in physical injuries or quasi-delicts causing physical injuries, the two instances where
Rivera and petitioner are liable for moral damages to respondent Umuyon. Article 2220 24 does
speak of awarding moral damages where there is injury to property, but the injury must be willful
and the circumstances show that such damages are justly due. There being no proof that the
accident was willful, Article 2220 does not apply.
Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to moral, temperate, liquidated or compensatory damages. 25 Exemplary
damages cannot be recovered as a matter of right; the court will decide whether or not they
should be adjudicated.26 In quasi-delicts, exemplary damages may be granted if the defendant
acted with gross negligence.27 While the amount of the exemplary damages need not be proved,
the plaintiff must show that he is entitled to moral, temperate or compensatory damages before
the court may consider the question of whether or not exemplary damages should be awarded. 28
As correctly pointed out by the Court of Appeals, Spouses Lomotan have shown that they are
entitled to compensatory damages while respondent Umuyon can recover both compensatory
and moral damages. To serve as an example for the public good, the Court affirms the award of
exemplary damages in the amount of P100,000.00 to respondents. Because exemplary damages
are awarded, attorneys fees may also be awarded in consonance with Article 2208 (1). 29 The
Court affirms the appellate courts award of attorneys fees in the amount of P25,000.00.
WHEREFORE, the instant petition for certiorari is PARTIALLY GRANTED. The Decision of the
Court of Appeals in CA-G.R. CV No. 58655 is AFFIRMED with MODIFICATION. The award of
actual damages for the cost of repairing the owner-type jeep is hereby REDUCED to P72,000.00
while the moral damages of P30,000.00 is awarded solely to respondent Umuyon. All other
awards of the Court of Appeals are AFFIRMED. Following jurisprudence,30 petitioner is ordered to
PAY legal interest of 6% per annum from the date of promulgation of the Decision dated 21 April
1997 of the Regional Trial Court, Branch 72, Antipolo, Rizal and 12% per annum from the time the
Decision of this Court attains finality, on all sums awarded until their full satisfaction.
SO ORDERED.

G.R. No. 123498

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
November 23, 2007

BPI FAMILY BANK, Petitioner,

vs.
AMADO FRANCO and COURT OF APPEALS, Respondents.
DECISION
NACHURA, J.:
Banks are exhorted to treat the accounts of their depositors with meticulous care and utmost
fidelity. We reiterate this exhortation in the case at bench.
Before us is a Petition for Review on Certiorari seeking the reversal of the Court of Appeals (CA)
Decision1 in CA-G.R. CV No. 43424 which affirmed with modification the judgment 2 of the
Regional Trial Court, Branch 55, Manila (Manila RTC), in Civil Case No. 90-53295.
This case has its genesis in an ostensible fraud perpetrated on the petitioner BPI Family Bank
(BPI-FB) allegedly by respondent Amado Franco (Franco) in conspiracy with other individuals, 3
some of whom opened and maintained separate accounts with BPI-FB, San Francisco del Monte
(SFDM) branch, in a series of transactions.
On August 15, 1989, Tevesteco Arrastre-Stevedoring Co., Inc. (Tevesteco) opened a savings and
current account with BPI-FB. Soon thereafter, or on August 25, 1989, First Metro Investment
Corporation (FMIC) also opened a time deposit account with the same branch of BPI-FB with a
deposit of P100,000,000.00, to mature one year thence.
Subsequently, on August 31, 1989, Franco opened three accounts, namely, a current, 4 savings,5
and time deposit,6 with BPI-FB. The current and savings accounts were respectively funded with
an initial deposit of P500,000.00 each, while the time deposit account had P1,000,000.00 with a
maturity date of August 31, 1990. The total amount of P2,000,000.00 used to open these
accounts is traceable to a check issued by Tevesteco allegedly in consideration of Francos
introduction of Eladio Teves,7 who was looking for a conduit bank to facilitate Tevestecos
business transactions, to Jaime Sebastian, who was then BPI-FB SFDMs Branch Manager. In turn,
the funding for the P2,000,000.00 check was part of the P80,000,000.00 debited by BPI-FB from
FMICs time deposit account and credited to Tevestecos current account pursuant to an Authority
to Debit purportedly signed by FMICs officers.
It appears, however, that the signatures of FMICs officers on the Authority to Debit were forged. 8
On September 4, 1989, Antonio Ong,9 upon being shown the Authority to Debit, personally
declared his signature therein to be a forgery. Unfortunately, Tevesteco had already effected
several withdrawals from its current account (to which had been credited the P80,000,000.00
covered by the forged Authority to Debit) amounting to P37,455,410.54, including the
P2,000,000.00 paid to Franco.
On September 8, 1989, impelled by the need to protect its interests in light of FMICs forgery
claim, BPI-FB, thru its Senior Vice-President, Severino Coronacion, instructed Jesus Arangorin 10 to
debit Francos savings and current accounts for the amounts remaining therein. 11 However,
Francos time deposit account could not be debited due to the capacity limitations of BPI-FBs
computer.12
In the meantime, two checks13 drawn by Franco against his BPI-FB current account were
dishonored upon presentment for payment, and stamped with a notation "account under
garnishment." Apparently, Francos current account was garnished by virtue of an Order of
Attachment issued by the Regional Trial Court of Makati (Makati RTC) in Civil Case No. 89-4996
(Makati Case), which had been filed by BPI-FB against Franco et al., 14 to recover the
P37,455,410.54 representing Tevestecos total withdrawals from its account.
Notably, the dishonored checks were issued by Franco and presented for payment at BPI-FB prior
to Francos receipt of notice that his accounts were under garnishment. 15 In fact, at the time the
Notice of Garnishment dated September 27, 1989 was served on BPI-FB, Franco had yet to be
impleaded in the Makati case where the writ of attachment was issued.

It was only on May 15, 1990, through the service of a copy of the Second Amended Complaint in
Civil Case No. 89-4996, that Franco was impleaded in the Makati case. 16 Immediately, upon
receipt of such copy, Franco filed a Motion to Discharge Attachment which the Makati RTC
granted on May 16, 1990. The Order Lifting the Order of Attachment was served on BPI-FB on
even date, with Franco demanding the release to him of the funds in his savings and current
accounts. Jesus Arangorin, BPI-FBs new manager, could not forthwith comply with the demand
as the funds, as previously stated, had already been debited because of FMICs forgery claim. As
such, BPI-FBs computer at the SFDM Branch indicated that the current account record was "not
on file."
With respect to Francos savings account, it appears that Franco agreed to an arrangement, as a
favor to Sebastian, whereby P400,000.00 from his savings account was temporarily transferred
to Domingo Quiaoits savings account, subject to its immediate return upon issuance of a
certificate of deposit which Quiaoit needed in connection with his visa application at the Taiwan
Embassy. As part of the arrangement, Sebastian retained custody of Quiaoits savings account
passbook to ensure that no withdrawal would be effected therefrom, and to preserve Francos
deposits.
On May 17, 1990, Franco pre-terminated his time deposit account. BPI-FB deducted the amount
of P63,189.00 from the remaining balance of the time deposit account representing advance
interest paid to him.
These transactions spawned a number of cases, some of which we had already resolved.
FMIC filed a complaint against BPI-FB for the recovery of the amount of P80,000,000.00 debited
from its account.17 The case eventually reached this Court, and in BPI Family Savings Bank, Inc. v.
First Metro Investment Corporation,18 we upheld the finding of the courts below that BPI-FB failed
to exercise the degree of diligence required by the nature of its obligation to treat the accounts
of its depositors with meticulous care. Thus, BPI-FB was found liable to FMIC for the debited
amount in its time deposit. It was ordered to pay P65,332,321.99 plus interest at 17% per annum
from August 29, 1989 until fully restored. In turn, the 17% shall itself earn interest at 12% from
October 4, 1989 until fully paid.
In a related case, Edgardo Buenaventura, Myrna Lizardo and Yolanda Tica (Buenaventura, et
al.),19 recipients of a P500,000.00 check proceeding from the P80,000,000.00 mistakenly credited
to Tevesteco, likewise filed suit. Buenaventura et al., as in the case of Franco, were also
prevented from effecting withdrawals 20 from their current account with BPI-FB, Bonifacio Market,
Edsa, Caloocan City Branch. Likewise, when the case was elevated to this Court docketed as BPI
Family Bank v. Buenaventura,21 we ruled that BPI-FB had no right to freeze Buenaventura, et al.s
accounts and adjudged BPI-FB liable therefor, in addition to damages.
Meanwhile, BPI-FB filed separate civil and criminal cases against those believed to be the
perpetrators of the multi-million peso scam. 22 In the criminal case, Franco, along with the other
accused, except for Manuel Bienvenida who was still at large, were acquitted of the crime of
Estafa as defined and penalized under Article 351, par. 2(a) of the Revised Penal Code. 23
However, the civil case24 remains under litigation and the respective rights and liabilities of the
parties have yet to be adjudicated.
Consequently, in light of BPI-FBs refusal to heed Francos demands to unfreeze his accounts and
release his deposits therein, the latter filed on June 4, 1990 with the Manila RTC the subject suit.
In his complaint, Franco prayed for the following reliefs: (1) the interest on the remaining
balance25 of his current account which was eventually released to him on October 31, 1991; (2)
the balance26 on his savings account, plus interest thereon; (3) the advance interest 27 paid to him
which had been deducted when he pre-terminated his time deposit account; and (4) the payment
of actual, moral and exemplary damages, as well as attorneys fees.

BPI-FB traversed this complaint, insisting that it was correct in freezing the accounts of Franco
and refusing to release his deposits, claiming that it had a better right to the amounts which
consisted of part of the money allegedly fraudulently withdrawn from it by Tevesteco and ending
up in Francos accounts. BPI-FB asseverated that the claimed consideration of P2,000,000.00 for
the introduction facilitated by Franco between George Daantos and Eladio Teves, on the one
hand, and Jaime Sebastian, on the other, spoke volumes of Francos participation in the
fraudulent transaction.
On August 4, 1993, the Manila RTC rendered judgment, the dispositive portion of which reads as
follows:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of [Franco] and
against [BPI-FB], ordering the latter to pay to the former the following sums:
1. P76,500.00 representing the legal rate of interest on the amount of P450,000.00 from
May 18, 1990 to October 31, 1991;
2. P498,973.23 representing the balance on [Francos] savings account as of May 18,
1990, together with the interest thereon in accordance with the banks guidelines on the
payment therefor;
3. P30,000.00 by way of attorneys fees; and
4. P10,000.00 as nominal damages.
The counterclaim of the defendant is DISMISSED for lack of factual and legal anchor.
Costs against [BPI-FB].
SO ORDERED.28
Unsatisfied with the decision, both parties filed their respective appeals before the CA. Franco
confined his appeal to the Manila RTCs denial of his claim for moral and exemplary damages,
and the diminutive award of attorneys fees. In affirming with modification the lower courts
decision, the appellate court decreed, to wit:
WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification
ordering [BPI-FB] to pay [Franco] P63,189.00 representing the interest deducted from the time
deposit of plaintiff-appellant. P200,000.00 as moral damages and P100,000.00 as exemplary
damages, deleting the award of nominal damages (in view of the award of moral and exemplary
damages) and increasing the award of attorneys fees from P30,000.00 to P75,000.00.
Cost against [BPI-FB].
SO ORDERED.29
In this recourse, BPI-FB ascribes error to the CA when it ruled that: (1) Franco had a better right
to the deposits in the subject accounts which are part of the proceeds of a forged Authority to
Debit; (2) Franco is entitled to interest on his current account; (3) Franco can recover the
P400,000.00 deposit in Quiaoits savings account; (4) the dishonor of Francos checks was not
legally in order; (5) BPI-FB is liable for interest on Francos time deposit, and for moral and
exemplary damages; and (6) BPI-FBs counter-claim has no factual and legal anchor.
The petition is partly meritorious.
We are in full accord with the common ruling of the lower courts that BPI-FB cannot unilaterally
freeze Francos accounts and preclude him from withdrawing his deposits. However, contrary to
the appellate courts ruling, we hold that Franco is not entitled to unearned interest on the time
deposit as well as to moral and exemplary damages.
First. On the issue of who has a better right to the deposits in Francos accounts, BPI-FB urges us
that the legal consequence of FMICs forgery claim is that the money transferred by BPI-FB to
Tevesteco is its own, and considering that it was able to recover possession of the same when
the money was redeposited by Franco, it had the right to set up its ownership thereon and freeze
Francos accounts.

