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G.R. No.

90888 September 13, 1990


FRUCTUOSO R. CAPCO, petitioner,
vs.
MANUEL R. MACASAET, JACOBO FELICIANO, and HONORABLE COURT OF
APPEALS, respondents.
GUTIERREZ, JR., J.:

The petitioner submits to us for review the propriety of the Court of Appeals' disregarding the findings of fact and the
award of damages made by the trial court.

This petition is an offshoot of an action for damages filed by the petitioner against the private respondents docketed
as Civil Case No. 24105 and decided by the Regional Trial Court, National Capital Judicial Region, Branch 151 of
Pasig, Metro Manila which ruled as follows:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant Manuel
Macasaet, sentencing the latter to pay the former, the following sums:

a) Three Hundred Two Thousand Six Hundred Fifty-Eight Pesos and Twenty Centavos
(P302,658.20) for and as actual damages;

b) One Hundred Thousand Pesos (P100,000.00) for and as moral damages;

c) Fifty Thousand Pesos (P50,000.00) for and as exemplary damages; and

d) Fifty Thousand Pesos (P50,000.00) for and as attorney's fees and litigation expenses.

The complaint and defendant Macasaet's cross claim against defendant Jacobo Feliciano are
dismissed.

Defendants Manuel Macasaet's and Jacobo Feliciano's counterclaims are likewise dismissed.

Costs against defendant Manuel Macasaet. (Rollo, pp. 55-56)

The petitioner was a stockholder of record, director and executive vice-president of Monte Oro Mineral Resources,
Inc. (Monte Oro for brevity'sake), a local mining company whose shares were traded in the stock market. He owned
56,588,358 shares of the capital stock of Monte Oro with par value of P0.01 per share or a total par value of
P565,883.58 as evidenced by Stock Certificate No. 002 (Exhibit "A") for 14,159,583 shares and Stock Certificate No.
026 (Exhibit "B") for 42,428,775 shares.

On February 18, 1976, the petitioner indorsed and delivered Stock Certificates Nos. 002 and 026 to private
respondent Manuel Macasaet, board chairman and President of Monte Oro, who personally received the said
certificate in the following tenor:

ACKNOWLEDGMENT RECEIPT

I hereby certify that I have personally received from Mr. Fructuoso R. Capco the following Monte
Oro Certificates in trust and for safe keeping only to be delivered and/or surrendered to him and/or
his heirs or duly authorized representative on demand. (Exhibit "C")

Cert. No. Amount Date Remarks

1
002 14,159,583 12/04/74 'Already Indorsed'

026 42,428,775 04/16/75 'Already Indorsed'


________

Total 56,588,358

Received as stated:

[Sgd) MANUEL R.
MACASAET'

(Exhibit "C")

On April 26,1976, the petitioner demanded the return of his stock certificates from respondent Macasaet who failed to
produce them because he had given them to the other private respondent Jacobo Feliciano, another officer of Monte
Oro, allegedly in connection with a contemplated joint venture with the group of one Leonilo Esguerra.

On April 28, 1976, respondent Macasaet replaced the petitioner's Stock Certificate No. 026 with his own Stock
Certificate No. 025 covering 42,578,700 shares. The petitioner duly acknowledged the receipt of the said replacement
(Exhibit "3").

On May 4, 1976, Stock Certificate No. 002 was returned by respondent Macasaet to the petitioner as evidenced by
the handwritten receipt signed by the latter (Exhibit "2") who likewise made a handwritten notation stating "all cleared"
at the left hand margin thereof.

On August 12, 1976, the petitioner filed a complaint for damages against the private respondents alleging, among
others, that at the time he demanded his Stock Certificate Nos. 002 and 026 totalling 56,588,358 shares from
respondent Macasaet the petitioner had a ready buyer for 0.014 per share for all shares; that due to the private
respondents' failure to return the said stock certificates upon demand, the petitioner lost P306,115.25 representing
the difference between the amount of P792,237.01 which he would have realized had his stock certificates been
promptly given back and the sum of P486,121.76, the actual net proceeds from the subsequent sale of P42,550,000
shares at various prices after respondent Macasaet delivered his own Stock Certificate No. 025 in exchange for the
petitioners Stock Certificate No. 026; that the aforesaid amount of P 306,115.25 had long been overdue and unpaid
and despite repeated demands from the private respondents for the payment thereof, the latter had failed and
refused to pay the same to the petitioner's damage and prejudice; and that due to the private respondents'
intentional, deliberate and malicious acts, moral and exemplary damages could be awarded to the petitioner.

Respondent Macasaet counter-alleged, among others, that he had in turn entrusted Stock Certificate Nos. 002 and
026 of the petitioner to his co-defendant, respondent Feliciano to be shown to a certain group for the purpose of a
joint venture; that respondent Macasaet had actually made several demands for the return of the said stock
certificates from respondent Feliciano who refused and failed to do so; that two days after the petitioner made the
demand, respondent Macasaet replaced the petitioner's Stock Certificate No. 026 with his own Stock Certificate No.
025 which covered 149,925 shares more than those of the petitioner's Stock Certificate No. 026; that the respondent
Macasaet returned the petitioner's Stock Certificate No. 002 on May 4, 1976 after he recovered the game from
respondent Feliciano; and that the words "ALL CLEARED" written by the petitioner himself on his acknowledgment
receipt as he received Stock Certificate No. 002 from respondent Macasaet undoubtedly meant to discharge private
respondent Macasaet from any responsibility or liability regarding the petitioner's stock certificates.

On August 8, 1983, the lower court rendered a judgment favorable to the petitioner. It also dismissed the complaint
and respondent Macasaet's cross-claim against respondent Feliciano and likewise dismissed private respondents'
counter-claims against the petitioner.

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On appeal by respondent Macasaet, the Court of Appeals on June 19, 1989, reversed and set aside the trial court's
judgment for lack of merit and supporting proof. The petitioner's complaint as well as the cross-claims and counter-
claims of private respondents were all dismissed.

After the petitioner's subsequent motion for reconsideration was denied on October 23, 1989, the present petition
was filed assigning as errors, to wit:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BLINDLY SUPPORTING THE


FIRST AND SECOND THEORY OF PRIVATE RESPONDENT THAT THE WRITTEN ANNOTATION
OF 'ALL CLEARED IN STOCK CERTIFICATE NO. 002 NECESSARILY INCLUDED ANOTHER
SEPARATE AND DIFFERENT STOCK CERTIFICATE NO. 026 AND ASSUMING THERETO
'PAYMENT' OF LIABILITY OF PRIVATE RESPONDENT TO PETITIONER.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN CLEARING PRIVATE


RESPONDENT OF RESPONSIBILITIES BY DISREGARDING OR ABROGATING A VOLUNTARY
CONTRACT OF TRUST, (ACKNOWLEDGMENT RECEIPT, DATED FEBRUARY 18,1976, ANNEX
"C" PLAINTIFF'S COMPLAINT; EXH. "C"-PLAINTIFF) ALSO ON MERE ASSUMPTION THAT THE
ENDORSEMENT ON THE SUBJECT STOCK CERTIFICATES CONSTITUTE FULL AUTHORITY
TO PRIVATE RESPONDENT TO DELIVER, CONVEY AND SELL THE SAME.

III

THE HONORABLE COURT OF APPEALS LIKEWISE COMMITTED GROSS ERROR IN


CLEARING THE PRIVATE RESPONDENT OF LIABILITY FOR ALL DAMAGES ALREADY
SUFFERED AND INCURRED BY PETITIONER.

IV

THE HONORABLE COURT OF APPEALS ALSO COMMITTED GRAVE ERROR BY


CONCLUDING LACK OF EVIDENCE TO SUPPORT CLAIM OF DAMAGES AND DISREGARDING
THE FACTS AND EVIDENCE DULY ADMITTED AND PROVEN AT A FORMAL TRIAL IN THE
LOWER COURT." (Petition, pp. 5-6, Rollo, pp. 16-17)

The petitioner's main argument rests on the oft-repeated pronouncement that the conclusions and findings of fact by
the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons
because the trial court is in a better position to examine real evidence as well as observe the demeanor of the
witnesses while testifying citing the case of Chase v. Buencamino (136 SCRA 605 [1985]). The petitioner faults the
respondent court for side-stepping the literal interpretation of the Acknowledgment Receipt dated February 18, 1972
signed by the respondent Macasaet which allegedly serves as a clear proof that Stock Certificate Nos. 002 and 026
were held by the latter in trust and for safekeeping only. The petitioner further labels as capricious the respondent
court's act of completely ignoring all the established evidence, both documentary and testimonial, duly admitted and
considered by the trial court.

The rule that the trial court's findings of facts are accorded due respect on appeal is not without exceptions. It is not
applicable where there are strong and cogent reasons as when the trial court's findings are not supported by the
evidence or when the trial court failed to consider material facts which would have led to a conclusion different from
what was stated in its judgment or when the trial court's decision was attended by grave abuse of discretion

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amounting to lack of jurisdiction. A review of the bases for the trial court's decision shows that the appellate court was
justified in being skeptical as it went over both the facts and the law.

The instant case was given due course to enable a more thorough presentation by the parties and review of the
records considering the petitioner's stress on the disparity between the factual findings of the trial court which found
respondent Macasaet liable for actual, moral and exemplary damages and the respondent appellate court which
discharged the said respondent from any liability regarding the petitioner's Stock Certificate Nos. 002 and 026.

It is true that when the petitioner delivered Stock Certificate Nos. 002 and 026 to respondent Macasaet the latter
acknowledged receiving them "in trust and for safekeeping only." This acknowledgment, however, cannot outweigh
the legal effects of the stock certificates having been "already indorsed". There is no dispute that respondent
Macasaet received the petitioner's certificates in that condition as evidenced by the same Acknowledgment Receipt
dated February 18, 1976.

Certificates of stocks are considered as "quasi-negotiable" instruments. When the owner or shareholder of these
certificates signs the printed form of sale or assignment at the back of every stock certificate without filling in the
blanks provided for the name of the transferee as well as for the name of the attorney-in-fact, the said owner or
shareholder, in effect, confers on another all the indicia of ownership of the said stock certificates. (Campos and
Lopez-Campos, Notes and Selected Cases on Negotiable Instruments Law, 1971 ed., p. 605). In the case at bar, the
petitioner signed the printed form at the back of both Stock Certificate Nos. 002 and 026 without filling in the blanks at
the time the said stock certificates were delivered to respondent Macasaet. Hence, the petitioner's acts of
indorsement and delivery conferred on respondent Macasaet the right to hold them as though they were his own. On
account of this apparent transfer of ownership, it was not irregular on the part of respondent Macasaet to deliver the
stock certificates in question to respondent Feliciano for consideration in connection with a contemplated tie-up
between two business groups.

At this juncture, it is worth noting that in view of the petitioner's concurrent positions as director, Executive Vice-
President and General Manager of Monte Oro at the time of the incident under consideration, he could not have been
unaware of the consequences of the delivery coupled with the indorsement of his two stock certificates to respondent
Macasaet, notwithstanding the tenor of the Acknowledgment Receipt. Moreover, it is hard to believe that the
petitioner's delivery of the subject stock certificates to respondent Macasaet was strictly for safe-keeping purposes
only because if that were his real and only intention, there is neither logic nor reason for the indorsement of the said
certificates.

After a careful perusal and examination of the records of this case, we find no legal ground that will constrain us to
depart from the rule that the Court of Appeals' findings of fact are deemed final, conclusive and binding on us if
supported by substantial evidence. We reiterate our ruling in the case of Hermo v. Court of Appeals, (155 SCRA 24
[1987]) that:

At once apparent is that the factual findings of the Court of Appeals are diametrically at odds with
those of the Trial Court,.... And basic is the rule that the conclusions of fact of a trial court are
entitled to great weight, and should not generally be disturbed on appeal, because it is in a better
position than the appellate tribunal to examine the evidence directly, and to observe the demeanor
of the witnesses while testifying. Withal, its findings of fact, though entitled to great respect, are not
conclusive on the Court of Appeals. In the exercise of its appellate jurisdiction, the Court of Appeals
may affirm, reverse, or modify the judgment or order appealed from, and may direct a new trial or
further proceeding to be had. It is indeed the duty of that Court chiefly though not exclusively to
review a Trial Court's findings of fact and correct such serious errors affecting them as may have
been properly assigned and as may be established by a reexamination of the recorded
evidence. And it is the findings of fact of the Court of Appeals, not those of the trial court that are as
a rule deemed final, and conclusive even on this Court. (Emphasis Supplied) (At p. 27)

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We find no reversible error in the respondent Court's holding that the petitioner failed to support his claim that he
suffered the claimed damages as a result of respondent Macasaet's failure to return Stock Certificate Nos. 002 and
026 upon demand. The alleged "unrealized profits" representing actual and compensatory damages must be
supported by substantial and convincing proof. The records are bereft of such kind of proof. Mere allegation that there
was a "ready and willing buyer' of all the petitioners shares covered by Stock Certificate Nos. 002 and 026 for P0.014
per share at the time the demand for the return of the said certificates was made cannot suffice to allow the
petitioners claim for unrealized profits to prosper. Such claim is clearly speculative in nature.

Actual or compensatory damages are those recoverable because of pecuniary loss in business, trade, property,
profession, job or occupation, and the same must be proved; otherwise, if the proof is flimsy and non-substantial, no
damages will be given (Danao v. Court of Appeal, 154 SCRA 447 [19871]; Rubio v. Court of Appeals, 141 SCRA 488
[1986]; Perfecto v. Gonzales, 128 SCRA 635 [1984]). Actual and compensatory damages require evidentiary proof.
They cannot be presumed. (Dee Hua Liong Electrical Equipment Corporation v. Reyes, 145 SCRA 713 [1986])

The good faith of respondent Macasaet is shown by the fact that after trying to recover the missing certificates, he
immediately substituted Stock Certificate No. 026 with his own Stock Certificate No. 025 which covered more shares
than the petitioner's replaced certificate. The petitioner's other Stock Certificate No. 002 was subsequently returned
and received by the petitioner with the notation "All Cleared" on the acknowledgment receipt duly signed and
personally written by him. We agree with the respondent court's ruling that the said notation meant to discharge
respondent Macasaet' together with his co-respondent Feliciano) from any liability with respect to the stock
certificates in question as there can be no other plausible interpretation therefor. He would not have written "all
cleared" if he was unhappy at that time about the substitution of the higher value certificate for his other certificate.

In fine, considering that in the absence of malice and bad faith, moral damages cannot be awarded (Philippine
National Bank v. Court of Appeals, 159 SCRA 433 [19881) and that the grant of moral and exemplary damages has
no basis if not predicated upon any of the cases enumerated in the Civil Code (Bagumbayan Corporation v.
Intermediate Appellate Court, 132 SCRA 441 [19841), we hold that the respondent court properly set aside the award
of actual, moral and exemplary damages given by the trial court in favor of the petitioner.

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED. The assailed decision dated June 19,
1989 and the resolution dated October 23, 1989 of the Court of Appeals are AFFIRMED.

SO ORDERED.

5
[G.R. No. 129029. April 3, 2000]

RAFAEL REYES TRUCKING CORPORATION, petitioner, vs. PEOPLE OF THE PHILIPPINES and
ROSARIO P. DY (for herself and on behalf of the minors Maria Luisa, Francis Edward, Francis Mark
and Francis Rafael, all surnamed Dy), respondents.

DECISION

PARDO, J.:

The case is an appeal via certiorari from the amended decision[1] of the Court of Appeals[2] affirming the decision and
supplemental decision of the trial court,[3] as follows:

"IN VIEW OF THE FOREGOING, judgment is hereby rendered dismissing the appeals interposed
by both accused and Reyes Trucking Corporation and affirming the Decision and Supplemental
Decision dated June 6, 1992 and October 26, 1992 respectively.