BPI-FB contends that its position is not unlike that of an owner of personal property who regains
possession after it is stolen, and to illustrate this point, BPI-FB gives the following example:
where Xs television set is stolen by Y who thereafter sells it to Z, and where Z unwittingly
entrusts possession of the TV set to X, the latter would have the right to keep possession of the
property and preclude Z from recovering possession thereof. To bolster its position, BPI-FB cites
Article 559 of the Civil Code, which provides:
Article 559. The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing
the price paid therefor.
BPI-FBs argument is unsound. To begin with, the movable property mentioned in Article 559 of
the Civil Code pertains to a specific or determinate thing. 30 A determinate or specific thing is one
that is individualized and can be identified or distinguished from others of the same kind. 31
In this case, the deposit in Francos accounts consists of money which, albeit characterized as a
movable, is generic and fungible.32 The quality of being fungible depends upon the possibility of
the property, because of its nature or the will of the parties, being substituted by others of the
same kind, not having a distinct individuality. 33
Significantly, while Article 559 permits an owner who has lost or has been unlawfully deprived of
a movable to recover the exact same thing from the current possessor, BPI-FB simply claims
ownership of the equivalent amount of money, i.e., the value thereof, which it had mistakenly
debited from FMICs account and credited to Tevestecos, and subsequently traced to Francos
account. In fact, this is what BPI-FB did in filing the Makati Case against Franco, et al. It staked its
claim on the money itself which passed from one account to another, commencing with the
forged Authority to Debit.
It bears emphasizing that money bears no earmarks of peculiar ownership, 34 and this
characteristic is all the more manifest in the instant case which involves money in a banking
transaction gone awry. Its primary function is to pass from hand to hand as a medium of
exchange, without other evidence of its title. 35 Money, which had passed through various
transactions in the general course of banking business, even if of traceable origin, is no
exception.
Thus, inasmuch as what is involved is not a specific or determinate personal property, BPI-FBs
illustrative example, ostensibly based on Article 559, is inapplicable to the instant case.
There is no doubt that BPI-FB owns the deposited monies in the accounts of Franco, but not as a
legal consequence of its unauthorized transfer of FMICs deposits to Tevestecos account. BPI-FB
conveniently forgets that the deposit of money in banks is governed by the Civil Code provisions
on simple loan or mutuum.36 As there is a debtor-creditor relationship between a bank and its
depositor, BPI-FB ultimately acquired ownership of Francos deposits, but such ownership is
coupled with a corresponding obligation to pay him an equal amount on demand. 37 Although BPIFB owns the deposits in Francos accounts, it cannot prevent him from demanding payment of
BPI-FBs obligation by drawing checks against his current account, or asking for the release of the
funds in his savings account. Thus, when Franco issued checks drawn against his current
account, he had every right as creditor to expect that those checks would be honored by BPI-FB
as debtor.
More importantly, BPI-FB does not have a unilateral right to freeze the accounts of Franco based
on its mere suspicion that the funds therein were proceeds of the multi-million peso scam Franco
was allegedly involved in. To grant BPI-FB, or any bank for that matter, the right to take whatever

action it pleases on deposits which it supposes are derived from shady transactions, would open
the floodgates of public distrust in the banking industry.
Our pronouncement in Simex International (Manila), Inc. v. Court of Appeals 38 continues to
resonate, thus:
The banking system is an indispensable institution in the modern world and plays a vital role in
the economic life of every civilized nation. Whether as mere passive entities for the safekeeping
and saving of money or as active instruments of business and commerce, banks have become an
ubiquitous presence among the people, who have come to regard them with respect and even
gratitude and, most of all, confidence. Thus, even the humble wage-earner has not hesitated to
entrust his lifes savings to the bank of his choice, knowing that they will be safe in its custody
and will even earn some interest for him. The ordinary person, with equal faith, usually maintains
a modest checking account for security and convenience in the settling of his monthly bills and
the payment of ordinary expenses. x x x.
In every case, the depositor expects the bank to treat his account with the utmost fidelity,
whether such account consists only of a few hundred pesos or of millions. The bank must record
every single transaction accurately, down to the last centavo, and as promptly as possible. This
has to be done if the account is to reflect at any given time the amount of money the depositor
can dispose of as he sees fit, confident that the bank will deliver it as and to whomever directs. A
blunder on the part of the bank, such as the dishonor of the check without good reason, can
cause the depositor not a little embarrassment if not also financial loss and perhaps even civil
and criminal litigation.
The point is that as a business affected with public interest and because of the nature of its
functions, the bank is under obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their relationship. x x x.
Ineluctably, BPI-FB, as the trustee in the fiduciary relationship, is duty bound to know the
signatures of its customers. Having failed to detect the forgery in the Authority to Debit and in
the process inadvertently facilitate the FMIC-Tevesteco transfer, BPI-FB cannot now shift liability
thereon to Franco and the other payees of checks issued by Tevesteco, or prevent withdrawals
from their respective accounts without the appropriate court writ or a favorable final judgment.
Further, it boggles the mind why BPI-FB, even without delving into the authenticity of the
signature in the Authority to Debit, effected the transfer of P80,000,000.00 from FMICs to
Tevestecos account, when FMICs account was a time deposit and it had already paid advance
interest to FMIC. Considering that there is as yet no indubitable evidence establishing Francos
participation in the forgery, he remains an innocent party. As between him and BPI-FB, the latter,
which made possible the present predicament, must bear the resulting loss or inconvenience.
Second. With respect to its liability for interest on Francos current account, BPI-FB argues that its
non-compliance with the Makati RTCs Order Lifting the Order of Attachment and the legal
consequences thereof, is a matter that ought to be taken up in that court.
The argument is tenuous. We agree with the succinct holding of the appellate court in this
respect. The Manila RTCs order to pay interests on Francos current account arose from BPI-FBs
unjustified refusal to comply with its obligation to pay Franco pursuant to their contract of
mutuum. In other words, from the time BPI-FB refused Francos demand for the release of the
deposits in his current account, specifically, from May 17, 1990, interest at the rate of 12%
began to accrue thereon.39
Undeniably, the Makati RTC is vested with the authority to determine the legal consequences of
BPI-FBs non-compliance with the Order Lifting the Order of Attachment. However, such authority
does not preclude the Manila RTC from ruling on BPI-FBs liability to Franco for payment of
interest based on its continued and unjustified refusal to perform a contractual obligation upon

demand. After all, this was the core issue raised by Franco in his complaint before the Manila
RTC.
Third. As to the award to Franco of the deposits in Quiaoits account, we find no reason to depart
from the factual findings of both the Manila RTC and the CA.
Noteworthy is the fact that Quiaoit himself testified that the deposits in his account are actually
owned by Franco who simply accommodated Jaime Sebastians request to temporarily transfer
P400,000.00 from Francos savings account to Quiaoits account. 40 His testimony cannot be
characterized as hearsay as the records reveal that he had personal knowledge of the
arrangement made between Franco, Sebastian and himself. 41
BPI-FB makes capital of Francos belated allegation relative to this particular arrangement. It
insists that the transaction with Quiaoit was not specifically alleged in Francos complaint before
the Manila RTC. However, it appears that BPI-FB had impliedly consented to the trial of this issue
given its extensive cross-examination of Quiaoit.
Section 5, Rule 10 of the Rules of Court provides:
Section 5. Amendment to conform to or authorize presentation of evidence. When issues not
raised by the pleadings are tried with the express or implied consent of the parties, they shall be
treated in all respects as if they had been raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to conform to the evidence and to raise these
issues may be made upon motion of any party at any time, even after judgment; but failure to
amend does not affect the result of the trial of these issues. If evidence is objected to at the trial
on the ground that it is now within the issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so with liberality if the presentation of the merits of the
action and the ends of substantial justice will be subserved thereby. The court may grant a
continuance to enable the amendment to be made. (Emphasis supplied)
In all, BPI-FBs argument that this case is not the right forum for Franco to recover the
P400,000.00 begs the issue. To reiterate, Quiaoit, testifying during the trial, unequivocally
disclaimed ownership of the funds in his account, and pointed to Franco as the actual owner
thereof. Clearly, Francos action for the recovery of his deposits appropriately covers the deposits
in Quiaoits account.
Fourth. Notwithstanding all the foregoing, BPI-FB continues to insist that the dishonor of Francos
checks respectively dated September 11 and 18, 1989 was legally in order in view of the Makati
RTCs supplemental writ of attachment issued on September 14, 1989. It posits that as the party
that applied for the writ of attachment before the Makati RTC, it need not be served with the
Notice of Garnishment before it could place Francos accounts under garnishment.
The argument is specious. In this argument, we perceive BPI-FBs clever but transparent ploy to
circumvent Section 4,42 Rule 13 of the Rules of Court. It should be noted that the strict
requirement on service of court papers upon the parties affected is designed to comply with the
elementary requisites of due process. Franco was entitled, as a matter of right, to notice, if the
requirements of due process are to be observed. Yet, he received a copy of the Notice of
Garnishment only on September 27, 1989, several days after the two checks he issued were
dishonored by BPI-FB on September 20 and 21, 1989. Verily, it was premature for BPI-FB to
freeze Francos accounts without even awaiting service of the Makati RTCs Notice of
Garnishment on Franco.
Additionally, it should be remembered that the enforcement of a writ of attachment cannot be
made without including in the main suit the owner of the property attached by virtue thereof.
Section 5, Rule 13 of the Rules of Court specifically provides that "no levy or attachment
pursuant to the writ issued x x x shall be enforced unless it is preceded, or contemporaneously
accompanied, by service of summons, together with a copy of the complaint, the application for
attachment, on the defendant within the Philippines."

Franco was impleaded as party-defendant only on May 15, 1990. The Makati RTC had yet to
acquire jurisdiction over the person of Franco when BPI-FB garnished his accounts. 43 Effectively,
therefore, the Makati RTC had no authority yet to bind the deposits of Franco through the writ of
attachment, and consequently, there was no legal basis for BPI-FB to dishonor the checks issued
by Franco.
Fifth. Anent the CAs finding that BPI-FB was in bad faith and as such liable for the advance
interest it deducted from Francos time deposit account, and for moral as well as exemplary
damages, we find it proper to reinstate the ruling of the trial court, and allow only the recovery of
nominal damages in the amount of P10,000.00. However, we retain the CAs award of
P75,000.00 as attorneys fees.
In granting Francos prayer for interest on his time deposit account and for moral and exemplary
damages, the CA attributed bad faith to BPI-FB because it (1) completely disregarded its
obligation to Franco; (2) misleadingly claimed that Francos deposits were under garnishment; (3)
misrepresented that Francos current account was not on file; and (4) refused to return the
P400,000.00 despite the fact that the ostensible owner, Quiaoit, wanted the amount returned to
Franco.
In this regard, we are guided by Article 2201 of the Civil Code which provides:
Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in
good faith is liable shall be those that are the natural and probable consequences of the breach
of the obligation, and which the parties have foreseen or could have reasonable foreseen at the
time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation.
(Emphasis supplied.)
We find, as the trial court did, that BPI-FB acted out of the impetus of self-protection and not out
of malevolence or ill will. BPI-FB was not in the corrupt state of mind contemplated in Article
2201 and should not be held liable for all damages now being imputed to it for its breach of
obligation. For the same reason, it is not liable for the unearned interest on the time deposit.
Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or
some moral obliquity and conscious doing of wrong; it partakes of the nature of fraud. 44 We have
held that it is a breach of a known duty through some motive of interest or ill will. 45 In the instant
case, we cannot attribute to BPI-FB fraud or even a motive of self-enrichment. As the trial court
found, there was no denial whatsoever by BPI-FB of the existence of the accounts. The computergenerated document which indicated that the current account was "not on file" resulted from the
prior debit by BPI-FB of the deposits. The remedy of freezing the account, or the garnishment, or
even the outright refusal to honor any transaction thereon was resorted to solely for the purpose
of holding on to the funds as a security for its intended court action, 46 and with no other goal but
to ensure the integrity of the accounts.
We have had occasion to hold that in the absence of fraud or bad faith, 47 moral damages cannot
be awarded; and that the adverse result of an action does not per se make the action wrongful,
or the party liable for it. One may err, but error alone is not a ground for granting such
damages.48
An award of moral damages contemplates the existence of the following requisites: (1) there
must be an injury clearly sustained by the claimant, whether physical, mental or psychological;
(2) there must be a culpable act or omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4)
the award for damages is predicated on any of the cases stated in Article 2219 of the Civil
Code.49

Franco could not point to, or identify any particular circumstance in Article 2219 of the Civil
Code,50 upon which to base his claim for moral damages.1wphi1
Thus, not having acted in bad faith, BPI-FB cannot be held liable for moral damages under Article
2220 of the Civil Code for breach of contract. 51
We also deny the claim for exemplary damages. Franco should show that he is entitled to moral,
temperate, or compensatory damages before the court may even consider the question of
whether exemplary damages should be awarded to him. 52 As there is no basis for the award of
moral damages, neither can exemplary damages be granted.
While it is a sound policy not to set a premium on the right to litigate, 53 we, however, find that
Franco is entitled to reasonable attorneys fees for having been compelled to go to court in order
to assert his right. Thus, we affirm the CAs grant of P75,000.00 as attorneys fees.
Attorneys fees may be awarded when a party is compelled to litigate or incur expenses to
protect his interest,54 or when the court deems it just and equitable. 55 In the case at bench, BPIFB refused to unfreeze the deposits of Franco despite the Makati RTCs Order Lifting the Order of
Attachment and Quiaoits unwavering assertion that the P400,000.00 was part of Francos
savings account. This refusal constrained Franco to incur expenses and litigate for almost two (2)
decades in order to protect his interests and recover his deposits. Therefore, this Court deems it
just and equitable to grant Franco P75,000.00 as attorneys fees. The award is reasonable in view
of the complexity of the issues and the time it has taken for this case to be resolved. 56
Sixth. As for the dismissal of BPI-FBs counter-claim, we uphold the Manila RTCs ruling, as
affirmed by the CA, that BPI-FB is not entitled to recover P3,800,000.00 as actual damages. BPIFBs alleged loss of profit as a result of Francos suit is, as already pointed out, of its own making.
Accordingly, the denial of its counter-claim is in order.
WHEREFORE, the petition is PARTIALLY GRANTED. The Court of Appeals Decision dated November
29, 1995 is AFFIRMED with the MODIFICATION that the award of unearned interest on the time
deposit and of moral and exemplary damages is DELETED.
No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-13851
July 27, 1960
DEOGRACIAS F. MALONZO, petitioner,
vs.
GREGORIA T. GALANG and FRANCISCO GALANG, respondents.
Felixberto V. Castillo for petitioner.
F.M. Ejercito for respondents.
REYES, J.B.L., J.:
On October 5, 1946, Gregoria T. Galang, wife of Francisco G. Galang, received from Deogracias T.
Malonzo a loan of P5,000.00 under a check which Gregoria cashed at the drawee bank National
City bank of New York, Manila.
Subsequently, on April 17, 1947, the Rehabilitation Finance Corporation loaned to Francisco G.
Galang a check in the sum of P14,968.00 drawn against the Philippine National Bank, Galang
endorsed the check to Deogracias F. Malonzo, who cashed it on April 25, 1947. Out of the
proceeds of the check, P10,000.00 was applied to the payment of the share and participation of
Francisco Galang in a fishing venture with Malonzo. The balance of P4,968.00, together with

P32.00 delivered in cash to Malonzo, paid off, according to Galang, the loan of P5,000.00
extended by the former to Galang's wife on October 5, 1946. However, Malonzo alleged that he
returned said amount of P4,968.00 to Galang, partly in cash (P1,000.00) and partly in check for
P3,968.00 dated May 19, 1947, made payable to Gregoria T. Galang and drawn against the
Philippine Trust Co.
Claiming that the P5,000.00 loan obtained from him by Gregoria T. Galang on October 5, 1946,
had remained unpaid, Malonzo sued the Galang spouses on August 27, 1955 for the payment
thereof, plus interests and attorney's fees (C.C. No. 27303, CFI of Manila).
The trial court refused to believe Malonzo's version that the loan in question had not yet been
paid; held that the same had already been liquidated as claimed by the defendant spouses; and
found the check for P3,968.00 delivered by Malonzo to Gregoria T. Galang on May 19, 1947 had
nothing to do with said loan and was in payment of another loan which she extended to Malonzo
just a few days before the check was issued. The lower court also found that the complaint was
clearly unfounded, dismissed the same, and sentenced Malonzo to pay the Galang spouses
under their counterclaim P500.00 compensatory and moral damages, and P1,000.00 attorney's
fees..
On appeal to the Court of Appeals by Malonzo, the judgment of the court a quo was affirmed in
toto. From this decision, Malonzo appealed to this Court, urging that there was no legal basis for
the award to respondents of compensatory and moral damages, and of attorney's fees.
As to attorney's fees, the award is correct and proper, in view of the finding of the trial court and
of the Court of Appeals that petitioner's action against respondents is clearly unfounded, since
Article 2208, par. (4), of the New Civil Code authorizes the recovery of attorney's fees "in case of
a clearly unfounded civil action or proceeding against the plaintiff". This provision applies equally
in favor of a defendant under a counterclaim for attorney's fees (as in this case), considering that
a counterclaim is a complaint by the defendant against the original plaintiff (Pongos vs. Hidalgo
Enterprises, Inc., et al., 84 Phil., 499; 47 Off. Gaz., [2] 733), wherein the defendant is the plaintiff
and the original plaintiff the defendant.
In regard to other items of compensatory damages supposedly suffered by respondents (i.e., in
addition to attorney's fees and costs that are also included in the concept of actual or
compensatory damages): assuming that they are recoverable in this case under the theory that
petitioner's having filed a clearly unfounded suit against respondents constitutes a tort against
the latter that makes the former "liable for all damages which are the natural and probable
consequences of the act or omission complained of" (Art. 2202, New Code), these damages can
not, however, be presumed, but must be duly proved (Art. 2199). Neither the trial court nor the
Court of Appeals has pointed out any specific facts which afford a basis for measuring whatever
compensatory or actual damages over and above attorney's fees and costs that respondents had
suffered. Upon the other hand, the award of compensatory damages to respondents was merged
by the trial court in a round sum (P500.00) that also included moral damages, showing that this
amount was not what respondents had proved to have suffered, but simply what the court
believed to be reasonably due to them for having been made to defend what the two courts
found to be a clearly unfounded suit. For this reason, we do not think the award of compensatory
damages to respondents should be allowed.
Finally, with respect to moral damages, we are inclined to agree with petitioner that these
damages are not recoverable herein, notwithstanding the finding of the trial court and the Court
of Appeals that his complaint against respondents was clearly unfounded or unreasonable. It will
be observed that unlike compensatory or actual damages which are generally recoverable in tort
cases as long as there is satisfactory proof thereof (Art. 2202), the Code has chosen to
enumerate the cases in which moral damages may be recovered (Art. 2219). A like enumeration
is made in regard (Art. 2208). But the two enumerations differ in the case of a clearly unfounded

suit, which is expressly mentioned in Art. 2208 (par. 4), as justifying for award of attorney's fees,
but is not included in the enumeration of Art. 2219 in respect to moral damages. It is true that
Art. 2219 also provides that moral damages may be awarded in "analogous cases" to those
enumerated, but we do not think the Code intended "a clearly unfounded civil action or
proceedings" to be one of these analogous cases wherein moral damages may be recovered, or
it would have expressly mentioned it in Art. 2219, as it did in Art. 2208; or else incorporated in
Art. 2208 by reference in Art. 2219. Besides, Art. 2219 specifically mentions "quasi-delicts
causing physical injuries", as an instance when moral damages may be allowed, thereby
implying that all other quasi-delicts not resulting in physical injuries are excluded (Strebel vs.
Figueras, 96 Phil., 321), excepting, of course, the special torts referred to in Art. 309 (par. 9, Art.
2219) and in Arts. 21, 26, 27, 28, 29, 30, 32, 34 and 35 on the chapter on human relations (par.
10, Art. 2219).
Furthermore, while no proof of pecuniary loss is necessary in order that moral damages may be
awarded, the amount of indemnity being left to the discretion of the court (Art. 2216), it is,
nevertheless, essential that the claimant satisfactorily prove the existence of the factual basis of
the damage (Art. 2217) and its causal relation to defendant's acts. This is so because moral
damages, though incapable of pecuniary estimation, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer
(Algara vs. Sandejas, 27 Phil., 284). The trial court and the Court of Appeals both seem to be of
the opinion that the mere fact that respondent were sued without any legal foundation entitled
them to an award of moral damages, hence they made no definite finding as to what the
supposed moral damages suffered consist of. Such a conclusion would make of moral damages a
penalty, which they are not, rather than a compensation for actual injury suffered, which they are
intended to be. Moral damages, in other words, are not corrective or exemplary damages.
The foregoing discussion makes it unnecessary to further dwell on the other points raised by the
appeal.
Wherefore, the decision appealed from is modified in the sense that the award of compensatory
and moral damages to respondents is eliminated, but is affirmed in all other respects. No costs.
Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Barrera, and Gutierrez David, JJ.,
concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-25913
February 29, 1969
HEIRS OF RAYMUNDO CASTRO, petitioners,
vs.
APOLONIO BUSTOS, respondent.
Sotto, Consengco and Dizon for petitioners.
Sipin, Abarcar and Baluyot for respondent.
BARREDO, J.:
Appeal from the Court of Appeals.
Respondent Apolonio Bustos was charged in the Court of First Instance of Pampanga on October
26, 1962 with the crime of murder for the killing of Raymundo Castro whose heirs are now the
petitioners. The trial court found Bustos guilty only of homicide and, crediting him with two
mitigating circumstances, namely, passion or obfuscation and voluntary surrender, sentenced
him to an indeterminate prison term of 2 years, 4 months and 1 day of prision correccional, as