"SO ORDERED."[4]

The facts are as follows:

On October 10, 1989, Provincial Prosecutor Patricio T. Durian of Isabela filed with the Regional Trial Court, Isabela,
Branch 19, Cauayan an amended information charging Romeo Dunca y de Tumol with reckless imprudence resulting
in double homicide and damage to property, reading as follows:

"That on or about the 20th day of June, 1989, in the Municipality of Cauayan, Province of Isabela,
Philippines, and within the jurisdiction of this Honorable Court, the said accused being the driver
and person-in-charge of a Trailer Truck Tractor bearing Plate No. N2A-867 registered in the name

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of Rafael Reyes Trucking Corporation, with a load of 2,000 cases of empty bottles of beer grande,
willfully, unlawfully and feloniously drove and operated the same while along the National Highway
of Barangay Tagaran, in said Municipality, in a negligent, careless and imprudent manner, without
due regard to traffic laws, rules and ordinances and without taking the necessary precautions to
prevent injuries to persons and damage to property, causing by such negligence, carelessness and
imprudence the said trailer truck to hit and bump a Nissan Pick-up bearing Plate No. BBG-957
driven by Feliciano Balcita and Francisco Dy, Jr., @ Pacquing, due to irreversible shock, internal
and external hemorrhage and multiple injuries, open wounds, abrasions, and further causing
damages to the heirs of Feliciano Balcita in the amount of P100,000.00 and to the death of
Francisco Dy, Jr.; @ Pacquing and damages to his Nissan Pick-Up bearing Plate No. BBG-957 in
the total amount of P2,000,000.00.

"CONTRARY TO LAW.

"Cauayan, Isabela, October 10, 1989.

"(Sgd.) FAUSTO C. CABANTAC


"Third Assistant Provincial Prosecutor"

Upon arraignment on October 23, 1989, the accused entered a plea of not guilty. On the same occasion, the offended
parties (Rosario P. Dy and minor children and Angelina M. Balcita and minor son Paolo) made a reservation to file a
separate civil action against the accused arising from the offense charged. [5] On November 29, 1989, the offended
parties actually filed with the Regional Trial Court, Isabela, Branch 19, Cauayan a complaint against petitioner Rafael
Reyes Trucking Corporation, as employer of driver Romeo Dunca y de Tumol, based on quasi delict. The petitioner
settled the claim of the heirs of Feliciano Balcita (the driver of the other vehicle involved in the accident). The private
respondents opted to pursue the criminal action but did not withdraw the civil case quasi ex delicto they filed against
petitioner. On December 15, 1989, private respondents withdrew the reservation to file a separate civil action against
the accused and manifested that they would prosecute the civil aspect ex delicto in the criminal action.[6]However,
they did not withdraw the separate civil action based on quasi delict against petitioner as employer arising from the
same act or omission of the accused driver.[7]

Upon agreement of the parties, the trial court consolidated both criminal and civil cases and conducted a joint trial of
the same.

The facts, as found by the trial court, which appear to be undisputed, are as follows:

"The defendant Rafael Reyes Trucking Corporation is a domestic corporation engaged in the
business of transporting beer products for the San Miguel Corporation (SMC for short) from the
latters San Fernando, Pampanga plant to its various sales outlets in Luzon. Among its fleets of
vehicles for hire is the white truck trailer described above driven by Romeo Dunca y Tumol, a duly
licensed driver. Aside from the Corporations memorandum to all its drivers and helpers to physically
inspect their vehicles before each trip (Exh. 15, pars. 4 & 5), the SMCs Traffic Investigator-
Inspector certified the roadworthiness of this White Truck trailer prior to June 20, 1989 (Exh. 17). In
addition to a professional drivers license, it also conducts a rigid examination of all driver applicants
before they are hired.

"In the early morning of June 20, 1989, the White Truck driven by Dunca left Tuguegarao, Cagayan
bound to San Fernando, Pampanga loaded with 2,000 cases of empty beer "Grande" bottles.
Seated at the front right seat beside him was Ferdinand Domingo, his truck helper ("pahinante" in
Pilipino). At around 4:00 oclock that same morning while the truck was descending at a slight
downgrade along the national road at Tagaran, Cauayan, Isabela, it approached a damaged portion
of the road covering the full width of the trucks right lane going south and about six meters in
length. These made the surface of the road uneven because the potholes were about five to six

7
inches deep. The left lane parallel to this damaged portion is smooth. As narrated by Ferdinand
Domingo, before approaching the potholes, he and Dunca saw the Nissan with its headlights on
coming from the opposite direction. They used to evade this damaged road by taking the left lance
but at that particular moment, because of the incoming vehicle, they had to run over it. This caused
the truck to bounce wildly. Dunca lost control of the wheels and the truck swerved to the left
invading the lane of the Nissan. As a result, Duncas vehicle rammed the incoming Nissan dragging
it to the left shoulder of the road and climbed a ridge above said shoulder where it finally stopped.
(see Exh. A-5, p. 8, record). The Nissan was severely damaged (Exhs. A-7, A-8, A-9 and A-14, pp.
9-11, record), and its two passengers, namely: Feliciano Balcita and Francisco Dy, Jr. died instantly
(Exh. A-19) from external and internal hemorrhage and multiple fractures (pp. 15 and 16, record).

"For the funeral expenses of Francisco Dy, Jr. her widow spent P651,360.00 (Exh. I-3). At the time
of his death he was 45 years old. He was the President and Chairman of the Board of the Dynamic
Wood Products and Development Corporation (DWPC), a wood processing establishment, from
which he was receiving an income of P10,000.00 a month (Exh. D). In the Articles of Incorporation
of the DWPC, the spouses Francisco Dy, Jr. and Rosario Perez Dy appear to be stockholders of
10,000 shares each with par value of P100.00 per share out of its outstanding and subscribed
capital stock of 60,000 shares valued at P6,000,000.00 (Exhs. K-1 & 10-B). Under its 1988 Income
Tax Returns (Exh. J) the DWPC had a taxable net income of P78,499.30 (Exh. J). Francisco Dy, Jr.
was a La Salle University graduate in Business Administration, past president of the Pasay
Jaycees, National Treasurer and President of the Philippine Jaycees in 1971 and 1976,
respectively, and World Vice-President of Jaycees International in 1979. He was also the recipient
of numerous awards as a civic leader (Exh. C). His children were all studying in prestigious schools
and spent about P180,000.00 for their education in 1988 alone (Exh. H-4).

"As stated earlier, the plaintiffs procurement of a writ of attachment of the properties of the
Corporation was declared illegal by the Court of Appeals. It was shown that on December 26, 1989,
Deputy Sheriff Edgardo Zabat of the RTC at San Fernando, Pampanga, attached six units of Truck
Tractors and trailers of the Corporation at its garage at San Fernando, Pampanga. These vehicles
were kept under PC guard by the plaintiffs in said garage thus preventing the Corporation to
operate them. However, on December 28, 1989, the Court of Appeals dissolved the writ (p. 30,
record) and on December 29, 1989, said Sheriff reported to this Court that the attached vehicles
were taken by the defendants representative, Melita Manapil (Exh. O, p. 31, record). The
defendants general Manager declared that it lost P21,000.00 per day for the non-operation of the
six units during their attachment (p. 31, t.s.n., Natividad C. Babaran, proceedings on December 10,
1990)."[8]

On June 6, 1992, the trial court rendered a joint decision, the dispositive portion of which reads as follows:

"WHEREFORE, in view of the foregoing considerations judgment is hereby rendered:

"1. Finding the accused Romeo Dunca y de Tumol guilty beyond reasonable doubt of the crime of
Double Homicide through Reckless Imprudence with violation of the Motor Vehicle Law (Rep. Act
No. 4136), and appreciating in his favor the mitigating circumstance of voluntary surrender without
any aggravating circumstance to offset the same, the Court hereby sentences him to suffer two (2)
indeterminate penalties of four months and one day of arresto mayor as minimum to three years,
six months and twenty days as maximum; to indemnify the Heirs of Francisco Dy. Jr. in the amount
of P3,000,000.00 as compensatory damages, P1,000,000.00 as moral damages, and
P1,030,000.00 as funeral expenses;

"2. Ordering the plaintiff in Civil Case No. Br. 19-424 to pay the defendant therein actual damages
in the amount of P84,000.00; and

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"3. Ordering the dismissal of the complaint in Civil Case No. Br. 19-424.

"No pronouncement as to costs.

"SO ORDERED.

"Cauayan, Isabela, June 6, 1992.

"(Sgd.) ARTEMIO R. ALIVIA


"Regional Trial Judge"[9]

On September 3, 1992, petitioner and the accused filed a notice of appeal from the joint decision.[10]

On the other hand, private respondents moved for amendment of the dispositive portion of the joint decision so as to
hold petitioner subsidiarily liable for the damages awarded to the private respondents in the event of insolvency of the
accused.[11]

On October 26, 1992, the trial court rendered a supplemental decision amending the dispositive portion by inserting
an additional paragraph reading as follows:

"2:A Ordering the defendant Reyes Trucking Corporation subsidiarily liable for all the damages
awarded to the heirs of Francisco Dy, Jr., in the event of insolvency of the accused but deducting
therefrom the damages of P84,000.00 awarded to said defendant in the next preceding paragraph;
and x x x"[12]

On November 12, 1992, petitioner filed with the trial court a supplemental notice of appeal from the supplemental
decision.[13]

During the pendency of the appeal, the accused jumped bail and fled to a foreign country. By resolution dated
December 29, 1994, the Court of Appeals dismissed the appeal of the accused in the criminal case.[14]

On January 6, 1997, the Court of Appeals rendered an amended decision affirming that of the trial court, as set out in
the opening paragraph of this decision.[15]

On January 31, 1997, petitioner filed a motion for reconsideration of the amended decision.[16]

On April 21, 1997, the Court of Appeals denied petitioners motion for reconsideration for lack of merit.[17]

Hence, this petition for review.[18]

On July 21, 1997, the Court required respondents to comment on the petition within ten (10) days from notice.[19]

On January 27, 1998, the Solicitor General filed his comment.[20] On April 13, 1998, the Court granted leave to
petitioner to file a reply and noted the reply it filed on March 11, 1998.[21]

We now resolve to give due course to the petition and decide the case.

Petitioner raises three (3) grounds for allowance of the petition, which, however, boil down to two (2) basic issues,
namely:

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1.....May petitioner as owner of the truck involved in the accident be held subsidiarily liable for the
damages awarded to the offended parties in the criminal action against the truck driver despite the
filing of a separate civil action by the offended parties against the employer of the truck driver?

2.....May the Court award damages to the offended parties in the criminal case despite the filing of
a civil action against the employer of the truck driver; and in amounts exceeding that alleged in the
information for reckless imprudence resulting in homicide and damage to property?[22]

We grant the petition, resolving under the circumstances pro hac vice to remand the cases to the trial court for
determination of the civil liability of petitioner as employer of the accused driver in the civil action quasi ex delicto re-
opened for the purpose.

In negligence cases, the aggrieved party has the choice between (1) an action to enforce civil liability arising from
crime under Article 100 of the Revised Penal Code; and (2) a separate action for quasi delictunder Article 2176 of the
Civil Code of the Philippines. Once the choice is made, the injured party can not avail himself of any other remedy
because he may not recover damages twice for the same negligent act or omission of the accused. [23] This is the rule
against double recovery.

In other words, "the same act or omission can create two kinds of liability on the part of the offender, that is, civil
liability ex delicto, and civil liability quasi delicto" either of which "may be enforced against the culprit, subject to the
caveat under Article 2177 of the Civil Code that the offended party can not recover damages under both types of
liability."[24]

In the instant case, the offended parties elected to file a separate civil action for damages against petitioner as
employer of the accused, based on quasi delict, under Article 2176 of the Civil Code of the Philippines. Private
respondents sued petitioner Rafael Reyes Trucking Corporation, as the employer of the accused, to be vicariously
liable for the fault or negligence of the latter. Under the law, this vicarious liability of the employer is founded on at
least two specific provisions of law.

The first is expressed in Article 2176 in relation to Article 2180 of the Civil Code, which would allow an action
predicated on quasi-delict to be instituted by the injured party against the employer for an act or omission of the
employee and would necessitate only a preponderance of evidence to prevail. Here, the liability of the employer for
the negligent conduct of the subordinate is direct and primary, subject to the defense of due diligence in the selection
and supervision of the employee. The enforcement of the judgment against the employer in an action based on
Article 2176 does not require the employee to be insolvent since the nature of the liability of the employer with that of
the employee, the two being statutorily considered joint tortfeasors, is solidary.[25] The second, predicated on Article
103 of the Revised Penal Code, provides that an employer may be held subsidiarily civilly liable for a felony
committed by his employee in the discharge of his duty. This liability attaches when the employee is convicted of a
crime done in the performance of his work and is found to be insolvent that renders him unable to properly respond to
the civil liability adjudged.[26]

As regards the first issue, the answer is in the negative. Rafael Reyes Trucking Corporation, as employer of the
accused who has been adjudged guilty in the criminal case for reckless imprudence, can not be held subsidiarily
liable because of the filing of the separate civil action based on quasi delict against it. In view of the reservation to file,
and the subsequent filing of the civil action for recovery of civil liability, the same was not instituted with the criminal
action. Such separate civil action was for recovery of damages under Article 2176 of the Civil Code, arising from the
same act or omission of the accused.[27]

Pursuant to the provision of Rule 111, Section 1, paragraph 3 of the 1985 Rules of Criminal Procedure, when private
respondents, as complainants in the criminal action, reserved the right to file the separate civil action, they waived
other available civil actions predicated on the same act or omission of the accused-driver. Such civil action includes
the recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, and 34 of the Civil
Code of the Philippines arising from the same act or omission of the accused.[28]

10
The intention of private respondents to proceed primarily and directly against petitioner as employer of accused truck
driver became clearer when they did not ask for the dismissal of the civil action against the latter based on quasi
delict.

Consequently, the Court of Appeals and the trial court erred in holding the accused civilly liable, and petitioner-
employer of the accused subsidiarily liable for damages arising from crime (ex delicto) in the criminal action as the
offended parties in fact filed a separate civil action against the employer based on quasi delict resulting in the waiver
of the civil action ex delicto.

It might be argued that private respondents as complainants in the criminal case withdrew the reservation to file a civil
action against the driver (accused) and manifested that they would pursue the civil liability of the driver in the criminal
action. However, the withdrawal is ineffective to reverse the effect of the reservation earlier made because private
respondents did not withdraw the civil action against petitioner based on quasi delict. In such a case, the provision of
Rule 111, Section 1, paragraph 3 of the 1985 Rules on Criminal Procedure is clear that the reservation to file or the
filing of a separate civil action results in a waiver of other available civil actions arising from the same act or omission
of the accused. Rule 111, Section 1, paragraph 2 enumerated what are the civil actions deemed waived upon such
reservation or filing, and one of which is the civil indemnity under the Revised Penal Code. Rule 111, Section 1,
paragraph 3 of the 1985 Rules on Criminal Procedure specifically provides:

"A waiver of any of the civil actions extinguishes the others. The institution of, or the reservation of
the right to file, any of said civil actions separately waives the others."

The rationale behind this rule is the avoidance of multiple suits between the same litigants arising out of the same act
or omission of the offender. The restrictive phraseology of the section under consideration is meant to cover all kinds
of civil actions, regardless of their source in law, provided that the action has for its basis the same act or omission of
the offender.[29]

However, petitioner as defendant in the separate civil action for damages filed against it, based on quasi delict, may
be held liable thereon. Thus, the trial court grievously erred in dismissing plaintiffs civil complaint. And the Court of
Appeals erred in affirming the trial courts decision. Unfortunately private respondents did not appeal from such
dismissal and could not be granted affirmative relief.[30]

The Court, however, in exceptional cases has relaxed the rules "in order to promote their objectives and assist the
parties in obtaining just, speedy, and inexpensive determination of every action or proceeding"[31] or exempted "a
particular case from the operation of the rules."[32]

Invoking this principle, we rule that the trial court erred in awarding civil damages in the criminal case and in
dismissing the civil action. Apparently satisfied with such award, private respondent did not appeal from the dismissal
of the civil case. However, petitioner did appeal. Hence, this case should be remanded to the trial court so that it may
render decision in the civil case awarding damages as may be warranted by the evidence.[33]

With regard to the second issue, the award of damages in the criminal case was improper because the civil action for
the recovery of civil liability was waived in the criminal action by the filing of a separate civil action against the
employer. As enunciated in Ramos vs. Gonong,[34] "civil indemnity is not part of the penalty for the crime committed."
The only issue brought before the trial court in the criminal action is whether accused Romeo Dunca y de Tumol is
guilty of reckless imprudence resulting in homicide and damage to property. The action for recovery of civil liability is
not included therein, but is covered by the separate civil action filed against the petitioner as employer of the accused
truck-driver.

In this case, accused-driver jumped bail pending his appeal from his conviction. Thus, the judgment convicting the
accused became final and executory, but only insofar as the penalty in the criminal action is concerned. The

11
damages awarded in the criminal action was invalid because of its effective waiver. The pronouncement was void
because the action for recovery of the civil liability arising from the crime has been waived in said criminal action.