minimum, to 8 years and 1 day of prision mayor, as maximum, and to indemnify the petitioners,
who were represented in the case by a private prosecutor, in the sum of six thousand pesos
(P6,000) "without prejudice to whatever the accused (respondent) is entitled from the
Government Service Insurance System (GSIS) for his services of around twenty-six (26) years as
a public school teacher, prior to October 20, 1962." Both respondent and petitioners appealed to
the Court of Appeals, respondent asking that appellate, court acquit him and petitioners praying,
on the other hand, that respondent be convicted of murder, that the portion regarding what said
respondent will receive from the GSIS be deleted and that he be ordered to pay petitioners "the
aggregate sum of P50,764.00 as indemnity and actual, moral, temperate and exemplary
damages." For the purposes of their appeal, petitioners even filed unnecessarily a printed record
on appeal. On October 18, 1965, the Court of Appeals rendered judgment modifying that of the
trial court insofar as it concerned (1) the amount of damages to be awarded petitioners thus:
... Aside from the P6,000 indemnity awarded by the trial court, which we uphold, we feel
justified, in the exercise of our discretion, to award to the heirs of the deceased moral
damages in the amount of P6,000 plus P13,380.00 to compensate for the loss of earning
of the decedent at the annual salary of P2,676.00 ....
and (2) the mitigating circumstance of "obfuscation", appreciated as such by the trial court,
which was changed to "vindication of a grave offense", but affirming it in all other respects. Upon
motion, however, of respondent for the reconsideration of said decision, reiterating his plea for
acquittal, or, in the alternative, praying for the elimination of the award of moral and
compensatory damages, the Court of Appeals promulgated on November 13, 1965, an amended
decision, the pertinent portions of which are:
The arguments interposed by the appellant in his Motion for consideration to support the
complete reversal of the judgment appealed from, have been considered and passed upon
in our decision, and we see no reason to alter the same in so far as the appellant's guilt of
the crime is concerned. On the other hand, we agree with the appellant that in the interest
of justice and equity and in view of the presence of two mitigating circumstances, without
any aggravating one to offset them, the award of moral and compensatory damages
should be eliminated.
WHEREFORE, the decision promulgated October 18, 1965, is hereby amended by
eliminating therefrom the award of P6,000.00 representing moral damages, and of
P13,380.00 representing the decedent's loss of earnings.
From this amended decision, only petitioners have appealed to Us. The prayer in their petition for
certiorari asks for nothing more than that the amended decision of the Court of Appeals be
revoked and reversed, and its original decision be affirmed in toto insofar as the award of
indemnity and damages is concerned. Since We find the grounds of the appeal meritorious, We
grant fully the prayer in the petition.
This case affords this Court as appropriate an opportunity, as any other, to restate, in a more
comprehensive way, the law regarding the items of damages that are recoverable in cases of
death caused by a crime, whether the claim therefor is made in the criminal proceedings itself or
in a separate civil action. In the instant case, recovery of such damages is being sought in the
criminal proceedings but even if it were claimed otherwise, the indemnity and damages would be
the same, for generally, the items of damages are identical in both procedures, except with
respect to attorney's fees and expenses of litigation which can be awarded only when a separate
civil action is instituted. (Art. 2208, Civil Code) With the clarifications We are making herein, at
least the writer of this opinion expects that litigations regarding the aspects of the law herein
passed upon may be minimized.
As a start, it is to be noted that in the matter of damages, the original decision of the Court of
Appeals, while correct in making a particularization in the award of indemnity and damages,

nonetheless, still failed to comply strictly with the constitutional requirement that all decisions of
courts of record must state both the facts and the law on which they are based. (Sec. 12, Art.
VIII, Constitution) In said original decision, the Court of Appeals held:
Coming now to the damages asked by the heirs of the deceased: Aside from the P6,000.00
indemnity awarded by the trial court which we uphold, we feel justified, in the exercise of
our discretion, to award to the heirs of the deceased moral damages in the amount of
P6,000 plus P13,380.00 to compensate for the loss of earning of the decedent at the
annual salary of P2,676.00 (Exh. V; p. 42 t.s.n. Vergara).
WHEREFORE, the appealed judgment is modified as above indicated in so far as it
concerns the amount of indemnity and damages to be awarded to the heirs of the
deceased, and the mitigating circumstance of vindication of a grave offense which takes
the place of the circumstance of obfuscation appreciated by the trial court; and affirmed in
all other respects. Costs against the appellant.
As can be seen, no legal or factual basis is stated therein for the award of indemnity and
damages to petitioners; worse, the impression is given that the said award is purely a matter of
discretion on the part of the court. Clearly, this is not in accordance with the law. Indeed, it must
have been this failure to refer to the pertinent legal provisions which induced the appellate court,
at the mere invocation by respondent of Art. 2204 of the Civil Code, to commit the error of
readily eliminating in the amended decision the items on moral damages and compensation for
loss of earning of the decedent which its original decision had correctly contained. Having held
that it had discretion in the premises, the court easily yielded to the argument that simply
because it had credited the respondent with two mitigating circumstances, it was already
justified in eliminating the items of damages already adverted to, presumably having in mind
said Art. 2204 which provides that:
In crimes, the damages to be adjudicated may be respectively increased or lessened
according to the aggravating or mitigating circumstances.
Of course, this was clear error, inasmuch as construed literally or otherwise, the quoted provision
does not warrant a complete deletion of said items of damages. In any event the court evidently
failed to take into account that several other provisions can come into play considering the
circumstances in this case.
When the commission of a crime results in death, the civil obligations arising therefrom are
governed by the penal laws, "... subject to the provisions of Art. 2177, and of the pertinent
provisions of Chapter 2, Preliminary Title on Human Relations, and of Title XVIII of this Book (Book
IV) regulating damages." (Art. 1161, Civil Code)
Thus, "every person criminally liable for a felony is also civily liable." (Art. 100, Revised Penal
Code). This civil liability, in case the felony involves death, includes indemnification for
consequential damages (Art. 104, id.) and said consequential damages in turn include "... those
suffered by his family or by a third person by reason of the crime." (Art. 107, id.) Since these
provisions are subject, however, as above indicated, to certain provisions of the Civil Code, We
will now turn to said provisions.
The general rule in the Civil Code is that:
In crimes and quasi-delicts, the defendant shall be liable for all damages which are the
natural and probable consequences of the act or omission complained of. It is not
necessary that such damages have been foreseen or could have reasonably been foreseen
by the defendant. (Art. 2202)
When, however, the crime committed involves death, there is Art. 2206 which provides thus:
The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and
the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be
assessed and awarded by the court, unless the deceased on account of permanent
physical disability not caused by the defendant, had no earning capacity at the time of his
death;
(2) If the deceased was obliged to give support according to the provisions of article 291,
the recipient who is not an heir called to the decedent's inheritance by law of testate or
intestate succession may demand support from the person causing the death, for a period
not exceeding five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of the deceased.
The amount of P3,000 referred to in the above article has already been increased by this Court
first, to P6,000.00 in People v. Amansec, 80 Phil. 426, and lately to P12,000.00 in the case of
People v. Pantoja, G. R. No. L-18793, promulgated October 11, 1968, and it must be stressed that
this amount, as well as the amount of moral damages, may be adjudicated even without proof of
pecuniary loss, the assessment of the moral damages being "left to the discretion of the court,
according to the circumstances of each case." (Art. 2216)
Exemplary damages may also be imposed as a part of this civil liability when the crime has been
committed with one or more aggravating circumstances, such damages being "separate and
distinct from fines and shall be paid to the offended party," (Art. 2230). Exemplary damages
cannot however be recovered as a matter of right; the court will decide whether or not they
should be given. (Art. 2233)
In any event, save as expressly provided in connection with the indemnity for the sole fact of
death (1st par., Art. 2206) and in cases wherein exemplary damages are awarded precisely
because of the attendance of aggravating circumstances, (Art. 2230) "... damages to be
adjudicated may be respectively increased or lessened according to the aggravating or
mitigating circumstances," (Art. 2204) but "the party suffering the loss or injury must exercise
the diligence of a good father of a family to minimize the damages resulting from the act or
omisson in question." (Art. 2203) "Interest as a part of the damages, may, in a proper case, be
adjudicated in the discretion of the Court." (Art. 2211) As to attorneys' fees and expenses of
litigation, the same may be recovered only when exemplary damages have been granted (Art.
2208, par. 1) or, as We have already stated, when there is a separate civil action.
Stated differently, when death occurs as a result of a crime, the heirs of the deceased are
entitled to the following items of damages:
1. As indemnity for the death of the victim of the offense P12,000.00, without the need
of any evidence or proof of damages, and even though there may have been mitigating
circumstances attending the commission of the offense.
2. As indemnity for loss of earning capacity of the deceased an amount to be fixed by
the Court according to the circumstances of the deceased related to his actual income at
the time of death and his probable life expectancy, the said indemnity to be assessed and
awarded by the court as a matter of duty, unless the deceased had no earning capacity at
said time on account of permanent disability not caused by the accused. If the deceased
was obliged to give support, under Art. 291, Civil Code, the recipient who is not an heir,
may demand support from the accused for not more than five years, the exact duration to
be fixed by the court.
3. As moral damages for mental anguish, an amount to be fixed by the court. This may
be recovered even by the illegitimate descendants and ascendants of the deceased.

4. As exemplary damages, when the crime is attended by one or more aggravating

circumstances, an amount to be fixed in the discretion of the court, the same to be
considered separate from fines.
5. As attorney's fees and expresses of litigation, the actual amount thereof, (but only
when a separate civil action to recover civil liability has been filed or when exemplary
damages are awarded).
6. Interests in the proper cases.
7. It must be emphasized that the indemnities for loss of earning capacity of the deceased
and for moral damages are recoverable separately from and in addition to the fixed sum of
P12,000.00 corresponding to the indemnity for the sole fact of death, and that these
damages may, however, be respectively increased or lessened according to the mitigating
or aggravating circumstances, except items 1 and 4 above, for obvious reasons.
In the light of the foregoing discussion, it is clear that the Court of Appeals erred in eliminating in
its amended decision, the items of moral damages and compensation for loss of earning capacity
of the deceased. Indeed, as to the award of moral damages in case of death, this Court has
already held in Mercado v. Lira, etc., G. R. Nos. L-13328-29, September 29, 1961, that once the
heirs of the deceased claim moral damages and are able to prove they are entitled thereto, it
becomes the duty of the court to make the award. We held:
Art. 2206 states further that "In addition" to the amount of at least P3,000.00 to be
awarded for the death of a passenger, the spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral damages as a consequence of the
death of their deceased kin, which simply means that once the above-mentioned heirs of
the deceased claim compensation for moral damages and are able to prove that they are
entitled to such award, it becomes the duty of the court to award moral damages to the
claimant in an amount commensurate with the mental anguish suffered by them.
This doctrine was reiterated in Maranan v. Perez, G. R. No. L-22272, June 26, 1967:
In connection with the award of damages, the court a quo granted only P3,000 to plaintiffappellant. This is the minimum compensatory damages amount recoverable under Art.
1764 in connection with Art. 2206 of the Civil Code when a breach of contract results in
the passenger's death. As has been the policy followed by this Court, this minimal award
should be increased to P6,000 .... Still, Art. 2206 and 1764 award moral damages in
addition to compensatory damages, to the parents of the passenger killed to compensate
for the mental anguish they suffered. A claim therefor, having been properly made, it
becomes the court's duty to award moral damages. Plaintiff demands P5,000 as moral
damages; however, in the circumstances, We consider P3,000 moral damages, in addition
to the P6,000 damages aforestated, as sufficient. Interest upon such damages are also due
to plaintiff-appellant.
Likewise, in the matter of the compensatory damages for the loss of earning capacity of the
deceased, We also held in the case of Daniel Bulante v. Chu Liante, G.R. Nos. L- 21583 and L21591-92, May 20, 1968 that:
The next item objected to refers to the damages awarded to the heirs of the deceased
passengers for loss of earning capacity, separately from the indemnities by reason of
death. The ground for the objection is that loss of earning capacity was not specifically
pleaded or claimed in the complaint. This item, however, may be considered included in
the prayer for "actual damages" and for other "just and equitable reliefs", especially if
taken in the light of Art. 2206, in connection with Art. 1764, of the Civil Code, which allows,
in addition to an indemnity of at least P3,000 by reason of death, recovery for loss of
earning capacity on the part of the deceased, the same to be paid to his heirs "in every