With respect to the issue that the award of damages in the criminal action exceeded the amount of damages alleged
in the amended information, the issue is de minimis. At any rate, the trial court erred in awarding damages in the
criminal case because by virtue of the reservation of the right to bring a separate civil action or the filing thereof,
"there would be no possibility that the employer would be held liable because in such a case there would be no
pronouncement as to the civil liability of the accused.[35]

As a final note, we reiterate that "the policy against double recovery requires that only one action be maintained for
the same act or omission whether the action is brought against the employee or against his employer. [36] The injured
party must choose which of the available causes of action for damages he will bring.[37]

Parenthetically, the trial court found the accused "guilty beyond reasonable doubt of the crime of Double Homicide
Through Reckless Imprudence with violation of the Motor Vehicle Law (Rep. Act No. 4136)." There is no such
nomenclature of an offense under the Revised Penal Code. Thus, the trial court was misled to sentence the accused
"to suffer two (2) indeterminate penalties of four (4) months and one (1) day of arresto mayor, as minimum, to three
(3) years, six (6) months and twenty (20) days of prision correccional, as maximum." This is erroneous because in
reckless imprudence cases, the actual penalty for criminal negligence bears no relation to the individual willful crime
or crimes committed, but is set in relation to a whole class, or series of crimes.[38]

Unfortunately, we can no longer correct this judgment even if erroneous, as it is, because it has become final and
executory.

Under Article 365 of the Revised Penal Code, criminal negligence "is treated as a mere quasi offense, and dealt with
separately from willful offenses. It is not a question of classification or terminology. In intentional crimes, the act itself
is punished; in negligence or imprudence, what is principally penalized is the mental attitude or condition behind the
act, the dangerous recklessness, lack of care or foresight, the imprudencia punible. Much of the confusion has arisen
from the common use of such descriptive phrase as homicide through reckless imprudence, and the like; when the
strict technical sense is, more accurately, reckless imprudence resulting in homicide; or simple imprudence causing
damages to property."[39]

There is need, therefore, to rectify the designation of the offense without disturbing the imposed penalty for the
guidance of bench and bar in strict adherence to precedent.

WHEREFORE, the Court GRANTS the petition and SETS ASIDE the amended decision and resolution of the Court
of Appeals in CA-G. R. CR No. 14448, promulgated on January 6, 1997, and the joint decision of the Regional Trial
Court, Isabela, Branch 19, Cauayan, in Criminal Case No. Br. 19-311 and Civil Case No. Br. 19-424, dated June 6,
1992.

IN LIEU THEREOF, the Court renders judgment as follows:

(1) In Criminal Case No. Br. 19-311, the Court declares the accused Romeo Dunca y de Tumol guilty beyond
reasonable doubt of reckless imprudence resulting in homicide and damage to property, defined and penalized under
Article 365, paragraph 2 of the Revised Penal Code, with violation of the automobile law (R. A. No. 4136, as
amended), and sentences him to suffer two (2) indeterminate penalties of four (4) months and one (1) day of arresto
mayor, as minimum, to three (3) years, six (6) months and twenty (20) days of prision correccional, as maximum,
[40]
without indemnity, and to pay the costs, and

(2) In Civil Case No. Br. 19-424, the Court orders the case re-opened to determine the liability of the defendant Rafael
Reyes Trucking Corporation to plaintiffs and that of plaintiffs on defendants counterclaim.

12
No costs in this instance.SO ORDERED.

G.R. No. L-59311 January 31, 1985

RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI), petitioner,


vs.
HON. JAIME M. LANTIN, THE SHERIFF OF THE COURT OF FIRST INSTANCE OF QUEZON CITY and RUFUS
B. RODRIGUEZ, respondents.

G.R. No. L-59320 January 31, 1985

GLOBE MACKAY CABLE AND RADIO CORPORATION, petitioner,


vs.
THE HONORABLE COURT OF APPEALS, HON. JAIME M. LANTIN, THE SHERIFF OF THE COURT OF FIRST
INSTANCE OF QUEZON CITY, AND RUFUS B. RODRIGUEZ, respondents.

GUTIERREZ, JR., J.:

In these interrelated petitions for review on certiorari, the Radio Communications of the Philippines, Inc. (RCPI) and
Globe Mackay Cable and Radio/Corporation (GLOBE) question the decision of the Court of Appeals, now
Intermediate Appellate Court, which refused to set aside the orders of the Court of First Instance of Rizal directing
execution pending appeal of an award of P213,148.00 damages in favor of private respondent Rufus B. Rodriguez.

On September 8, 1978, Rufus B. Rodriguez, as President of the World Association of Law Students (WALS), sent two
cablegrams overseas through RCPI, one addressed to Mohammed Elsir Taha in Khartoum, Sudan Socialist Union,
and the other to Diane Merger in Athens, Georgia, United States. The cablegrams were, in turn, relayed to GLOBE
for transmission to their foreign destinations. The telegram to Taha advised him of Rodriguez's pending arrival in
Khartoum on September 18, 1978, while the telegram to Merger advised her of the scheduled WALS conference in
Khartoum. Rodriguez left the Philippines on September 15, 1978. On September 18, 1978, he arrived in Khartoum,
Sudan at 9:30 in the evening. Nobody was at the airport to meet him. Due to the lateness of the hour, he was forced
to sleep at the airport. He lined up five (5) chairs together and lay down with his luggages near him. Because of the
non-receipt of the cablegram, Taha was not able to meet him. Worse all preparations for the international conference
had to be cancelled. Furthermore, Fernando Barros, the Vice-President, arrived the next day from Chile, followed by
the other officers from other countries except Diane Merger, the organization's secretary. It turned out that the wire
sent by Rodriguez to Merger was delivered to the address on the message but the person who delivered it was told
that the addressee was no longer staying there. This fact was not accordingly reported to Rodriguez in Metro Manila.
The undelivered cablegram was not returned by the correspondent abroad to Globe for disposition in the Philippines,

On December 8, 1978, Rodriguez filed a complaint for compensatory damages in the amount of P45,147.00, moral
damages in the amount of P250,000.00,' and exemplary damages in the amount of P50,000.00 against RCPI and
GLOBE.

On March 17, 1980, the then Presiding Judge Lino L. Aover of the Court of First Instance of Rizal rendered a
decision, the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered ordering the defendants jointly and severally to pay
the plaintiff the total sum of TWO HUNDRED THIRTEEN THOUSAND ONE HUNDRED FORTY
EIGHT PESOS (P213,148.00) by way of damages and to pay the costs of this suit.

The above amount is broken down as follows by the trial court:

13
Moral damages consequent to the humiliation and embarrassment that the plaintiff suffered under
the two causes of action in the amount of P100,000.00 are adequate. Exemplary damages under
both counts are fixed reasonably at P50,000.00. On the actual damages, the court accepts
plaintiff's expenses for the preparation of the trip at P10,000.00; plane fare at P20,000.00; stay in
transit in Pakistan at P5,000.00; his hotel bills in Khartoum at P4,000.00; his meals in Khartoum at
P4,000.00 and the telegraphic toll at P78.00. The court refuses the sum spent for the dinner that he
allegedly tendered as not established by sufficient proof.

With respect to the telegram sent to Diane Merger, the court finds that the actual damages amount
to P70.00 representing the cost of the cablegram. As for attorney's fees, the court finds that the
amount of P20,000.00 including litigation of expenses are reasonable.

On May 26, 1980, Rodriguez filed a "Motion for Execution Before Expiration of Time to Appeal" relying on Rule 39,
Section 2 of the Revised Rules of Court alleging that the appeal is clearly dilatory and that the lapse of time would
make the ultimate judgment illusory and ineffective. An opposition to the motion was filed by RCPI on June 3, 1980
and by GLOBE on November 18,1980.

On January 21, 1981, the respondent court of first instance granted the said motion in an order which reads as
follows:

Upon consideration of the Motion for execution pending appeal, the opposition thereto and the
arguments in open court by the parties, and finding that:

a) the appeal was for the purpose of delay, there being breach of contract, and defendants'
evidence being weak or feeble;

b) plaintiff is willing to put up a bond in the amount of P213,148.00 to answer for damages if the
decision is reversed on appeal

the Court grants the motion. Let writ of execution pending appeal be issued upon the filing of a
bond by plaintiff in the sum of P213,148.00. Said bond should be filed within ten (10) days from
receipt of this order.

On February 5, 1981, the same court issued another order which reads as follows:

The bond pursuant to the order of January 21, 1981, is approved. Let writ of execution of judgment
pending appeal be issued forthwith.

On February 10, 1981, GLOBE filed a motion for reconsideration of the above order and expressed
its desire to put up a supersedeas bond to stay immediate execution. This motion was denied in an
order dated February 17, 1981. Even before the issuance of this order denying petitioner's motion
for reconsideration, the respondent Sheriff, on February 13, 1981, insisted on levying on the funds
and assets of petitioners RCPI and GLOBE, prompting them to file an "Urgent Motion to Recall Writ
of Execution. This urgent motion was likewise denied.

On February 17, 1981, RCPI and GLOBE filed with the Court of Appeals a petition for certiorari, mandamus, and
prohibition with a prayer for the issuance of a writ of preliminary injunction. On February 20, 1981, the Court of
Appeals issued a restraining order enjoining the lower court from further proceeding with the civil case and from
enforcing the writ of execution until further orders. On November 10, 1981, the Court of Appeals rendered a decision.
The dispositive portion reads as follows:

14
WHEREFORE, the herein petition is hereby dismissed for lack of merit and the questioned orders
of January 21, 1981, February 5, 1981 and February 20, 1981 are hereby declared valid and legal.
Consequently, the restraining order issued earlier on February 2, 1981 is hereby lifted.

With costs against the petitioners.

Within fifteen (15) days from receipt of the abovequoted decision, the petitioners filed with the respondent Court of
Appeals a motion for reconsideration. On December 28, 1981, petitioners received a resolution of the Court of
Appeals denying their motion for reconsideration.

On January 18, 1982, this petition entitled appeal by certiorari was filed.

The petitioners' arguments revolve around the alleged grave abuse of discretion committed by the Court of Appeals
when it declined to disturb the judgment of the trial court on the issuance of the writ of execution pending appeal.

Section 2, Rule 39 of the Revised Rules of Court provides:

On motion of the prevailing party with notice to the adverse party the court may, in its discretion,
order execution to issue even before the expiration of the time to appeal, upon good reasons to be
stated in a special order. If a record on appeal is filed thereafter, the motion and the special order
shall be included therein.

The rule specifically vests the court with the exercise of discretionary power. The requisites for the court's valid
exercise of the discretion to order execution pending appeal are: (1) there must be a motion by the prevailing party
with notice to the adverse party; (2) there must be good reasons for issuing the execution, and (3) the good reasons
must be stated in a special order.

Considering the nature of the wrongful acts found by the trial court and the amount of damages adjudicated as
recoverable, both of which are stated in detail in the decisions and various orders of the trial court and the appellate
court, we are constrained to sustain the respondent courts insofar as the award for actual or compensatory damages
are concerned but to postpone the execution of the awards for moral and exemplary damages until such time as the
merits of the cases now on regular appeal before the Court of Appeals are finally determined. The execution of any
award for moral and exemplary damages is dependent on the outcome of the main case. Unlike actual damages for
which the petitioners may clearly be held liable if they breach a specific contract and the amounts of which are fixed
and certain, liabilities with respect to moral and exemplary damages as wen as the exact amounts remain uncertain
and indefinite pending resolution by the Intermediate Appellate Court and eventually the Supreme Court. The
existence of the factual bases of these types of damages and their causal relation to the petitioners' act will have to
be determined in the light of the assignments of errors on appeal. It is possible that the petitioners, after all, while
liable for actual damages may not be liable for moral and exemplary damages. Or as in some cases elevated to the
Supreme Court, the awards may be reduced. (See Radio Communications of the Philippines, Inc. v. Intermediate
Appellate Court, et al., G.R. No. 67034, December 3, 1984)

In its questioned decision, the Court of Appeals acknowledged the nature of execution pending appeal as an
exceptional remedy which must be interpreted restrictively, citing the many ruling cases on this point. At the same
time, what was before the appellate court was not the application of a general rule but the exception thereto, the
special reasons or circumstances warranting execution pending appeal. The Court of Appeals quoted with approval
the trial court's findings:

xxx xxx xxx

2. Execution pending appeal is discretionary. Execution pending appeal is a matter of sound


discretion on the part of the trial court. (National Marketing Corporation v. Tan, L- 17768, March 31,

15
1962; Ong Sit v. Piccio, 78 Phil. 232; Go Changjo v. Roldan Sy Changjo, 18 Phil. 405). The
appellate court will not interfere, control or inquire into the exercise of this discretion, unless it is
shown that there has been an abuse thereof. Asturias v. Victoriano, 98 Phil. 581; Naredo v. Yatco,
80 Phil. 220; Federal Fils Inc. v. Ocampo, 78 Phil. 479; Ong Sit v. Piccio supra; Buenaventura v.
Pea 78 Phil. 798; Presbitero v. Rodas, 73 Phil. 300; Iloilo Trading and Exchange v. Rodas, 73 Phil.
327; Hacienda Navarro, Inc. v. Labrador, 65 Phil. 536; Lusk v. Stevens, 64 Phil. 154; Gamay
v. Gutierrez David, 48 Phil. 768; Gutierrez Hermanos v. Orias Hermanos & Co., 39 Phil. 92; Case v.
Metropole Hotel, 5 Phil. 49; Macke v. Camps, 5 Phil. 185; Calvo v. De Gutierrez, 4 Phil. 203)

3. Requirement of good reasons. The requirement that execution pending appeal must
be supported by good reasons, to be stated in a special order, should be complied with because
the existence of good reasons is the element that gives validity to an order of execution (Alcasid v.
Samson, 102 Phil. 735; De la Rosa v. City of Baguio, 90 Phil. 720) (sic) Unless the reasons are
made known it would be difficult to determine whether judicial discretion has been properly
exercised in the case (Asturias v. Victoriano, supra If the discretionary power of the court is to have
any meaning, the sufficiency of the reasons for ordering such execution is naturally to be
determined by the court. (Buenaventura v. Pea, supra; Lusk v. Stevens, supra.)

Whether the reasons are so urgent and compelling as to justify execution pending appeal depends
upon the circumstances of the case. The filing of a bond by the prevailing party, as required by the
court in its order of execution, constitutes good reason for the issuance of a writ of execution
mending appeal (Rodriguez v. Court of Appeals, L-12554, May 23, 1959; Hacienda Navarro, Inc. v.
Labrador, supra; People's Bank & Trust Co. v. San Jose, 96 Phil. 895).

The court likewise noted that the questioned order made reference to the reasons averred in the motion which
appeared to it to be good and which it found to be sufficient compliance with the law (Joven v. Boncan, 67 Phil. 252).
It noted the finding of the trial court that the appeal interposed by the petitioners was not based on strong grounds,
which finding is again a good reason for execution pending appeal. (Presbitero v. Rodas, 73 Phil. 300; Iloilo Trading
Center and Exchange v. Rodas, 78 Phil. 789)

The petitioners pit their arguments against the conclusions of the Court of Appeals and the Court of First Instance on
the special nature of the circumstances warranting the exercise of discretionary power, the weak defenses at trial and
weak reasons on appeal, and the nature of the evidence upon which the decision is based. Insofar as actual and
compensatory damages are concerned, we find insufficient cause to restrain the exercise of discretionary power.

The petitioners question the findings of the Court of Appeals that:

The respondent court had to look back at the sworn complaint that, the private respondent in the
aforesaid complaint had to sleep at the airport left alone to himself throughout the night with nobody
to talk to because in Khartoum, Sudan, only a few people if at all, could speak English and because
our country has no consulate in the said place, language barrier was a big problem in looking for a
taxicab to the hotel. To repeat, he had to sleep on the 5 chairs put together; he is a respectable
man in the country who had to go to Khartoum as President of the World Association of Law
Students in the Philippines and had to make the trip to Sudan for a conference; that he was a third
year law student of the College of Law in the University of the Philippines and the Cagayan de Oro
Sangguniang Panglunsod City where he is from, even passed a Resolution congratulating him for
having been chosen or selected the President of the World Association of Law Students or WALS,
invited by the Sudanese government for the conference on September 18, 1978: arriving at the
airport at 9:30 in the evening; as he could not talk in Arabic, he was left alone to himself to repeat
until he had to wait for the next morning to have somebody to translate in Arabic language how to
find the place of Mohammed Elsir Taha who invited him as per telegrams exchanged between him
and the plaintiff, now private respondent that the latter's residence was found to be 20 kilometers
away (Office of the Secretary of the African Youth Committee, Sudan Socialist Union); that because

16
the telegram sent by him in Manila, Philippines on September 8, 1978 was not delivered to
Mohammed Taha, the latter was not able to meet him at the airport; on the other hand, the telegram
sent to Diane Merger as Secretary of the conference committee having been delivered to the
address given by him but the person who delivered was told that the said addressee was no longer
staying there and moved out a year ago but this fact was not informed/reported accordingly to him
in Metro Manila, Philippines where the cablegram was sent and which cablegram was not returned
by the receiver abroad to Globe for disposition in the Philippines. Evidently, there was a breach of
contractual obligation committed against him by the defendants, now private respondent Globe
Mackay and RCPI, and therefore, he is entitled to such damages which he has claimed for the
humiliation, suffering, mental anguish and besmirched reputation as a result of the non-delivery of
the cables, which damages amounted to P213,148.00.