case ... unless the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death."
To be sure, these cases of Mercado v. Lira, Maranan v. Perez and Bulante v. Chu Liante from
which We have quoted, were actions based on contracts of common carriers. But the abovementioned doctrines are equally applicable to civil liability ex delicto because, after all, Art. 2206
of the Civil Code which was applied in said cases is precisely the provision pertinent to liability
arising from crimes (and quasi-delicts). No doubt, said Article must have been relied upon by the
court in the above cases only because Art. 1764 of the Civil Code provides that said "Art. 2206
shall also apply to the death of a passenger caused by the breach of contract of a common
carrier." Accordingly, the interpretation given to said article in those cases are applicable to the
case at bar. In other words, this must be so because under the Civil Code, the same rules on
damages are generally to be observed, whether death results from a crime or a quasi-delict or a
breach of the contract of common carriage.
As to the amount of the indemnity for moral damages and loss of earning capacity of the
deceased in the present case, the original decision of the Court of Appeals awarding them, does
not afford sufficient basis for Us to increase the amounts fixed by said court, as prayed for by
appellants. As has already been stated, the said decision failed to follow the Constitution, not
only in not stating the law on which it is based but also in not making the necessary findings of
fact on which it based its discretion in fixing the respective amounts it awarded for moral and
compensatory damages. Legally, therefore, We can, if We wish to, return this case to that court
for it to supply these constitutional omissions. We opt however, to save time and further
difficulties for and damages to, the petitioners. Extant in the records before Us is the fact that
the respondent has never disputed that petitioners are the widow and seven children of the
deceased, three of whom were still minors at the time of his death, nor that the said deceased
was a public school teacher, 56 years old, and earning P2,276.00 a year. These facts appear to
have been repeatedly asserted in the briefs of petitioners in the Court of Appeals and in this
Court. No denial was ever made by the respondent. When respondent moved for the
reconsideration of the original decision of the Court of Appeals, (Annex E of Petition for Certiorari)
he only argued that in view of the mitigating circumstances credited to him by said court,
petitioners were not entitled to moral damages and to indemnity for loss of earning capacity of
the deceased; the amounts fixed therefor by said court he never questioned. When petitioners
filed their motion for reconsideration of the amended decision of the Court of Appeals, these
facts (relationship, earnings, etc.) were reiterated. (Annex G, id.) Respondent did not file any
answer to said motion despite the resolution requiring him to do so. (Par. 12, Petition for
Certiorari) Neither has respondent filed any brief in the present instance, notwithstanding
repeated requests on his part for extension to file the same, which, incidentally, were all granted.
Under these circumstances, We feel justified in brushing aside strict technicalities of procedure in
order to accomplish substantial justice more expeditiously. Anyway, as We said at the outset,
petitioners are asking Us, in the prayer of their petition for certiorari, for nothing more than to
affirm "in toto" the original decision of the Court of Appeals, and in their lone assignment of error
in the present instance, their only claim is that "the Court of Appeals erred when it issued the
amended decision eliminating the award of P6,000 moral damages and the award of P13,380.00
loss of earnings of the deceased Raymundo Castro." In these circumstances, even if We should
award the amounts of damages just mentioned, inspite of the absence of the pertinent findings
of fact by the Court of Appeals, We would not have to reach beyond amounts that are undisputed
by the respondent.
We, therefore, overrule the prayer for additional damages in petitioners' brief and We hold that,
on the basis of the facts not questioned by respondent, they are entitled only to the P6,000.00 as
moral damages and the P13,380.00 as compensatory damages for the loss of earning capacity of

the deceased awarded in the original decision of the Court of Appeals in addition, of course, to
the indemnity for death fixed also by said court at P6,000.00. This amount of P6,000.00 We
cannot increase to P12,000.00, as allowed in People v. Pantoja, supra, and the subsequent cases,
(People v. Mongaya G. R. No. L-23708, October 31, 1968, and People v. Ramos, G. R. No. L-19143,
November 29, 1968) because in the instant suit, neither party has appealed in relation thereto.
This case is now before Us on appeal by the offended party only as to specific portions of the civil
indemnity to be paid by the respondent. It would have been different if the whole criminal case
were up for our review because then, even without any appeal on the part of the offended party,
We could have still increased the said liability of the accused, here-in respondent. (See Mercado
v. Lira, supra.)
At this juncture, for the guidance of parties similarly situated as petitioners herein, and so that
there may be no useless expenses in appeals by offended parties in regard to the civil aspect of
a criminal case when no separate civil action has been filed by them, it should be made clear
that when there is no such separate civil action and the claim for civil indemnity is joined with
the criminal case, no record on appeal, whether printed, typewritten or mimeographed, is
necessary, except perhaps when formal pleading raising complicated questions are filed in
connection therewith, and still, this would be purely optional on the appellant because anyway
the whole original record of the case is elevated in appeals in criminal cases. It is already settled
that appeals relating to the civil aspects of a criminal case should follow the procedure for appeal
required by rules of criminal procedure. (People vs. Lorredo, 50 Phil. 209, 220-221; People v.
ViIlanueva, G.R. No. L-18769, May 27, 1966)lawphi1.nt
WHEREFORE, the amended decision of the Court of Appeals is modified as hereinabove
indicated, in so far as the civil liability of respondent is concerned, with costs against him in this
instance.
Dizon, Makalintal, Zaldivar, Fernando and Teehankee, JJ., concur.
Concepcion, C.J., Reyes, J.B.L. and Sanchez, JJ., concur in the result.
Castro, J., reserves his vote.
Separate Opinions
CAPISTRANO, J., concurring:
I concur, and take this opportunity to express my views on certain points not covered by the
majority opinion.
1. In the criminal action for death by crime, as murder, homicide, and homicide through
reckless imprudence it is the duty of the Fiscal, unless the heirs reserve their right to file a
separate civil action, to demand payment, for the benefit of the heirs of the deceased, of
the damages ordained in Article 2206 and 2230 of the Civil Code. This duty is apparent
from the following considerations: (a) A crime is an offense against both the State and the
offended party. This is so because before the State intervened in its punishment, a crime
was an offense purely against the injured party calling for private vengeance. It was only
after "the period of private vengeance" in the history of criminal law that the State
decided to intervene in the punishment of crime for reasons of social defense. (b) The civil
liability in crime is generally determined in the criminal action pursuant to the basic
principle that "every person criminally liable is civilly liable." Since the Fiscal has full
control of the criminal action, he is the only one who may demand payment therein of the
civil indemnity for the benefit of the heirs of the deceased. (c) In case the Fiscal does not
demand payment of the civil indemnity in the criminal action and the judgment does not
order its payment, said judgment will constitute a bar to a future civil action to recover the
civil indemnity. (d) Most of the injured parties in crime are poor or ignorant. For this

reason, the intervention of a private prosecutor, hired by the heirs of the deceased, in the
criminal action, is rare. (e) The trial court usually awards only the amount of P12,000 as
damages for the death unless the other items of damages specified in Articles 2206 and
2230 of the Civil Code are demanded by the Fiscal. The failure of the Fiscals throughout
the country to make such demand in the criminal actions has resulted in the law (Art.
2206, except par. 1, and Art. 2230) having fallen into disuse for a period of more than 18
years (from 1950 when the New Civil Code took effect, until now), contrary to the great
expectations of the Code Commission and the Legislature. Said failure has also resulted in
great injustice to the countless heirs of the victims of murder, homicide and homicide
through reckless imprudence during said period of 18 years.
2. Accordingly, unless the heirs reserve their right to file a separate civil action, the Fiscal
should also allege in the information all the items of damages recoverable for the benefit
of the heirs of the deceased as follows: (a) P12,000 for the death of the victim; (b) the
amount constituting loss of the earning capacity of the deceased; (e) the amount of
monthly support to be given by the accused for the period not exceeding five years in
case the deceased was obligated to give support under Article 291 of the Civil Code to a
recipient who is not an intestate heir of the deceased; (d) that moral damages are
demanded by and on behalf of the surviving spouse, legitimate and illegitimate
descendants, and ascendants of the deceased for mental anguish by reason of the death
of the deceased, the amount of award to each of them individually to be determined in the
discretion of the court on proof of mental anguish and the depth or intensity of the same;
and (e) exemplary damages in the amount to be determined by the court to be paid to the
heirs of the deceased in case of the presence of one or more aggravating circumstance in
the commission of the crime.
3. Where a private prosecutor, hired by the heirs of the deceased, intervenes in the
criminal action, as in the case at bar, the heirs may also demand and recover reasonable
attorney's fees and expenses of litigation. This is just. From the provision of Article 2208(9)
of the Civil Code which allows recovery of attorney's fees and expenses of litigation in case
of a separate civil action to recover civil liability arising from a crime, it does not follow
that the converse is true. Whether the heirs recover the civil liability through a private
prosecutor in criminal action or through counsel in a separate civil action, they are entitled
to attorney's fees and expenses of litigation. What is important is not in what action the
civil liability is recovered, but the fact that in either action the heirs have paid attorney's
fees and expenses of litigation.
4. Those heirs entitled to the civil indemnity are the intestate heirs of the deceased in the
order of intestate succession. The Fiscal should therefore give in the information the
names and personal circumstances of the heirs entitled to the civil indemnity in
accordance with the law of intestate succession so that the trial court may make the
award in their names. This will avoid further or subsequent litigation on who, among
several claimants, are really the heirs entitled to the civil indemnity. The practice of the
trial courts in awarding the civil indemnity to "the heirs of the deceased," does not satisfy
the law and should be abandoned.
Does the term "heirs" include testamentary heirs? An affirmative answer is proper.
According to Manresa "Donde la ley no distingue, no debemos distinguir." The heirs,
whether testate or intestate, are a continuation of the juridical personality of the
decedent. The law has a tender regard for the will of the testator expressed in his last will
and testament on the ground that any disposition made by the testator is better than that
which the law can make. For this reason, intestate succession is nothing more than a
disposition based upon the presumed will of the decedent.

5. The award of moral damages to the surviving spouse, legitimate and illegitimate
descendants, and ascendants of the deceased, should be made to each of them
individually and in varying amounts depending upon proof of mental anguish and the
depth or intensity of the same. Where it is shown that one or some did not suffer mental
anguish or could not have suffered the same, no award of moral damages should be made
to him or to them. For example: The evidence shows that the surviving widow, who had a
paramour, when informed of the death of her husband, said: "Mabuti nga. Ngayon maaari
na akong pakasal kay Pepe." Another example: The evidence shows that the legitimate
children (or grandchildren) were aged one, two and four at the time their father was killed.
In the very nature of things these children (or descendants) could not have suffered
mental anguish. In these examples there should be no award of moral damages to the
widow and the infant children.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-25414 July 30, 1971
LEOPOLDO ARANETA, petitioner,
vs.
BANK of AMERICA, respondent.
Gatchalian and Sison for petitioner.
Lichauco, Picazo and Agcaoili for respondent.
MAKALINTAL, J.:
Petition for review by certiorari of the decision of Court of Appeals in CA-G.R. No. L-34508-R
modifying that of the Court of First Instance of Manila in the Case No. 52442.
Leopoldo Araneta, the petitioner herein, was a local merchant engaged in the import and export
business. On June 30, 1961 he issued a check for $500 payable to cash and drawn against the
San Francisco main office of the Bank of America, where he had been maintaining a dollar
current account since 1948. At that time he had a credit balance of $523.81 in his account,
confirmed by the bank's assistant cashier in a letter to Araneta dated September 7, 1961.
However, when the check was received by the bank on September 8, 1961, a day after the date
of the letter, it was dishonored and stamped with the notation "Account Closed."
Upon inquiry by Araneta as to why his check had been dishonored, the Bank of America
acknowledged that it was an error, explaining that for some reason the check had been encoded
with wrong account number, and promising that "we shall make every effort to see that this does
not reoccur." The bank sent a letter of apology to the payee of the check, a Mr. Harry Gregory of
Hongkong, stating that "the check was returned through an error on our part and should not
reflect adversely upon Mr. Araneta." In all probability the matter would have been considered
closed, but another incident of a similar nature occurred later.
On May 25, and 31, 1962 Araneta issued Check No. 110 for $500 and Check No. 111 for $150,
respectively, both payable to cash and drawn against the Bank of America. These two checks
were received by the bank on June 3, 1962. The first check appeared to have come into the
hands of Rufina Saldana, who deposited it to her account the First National City Bank of New
York, which in turn cleared it through the Federal Reserve Bank. The second check appeared to
have been cleared through the Wells Fargo Bank. Despite the sufficiency of Araneta's deposit

balance to cover both checks, they were again stamped with the notation "Account Closed" and
returned to the respective clearing banks.
In the particular case of Check No. 110, it was actually paid by the Bank of America to the First
National City Bank. Subsequently, however, the Bank of America, claiming that the payment had
been inadvertently made, returned the check to the First National City Bank with the request that
the amount thereof be credited back to the Bank of America. In turn, the First National City Bank
wrote to the depositor of the check, Rufina Saldana, informing her about its return with the
notation "Account Closed" and asking her consent to the deduction of its amount from her
deposit. However, before Mrs. Saldana's reply could be received, the Bank of America recalled
the check from the First National City Bank and honored it.
In view of the foregoing incidents, Araneta, through counsel, sent a letter to the Bank of America
demanding damages in the sum of $20,000. While admitting responsibility for the inconvenience
caused to Araneta, the bank claimed that the amount demanded was excessive, and offered to
pay the sum of P2,000.00. The offer was rejected.
On December 11, 1962 Araneta filed the complaint in this case against the Bank of America for
the recovery of the following:
1. Actual or compensatory damages P30,000.00
2. Moral damages 20,000.00
3. Temperate damages 50,000.00
4. Exemplary damages 10,000.00
5. Attorney's fees 10,000.00
TOTAL P120,000.00
The judgment of the trial court awarded all the item prayed for, but on appeal by the defendant
the Court of Appeals eliminated the award of compensatory and temperate damages and
reduced the moral damages to P8,000.00, the exemplary damages to P1,000.00 and the
attorney's fees to P1,000.00.
Not satisfied with the decision of the appellate court the plaintiff filed the instant petition for
review, alleging two reasons why it should be allowed, as follows:
(1) The Court of Appeals erred in holding that temperate damages cannot be
awarded without proof of actual pecuniary loss. There is absolutely no legal basis for
this ruling; worse yet, it runs counter to the very provisions of ART. 2216 of the New
Civil Code and to the established jurisprudence on the matter;
(2) The Court of Appeals erred in not holding that moral damages may be recovered
as an item separate and distinct from the damages recoverable for injury to
business standing and commercial credit. This involves the application of paragraph
(2) of Art. 2205 of the New Civil Code which up to now has not yet received an
authoritative interpretation from the Supreme Court. ... .
In his brief, however, the petitioner assigned five (5) errors committed by the appellate court,
namely: (1) in concluding that the petitioner, on the basis of the evidence, had not sufficiently
proven his claim for actual damages, where such evidence, both testimonial and documentary,
stands uncontradicted on the record; (2) in holding that temperate damages cannot be awarded
to the petitioner without proof of actual pecuniary loss; (3) in not granting moral damages for
mental anguish, besmirched reputation, wounded feelings, social humiliation, etc., separate and
distinct from the damages recoverable for injury to business reputation; (4) in reducing, without
any ostensible reason, the award of exemplary damages granted by the lower court; and (5) in
reducing, without special reason, the award of attorney's fees by the lower court.
We consider the second and third errors, as they present the issues raised in the petition for
review and on the basis of which it was given due course.
In disallowing the award of temperate damages, the Court of Appeals ruled:

In view of all the foregoing considerations we hold that the plaintiff has not proven
his claim that the two checks for $500 each were in partial payment of two orders
for jewels worth P50,000 each. He has likewise not proven the actual damage which
he claims he has suffered. And in view of the fact that he has not proven the
existence of the supposed contract for himself to buy jewels at a profit there is not
even an occasion for an award of temperate damages on this score.
This ruling is now assailed as erroneous and without legal basis. The petitioner maintains that in
an action by a depositor against a bank for damages resulting from the wrongful dishonor of the
depositor's checks, temperate damages for injury to business standing or commercial credit may
be recovered even in the absence of definite proof of direct pecuniary loss to the plaintiff, a
finding as it was found by the Court of Appeals that the wrongful acts of the respondent had
adversely affected his credit being sufficient for the purpose. The following provisions of the Civil
Code are invoked:
ART. 2205. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases of temporary or permanent
personal injury;
(2) For injury to the plaintiff's business standing or commercial credit.
ART. 2216. No proof of pecuniary loss is necessary in order that moral, nominal,
temperate, liquidated or exemplary damages may be adjudicated. The assessment
of such damages, except liquidated ones, is left to the discretion of the court,
according to the circumstances of each case.
Also invoked by the petitioner is the case of Atlanta National Bank vs. Davis, 96 Ga 334, 23 SE
190; 1 and the following citations in American Jurisprudence:
In some states what are called "temperate damages" are allowed in certain classes
of cases, without proof of actual or special damages, where the wrong done must in
fact have caused actual damage to the plaintiff, though from the nature of the case,
he cannot furnish independent, distinct proof thereof. Temperate damages are more
than nominal damages, and, rather, are such as would be a reasonable
compensation for the injury sustained. ... . (15 Am. Jur. 400)
... . It has been generally, although not universally, held, in an action based upon
the wrongful act of a bank dishonoring checks of a merchant or trader having
sufficient funds on deposit with the bank, that substantial damages will be
presumed to follow such act as a necessary and natural consequence, and
accordingly, that special damages need not be shown. One of the reasons given for
this rule is that the dishonor of a merchant's or trader's check is tantamount or
analogous, to a slander of his trade or business, imputing to him insolvency or bad
faith. ... . (10 Am. Jur. 2d. 545)
On the other hand the respondent argues that since the petitioner invokes Article 2205 of the
Civil Code, which speaks of actual or compensatory damages for injury to business standing or
commercial credit, he may not claim them as temperate damages and thereby dispense with
proof of pecuniary loss under Article 2216. The respondent cites Article 2224, which provides
that "temperate or moderate damages, which are more than nominal but less than
compensatory damages may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, proved with certainty," and
contends that the petitioner failed to show any such loss in this case.
The question, therefore, is whether or not on the basis of the findings of the Court of Appeals,
there is reason to conclude that the petitioner did sustain some pecuniary loss although no
sufficient proof of the amount thereof has been adduced. In rejecting the claim for temperate
damages the said Court referred specifically to the petitioner's failure to prove "the existence of

a supposed contract for him to buy jewels at a profit," in connection with which he issued the two
checks which were dishonored by the respondent. This may be true as far as it goes, that is, with
particular reference to the alleged loss in that particular transaction. But it does not detract from
the finding of the same Court that actual damages had been suffered, thus:
... Obviously, the check passed the hands of other banks since it was cleared in the
United States. The adverse reflection against the credit of Araneta with said banks
was not cured nor explained by the letter of apology to Mr. Gregory.
xxx xxx xxx
... This incident obviously affected the credit of Araneta with Miss Saldana.
xxx xxx xxx
However, in so far as the credit of Araneta with the First National City Bank, with
Miss Rufina Saldana and with any other persons who may have come to know about
the refusal of the defendant to honor said checks, the harm was done ...
The financial credit of a businessman is a prized and valuable asset, it being a significant part of
the foundation of his business. Any adverse reflection thereon constitutes some material loss to
him. As stated in the case Atlanta National Bank vs. Davis, supra, citing 2 Morse Banks, Sec. 458,
"it can hardly be possible that a customer's check can be wrongfully refused payment without
some impeachment of his credit, which must in fact be an actual injury, though he cannot, from
the nature of the case, furnish independent, distinct proof thereof."
The Code Commission, in explaining the concept of temperate damages under Article 2224,
makes the following comment:
In some States of the American Union, temperate damages are allowed. There are
cases where from the nature of the case, definite proof of pecuniary loss cannot be
offered, although the court is convinced that there has been such loss. For instance,
injury to one's commercial credit or to the goodwill of a business firm is often hard
to show with certainty in terms of money. Should damages be denied for that
reason? The judge should be empowered to calculate moderate damages in such
cases, rather than that the plaintiff should suffer, without redress from the
defendant's wrongful act.
The petitioner, as found by the Court of Appeals, is a merchant of long standing and good
reputation in the Philippines. Some of his record is cited in the decision appealed from. We are of
the opinion that his claim for temperate damages is legally justified. Considering all the
circumstances, including the rather small size of the petitioner's account with the respondent,
the amounts of the checks which were wrongfully dishonored, and the fact that the respondent
tried to rectify the error soon after it was discovered, although the rectification came after the
damage had been caused, we believe that an award of P5,000 by way of temperate damages is
sufficient.
Under the third error assigned by the petitioner in his brief, which is the second of the two
reasons relieve upon in his petition for review, he contends that moral damages should have
been granted for the injury to his business standing or commercial credit, separately from his
wounded feelings and mental anguish. It is true that under Article 2217 of the Civil Code.
"besmirched reputation" is a ground upon which moral damages may be claimed, but the Court
of Appeals did take this element into consideration in adjudging the sum of P8,000 in his favor.
We quote from the decision:
... the damages to his reputation as an established and well known international
trader entitled himself to recover moral damages.
xxx xxx xxx
... It was likewise established that when plaintiff learned that his checks were not
honored by the drawee Bank, his wounded feelings and the mental anguish suffered