The merits of the main case are not to be determined in a petition questioning execution pending appeal (City of
Manila v. Court of Appeals, 72 SCRA 98). However, the facts and circumstances clearly brought out during trial
cannot help but influence whether or not an appeal appears to be dilatory and whether or not there are sufficient
reasons including considerations of justice and equity to justify a departure from the regular procedures regarding
execution.

Petitioners question the alleged presence of superior circumstances demanding urgency of execution pending
appeal. Any delay in final adjudication on the merits will be the fault of the courts and not theirs, according to them.

Petitioner GLOBE states:

In the light of the peculiar circumstances obtaining in the case at bar, among which are that:

1. The judgment creditor does not even have a cause of action against herein petitioner;

2. The greater portion of the amount awarded in the judgment of the trial court cannot be legally
given; and

3. Herein petitioner's defenses are legal and valid and the evidence submitted to prove them,
positive and convincing.

any bond which the prevailing party might have posted cannot fully compensate for the
inconvenience and damages which petitioner will suffer by reason of such hasty execution for the
reason that the said execution will be morally, legally, equitably and outrageously incorrect. ...

The respondent introduced evidence to show that he suffered mental anguish, serious anxiety, besmirched
reputation, wounded feelings, and social humiliation. The petitioners question the extent of these sufferings and
further aver that their acts claimed to have caused the injury were not wrongful, deliberate, wanton, and tainted with
bad faith or fraud.

Our review of the records constrains us to allow execution pending appeal of actual but not the moral and exemplary
damages which must await the final determination of the main cases.

WHEREFORE, the petition is GRANTED PARTIAL DUE COURSE. The November 10, 1981 decision and December
22, 1981 resolution of the appellate court are SET ASIDE and a new ORDER is ENTERED authorizing execution
pending appeal of P43,148.00 actual damages upon the private respondent's filing of a bond in the same amount.
The execution of any award for moral damages, exemplary damages, and attorney's fees is enjoined until after final
resolution of the issues in the main case.

SO ORDERED.

17
G.R. No. L-61464 May 28, 1988
BA FINANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO (doing business under the
name and style of A & L INDUSTRIES), respondents.

GUTIERREZ, JR., J.:

This is a petition for review seeking to set aside the decision of the Court of Appeals which affirmed the decision of
the then Court of First Instance of Manila, dismissing the complaint instituted by the petitioner and ordering it to pay
damages on the basis of the private respondent's counterclaim.

On July 1, 1975, private respondent Augusto Yulo secured a loan from the petitioner in the amount of P591,003.59 as
evidenced by a promissory note he signed in his own behalf and as representative of the A & L Industries.
Respondent Yulo presented an alleged special power of attorney executed by his wife, respondent Lily Yulo, who
manages A & L Industries and under whose name the said business is registered, purportedly authorizing Augusto
Yulo to procure the loan and sign the promissory note. About two months prior to the loan, however, Augusto Yulo
had already left Lily Yulo and their children and had abandoned their conjugal home. When the obligation became
due and demandable, Augusto Yulo failed to pay the same.

On October 7, 1975, the petitioner filed its amended complaint against the spouses Augusto and Lily Yulo on the
basis of the promissory note. It also prayed for the issuance of a writ of attatchment alleging that the said spouses

18
were guilty of fraud in contracting the debt upon which the action was brought and that the fraud consisted of the
spouses' inducing the petitioner to enter into a contract with them by executing a Deed of Assignment in favor of the
petitioner, assigning all their rights, titles and interests over a construction contract executed by and between the
spouses and A. Soriano Corporation on June 19, 1974 for a consideration of P615,732.50 when, in truth, the spouses
did not have any intention of remitting the proceeds of the said construction contract to the petitioner because despite
the provisions in the Deed of Assignment that the spouses shall, without compensation or costs, collect and receive in
trust for the petitioner all payments made upon the construction contract and shall remit to the petitioner all collections
therefrom, the said spouses failed and refuse to remit the collections and instead, misappropriated the proceeds for
their own use and benefit, without the knowledge or consent of the petitioner.

The trial court issued the writ of attachment prayed for thereby enabling the petitioner to attach the properties of A & L
Industries. Apparently not contented with the order, the petitioner filed another motion for the examination of
attachment debtor, alleging that the properties attached by the sheriff were not sufficient to secure the satisfaction of
any judgment that may be recovered by it in the case. This was likewise granted by the court.

Private respondent Lily Yulo filed her answer with counterclaim, alleging that although Augusta Yulo and she are
husband and wife, the former had abandoned her and their children five (5) months before the filing of the complaint;
that they were already separated when the promissory note was executed; that her signature in the special power of
attorney was forged because she had never authorized Augusto Yulo in any capacity to transact any business for and
in behalf of A & L Industries, which is owned by her as a single proprietor, that she never got a single centavo from
the proceeds of the loan mentioned in the promissory note; and that as a result of the illegal attachment of her
properties, which constituted the assets of the A & L Industries, the latter closed its business and was taken over by
the new owner.

After hearing, the trial court rendered judgment dismissing the petitioner's complaint against the private respondent
Lily Yulo and A & L Industries and ordering the petitioner to pay the respondent Lily Yulo P660,000.00 as actual
damages; P500,000.00 as unrealized profits; P300,000.00 as exemplary damages; P30,000.00 as and for attorney's
fees; and to pay the costs.

The petitioner appealed. The Court of Appeals affirmed the trial court's decision except for the exemplary damages
which it reduced from P300,000.00 to P150,000.00 and the attorney's fees which were reduced from P30,000.00 to
P20,000.00.

In resolving the question of whether or not the trial court erred in holding that the signature of respondent Lily Yulo in
the special power of attorney was forged, the Court of Appeals said:

The crucial issue to be determined is whether or not the signatures of the appellee Lily Yulo in
Exhibits B and B-1 are forged. Atty. Crispin Ordoa, the Notary Public, admitted in open court that
the parties in the subject documents did not sign their signatures in his presence. The same were
already signed by the supposed parties and their supposed witnesses at the time they were
brought to him for ratification. We quote from the records the pertinent testimony of Atty. Ordoa,
thus:

Q. This document marked as Exhibit B-1, when this was presented to you by that
common friend, June Enriquez, it was already typewritten, it was already
accomplished, all typewritten.?

A. Yes, sir.

Q And the parties had already affixed their signatures in this document?

A. Yes, sir.

19
Q. In this document marked as Exhibit B although it appears here that this is an
acknowledgment, you have not stated here that the principal actually
acknowledged this document to be her voluntary act and deed?

A This in one of those things that escaped my attention. Actually I have not gone
over the second page. I believed it was in order I signed it. (TSN pp. 13-14,
Hearing of Nov. 26, 1976).

The glaring admission by the Notary Public that he failed to state in the acknowledgment portion of
Exhibit B-1 that the appellee Lily Yulo acknowledged the said document to be her own voluntary act
and deed, is a very strong and commanding circumstance to show that she did not appear
personally before the said Notary Public and did not sign the document.

Additionally, the Notary Public admitted that, while June Enriquez is admittedly a mutual friend of
his and the defendant Augusta Yulo, and who is also an instrumental witness in said Exhibit B-1.,
he could not recognize or tell which of the two signatures appearing therein, was the signature of
this June Enriquez.

Furthermore, as the issue is one of credibility of a witness, the findings and conclusions of the trial
court before whom said witness, Atty. Crispin Ordoa, the Notary Public before whom the
questioned document was supposedly ratified and acknowledged, deserve great respect and are
seldom disturbed on appeal by appellate tribunals, since it is in the best and peculiar advantage of
determining and observing the conduct, demeanor and deportment of a particular witness while he
is testifying in court, an opportunity not enjoyed by the appellate courts who merely have to rely on
the recorded proceedings which transpired in the court below, and the records are bare of any
circumstance of weight, which the trial court had overlooked and which if duly considered, may
radically affect the outcome of the case.

On the other hand, the appellee Lily Yulo, to back up her claim of forgery of her signature in Exhibit
B-1, presented in court a handwriting expert witness in the person of Police Captain Yakal Giron of
the Integrated National Police Training Command, and who is also a Document Examiner of the
same Command's Crime Laboratory at Fort Bonifacio, Metro Manila. His experience as an
examiner of questioned and disputed documents, in our mind, is quite impressive. To qualify him as
a handwriting expert, he declared that he underwent extensive and actual studies and examination
of disputed or questioned document, both at the National Bureau of Investigation Academy and
National Bureau of Investigation Questioned Document Laboratory, respectively, from July 1964, up
to his appointment as Document Examiner in June, 1975, and, to further his experience along this
line, he attended the 297th Annual Conference of the American Society of Questioned Docurnent
Examiners held at Seattle, Washington, in August 1971, as a representative of the Philippines, and
likewise conducted an observation of the present and modern trends of crime laboratories in the
West Coast, U.S.A., in 1971; that he likewise had conducted actual tests and examination of about
100,000 documents, as requested by the different courts, administrative, and governmental
agencies of the Government, substantial portions of which relate to actual court cases.

In concluding that the signatures of the appellee Lily Yulo, in the disputed document in question
(Exh. B-1), were all forgeries, and not her genuine signature, the expert witness categorically
recited and specified in open court what he observed to be about twelve (12) glaring and material
significant differences, in his comparison of the signatures appearing in the genuine specimen
signatures of the said appellee and with those appearing in the questioned document (Exhibit B-1).
Indeed, we have likewise seen the supposed notable differences, found in the standard or genuine
signatures of the appellee which were lifted and obtained in the official files of the government,
such as the Bureau of Internal Revenue on her income tax returns, as compared to the pretended
signature of the appellee appearing in Exhibits B, B-1. It is also noteworthy to mention that the

20
appellant did not even bother to conduct a cross-examination of the handwriting expert witness,
Capt. Giron, neither did the appellant present another handwriting expert, at least to counter-act or
balance the appellee's handwriting expert.

Prescinding from the foregoing facts, we subscribe fully to the lower court's observations that the
signatures of the appellee Lily Yulo in the questioned document (Exh. B-1) were forged. Hence, we
find no factual basis to disagree. (pp. 28-30, Rollo)

As to the petitioner's contention that even if the signature of Lily Yulo was forged or even if the attached properties
were her exclusive property, the same can be made answerable to the obligation because the said properties form
part of the conjugal partnership of the spouses Yulo, the appellate court held that these contentions are without merit
because there is strong preponderant evidence to show that A & L Industries belongs exclusively to respondent Lily
Yulo, namely: a) The Certificate of Registration of A & L Industries, issued by the Bureau of Commerce, showing that
said business is a single proprietorship, and that the registered owner thereof is only Lily Yulo; b) The Mayor's Permit
issued in favor of A & L Industries, by the Caloocan City Mayor's Office showing compliance by said single
proprietorship company with the City Ordinance governing business establishments; and c) The Special Power of
Attorney itself, assuming but without admitting its due execution, is tangible proof that Augusto Yulo has no interest
whatsoever in the A & L Industries, otherwise, there would have been no necessity for the Special Power of Attorney
if he is a part owner of said single proprietorship.

With regard to the award of damages, the Court of Appeals affirmed the findings of the trial court that there was bad
faith on the part of the petitioner as to entitle the private respondent to damages as shown not only by the fact that
the petitioner did not present the Deed of Assignment or the construction agreement or any evidence whatsoever to
support its claim of fraud on the part of the private respondent and to justify the issuance of a preliminary attachment,
but also by the following findings:

Continuing and elaborating further on the appellant's mala fide actuations in securing the writ of
attachment, the lower court stated as follows:

Plaintiff not satisfied with the instant case where an order for attachment has
already been issued and enforced, on the strength of the same Promissory Note
(Exhibit"A"), utilizing the Deed of Chattel Mortgage (Exhibit "4"), filed a
foreclosure proceedings before the Office of the Sheriff of Caloocan (Exhibit"6")
foreclosing the remaining properties found inside the premises formerly occupied
by the A & L Industries. A minute examination of Exhibit "4" will show that the
contracting parties thereto, as appearing in par. 1 thereof, are Augusto Yulo,
doing business under the style of A & L Industries (should be A & L Glass
Industries Corporation), as mortgagor and BA Finance Corporation as
mortgagee, thus the enforcement of the Chattel Mortgage against the property of
A & L Industries exclusively owned by Lily T. Yulo appears to be without any
factual or legal basis whatsoever. The chattel mortgage, Exhibit "4" and the
Promissory Note, Exhibit A, are based on one and the same obligation. Plaintiff
tried to enforce as it did enforce its claim into two different modes a single
obligation.

Aware that defendant Lily Yulo, filed a Motion to Suspend Proceedings by virtue
of a complaint she filed with the Court of First Instance of Caloocan, seeking
annulment of the Promissory Note, the very basis of the plaintiff in filing this
complaint, immediately after the day it filed a Motion for the Issuance of an Alias
Writ of Preliminary Attachment . . .Yet, inspite of the knowledge and the filing of
this Motion to Suspend Proceedings, the Plaintiff still filed a Motion for the
Issuance of a Writ of Attachment dated February 6, 1976 before this court. To
add insult to injury, plaintiff even filed a Motion for Examination of the Attachment

21
Debtor, although aware that Lily Yulo had already denied participation in the
execution of Exhibits "A" and "B". These incidents and actions taken by plaintiff,
to the thinking of the court, are sufficient to prove and establish the element of
bad faith and malice on the part of plaintiff which may warrant the award of
damages in favor of defendant Lily Yulo. (Ibid., pp. 102-103).<re||an1w>

Indeed, the existence of evident bad faith on the appellant's part in proceeding
against the appellee Lily Yulo in the present case, may likewise be distressed on
the fact that its officer Mr. Abraham Co, did not even bother to demand the
production of at least the duplicate original of the Special Power of Attorney
(Exhibit B) and merely contended himself with a mere xerox copy thereof, neither
did he require a more specific authority from the A & L Industries to contract the
loan in question, since from the very content and recitals of the disputed
document, no authority, express or implied, has been delegated or granted to
August Yulo to contract a loan, especially with the appellant. (pp. 33-34, Rollo)

Concerning the actual damages, the appellate court ruled that the petitioner should have presented evidence to
disprove or rebut the private respondent's claim but it remained quiet and chose not to disturb the testimony and the
evidence presented by the private respondent to prove her claim.

In this petition for certiorari, the petitioner raises three issues. The first issue deals with the appellate court's
affirmance of the trial court's findings that the signature of the private respondent on the Special Power of Attorney
was forged. According to the petitioner, the Court of Appeals disregarded the direct mandate of Section 23, Rule 132
of the Rules of Court which states in part that evidence of handwriting by comparison may be made "with writings
admitted or treated as genuine by the party against whom the evidence is offered, or proved to be genuine to the
satisfaction of the judge," and that there is no evidence on record which proves or tends to prove the genuineness of
the standards used.

There is no merit in this contention.

The records show that the signatures which were used as "standards" for comparison with the alleged signature of
the private respondent in the Special Power of Attorney were those from the latter's residence certificates in the years
1973, 1974 and 1975, her income tax returns for the years 1973 and 1975 and from a document on long bond paper
dated May 18, 1977. Not only were the signatures in the foregoing documents admitted by the private respondent as
hers but most of the said documents were used by the private respondent in her transactions with the government. As
was held in the case of Plymouth Saving & Loan Assn. No. 2 v. Kassing (125 NE 488, 494):

We believe the true rule deduced from the authorities to be that the genuineness of a "standard"
writing may be established (1) by the admission of the person sought to be charged with the
disputed writing made at or for the purposes of the trial or by his testimony; (2) by witnesses who
saw the standards written or to whom or in whose hearing the person sought to be charged
acknowledged the writing thereof; (3) by evidence showing that the reputed writer of the standard
has acquiesced in or recognized the same, or that it has been adopted and acted upon by him his
business transactions or other concerns....