by him caused his blood pressure to rise beyond normal limits, thereby
necessitating medical attendance for an extended period.
The trial court awarded attorney's fees in the amount of P10,000. This was reduced by the Court
of Appeals to only P1,000. Considering the nature and extent of the services rendered by the
petitioner's counsel both in the trial and appellate courts, the amount should be increased to
P4,000. This may be done motu propio by this Court under Article 2208 of the Civil Code, which
provides that attorney's fees may be recovered in the instances therein enumerated and "in any
other case where the Court deems, it first and equitable that attorney's fees ... should be
recovered," provided the amount thereof be reasonable in all cases.
We do not entertain the first and fourth errors assigned by the petitioner. Neither of them was
raised and ruled upon as reasons for the allowance of his petition for review, as required by
Section 2 of Rule 45. Besides, the first error involves a question of fact and calls for a review of
the evidence and a reappraisal of its probative value a task not within the appellate
jurisdiction of this case. And with respect to the fourth error, while there was gross negligence on
the part of the respondent, the record shows, as hereinbefore observed, that it tried to rectify its
error soon after the same was discovered, although not in time to prevent the damage to the
petitioner.
WHEREFORE, the judgment of the Court of Appeals is modified by awarding temperate damages
to the petitioner in the sum of P5,000 and increasing the attorney's fees to P4,000; and is
affirmed in all other respects. Costs against the respondent.
Concepcion, C.J., Reyes, J.B.L., Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.
Dizon, J., is on leave.
Footnotes
1 In this case the plaintiff, whose check was wrongfully dishonored by the bank, was
not required to prove special damages in order to recover substantial damages
since, the court observed, such damages would naturally follow the dishonor of a
check by a bank, although they were probably not susceptible of independent
distinct proof. The plaintiff was awarded $200 as temperate damages.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 166869
February 16, 2010
PHILIPPINE HAWK CORPORATION, Petitioner,
vs.
VIVIAN TAN LEE, Respondent.
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari 1 of the Decision of the Court of Appeals in CA-G.R. CV
No. 70860, promulgated on August 17, 2004, affirming with modification the Decision of the
Regional Trial Court (RTC) of Quezon City, Branch 102, dated March 16, 2001, in Civil Case No. Q91-9191, ordering petitioner Philippine Hawk Corporation and Margarito Avila to jointly and
severally pay respondent Vivian Tan Lee damages as a result of a vehicular accident.
The facts are as follows:

On March 15, 2005, respondent Vivian Tan Lee filed before the RTC of Quezon City a Complaint 2
against petitioner Philippine Hawk Corporation and defendant Margarito Avila for damages based
on quasi-delict, arising from a vehicular accident that occurred on March 17, 1991 in Barangay
Buensoceso, Gumaca, Quezon. The accident resulted in the death of respondents husband,
Silvino Tan, and caused respondent physical injuries.
On June 18, 1992, respondent filed an Amended Complaint, 3 in her own behalf and in behalf of
her children, in the civil case for damages against petitioner. Respondent sought the payment of
indemnity for the death of Silvino Tan, moral and exemplary damages, funeral and interment
expenses, medical and hospitalization expenses, the cost of the motorcycles repair, attorneys
fees, and other just and equitable reliefs.
The accident involved a motorcycle, a passenger jeep, and a bus with Body No. 119. The bus was
owned by petitioner Philippine Hawk Corporation, and was then being driven by Margarito Avila.
In its Answer,4 petitioner denied liability for the vehicular accident, alleging that the immediate
and proximate cause of the accident was the recklessness or lack of caution of Silvino Tan.
Petitioner asserted that it exercised the diligence of a good father of the family in the selection
and supervision of its employees, including Margarito Avila.
On March 25, 1993, the trial court issued a Pre-trial Order 5 stating that the parties manifested
that there was no possibility of amicable settlement between them. However, they agreed to
stipulate on the following facts:
1. On March 17, 1991, in Bgy. Buensoceso, Gumaca, Quezon, plaintiff Vivian Lee Tan and
her husband Silvino Tan, while on board a motorcycle with [P]late No. DA-5480 driven by
the latter, and a Metro Bus with [P]late No. NXR-262 driven by Margarito Avila, were
involved in an accident;
2. As a result of the accident, Silvino Tan died on the spot while plaintiff Vivian Lee Tan
suffered physical injuries which necessitated medical attention and hospitalization;
3. The deceased Silvino Tan is survived by his wife, plaintiff Vivian Lee Tan and four
children, three of whom are now residents of the United States; and
4. Defendant Margarito Avila is an employee of defendant Philippine Hawk. 6
The parties also agreed on the following issues:
1. Whether or not the proximate cause of the accident causing physical injuries upon the
plaintiff Vivian Lee Tan and resulting in the death of the latters husband was the
recklessness and negligence of Margarito Avila or the deceased Silvino Tan; and
2. Whether or not defendant Philippine Hawk Transport Corporation exercised the diligence
of a good father of the family in the selection and supervision of its driver Margarito Avila. 7
Respondent testified that on March 17, 1991, she was riding on their motorcycle in tandem with
her husband, who was on the wheel, at a place after a Caltex gasoline station in Barangay
Buensoceso, Gumaca, Quezon on the way to Lopez, Quezon. They came from the Pasumbal
Machine Shop, where they inquired about the repair of their tanker. They were on a stop position
at the side of the highway; and when they were about to make a turn, she saw a bus running at
fast speed coming toward them, and then the bus hit a jeep parked on the roadside, and their
motorcycle as well. She lost consciousness and was brought to the hospital in Gumaca, Quezon,
where she was confined for a week. She was later transferred to St. Lukes Hospital in Quezon
City, Manila. She suffered a fracture on her left chest, her left arm became swollen, she felt pain
in her bones, and had high blood pressure. 8
Respondents husband died due to the vehicular accident. The immediate cause of his death was
massive cerebral hemorrhage.9
Respondent further testified that her husband was leasing 10 and operating a Caltex gasoline
station in Gumaca, Quezon that yielded one million pesos a year in revenue. They also had a
copra business, which gave them an income of P3,000.00 a month or P36,000.00 a year.11

Ernest Ovial, the driver of the passenger jeep involved in the accident, testified that in the
afternoon of March 17, 1991, his jeep was parked on the left side of the highway near the
Pasumbal Machine Shop. He did not notice the motorcycle before the accident. But he saw the
bus dragging the motorcycle along the highway, and then the bus bumped his jeep and sped
away.12
For the defense, Margarito Avila, the driver of petitioners bus, testified that on March 17, 1999,
at about 4:30 p.m., he was driving his bus at 60 kilometers per hour on the Maharlika Highway.
When they were at Barangay Buensoceso, Gumaca, Quezon, a motorcycle ran from his left side
of the highway, and as the bus came near, the motorcycle crossed the path of the bus, and so he
turned the bus to the right. He heard a loud banging sound. From his side mirror, he saw that the
motorcycle turned turtle ("bumaliktad"). He did not stop to help out of fear for his life, but drove
on and surrendered to the police. He denied that he bumped the motorcycle. 13
Avila further testified that he had previously been involved in sideswiping incidents, but he forgot
how many times.14
Rodolfo Ilagan, the bus conductor, testified that the motorcycle bumped the left side of the bus
that was running at 40 kilometers per hour. 15
Domingo S. Sisperes, operations officer of petitioner, testified that, like their other drivers, Avila
was subjected to and passed the following requirements:
(1) Submission of NBI clearance;
(2) Certification from his previous employer that he had no bad record;
(3) Physical examination to determine his fitness to drive;
(4) Test of his driving ability, particularly his defensive skill; and
(5) Review of his driving skill every six months. 16
Efren Delantar, a Barangay Kagawad in Buensoceso, Gumaca, Quezon, testified that the bus was
running on the highway on a straight path when a motorcycle, with a woman behind its driver,
suddenly emerged from the left side of the road from a machine shop. The motorcycle crossed
the highway in a zigzag manner and bumped the side of the bus. 17
In its Decision dated March 16, 2001, the trial court rendered judgment against petitioner and
defendant Margarito Avila, the dispositive portion of which reads:
ACCORDINGLY, MARGARITO AVILA is adjudged guilty of simple negligence, and judgment is
hereby rendered in favor of the plaintiff Vivian Lee Tan and h[er] husbands heirs ordering the
defendants Philippine Hawk Corporation and Margarito Avila to pay them jointly and solidarily the
sum of P745,575.00 representing loss of earnings and actual damages plus P50,000.00 as moral
damages.18
The trial court found that before the collision, the motorcycle was on the left side of the road, just
as the passenger jeep was. Prior to the accident, the motorcycle was in a running position
moving toward the right side of the highway. The trial court agreed with the bus driver that the
motorcycle was moving ahead of the bus from the left side of the road toward the right side of
the road, but disagreed that the motorcycle crossed the path of the bus while the bus was
running on the right side of the road. 19
The trial court held that if the bus were on the right side of the highway, and Margarito Avila
turned his bus to the right in an attempt to avoid hitting the motorcyle, then the bus would not
have hit the passenger jeep, which was then parked on the left side of the road. The fact that the
bus also hit the passenger jeep showed that the bus must have been running from the right lane
to the left lane of the highway, which caused the collision with the motorcycle and the passenger
jeep parked on the left side of the road. The trial court stated that since Avila saw the motorcycle
before the collision, he should have stepped on the brakes and slowed down, but he just
maintained his speed and veered to the left. 20 The trial court found Margarito Avila guilty of
simple negligence.

The trial court held petitioner bus company liable for failing to exercise the diligence of a good
father of the family in the selection and supervision of Avila, having failed to sufficiently inculcate
in him discipline and correct behavior on the road. 21
On appeal, the Court of Appeals affirmed the decision of the trial court with modification in the
award of damages. The dispositive portion of the decision reads:
WHEREFORE, foregoing premises considered, the appeal is DENIED. The assailed decision dated
March 16, 2001 is hereby AFFIRMED with MODIFICATION. Appellants Philippine Hawk and Avila
are hereby ordered to pay jointly and severally appellee the following amount: (a) P168,019.55
as actual damages; (b) P10,000.00 as temperate damages; (c) P100,000.00 as moral damages;
(d) P590,000.00 as unearned income; and (e) P50,000.00 as civil indemnity.22
Petitioner filed this petition, raising the following issues:
1) The Court of Appeals committed grave abuse of discretion amounting to lack of
jurisdiction in passing upon an issue, which had not been raised on appeal, and which had,
therefore, attained finality, in total disregard of the doctrine laid down by this Court in
Abubakar v. Abubakar, G.R. No. 134622, October 22, 1999.
2) The Court of Appeals committed reversible error in its finding that the petitioners bus
driver saw the motorcycle of private respondent executing a U-turn on the highway "about
fifteen (15) meters away" and thereafter held that the Doctrine of Last Clear was
applicable to the instant case. This was a palpable error for the simple reason that the
aforesaid distance was the distance of the witness to the bus and not the distance of the
bus to the respondents motorcycle, as clearly borne out by the records.
3) The Court of Appeals committed reversible error in awarding damages in total disregard
of the established doctrine laid down in Danao v. Court of Appeals, 154 SCRA 447 and
Viron Transportation Co., Inc. v. Delos Santos, G.R. No. 138296, November 22, 2000. 23
In short, the issues raised by petitioner are: (1) whether or not negligence may be attributed to
petitioners driver, and whether negligence on his part was the proximate cause of the accident,
resulting in the death of Silvino Tan and causing physical injuries to respondent; (2) whether or
not petitioner is liable to respondent for damages; and (3) whether or not the damages awarded
by respondent Court of Appeals are proper.
Petitioner seeks a review of the factual findings of the trial court, which were sustained by the
Court of Appeals, that petitioners driver was negligent in driving the bus, which caused physical
injuries to respondent and the death of respondents husband.
The rule is settled that the findings of the trial court, especially when affirmed by the Court of
Appeals, are conclusive on this Court when supported by the evidence on record. 24 The Court has
carefully reviewed the records of this case, and found no cogent reason to disturb the findings of
the trial court, thus:
The Court agree[s] with the bus driver Margarito that the motorcycle was moving ahead of the
bus towards the right side from the left side of the road, but disagrees with him that it crossed
the path of the bus while the bus was running on the right side of the highway.
If the bus were on the right side of the highway and Margarito turned his bus to the right in an
attempt to avoid hitting it, then the bus would not have hit the passenger jeep vehicle which was
then parked on the left side of the road. The fact that the bus hit the jeep too, shows that the bus
must have been running to the left lane of the highway from right to the left, that the collision
between it and the parked jeep and the moving rightways cycle became inevitable. Besides,
Margarito said he saw the motorcycle before the collision ahead of the bus; that being so, an
extra-cautious public utility driver should have stepped on his brakes and slowed down. Here, the
bus never slowed down, it simply maintained its highway speed and veered to the left. This is
negligence indeed.25