Furthermore, the judge found such signatures to be sufficient as standards. In the case of Taylor-Wharton Iron &
Steel Co. v. Earnshaw (156 N.E. 855, 856), it was held:

When a writing is offered as a standard of comparison it is for the presiding judge to decide
whether it is the handwriting of the party to be charged. Unless his finding is founded upon error of
law, or upon evidence which is, as matter of law, insufficient to justify the finding, this court will not
revise it upon exceptions." (Costelo v. Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuez v. Perry,
113 Mass, 274, 276.)

22
We cannot find any error on the part of the trial judge in using the above documents as standards and also in giving
credence to the expert witness presented by the private respondent whose testimony the petitioner failed to rebut and
whose credibility it likewise failed to impeach. But more important is the fact that the unrebutted handwriting expert's
testimony noted twelve (12) glaring and material differences in the alleged signature of the private respondent in the
Special Power of Attorney as compared with the specimen signatures, something which the appellate court also took
into account. In Cesar v. Sandiganbayan (134 SCRA 105, 132), we ruled:

Mr. Maniwang pointed to other significant divergences and distinctive characteristics between the
sample signatures and the signatures on the questioned checks in his report which the court's
Presiding Justice kept mentioning during Maniwang's testimony.

In the course of his cross-examination, NBI expert Tabayoyong admitted that he saw the
differences between the exemplars used and the questioned signatures but he dismissed the
differences because he did not consider them fundamental. We rule that significant differences are
more fundamental than a few similarities. A forger always strives to master some similarities.

The second issue raised by the petitioner is that while it is true that A & L Industries is a single proprietorship and the
registered owner thereof is private respondent Lily Yulo, the said proprietorship was established during the marriage
and its assets were also acquired during the same. Therefore, it is presumed that this property forms part of the
conjugal partnership of the spouses Augusto and Lily Yulo and thus, could be held liable for the obligations contracted
by Augusto Yulo, as administrator of the partnership.

There is no dispute that A & L Industries was established during the marriage of Augusta and Lily Yulo and therefore
the same is presumed conjugal and the fact that it was registered in the name of only one of the spouses does not
destroy its conjugal nature (See Mendoza v. Reyes, 124 SCRA 161, 165). However, for the said property to be held
liable, the obligation contracted by the husband must have redounded to the benefit of the conjugal partnership under
Article 161 of the Civil Code. In the present case, the obligation which the petitioner is seeking to enforce against the
conjugal property managed by the private respondent Lily Yulo was undoubtedly contracted by Augusto Yulo for his
own benefit because at the time he incurred the obligation he had already abandoned his family and had left their
conjugal home. Worse, he made it appear that he was duly authorized by his wife in behalf of A & L Industries, to
procure such loan from the petitioner. Clearly, to make A & L Industries liable now for the said loan would be unjust
and contrary to the express provision of the Civil Code. As we have ruled in Luzon Surety Co., Inc. v. De Gracia (30
SCRA 111, 115-117):

As explained in the decision now under review: "It is true that the husband is the administrator of
the conjugal property pursuant to the provisions of Art. 163 of the new Civil Code. However, as
such administrator the only obligations incurred by the husband that are chargeable against the
conjugal property are those incurred in the legitimate pursuit of his career, profession or business
with the honest belief that he is doing right for the benefit of the family. This is not true in the case
at bar for we believe that the husband in acting as guarantor or surety for another in an indemnity
agreement as that involved in this case did not act for the benefit of the conjugal partnership. Such
inference is more emphatic in this case, when no proof is presented that Vicente Garcia in acting
as surety or guarantor received consideration therefore, which may redound to the benefit of the
conjugal partnership.(Ibid, pp. 46-47).

xxx xxx xxx

xxx xxx xxx

In the most categorical language, a conjugal partnership under that provision is liable only for such
"debts and obligations contracted by the husband for the benefit of the conjugal partnership." There
must be the requisite showing then of some advantage which clearly accrued to the welfare of the
spouses. There is none in this case.

23
xxx xxx xxx

Moreover, it would negate the plain object of the additional requirement in the present Civil Code
that a debt contracted by the husband to bind a conjugal partnership must redound to its benefit.
That is still another provision indicative of the solicitude and tender regard that the law manifests for
the family as a unit. Its interest is paramount; its welfare uppermost in the minds of the codifiers
and legislators.

We, therefore, rule that the petitioner cannot enforce the obligation contracted by Augusto Yulo against his conjugal
properties with respondent Lily Yulo. Thus, it follows that the writ of attachment cannot issue against the said
properties.

Finally, the third issue assails the award of actual damages according to the petitioner, both the lower court and the
appellate court overlooked the fact that the properties referred to are still subject to a levy on attachment. They are,
therefore, still under custodia legis and thus, the assailed decision should have included a declaration as to who is
entitled to the attached properties and that assuming arguendo that the attachment was erroneous, the lower court
should have ordered the sheriff to return to the private respondent the attached properties instead of condemning the
petitioner to pay the value thereof by way of actual damages.

In the case of Lazatin v. Twao (2 SCRA 842, 847), we ruled:

xxx xxx xxx

... It should be observed that Sec. 4 of Rule 59, does not prescribed the remedies available to the
attachment defendant in case of a wrongful attachment, but merely provides an action for recovery
upon the bond, based on the undertaking therein made and not upon the liability arising from a
tortuous act, like the malicious suing out of an attachment. Under the first, where malice is not
essential, the attachment defendant, is entitled to recover only the actual damages sustained by
him by reason of the attachment. Under the second, where the attachment is maliciously sued out,
the damages recoverable may include a compensation for every injury to his credit, business or
feed (Tyler v. Mahoney, 168 NC 237, 84 SE 362; Pittsburg etc. 5 Wakefield, etc., 135 NC 73, 47 SE
234). ...

The question before us, therefore, is whether the attachment of the properties of A & L Industries was wrongful so as
to entitle the petitioner to actual damages only or whether the said attachment was made in bad faith and with malice
to warrant the award of other kinds of damages. Moreover, if the private respondent is entitled only to actual
damages, was the court justified in ordering the petitioner to pay for the value of the attached properties instead of
ordering the return of the said properties to the private respondent Yulo ?

Both the trial and appellate courts found that there was bad faith on the part of the petitioner in securing the writ of
attachment. We do not think so. "An attachment may be said to be wrongful when, for instance, the plaintiff has no
cause of action, or that there is no true ground therefore, or that the plaintiff has a sufficient security other than the
property attached, which is tantamout to saying that the plaintiff is not entitled to attachment because the
requirements of entitling him to the writ are wanting. (7 C.J.S., 664)" (p. 48, Section 4, Rule 57, Francisco, Revised
Rules of Court).

Although the petitioner failed to prove the ground relied upon for the issuance of the writ of attachment, this failure
cannot be equated with bad faith or malicious intent. The steps which were taken by the petitioner to ensure the
security of its claim were premised, on the firm belief that the properties involved could be made answerable for the
unpaid obligation due it. There is no question that a loan in the amount of P591,003.59 was borrowed from the bank.

24
We, thus, find that the petitioner is liable only for actual damages and not for exemplary damages and attorney's fees.
Respondent Lily Yulo has manifested before this Court that she no longer desires the return of the attached
properties since the said attachment caused her to close down the business. From that time she has become a mere
employee of the new owner of the premises. She has grave doubts as to the running condition of the attached
machineries and equipments considering that the attachment was effected way back in 1975. She states as a matter
of fact that the petitioner has already caused the sale of the machineries for fear that they might be destroyed due to
prolonged litigation. We, therefore, deem it just and equitable to allow private respondent Lily Yulo to recover actual
damages based on the value of the attached properties as proven in the trial court, in the amount of P660,000.00. In
turn, if there are any remaining attached properties, they should be permanently released to herein petitioner.

We cannot, however, sustain the award of P500,000.00 representing unrealized profits because this amount was not
proved or justified before the trial court. The basis of the alleged unearned profits is too speculative and conjectural to
show actual damages for a future period. The private respondent failed to present reports on the average actual
profits earned by her business and other evidence of profitability which are necessary to prove her claim for the said
amount (See G. A. Machineries, Inc. v. Yaptinchay, 126 SCRA 78, 88).

The judgment is therefore set aside insofar as it holds the petitioner liable for P500,000.00 actual damages
representing unrealized profits, P150,000.00 for exemplary damages and P20,000.00 for attorney's fees. As stated
earlier, the attached properties, should be released in favor of the petitioner.

WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and the petitioner is ordered to pay the
private respondent Lily Yulo the amount of SIX HUNDRED SIXTY THOUSAND PESOS (P660,000.00) as actual
damages. The remaining properties subject of the attachment are ordered released in favor of the petitioner.

SO ORDERED.

25
G.R. No. L-22590 March 20, 1987
SOLOMON BOYSAW and ALFREDO M. YULO, JR., plaintiffs-appellants,
vs.
INTERPHIL PROMOTIONS, INC., LOPE SARREAL, SR., and MANUEL NIETO, JR., defendants-
appellees.
Felipe Torres and Associates for plaintiffs-appellants.
V.E. Del Rosario & Associates for defendant-appellee M. Nieto, Jr.
A.R. Naravasa & Pol Tiglao, Jr. for defendant-appellee Interphil Promotions, Inc.
RESOLUTION
FERNAN, J.:

This is an appeal interposed by Solomon Boysaw and Alfredo Yulo, Jr., from the decision dated July 25, 1963 and
other rulings and orders of the then Court of First Instance [CFI] of Rizal, Quezon City, Branch V in Civil Case No. Q-
5063, entitled "Solomon Boysaw and Alfredo M. Yulo, Jr., Plaintiffs versus Interphil Promotions, Inc., Lope Sarreal, Sr.
and Manuel Nieto, Jr., Defendants," which, among others, ordered them to jointly and severally pay defendant-
appellee Manuel Nieto, Jr., the total sum of P25,000.00, broken down into P20,000.00 as moral damages and
P5,000.00 as attorney's fees; the defendants-appellees Interphil Promotions, Inc. and Lope Sarreal, Sr., P250,000.00
as unrealized profits, P33,369.72 as actual damages and P5,000.00 as attorney's fees; and defendant-appellee Lope
Sarreal, Sr., the additional amount of P20,000.00 as moral damages aside from costs.

The antecedent facts of the case are as follows:

On May 1, 1961, Solomon Boysaw and his then Manager, Willie Ketchum, signed with Interphil Promotions, Inc.
represented by Lope Sarreal, Sr., a contract to engage Gabriel "Flash" Elorde in a boxing contest for the junior
lightweight championship of the world.

It was stipulated that the bout would be held at the Rizal Memorial Stadium in Manila on September 30, 1961 or not
later than thirty [30] days thereafter should a postponement be mutually agreed upon, and that Boysaw would not,
prior to the date of the boxing contest, engage in any other such contest without the written consent of Interphil
Promotions, Inc.

On May 3, 1961, a supplemental agreement on certain details not covered by the principal contract was entered into
by Ketchum and Interphil. Thereafter, Interphil signed Gabriel "Flash" Elorde to a similar agreement, that is, to
engage Boysaw in a title fight at the Rizal Memorial Stadium on September 30, 1961.

On June 19, 1961, Boysaw fought and defeated Louis Avila in a ten-round non-title bout held in Las Vegas, Nevada,
U.S.A. [pp. 26-27, t.s.n., session of March 14, 1963].

26
On July 2, 1961, Ketchum on his own behalf and on behalf of his associate Frank Ruskay, assigned to J. Amado
Araneta the managerial rights over Solomon Boysaw.

Presumably in preparation for his engagement with Interphil, Solomon Boysaw arrived in the Philippines on July 31,
1961.

On September 1, 1961, J. Amado Araneta assigned to Alfredo J. Yulo, Jr. the managerial rights over Boysaw that he
earlier acquired from Ketchum and Ruskay. The next day, September 2, 1961, Boysaw wrote Lope Sarreal, Sr.
informing him of his arrival and presence in the Philippines.

On September 5, 1961, Alfredo Yulo, Jr. wrote to Sarreal informing him of his acquisition of the managerial rights over
Boysaw and indicating his and Boysaw's readiness to comply with the boxing contract of May 1, 1961. On the same
date, on behalf of Interphil Sarreal wrote a letter to the Games and Amusement Board [GAB] expressing concern over
reports that there had been a switch of managers in the case of Boysaw, of which he had not been formally notified,
and requesting that Boysaw be called to an inquiry to clarify the situation.

The GAB called a series of conferences of the parties concerned culminating in the issuance of its decision to
schedule the Elorde-Boysaw fight for November 4, 1961. The USA National Boxing Association which has
supervisory control of all world title fights approved the date set by the GAB

Yulo, Jr. refused to accept the change in the fight date, maintaining his refusal even after Sarreal on September 26,
1961, offered to advance the fight date to October 28, 1961 which was within the 30-day period of allowable
postponements provided in the principal boxing contract of May 1, 1961.

Early in October 1961, Yulo, Jr. exchanged communications with one Mamerto Besa, a local boxing promoter, for a
possible promotion of the projected Elorde-Boysaw title bout. In one of such communications dated October 6, 1961,
Yulo informed Besa that he was willing to approve the fight date of November 4,1961 provided the same was
promoted by Besa.

While an Elorde-Boysaw fight was eventually staged, the fight contemplated in the May 1, 1961 boxing contract never
materialized.

As a result of the foregoing occurrences, on October 12, 1961, Boysaw and Yulo, Jr. sued Interphil, Sarreal, Sr. and
Manuel Nieto, Jr. in the CFI of Rizal [Quezon City Branch] for damages allegedly occasioned by the refusal of
Interphil and Sarreal, aided and abetted by Nieto, Jr., then GAB Chairman, to honor their commitments under the
boxing contract of May 1,1961.

On the first scheduled date of trial, plaintiff moved to disqualify Solicitor Jorge Coquia of the Solicitor General's Office
and Atty. Romeo Edu of the GAB Legal Department from appearing for defendant Nieto, Jr. on the ground that the
latter had been sued in his personal capacity and, therefore, was not entitled to be represented by government
counsel. The motion was denied insofar as Solicitor General Coquia was concerned, but was granted as regards the
disqualification of Atty. Edu.

The case dragged into 1963 when sometime in the early part of said year, plaintiff Boysaw left the country without
informing the court and, as alleged, his counsel. He was still abroad when, on May 13, 1963, he was scheduled to
take the witness stand. Thus, the lower court reset the trial for June 20, 1963. Since Boysaw was still abroad on the
later date, another postponement was granted by the lower court for July 23, 1963 upon assurance of Boysaw's
counsel that should Boysaw fail to appear on said date, plaintiff's case would be deemed submitted on the evidence
thus far presented.

27
On or about July 16, 1963, plaintiffs represented by a new counsel, filed an urgent motion for postponement of the
July 23, 1963 trial, pleading anew Boysaw's inability to return to the country on time. The motion was denied; so was
the motion for reconsideration filed by plaintiffs on July 22, 1963.

The trial proceeded as scheduled on July 23, 1963 with plaintiff's case being deemed submitted after the plaintiffs
declined to submit documentary evidence when they had no other witnesses to present. When defendant's counsel
was about to present their case, plaintiff's counsel after asking the court's permission, took no further part in the
proceedings.

After the lower court rendered its judgment dismissing the plaintiffs' complaint, the plaintiffs moved for a new trial. The
motion was denied, hence, this appeal taken directly to this Court by reason of the amount involved.

From the errors assigned by the plaintiffs, as having been committed by the lower court, the following principal issues
can be deduced:

1. Whether or not there was a violation of the fight contract of May 1, 1961; and if there was, who
was guilty of such violation.

2. Whether or not there was legal ground for the postponement of the fight date from September 1,
1961, as stipulated in the May 1, 1961 boxing contract, to November 4,1961,

3. Whether or not the lower court erred in the refusing a postponement of the July 23, 1963 trial.

4. Whether or not the lower court erred in denying the appellant's motion for a new trial.

5. Whether or not the lower court, on the basis of the evidence adduced, erred in awarding the
appellees damages of the character and amount stated in the decision.

On the issue pertaining to the violation of the May 1, 1961 fight contract, the evidence established that the contract
was violated by appellant Boysaw himself when, without the approval or consent of Interphil, he fought Louis Avila on
June 19, 1961 in Las Vegas Nevada. Appellant Yulo admitted this fact during the trial. [pp. 26-27, t.s.n., March 14,
1963].

While the contract imposed no penalty for such violation, this does not grant any of the parties the unbridled liberty to
breach it with impunity. Our law on contracts recognizes the principle that actionable injury inheres in every
contractual breach. Thus:

Those who in the performance of their obligations are guilty of fraud, negligence or delay, and
those who in any manner contravene the terms thereof, are liable for damages. [Art. 1170, Civil
Code].

Also:

The power to rescind obligations is implied, in reciprocal ones, in case one of the obligors should
not comply with what is incumbent upon him. [Part 1, Art. 1191, Civil Code].

There is no doubt that the contract in question gave rise to reciprocal obligations. "Reciprocal obligations are those
which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the
obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously, so that the
performance of one is conditioned upon the simultaneous fulfillment of the other" [Tolentino, Civil Code of the
Philippines, Vol. IV, p. 175.1

28
The power to rescind is given to the injured party. "Where the plaintiff is the party who did not perform the
undertaking which he was bound by the terms of the agreement to perform 4 he is not entitled to insist upon the
performance of the contract by the defendant, or recover damages by reason of his own breach " [Seva vs. Alfredo
Berwin 48 Phil. 581, Emphasis supplied].

Another violation of the contract in question was the assignment and transfer, first to J. Amado Araneta, and
subsequently, to appellant Yulo, Jr., of the managerial rights over Boysaw without the knowledge or consent of
Interphil.

The assignments, from Ketchum to Araneta, and from Araneta to Yulo, were in fact novations of the original contract
which, to be valid, should have been consented to by Interphil.

Novation which consists in substituting a new debtor in the place of the original one, may be made
even without the knowledge or against the will of the latter, but not without the consent of the
creditor. [Art. 1293, Civil Code, emphasis supplied].

That appellant Yulo, Jr., through a letter, advised Interphil on September 5, 1961 of his acquisition of the managerial
rights over Boysaw cannot change the fact that such acquisition, and the prior acquisition of such rights by Araneta
were done without the consent of Interphil. There is no showing that Interphil, upon receipt of Yulo's letter, acceded to
the "substitution" by Yulo of the original principal obligor, who is Ketchum. The logical presumption can only be that,
with Interphil's letter to the GAB expressing concern over reported managerial changes and requesting for
clarification on the matter, the appellees were not reliably informed of the changes of managers. Not being reliably
informed, appellees cannot be deemed to have consented to such changes.

Under the law when a contract is unlawfully novated by an applicable and unilateral substitution of the obligor by
another, the aggrieved creditor is not bound to deal with the substitute.

The consent of the creditor to the change of debtors, whether in expromision or delegacion is an,
indispensable requirement . . . Substitution of one debtor for another may delay or prevent the
fulfillment of the obligation by reason of the inability or insolvency of the new debtor, hence, the
creditor should agree to accept the substitution in order that it may be binding on him.

Thus, in a contract where x is the creditor and y is the debtor, if y enters into a contract with z,
under which he transfers to z all his rights under the first contract, together with the obligations
thereunder, but such transfer is not consented to or approved by x, there is no novation. X can still
bring his action against y for performance of their contract or damages in case of breach.
[Tolentino, Civil Code of the Philippines, Vol. IV, p. 3611.

From the evidence, it is clear that the appellees, instead of availing themselves of the options given to them by law of
rescission or refusal to recognize the substitute obligor Yulo, really wanted to postpone the fight date owing to an
injury that Elorde sustained in a recent bout. That the appellees had the justification to renegotiate the original
contract, particularly the fight date is undeniable from the facts aforestated. Under the circumstances, the appellees'
desire to postpone the fight date could neither be unlawful nor unreasonable.

We uphold the appellees' contention that since all the rights on the matter rested with the appellees, and appellants'
claims, if any, to the enforcement of the contract hung entirely upon the former's pleasure and sufferance, the GAB
did not act arbitrarily in acceding to the appellee's request to reset the fight date to November 4, 1961. It must be
noted that appellant Yulo had earlier agreed to abide by the GAB ruling.

In a show of accommodation, the appellees offered to advance the November 4, 1961 fight to October 28, 1961 just
to place it within the 30- day limit of allowable postponements stipulated in the original boxing contract.

29
The refusal of appellants to accept a postponement without any other reason but the implementation of the terms of
the original boxing contract entirely overlooks the fact that by virtue of the violations they have committed of the terms
thereof, they have forfeited any right to its enforcement.

On the validity of the fight postponement, the violations of the terms of the original contract by appellants vested the
appellees with the right to rescind and repudiate such contract altogether. That they sought to seek an adjustment of
one particular covenant of the contract, is under the circumstances, within the appellee's rights.

While the appellants concede to the GAB's authority to regulate boxing contests, including the setting of dates
thereof, [pp. 44-49, t.s.n., Jan. 17, 1963], it is their contention that only Manuel Nieto, Jr. made the decision for
postponement, thereby arrogating to himself the prerogatives of the whole GAB Board.

The records do not support appellants' contention. Appellant Yulo himself admitted that it was the GAB Board that set
the questioned fight date. [pp. 32-42, t.s.n., Jan. 17, 1963]. Also, it must be stated that one of the strongest
presumptions of law is that official duty has been regularly performed. In this case, the absence of evidence to the
contrary, warrants the full application of said presumption that the decision to set the Elorde-Boysaw fight on
November 4, 1961 was a GAB Board decision and not of Manuel Nieto, Jr. alone.

Anent the lower court's refusal to postpone the July 23, 1963 trial, suffice it to say that the same issue had been
raised before Us by appellants in a petition for certiorari and prohibition docketed as G.R. No. L-21506. The dismissal
by the Court of said petition had laid this issue to rest, and appellants cannot now hope to resurrect the said issue in
this appeal.

On the denial of appellant's motion for a new trial, we find that the lower court did not commit any reversible error.

The alleged newly discovered evidence, upon which the motion for new trial was made to rest, consists merely of
clearances which Boysaw secured from the clerk of court prior to his departure for abroad. Such evidence cannot
alter the result of the case even if admitted for they can only prove that Boysaw did not leave the country without
notice to the court or his counsel.

The argument of appellants is that if the clearances were admitted to support the motion for a new trial, the lower
court would have allowed the postponement of the trial, it being convinced that Boysaw did not leave without notice to
the court or to his counsel. Boysaw's testimony upon his return would, then, have altered the results of the case.

We find the argument without merit because it confuses the evidence of the clearances and the testimony of Boysaw.
We uphold the lower court's ruling that:

The said documents [clearances] are not evidence to offset the evidence adduced during the
hearing of the defendants. In fact, the clearances are not even material to the issues raised. It is
the opinion of the Court that the 'newly discovered evidence' contemplated in Rule 37 of the Rules
of Court, is such kind of evidence which has reference to the merits of the case, of such a nature
and kind, that if it were presented, it would alter the result of the judgment. As admitted by the
counsel in their pleadings, such clearances might have impelled the Court to grant the
postponement prayed for by them had they been presented on time. The question of the denial of
the postponement sought for by counsel for plaintiffs is a moot issue . . . The denial of the petition
for certiorari and prohibition filed by them, had he effect of sustaining such ruling of the court . . .
[pp. 296-297, Record on Appeal].

The testimony of Boysaw cannot be considered newly discovered evidence for as appellees rightly contend, such
evidence has been in existence waiting only to be elicited from him by questioning.

30
We cite with approval appellee's contention that "the two qualities that ought to concur or dwell on each and every of
evidence that is invoked as a ground for new trial in order to warrant the reopening . . . inhered separately on two
unrelated species of proof" which "creates a legal monstrosity that deserves no recognition."

On the issue pertaining to the award of excessive damages, it must be noted that because the appellants wilfully
refused to participate in the final hearing and refused to present documentary evidence after they no longer had
witnesses to present, they, by their own acts prevented themselves from objecting to or presenting proof contrary to
those adduced for the appellees.

On the actual damages awarded to appellees, the appellants contend that a conclusion or finding based upon the
uncorroborated testimony of a lone witness cannot be sufficient. We hold that in civil cases, there is no rule requiring
more than one witness or declaring that the testimony of a single witness will not suffice to establish facts, especially
where such testimony has not been contradicted or rebutted. Thus, we find no reason to disturb the award of
P250,000.00 as and for unrealized profits to the appellees.

On the award of actual damages to Interphil and Sarreal, the records bear sufficient evidence presented by appellees
of actual damages which were neither objected to nor rebutted by appellants, again because they adamantly refused
to participate in the court proceedings.

The award of attorney's fees in the amount of P5,000.00 in favor of defendant-appellee Manuel Nieto, Jr. and another
P5,000.00 in favor of defendants-appellees Interphil Promotions, Inc. and Lope Sarreal, Sr., jointly, cannot also be
regarded as excessive considering the extent and nature of defensecounsels' services which involved legal work for
sixteen [16] months.

However, in the matter of moral damages, we are inclined to uphold the appellant's contention that the award is not
sanctioned by law and well- settled authorities. Art. 2219 of the Civil Code provides:

Art. 2219. Moral damages may be recovered in the following analogous cases:

1) A criminal offense resulting in physical injuries;

2) Quasi-delict causing physical injuries;

3) Seduction, abduction, rape or other lascivious acts;

4) Adultery or concubinage;

5) Illegal or arbitrary detention or arrest;

6) Illegal search;

7) Libel, slander or any other form of defamation;

8) Malicious prosecution;

9) Acts mentioned in Art. 309.

10) Acts and actions referred to in Arts., 21, 26, 27, 28, 29, 30, 32, 34 and 35.

The award of moral damages in the instant case is not based on any of the cases enumerated in Art. 2219 of the Civil
Code. The action herein brought by plaintiffs-appellants is based on a perceived breach committed by the

31
defendants-appellees of the contract of May 1, 1961, and cannot, as such, be arbitrarily considered as a case of
malicious prosecution.

Moral damages cannot be imposed on a party litigant although such litigant exercises it erroneously because if the
action has been erroneously filed, such litigant may be penalized for costs.

The grant of moral damages is not subject to the whims and caprices of judges or courts. The
court's discretion in granting or refusing it is governed by reason and justice. In order that a person
may be made liable to the payment of moral damages, the law requires that his act be wrongful.
The adverse result of an action does not per se make the act wrongful and subject the actor to the
payment of moral damages. The law could not have meant to impose a penalty on the right to
litigate; such right is so precious that moral damages may not be charged on those who may
exercise it erroneously. For these the law taxes costs. [Barreto vs. Arevalo, et. al. No. L-7748, Aug.
27, 1956, 52 O.G., No. 13, p. 5818.]

WHEREFORE, except for the award of moral damages which is herein deleted, the decision of the lower court is
hereby affirmed.

G.R. No. L-40233 February 14, 1934


THE BACHRACH MOTOR CO., INC., plaintiff-appellee,
vs.
JOSE ESTEVA and TEAL MOTOR CO., INC., defendants.
JOSE ESTEVA, appellant.
Gregorio Perfecto and Zosimo Rivas for appellant.
Mariano Ezpeleta for appellee.
MALCOLM, J.:

32
This case presents the unusual circumstances of a chattel mortgage, the debt evidenced by a series of promissory
notes executed by two parties, the holder of the mortgage retaining the mortgage but transferring the notes to a third
party, the mortgagee foreclosing the mortgage, and the third party suing upon the promissory notes. A skeleton
narration of the facts will more clearly elucidate the foregoing statement, and may be made as follows:

Beginning with 1927, Jose Esteva bought a number of motor trucks from the Teal Motor Co., Inc. The latter company
assured Esteva that it would not make any attempt to repossess the property in less than three months after the due
date of any one note, but this assurance, dated September 25, 1929, referred to the set of notes executed on that
date. On April 8, 1930, a chattel mortgage was made which consolidated all of Esteva's indebtedness to the Teal
Motor Co., Inc. The mortgage was for the sum of P54,500, and was given as security for the payment of twenty-two
promissory notes maturing on specified dates. On April 12, 1930, the Teal Motor Co., Inc., endorsed the promissory
notes to the Bachrach Motor Co., Inc. Esteva failed to make payments of certain notes as they became due. A
proposition was made by him to the Teal Motor Co., Inc., for the formation of a corporation, but the papers for this
purpose were never signed. On March 31, 1931, foreclosure proceedings were started by the Teal Motor Co., Inc.,
and shortly thereafter the trucks, trailers, and automobile of Esteva were sold to the highest bidder, which was the
Teal Motor Co., Inc., for the sum of P20,000. Subsequently, on December 9, 1931, the instant action was begun by
the Bachrach Motor Co., Inc., to secure the payment from Jose Esteva and the Teal Motor Co., Inc., of the amounts
due under the promissory notes. The attempt of Esteva to present a cross-complaint for damages failed, and the
case went to trial on the complaint of the plaintiff and the answers of the defendants. Judgment was rendered in favor
of the plaintiff and against the defendants, jointly and severally, for the sum of P34,749.41, with interest at the rate of
12 per cent per annum from December 10, 1931, and with an additional sum of P3,483.72 as penalty, and in favor of
the plaintiff and against the Teal Motor Co., Inc., for the sum of P20,000, with interest at the rate of 12 per cent per
annum from December 10, 1931, with an additional sum of P2,000 as penalty, with costs against the defendants.

Appealing from the judgment just mentioned, Esteva makes the following assignments of error:

1. The trial court erred in not admitting Jose Esteva's amended answer dated February 12, 1932.

2. The trial court erred in admitting as part only of the special defense of Jose Esteva his cross-complaint
dated June 15, 1932.

3. The trial court erred in stating that as the Teal Motor Co., Inc., has not accepted the proposition of Jose
Esteva to form a corporation to assume his obligation, there was no novation of contract.

4. The trial court erred in stating that the foreclosure of the mortgage of Jose Esteva was timely.1vvphi1.net

5. The trial court erred in not deciding that the foreclosure of the mortgage of Jose Esteva by Teal Motor Co.,
Inc., was illegal.

6. The trial court erred in not deciding that there was collusion between plaintiff and defendant Teal Motor
Co., Inc., in depriving Jose Esteva illegally of his mortgaged properties.

7. The trial court erred in not granting the motion of Jose Esteva for new trial.

8. The trial court erred in deciding that the damages proved by Jose Esteva were speculative.

9. The trial court erred in not adjudging plaintiff and defendant Teal Motor Co., Inc., responsible for the return
of Jose Esteva's vehicles and for the payment of the corresponding damages.

With reference to the assigned errors, we may say generally that we either find unsustainable or unnecessary to
discuss errors 1, 2, 3, 4, 7, and 8, and that we find sustainable error 5 in toto and errors 6 and 9 in part.

33
Our Chattel Mortgage Law, Act No. 1508, in its section 3, defines a chattel mortgage as "a conditional sale of
personal property as security for the payment of a debt, or the performance of some other obligation specified
therein." Section 5 of the law sets forth the form of a chattel mortgage, which form was substantially followed in the
present instance. Otherwise, the law is silent with reference to the facts before us. However, there are certain basic
principles which it is only needful to write down in order to see clearly the correct result.

In the law of chattel mortgages the debt is the principal thing. The mortgage is but an incident to the debt. Separated
from the debt, the mortgage has no determinate value. Customarily the foreclosure of the mortgage accompanied as
it is by the debt follows in due course without mishap. Ordinarily also, the transfer of the debt carries with it the
mortgage. So a sale and delivery of notes secured by a chattel mortgage, although unaccompanied by an
assignment of the mortgage itself, authorizes the purchaser to act as the mortgagee's agent and to do whatever he
could have done to enforce the mortgage. So likewise, whatever discharges the debt discharges the mortgage. All
this unless there be an agreement to the contrary.

Possibly as good a presentation of the applicable law as any is that to be found in the old case of Langdon vs. Buel
( [1832], 9 Wend. N. Y., 80). This was a case of a chattel mortgage being executed on a steam engine and with the
debt shown by two notes. The notes which this mortgage was given to secure were assigned to a third party. The
question was, did not the mortgage pass with the notes as incidents to them and should the action not have been
brought in the name of the third party? The court answered: "A mortgage of either real or personal estate is but an
accessory or incident to the debt, or the security which is given as the evidence of the debt. The assignment of the
security passes the interest in the mortgage. The mortgage cannot exist as an independent debt. If by special
agreement it does not accompany the security assigned, it is ipso facto extinguished, and ceases to be a subsisting
demand."