Petitioner contends that the Court of Appeals was mistaken in stating that the bus driver saw
respondents motorcycle "about 15 meters away" before the collision, because the said distance,
as testified to by its witness Efren Delantar Ong, was Ongs distance from the bus, and not the
distance of the bus from the motorcycle. Petitioner asserts that this mistaken assumption of the
Court of Appeals made it conclude that the bus driver, Margarito Avila, had the last clear chance
to avoid the accident, which was the basis for the conclusion that Avila was guilty of simple
negligence.
A review of the records showed that it was petitioners witness, Efren Delantar Ong, who was
about 15 meters away from the bus when he saw the vehicular accident. 26 Nevertheless, this fact
does not affect the finding of the trial court that petitioners bus driver, Margarito Avila, was
guilty of simple negligence as affirmed by the appellate court. Foreseeability is the fundamental
test of negligence.27 To be negligent, a defendant must have acted or failed to act in such a way
that an ordinary reasonable man would have realized that certain interests of certain persons
were unreasonably subjected to a general but definite class of risks. 28
In this case, the bus driver, who was driving on the right side of the road, already saw the
motorcycle on the left side of the road before the collision. However, he did not take the
necessary precaution to slow down, but drove on and bumped the motorcycle, and also the
passenger jeep parked on the left side of the road, showing that the bus was negligent in veering
to the left lane, causing it to hit the motorcycle and the passenger jeep.
Whenever an employees negligence causes damage or injury to another, there instantly arises a
presumption that the employer failed to exercise the due diligence of a good father of the family
in the selection or supervision of its employees. 29 To avoid liability for a quasi-delict committed by
his employee, an employer must overcome the presumption by presenting convincing proof that
he exercised the care and diligence of a good father of a family in the selection and supervision
of his employee.30
The Court upholds the finding of the trial court and the Court of Appeals that petitioner is liable
to respondent, since it failed to exercise the diligence of a good father of the family in the
selection and supervision of its bus driver, Margarito Avila, for having failed to sufficiently
inculcate in him discipline and correct behavior on the road. Indeed, petitioners tests were
concentrated on the ability to drive and physical fitness to do so. It also did not know that Avila
had been previously involved in sideswiping incidents.
As regards the issue on the damages awarded, petitioner contends that it was the only one that
appealed the decision of the trial court with respect to the award of actual and moral damages;
hence, the Court of Appeals erred in awarding other kinds of damages in favor of respondent,
who did not appeal from the trial courts decision.
Petitioners contention is unmeritorious.
Section 8, Rule 51 of the 1997 Rules of Civil Procedure provides:
SEC. 8. Questions that may be decided. -- No error which does not affect the jurisdiction over the
subject matter or the validity of the judgment appealed from or the proceedings therein will be
considered unless stated in the assignment of errors, or closely related to or dependent on an
assigned error and properly argued in the brief, save as the court pass upon plain errors and
clerical errors.
Philippine National Bank v. Rabat 31 cited the book32 of Justice Florenz D. Regalado to explain the
section above, thus:
In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now includes some
substantial changes in the rules on assignment of errors. The basic procedural rule is that
only errors claimed and assigned by a party will be considered by the court, except errors

affecting its jurisdiction over the subject matter. To this exception has now been added
errors affecting the validity of the judgment appealed from or the proceedings therein.
Also, even if the error complained of by a party is not expressly stated in his assignment of
errors but the same is closely related to or dependent on an assigned error and properly
argued in his brief, such error may now be considered by the court. These changes are of
jurisprudential origin.
2. The procedure in the Supreme Court being generally the same as that in the Court of
Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it has been held that the
latter is clothed with ample authority to review matters, even if they are not assigned as
errors on appeal, if it finds that their consideration is necessary in arriving at a just
decision of the case. Also, an unassigned error closely related to an error properly
assigned (PCIB vs. CA, et al., L-34931, Mar. 18, 1988), or upon which the determination of
the question raised by error properly assigned is dependent, will be considered by the
appellate court notwithstanding the failure to assign it as error (Ortigas, Jr. vs. Lufthansa
German Airlines, L-28773, June 30, 1975; Soco vs. Militante, et al., G.R. No. 58961, June
28, 1983).
It may also be observed that under Sec. 8 of this Rule, the appellate court is authorized to
consider a plain error, although it was not specifically assigned by the appellant (Dilag vs.
Heirs of Resurreccion, 76 Phil. 649), otherwise it would be sacrificing substance for
technicalities.33
In this case for damages based on quasi-delict, the trial court awarded respondent the sum of
P745,575.00, representing loss of earning capacity (P590,000.00) and actual damages
(P155,575.00 for funeral expenses), plus P50,000.00 as moral damages. On appeal to the Court
of Appeals, petitioner assigned as error the award of damages by the trial court on the ground
that it was based merely on suppositions and surmises, not the admissions made by respondent
during the trial.
In its Decision, the Court of Appeals sustained the award by the trial court for loss of earning
capacity of the deceased Silvino Tan, moral damages for his death, and actual damages,
although the amount of the latter award was modified.
The indemnity for loss of earning capacity of the deceased is provided for by Article 2206 of the
Civil Code.34 Compensation of this nature is awarded not for loss of earnings, but for loss of
capacity to earn money.35
As a rule, documentary evidence should be presented to substantiate the claim for damages for
loss of earning capacity. 36 By way of exception, damages for loss of earning capacity may be
awarded despite the absence of documentary evidence when: (1) the deceased is self-employed
and earning less than the minimum wage under current labor laws, in which case, judicial notice
may be taken of the fact that in the deceased's line of work no documentary evidence is
available; or (2) the deceased is employed as a daily wage worker earning less than the
minimum wage under current labor laws.37
In this case, the records show that respondents husband was leasing and operating a Caltex
gasoline station in Gumaca, Quezon. Respondent testified that her husband earned an annual
income of one million pesos. Respondent presented in evidence a Certificate of Creditable
Income Tax Withheld at Source for the Year 1990, 38 which showed that respondents husband
earned a gross income of P950,988.43 in 1990. It is reasonable to use the Certificate and
respondents testimony as bases for fixing the gross annual income of the deceased at one
million pesos before respondents husband died on March 17, 1999. However, no documentary
evidence was presented regarding the income derived from their copra business; hence, the
testimony of respondent as regards such income cannot be considered.

In the computation of loss of earning capacity, only net earnings, not gross earnings, are to be
considered; that is, the total of the earnings less expenses necessary for the creation of such
earnings or income, less living and other incidental expenses. 39 In the absence of documentary
evidence, it is reasonable to peg necessary expenses for the lease and operation of the gasoline
station at 80 percent of the gross income, and peg living expenses at 50 percent of the net
income (gross income less necessary expenses).
In this case, the computation for loss of earning capacity is as follows:
Net Earning
Capacity

Life Expectancy
[2/3 (80-age at the
time of death)]

Gross Annual
Income (GAI)

Reasonable and
Necessary Expenses
(80% of GAI)

[2/3 (80-65)]

P1,000,000.00

P800,000.00

2/3 (15)

P200,000.00

P100,000.00(Living
Expenses)

30/3

P100,000.00

10

P100,000.00

X
=
P1,000,000.00
The Court of Appeals also awarded actual damages for the expenses incurred in connection with
the death, wake, and interment of respondents husband in the amount of P154,575.30, and the
medical expenses of respondent in the amount of P168,019.55.
Actual damages must be substantiated by documentary evidence, such as receipts, in order to
prove expenses incurred as a result of the death of the victim 40 or the physical injuries sustained
by the victim. A review of the valid receipts submitted in evidence showed that the funeral and
related expenses amounted only to P114,948.60, while the medical expenses of respondent
amounted only to P12,244.25, yielding a total of P127,192.85 in actual damages.
Moreover, the Court of Appeals correctly sustained the award of moral damages in the amount of
P50,000.00 for the death of respondents husband. Moral damages are not intended to enrich a
plaintiff at the expense of the defendant. 41 They are awarded to allow the plaintiff to obtain
means, diversions or amusements that will serve to alleviate the moral suffering he/she has
undergone due to the defendants culpable action and must, perforce, be proportional to the
suffering inflicted.42
In addition, the Court of Appeals correctly awarded temperate damages in the amount of
P10,000.00 for the damage caused on respondents motorcycle. Under Art. 2224 of the Civil
Code, temperate damages "may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be proved with certainty." The
cost of the repair of the motorcycle was prayed for by respondent in her Complaint. However, the
evidence presented was merely a job estimate 43 of the cost of the motorcycles repair amounting
to P17, 829.00. The Court of Appeals aptly held that there was no doubt that the damage caused
on the motorcycle was due to the negligence of petitioners driver. In the absence of competent
proof of the actual damage caused on the motorcycle or the actual cost of its repair, the award of
temperate damages by the appellate court in the amount of P10,000.00 was reasonable under
the circumstances.44
The Court of Appeals also correctly awarded respondent moral damages for the physical injuries
she sustained due to the vehicular accident. Under Art. 2219 of the Civil Code, 45 moral damages
may be recovered in quasi-delicts causing physical injuries. However, the award of P50,000.00
should be reduced to P30,000.00 in accordance with prevailing jurisprudence. 46

Further, the Court of Appeals correctly awarded respondent civil indemnity for the death of her
husband, which has been fixed by current jurisprudence at P50,000.00.47 The award is proper
under Art. 2206 of the Civil Code.48
In fine, the Court of Appeals correctly awarded civil indemnity for the death of respondents
husband, temperate damages, and moral damages for the physical injuries sustained by
respondent in addition to the damages granted by the trial court to respondent. The trial court
overlooked awarding the additional damages, which were prayed for by respondent in her
Amended Complaint. The appellate court is clothed with ample authority to review matters, even
if they are not assigned as errors in the appeal, if it finds that their consideration is necessary in
arriving at a just decision of the case. 49
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated August 17, 2004
in CA-G.R. CV No. 70860 is hereby AFFIRMED with MODIFICATION. Petitioner Philippine Hawk
Corporation and Margarito Avila are hereby ordered to pay jointly and severally respondent
Vivian Lee Tan: (a) civil indemnity in the amount of Fifty Thousand Pesos (P50,000.00); (b) actual
damages in the amount of One Hundred Twenty-Seven Thousand One Hundred Ninety-Two Pesos
and Eighty-Five Centavos ( P127,192.85); (c) moral damages in the amount of Eighty Thousand
Pesos (P80,000.00); (d) indemnity for loss of earning capacity in the amount of One Million Pesos
(P1,000,000.00); and (e) temperate damages in the amount of Ten Thousand Pesos (P10,000.00).
Costs against petitioner.
SO ORDERED.