In the instant case, the mortgage cannot be impliedly found to have passed as an incident of the debt because there
was an agreement to the contrary. The Teal Motor Co., Inc., retained the mortgage and foreclosed it, while the
Bachrach Motor Co., Inc., received the promissory notes and sued upon them. What was the legal effect of this
unique arrangement knowingly entered into? As to the mortgage, it ceased to exist because there was no debt to
which it could attach. The foreclosure proceedings were as a consequence a nullity. As to the debt, the promissory
notes unpaid, they were obligations of Esteva to the Teal Motor Co., Inc., which assigned its rights to the Bachrach
Motor Co., Inc. The latter, as a holder of the notes, could sue upon them. But what cannot be countenanced is the
separation of the notes from the mortgage and both the foreclosure of the mortgage and a suit on the notes.

The rights of Bachrach Motor Co Inc,. are as above indicated and include the privilege of securing payment from
Esteva of all that is due on the promissory notes. The rights of Esteva, who has been injured by an illegal foreclosure
of the mortgage, consist in securing damages from the entities who caused him these damages. In this connection it
may be said that the evidence is sufficient to establish the interlocking relationship between the Teal Motor Co., Inc.,
and the Bachrach Motor Co., Inc. The action of Esteva would, therefore, lie against both corporations. This
conclusion is the more evident when we realize that to hold otherwise might simply result in permitting Esteva to
prove damages against the Teal Motor Co., Inc., a corporation with possibly no visible assets. The corresponding
obligations of the Bachrach Motor Co., Inc., the Teal Motor Co., Inc., and Jose Esteva will necessarily have to be
determined at a new trial, at which the Bachrach Motor Co., Inc., can establish the debt due from Esteva and the
latter can set off against the debt whatever damages he can prove at the trial.

Agreeable to the foregoing pronouncements, the appealed judgment will be set aside, and the record remanded for a
new trial, with permission to the parties to file their corresponding pleadings, and present their evidence. So ordered,
the costs of this instance to be paid by the plaintiff and appellee.

34
G.R. No. L-44748 August 29, 1986
RADIO COMMUNICATIONS OF THE PHILS., INC. (RCPI). petitioner,
vs.
COURT OF APPEALS and LORETO DIONELA, respondents.
O. Pythogoras Oliver for respondents.
PARAS, J.:

Before Us, is a Petition for Review by certiorari of the decision of the Court of Appeals, modifying the decision of the
trial court in a civil case for recovery of damages against petitioner corporation by reducing the award to private
respondent Loreto Dionela of moral damages from P40,000 to Pl5,000, and attorney's fees from P3,000 to P2,000.

The basis of the complaint against the defendant corporation is a telegram sent through its Manila Office to the
offended party, Loreto Dionela, reading as follows:

176 AS JR 1215PM 9 PAID MANDALUYONG JUL 22-66 LORETO DIONELA CABANGAN


LEGASPI CITY

WIRE ARRIVAL OF CHECK FER

LORETO DIONELA-CABANGAN-WIRE ARRIVAL OF CHECK-PER

115 PM

SA IYO WALANG PAKINABANG DUMATING KA DIYAN-WALA-KANG PADALA DITO KAHIT


BULBUL MO

(p. 19, Annex "A")

Plaintiff-respondent Loreto Dionela alleges that the defamatory words on the telegram sent to him not only wounded
his feelings but also caused him undue embarrassment and affected adversely his business as well because other
people have come to know of said defamatory words. Defendant corporation as a defense, alleges that the additional
words in Tagalog was a private joke between the sending and receiving operators and that they were not addressed
to or intended for plaintiff and therefore did not form part of the telegram and that the Tagalog words are not
defamatory. The telegram sent through its facilities was received in its station at Legaspi City. Nobody other than the
operator manned the teletype machine which automatically receives telegrams being transmitted. The said telegram
was detached from the machine and placed inside a sealed envelope and delivered to plaintiff, obviously as is. The
additional words in Tagalog were never noticed and were included in the telegram when delivered.

The trial court in finding for the plaintiff ruled as follows:

There is no question that the additional words in Tagalog are libelous. They clearly impute a vice or
defect of the plaintiff. Whether or not they were intended for the plaintiff, the effect on the plaintiff is
the same. Any person reading the additional words in Tagalog will naturally think that they refer to
the addressee, the plaintiff. There is no indication from the face of the telegram that the additional
words in Tagalog were sent as a private joke between the operators of the defendant.

The defendant is sued directly not as an employer. The business of the defendant is to transmit
telegrams. It will open the door to frauds and allow the defendant to act with impunity if it can
escape liability by the simple expedient of showing that its employees acted beyond the scope of
their assigned tasks.

35
The liability of the defendant is predicated not only on Article 33 of the Civil Code of the Philippines
but on the following articles of said Code:

ART. 19.- Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.

ART. 20.-Every person who, contrary to law, wilfully or negligently causes damage to another, shall
indemnify the latter for the same.

There is sufficient publication of the libelous Tagalog words. The office file of the defendant
containing copies of telegrams received are open and held together only by a metal fastener.
Moreover, they are open to view and inspection by third parties.

It follows that the plaintiff is entitled to damages and attorney's fees. The plaintiff is a businessman.
The libelous Tagalog words must have affected his business and social standing in the community.
The Court fixes the amount of P40,000.00 as the reasonable amount of moral damages and the
amount of P3,000.00 as attorney's fee which the defendant should pay the plaintiff. (pp. 15-16,
Record on Appeal)

The respondent appellate court in its assailed decision confirming the aforegoing findings of the lower court stated:

The proximate cause, therefore, resulting in injury to appellee, was the failure of the appellant to
take the necessary or precautionary steps to avoid the occurrence of the humiliating incident now
complained of. The company had not imposed any safeguard against such eventualities and this
void in its operating procedure does not speak well of its concern for their clientele's interests.
Negligence here is very patent. This negligence is imputable to appellant and not to its employees.

The claim that there was no publication of the libelous words in Tagalog is also without merit. The
fact that a carbon copy of the telegram was filed among other telegrams and left to hang for the
public to see, open for inspection by a third party is sufficient publication. It would have been
otherwise perhaps had the telegram been placed and kept in a secured place where no one may
have had a chance to read it without appellee's permission.

The additional Tagalog words at the bottom of the telegram are, as correctly found by the lower
court, libelous per se, and from which malice may be presumed in the absence of any showing of
good intention and justifiable motive on the part of the appellant. The law implies damages in this
instance (Quemel vs. Court of Appeals, L-22794, January 16, 1968; 22 SCRA 44). The award of
P40,000.00 as moral damages is hereby reduced to P15,000.00 and for attorney's fees the amount
of P2,000.00 is awarded. (pp. 22-23, record)

After a motion for reconsideration was denied by the appellate court, petitioner came to Us with the following:

ASSIGNMENT OF ERRORS

The Honorable Court of Appeals erred in holding that Petitioner-employer should answer directly
and primarily for the civil liability arising from the criminal act of its employee.

II

36
The Honorable Court of Appeals erred in holding that there was sufficient publication of the alleged
libelous telegram in question, as contemplated by law on libel.

III

The Honorable Court of Appeals erred in holding that the liability of petitioner-company-employer is
predicated on Articles 19 and 20 of the Civil Code, Articles on Human Relations.

IV

The Honorable Court of Appeals erred in awarding Atty's. fees. (p. 4, Record)

Petitioner's contentions do not merit our consideration. The action for damages was filed in the lower court directly
against respondent corporation not as an employer subsidiarily liable under the provisions of Article 1161 of the New
Civil Code in relation to Art. 103 of the Revised Penal Code. The cause of action of the private respondent is based
on Arts. 19 and 20 of the New Civil Code (supra). As well as on respondent's breach of contract thru the negligence
of its own employees. 1

Petitioner is a domestic corporation engaged in the business of receiving and transmitting messages. Everytime a
person transmits a message through the facilities of the petitioner, a contract is entered into. Upon receipt of the rate
or fee fixed, the petitioner undertakes to transmit the message accurately. There is no question that in the case at bar,
libelous matters were included in the message transmitted, without the consent or knowledge of the sender. There is
a clear case of breach of contract by the petitioner in adding extraneous and libelous matters in the message sent to
the private respondent. As a corporation, the petitioner can act only through its employees. Hence the acts of its
employees in receiving and transmitting messages are the acts of the petitioner. To hold that the petitioner is not
liable directly for the acts of its employees in the pursuit of petitioner's business is to deprive the general public
availing of the services of the petitioner of an effective and adequate remedy. In most cases, negligence must be
proved in order that plaintiff may recover. However, since negligence may be hard to substantiate in some cases, we
may apply the doctrine of RES IPSA LOQUITUR (the thing speaks for itself), by considering the presence of facts or
circumstances surrounding the injury.

WHEREFORE, premises considered, the judgment of the appellate court is hereby AFFIRMED.

SO ORDERED.

37
G.R. No. L-9973 November 6, 1914
W. E. HICKS, plaintiff-appellant,
vs.
MANILA HOTEL COMPANY, defendant-appellee.
MORELAND, J.:

This is an appeal from a judgment of the Court of First Instance of the city of Manila dismissing upon the merits after
trial plaintiff's action to recover damages alleged to have been sustained through defendant's breach of a stipulation
to renew for a second year a written contract for the exclusive five-passenger automobile privilege of the defendant
hotel.

It seems that, on the 9th of November 1912, plaintiff and defendant entered into a written contract by which the
defendant ceded to the plaintiff the exclusive right to serve its patrons with five-passenger automobiles for a period of
one year from the date thereof, with certain rights with respect to a renewal of the contract for a second year. Plaintiff
entered on the performance of his duties under the contract and successfully discharged them during the first year.
When about half of the first year had expired, and about June, 1913, the defendant company, disregarding, as plaintiff
claims, the terms of its agreement with him, invited proposals from various garages for its five-passenger automobile
privilege for the ensuing year, that is, from November, 1913, to November, 1914, the time covered by the second year
of plaintiff's contract. Under these proposals various garages competed for the privilege, including that of George E.
Brown, and, after certain negotiations with the latter, his offer was accepted by the defendant company and a written
contract made with him for the exclusive right to the privilege during the year beginning November 9, 1913. This
contract with Brown was executed some months prior to the termination of the first year of plaintiff's contract.

Upon the termination of the first year of the contract the defendant company having, as we have seen, already
entered into a contract with Brown relative to the matter included in plaintiff's contract for the period representing the
second year thereof, refused, over plaintiff's objections and protests, to permit him to continue for the second year,
deprived him of the privilege which the contract conferred, and evicted him from the hotel where, under the terms of
the contract, he was entitled to have and did have an office.

This action was brought to recover damages for breach of contract.

The contract between the parties hereto contains a clause which forms the subject matter of this litigation. It is as
follows: "This agreement to remain in effect for a period of one year from date, with preference over others of
renewing for a further period of one year."

There are two questions involved.

The first one is whether that portion of the agreement just quoted gave the plaintiff an enforceable right to renew the
contract for a second year.

38
The second is whether the plaintiff, even though he had that right, did, by his acts and conduct, waive that right and
thereby exempt the defendant from the liability, if any, which it incurred by its eviction of plaintiff and the refusal to
permit him to enjoy the privilege for the second year.

As to the first question:

Counsel for the defendant company contended that the clause quoted gave the appellant no right to renew the
contract sued upon for the second year. They assert that it did nothing more than give to plaintiff the right to compete
with others in obtaining defendant's five-passenger automobile privilege for the said second year, with preference to
him to be engaged over his competitors in case his offer was equally profitable to the defendant hotel. They further
contend that the competition into which he was thus thrust did not relate exclusively to the contract in which the
clause is found or to the terms and conditions of that contract; but that it referred to any contract which the defendant
hotel offered to make or could make with any person, whatever its terms and conditions might be.

On the other hand, plaintiff claims that the contract gave him a right to renew and that the stipulation for a renewal did
not contemplate other or different terms than those embraced in the contract to be renewed and that by entering into
the Brown contract and evicting the plaintiff from the premises the defendant violated its obligation to grant the
plaintiff a renewal of his contract for a second year.

We are constrained to agree with plaintiff's contention.

It must be remembered that the contract relating to the five-passenger automobile privilege was complete contract,
whereby the plaintiff was required to furnish a certain number of five-passenger automobile and to attend faithfully
and fully to the requirements of the patrons of the hotel, for which he was to receive a stipulated compensation. The
construction placed upon the clause by defendant deprives the plaintiff of any right or interest in that particular
contract or any renewal thereof and relegates him to a scramble to obtain not the same contract for a second year but
an entirely different contract for one or more years. By this contention the clause in question is torn from the
agreement in which it was placed by the parties and made to do service not with relation to the contract in which it is
found but with relation to another contract different in every conceivable term.

It would see, other things being equal, that a clause in a contract should be construed with reference to the contract
in which it is found, and if it accords a privilege to one party or the other, it should be in connection with the contract to
which it refers. The contract in which the clause is found was, generally speaking, one whereby the plaintiff was to
furnish a certain number of five-passenger automobiles, attend faithfully to the needs of the patrons of the hotel, to
continue his service for a period of one year and to receive as compensation all the proceeds of the business less,
say, 10 per cent to be paid to the defendant for the privilege. This, with other details, is the contract in which the
clause is found and to which it refers. That clause was, in our judgment, not intended to do duty with reference to a
contract, such as the hotel company made with Brown, already referred to, by which the latter was to have the five-
passenger automobile privilege of the hotel, as well as all other automobile and carriage privileges, upon the payment
to the hotel of a flat sum of, say, P10,000 annually. According to the defendant, the clause in question simply
concedes to plaintiff the privilege over Brown, if he desired it, of taking and accepting the contract which the hotel
made with Brown. In other words, defendant here contends, and the court below found, that the clause in question
did not confer a certain, enforceable right upon the plaintiff with reference to the contract in which the clause was
found, but simply gave him the preference over others to make with the defendant company any contract which the
latter might be able to make with any other person. As stated in the brief of counsel in the trial court the stipulation for
a renewal conferred upon the plaintiff only the right to make "as satisfactory an offer as any other person," and that
since plaintiff failed to make as favorable an offer as did Mr. Brown, that is, since plaintiff would do no more than
propose a renewal of the old contract, the hotel company had a right to contract with Brown.

Manifestly the clause "with preference over others of renewing for a further period of one year" was inserted for a
purpose. It was intended to confer a right either on the plaintiff or upon the defendant. That it was not intended to
confer a right on the defendant is conceded. It must have been intended, therefore, to do something favorable to the
plaintiff. What was it?

39
While it is conceded that the clause quoted confers no right on the defendant company, the latter, nevertheless,
contends that it conferred no right on the plaintiff. Even though the clause, as claimed by defendant, gave the plaintiff
a preference over others with respect to some other contract, a contract which might be entirely distasteful to the
plaintiff in every term and which, wit his limited resources, he would be unable to accept at all, such preference would
not be a substantial right. In fact, it would be a right the effect of which would be not only problematical but as likely to
be injurious as beneficial. If the clause conferred no right upon either the plaintiff or the defendant, then it has no
meaning to which the law attaches importance. That this was intended we cannot believe. We are confident that it
was placed in the contract for the purpose of conferring upon the plaintiff an enforceable right and one which related
to the very contract in which it was placed. This clause sets out with sufficient clearness an agreement for a renewal
of the contract for a second year. It cannot have any other significance in language. The grammatical construction of
the stipulation precludes the legal construction given it by the court below. The clause "with preference over others of
renewing for a further period of one year" does not modify anything preceding it. It must be construed as a separate
and independent sentence whose subject is suppressed. Should we supply the words omitted by the draftsman,
apparently with a view to brevity, the stipulation would be plain; it would clearly appear that it was intended to be a
stipulation in favor of the plaintiff.

Nor is the contention made by the defendant relative to the phrase "with preference over others" sufficient to destroy
that construction. It is asserted that this phrase deprived the plaintiff of the right of renewing the existing contract and
relegated him to the barren right of accepting at the end of the first year the bast terms that defendant might be able
to secure from other persons for the exclusive concession to which the contract refers, thereby transforming the
stipulation for renewal in favor of the plaintiff to one in favor of the defendant. As already pointed out, the grammatical
structure of the stipulation shows both that the thing to be renewed was agreement in force the first year and that the
party who possessed the right to renew was the plaintiff.

The construction of the phrase "with preference over others" contended for by the defendant and found by the court
below not only overthrows the grammatical structure of the stipulation, namely, the word "renew." The meaning of that
word, wherever applied with respect to real or personal rights, is not a matter of discussion and, unless the stipulation
to renew expressly provides for variations in the terms of the contract to the renewed, the clause of renewal always
relates to the contract in which it is found. To attribute to the words "with preference over others" a meaning that
nullifies an essential word of common usage and conventional signification is to vary an elementary rule of
construction. While the use of the phrase "over others" after the noun "preference," which means the act of
preference or the state of being preferred or chosen before others, is not altogether elegant English and is somewhat
ambiguous with respect to that right, including the other party to the contract; and if the party conceding the right adds
to the contract a phrase "with preference over others" with respect to that right, it adds nothing to the contract and
those words may be stricken out without altering its natural or legal sense. Thus, in the contract before us, if the
defendant company, by the clause in question, conceded to the plaintiff an enforceable right, then the plaintiff
received preference over all others with respect to that right and the adding of the words "with preference over
others" did not serve to deprive the plaintiff of the right thus conceded, and those words should not be so construed
as to effect that end. They were useless and redundant and could have had no force or effect without destroying the
very purpose for which the clause itself was inserted. If this construction were not followed, we would be obliged, as
already intimated, to declare that the phrase "renewing for a further period of one year" would have no adequate
significance. The construction contended for by the defendant wipes these words from the contracts and leaves it in
that respect the same as if they had not been inserted. No such construction can be permitted, as it takes from the
contract words of the most material signification. If, in the construction of a contract, one of two clauses must be
eliminated, it must be that one the influence of which upon the essentials of the contract is the least. As we have
shown, the words "with preference over others" are of no substantial significance. On the other hand, the phrase
providing for a renewal is of very great materiality and importance and carries into the contract an idea which would
not have there if it had not been used.

As to the second question:

What appears to be, perhaps, the main contention of the defendant in this case is that plaintiff never made a request
for the renewal of the contract for the second year but, instead of so doing, sought to make other and different

40
arrangements with the hotel and with Brown, to whom, as we have seen, the hotel conceded the privilege which is
the subject of this action, thereby indicating an intention to abandon his right, if any he had, to a renewal of the
contract for the second year. It is asserted by counsel for the defendant that in July plaintiff attempted to enter into a
partnership agreement with the hotel relative to the privilege in question for the period covering the second year of
plaintiff's contract, and that, filing in that, and believing that Brown would secure the privilege from the hotel, he
thereupon sough to make a contract with Brown by which he could assist him in fulfilling his contract with the hotel. It
is even contended by defendant that plaintiff actually did enter into an agreement with Brown relative to that matter.

A careful reading of the testimony in this case leads us to differ with counsel for the appellee as to the real facts of the
case and constrains us to differ materially from the conclusions drawn by counsel for the defendant from the acts of
the plaintiff as se out in the record.

As to the facts, we may say that the evidence does not sustain the contention that plaintiff entered into a contract with
Brown. The proof discloses that the plaintiff sought to make arrangements with the hotel of a nature different from
those contained in the contract under consideration and also that he had negotiations with Brown looking to an
agreement with him whereby he might assist him in handling the five-passenger automobile business under the
privilege which it appeared the hotel would concede to him. No contract, however, was made with either and the
plaintiff at no time found himself under any obligation to the defendant or Brown by reason of the acts which appellee
makes the basis of its argument.

To us the important fact is that before the plaintiff entered into negotiations or made any offers with respect to the five-
passenger automobile privilege either with or to the defendant or Brown, the hotel had impliedly denied the plaintiff's
rights with respect to the contract before us, had refused to recognize the clause for a renewal of the contract for a
second year as binding upon it, and, as a result, as early as June, 1913, had, according to is brief in this court "invited
proposals from various garages for its automobile service for the ensuing year." In other words, the defendant had,
prior to the negotiations and offers of plaintiff, repudiated its contract with him so far as it related to the renewal for the
second year and was preparing itself to make a contract with any person with whom it might secure the most
advantageous terms.

Not only did the defendant advertise for bids or offers concerning its automobile privilege for the period embraced in
the second year of the contract under consideration, but sometime before the first year of that contract had expired
the defendant had actually made a contract with Brown by which it had conceded to him said privilege for the period
embraced in the second year of the plaintiff's contract. Thus, when the first year of plaintiff's contract terminated, he
found that the defendant had rejected its obligation under the renewal clause, had let the contract to another person,
and when he sought, as he did seek, to continue in the performance of his contract for the second year, defendant
evicted him from the premises and denied him the right which he sought to exercise.

We are of the opinion that, when a person who is under an obligation to another to perform certain acts upon the
demand of that person, repudiates that obligation prior to the time when the demand for its fulfillment is necessary,
the person to whom that obligation runs is not required to sit down, fold his hands and calmly await the disaster which
the violation of the obligation entails. We believe that, under such circumstances, he is entirely within his rights and,
therefore, waives nothing, when he seeks other employment or the same or similar employment with others, or
attempts to make other arrangement relative to the same subject matter even with the person or corporation which
owed him the obligation repudiated. So long as it appears with fair clearness that his purpose is to protect himself
against the result of the repudiation, his acts do not constitute a waiver of his rights under the obligation repudiated,
nor do they estop him from making a claim by reason of its breach. The waiver will not be presumed; and, if the
intention to waive or release is denied, such waiver or release must be proven by the party alleging it by a
preponderance of the evidence.

The legitimate object is to enable the party upon whom it is made to perform his contract and discharge his liability
agreeable to the nature of it without a suit at law; and whenever such party wholly denies the right of the other to
assert title in himself or unqualifiedly refuses performance of the obligation, a demand is made useless, and therefore
unnecessary, since lex neminem cogit ad vana. For the same reason and upon the same principle the failure to make

41
a demand before suit may be cured by proof that the defendant could not have complied with the demand if it had
been made; as where a person contracts to assign his interest in certain lands to another within a specified time upon
payment of consideration therefor, and the vendor prior to the stipulated time assigns his interest to a stranger. In
such case a request by the vendee for the performance of the contract is unnecessary. The rule stated otherwise is to
the effect that where a party bound to the future performance of a contract puts it out of his power to perform it, the
other party may treat this as a breach and sue him at once, having thus an immediate right of action for breach of the
contract by anticipation.

It may not be amiss, perhaps, to note that the defendant company was in no way injured by the acts of the plaintiff
complained of. There resulted no damage directly nor did the company change position to its disadvantage by reason
of his affirmative acts or of his neglect, if there were such to demand a renewal prior to the termination of the first year
under the agreement.

It may be noted that the plaintiff was under no obligation to defendant with respect to a renewal of the contract. The
obligation was wholly on the side of the defendant. Therefore, in doing whatever he did to obtain other employment,
he was not violating any obligation which he owed to the defendant and, therefore, gave it no legal reason for
complaint. The plaintiff had a right to look about for a better situation and to seek to improve his condition with respect
to the period embraced within the second year referred to in the contract. We do not believe that the contract should
be construed to deny plaintiff the ordinary opportunities which men have for the betterment of their condition,
especially after the other party to the contract has repudiated it. Even though one is engaged in the performance of a
contract which he has with another, that fact does not require him to stand still and refrain from all attempts to
improve his condition, after the termination of the contract which he is engaged in performing, for fear that such
activities will preclude him from enforcing obligations which the others owes him. At the time of the activities of the
plaintiff complained of the time had not yet arrived when plaintiff was bound to exercise his option, if it may be called
an option, with respect to the second year referred to in the contract. Defendant was in no way misled and in no way
injured by plaintiff activities.

The remaining question relates to plaintiff's damages.

The plaintiff claims his damage to be P10,800, basing that claim upon the profits which he would have received if he
had continued the business for the second year.

The appellee makes no objection to this amount, the question of the amount of damages not having been referred to
in its brief. It is the practice of this court, in case of reversal of a judgment dismissing the complaint on the merits, to
examine the evidence and enter or order entered the judgment which the inferior court should have rendered; and,
where the action is for a sum of money or damages, to find from the evidence the amount due or the damages
suffered and to render or order the trial court to render judgment for the amount. We assume that the practice is
thoroughly understood and that if appellee had any objection to urge as to the amount of damages which should be
awarded to the plaintiff in case judgment should be found for him in this court, it would have presented it in its brief.

The only damages claimed relate to profits. Article 1106 and 1107 of the Civil Code reads as follows:

Indemnity for losses and damages includes not only the amount of the loss which may have suffered, but
also that of the profits which the creditor many have failed to realize, reserving the provisions contained in
the following articles.

The losses and damages for which a debtor in good faith is liable, are those foreseen or which may have
been foreseen, at the time of constituting the obligation, and which may be necessary consequence of its
non-fulfillment.

In case of fraud, the debtor shall be liable for all those which clearly may originate from the no-fulfillment of
the obligation.

42
Under these provisions we are required to determine the amount of profits which plaintiff failed to realize by reason of
the refusal of defendant to permit him to continue under the contract for the second year and which were foreseen or
which might have been foreseen at the time the contract was made and which were a necessary consequence of the
breach. Plaintiff testified that he made P11,000 profit the first year and that he would unquestionably have made a net
profit of P1,200 a month if he had been left to enjoy the second year of the contract. There is no evidence
contradicting this, and while the estimation of speculation, it is inherent in the nature of the subject matter and not in
its manner of treatment. As was said in the case of Ft. Smith & W.R. Co. vs. Williams (30 Okla., 726):

This has ever been looked upon the treated by the courts as a vexed and difficult question. It has been, and
will always be, impossible to law down any fixed and definite rule correctly applicable in all cases. There has
never been a rule established which was decisive and universally followed by the courts in all cases, but the
inclination of the earlier authorities to hold that contemplated profits per se were improper elements of
damage has given way under the riper wisdom of jurisprudence, and, instead of holding to the earlier
inclination, the weight of authorities in modern jurisprudence either holds or concedes that, where a loss of
profits is not too remote or conjectural to be suspectible of computation with reasonable accuracy, they are
proper elements of damage.

This rule is recognized with approval by each and all of the following authorities cited by counsel for plaintiff
in error in support of his first proposition: Strawn vs. Cogswell (28 Ill., 461); Frazer vs. Smith (60 Ill.,
145); Galveston H. and S. A. R. Co. vs. Jessee (2 Willson Civ. Cas. Ct. App., sec. 405), and authorities
cited; People's Sav. Bank of Waterloo vs. C. F. Transit Co. (118 Iowa, 740, 92 N. W., 691); Bartow vs. Erie
R. Co. (73 N. J. L., 12, 62 Atl., 489); H. and T. C. R. R. Co. vs. Hill (63 Tex., 381, 51 Am. Rep.,
462); Western U. Teleg. Co. vs. Crall (39 Kan., 580, 18 Pac., 719); Moulthrop vs. Hyett (105 Ala., 493, 53
Am. St. Rep., 139, 17 So., 33); Williams vs. Island City Mercantile and Mill Co. (25 Ore. 573, 37 Pac.,
51); Brigham and Co. vs. Carlisle (78 Ala., 244, 56 Am. Rep., 28); Gas Co.vs. Glass Co. (56 Kan., 622, 54
Am. St. Rep., 598, 44 Pac., 621); Cutting vs. Miner (30 App. Div., 457, 52 N. Y. Supp., 288); Griffin vs.
Colver (16 N. Y., 489, 69 Am. Dec., 718); Western Gravel Road Co. vs. Cox (39 Ind., 263); Florida Northern
R. Co. vs. Southern Supply Co. (112 Ga., 1, 37 S. E., 130); Bell vs. Reynolds (78 Ala., 511, 56 Am. Rep.,
55); Pollock and Co. vs. Gantt (69 Ala., 373, 44 Am. Rep., 519); Witherbee vs. Meyer (115 N. Y., 446, 50 N.
E., 58).

xxx xxx xxx

None of the above authorities have held against the justness of the rule of applying profits as a measure of
damages, but have merely held it inapplicable to the cases decided. There is more or less inaccuracy in
every action for damages for breach of contract, but in order to justify a recovery in any case, assuming that
a breach has been committed, there are two necessary elements to be considered: One that a damage has
been done; the other that such damage is the result of the breach. The amount of the one should be
computed with reasonable accuracy. The fact of the other must be determined with reasonable certainty. A
less degree of accuracy is required in the former than of certainty in the latter, but neither is required to be
absolute or beyond conjectural possibilities. Where it reasonably appears that a party has been damaged,
and that such damage is the direct result of the breach, then a recovery is justified. The next step is to
ascertain how much will reasonably compensate the injured party. This should be computed by the plainest,
easiest, and most accurate measure which will do justice in the premises, and if from the conditions in the
contract, and the nature of the breach, it reasonably appears that the extent or amount of damages may be
more readily, easily, correctly, and justly ascertained by applying the loss of profits as a measure, if it is
evident that profits were lost and the amount thereof can be calculated with reasonable accuracy, then such
profits are the true measure to be applied. In such cases, however, it should appear evident that profits were
lost. The amount may be estimated with only reasonable accuracy; but the fact that profits were lost should
require stricter proof. This doctrine is deduced from a vast weight of authorities, both American and English,
including 2 Joyce on Damages, and authorities; 1 Sutherland on Damages (3 ed.) and notes and cases
cited; 1 Sedgwick on Damages (8th ed.); 8 Am. and Eng. Enc. (2 ed. and authorities cited in notes, 13 Cyc.
and cases cited Bryson vs. McCone (121 Cal., 153; 53 Pac., 637); Blagen vs. Thompson (23 Ore., 239; 18

43
L. R. A., 315; 31 Pac., 647); Dart vs. Laimbeer (107 N. Y., 664; 14 N. E., 291); Brown vs. Hadley (43 Kan.,
267; 23 Pac., 492); Hoge vs. Norton (22 Kan., 374); Hadley vs. Baxendale (9 Exch., 341; 2 C. L. R., 517; 23
L. J. Exch. N. S., 179; 18 Jur., 358; 2 Week. Rep., 302; 26 Eng. L. and Eq. Rep., 398; 5 Eng. Rul. Cas., 502;
a leading case both in England and American); Tootle vs. Kent (12 Okla., 674; 73 Pac., 310); Choctaw Ry.
Co. vs. Jacobs (15 Okla., 493; 82 Pac., 502); Mace vs. Ramsey (74 N. C., 11); Butler vs. Manhattan R. R.
Co. (143 N. Y., 417; 26 L. R. A., 46; 42 Am. St. Rep., 738; 38 N. E., 454); Bluegrass Cordage Co. vs.
Luthy (98 Ky., 583; 33 S. W., 835); Simpson vs. Londen etc. R. Co. (I. Q. B. Div., 274; 45 L. J. Q. B. N. S.,
182; 33 L. T. N. S., 805; 24 Week. Rep., 294).

In the case before us there seems to be as little speculation in determining the profits which the plaintiff might have
recovered as is usual in cases where the time for which the profits are to be recovered extends over a considerable
period of time. It is undisputed that the business was a very profitable one the first year and that the second year
would have been more profitable than the first. While the estimate of the amount of profits for the second year is an
estimate of necessity, it is one which is based upon facts testified to by the plaintiff, which were within his knowledge
and which appear to the court to sustain his contention. While the evidence is not as conclusive as in cases where
the damages are certain and capable of accurate statement, we are satisfied with its sufficiency, particularly in view of
the fact that all that courts may require of litigants is the production of the best evidence of which the case is
susceptible.

As to whether or not the plaintiff in an action of this character may recover only that portion of the profits which had
accrued up to the time of bringing the action, or whether he may sue for all the damages resulting from the breach in
a single action, even though that action is begun long before the period during which the profits will accrue has
expired, we may say that, in our judgment, the weight of authority is to the effect that the plaintiff need bring but one
action and that he may recover the damages sustained for the whole period even though it be by anticipation. lawph!
1.net

The principle on which the case of Pierce vs. Tennessee Coal, Iron and Railroad Co. (173 U. S., 1) is decided is, in
our judgment, applicable to the case at bar. That was a case in which the plaintiff, while employed as a machinist in
the defendant's coal mine in Alabama, was seriously hurt under circumstances which the plaintiff claimed, and the
defendant denied, rendered it liable to him in damages. The parties were desirous of settling and compromising
plaintiff's claim for damages for the injuries and, after repeated negotiations, they made an agreement by which the
defendant was to pay to the plaintiff regular wages while he was disabled, to furnish him with such supplies as he
might choose to get from the commissary, to give him coal and wood for fuel at his dwelling house and the benefitof a
garden belonging to the defendant. The agreement was carried out by the defendant for some time and then it
discharged the plaintiff from its employ before his disability ceased.

After discussing certain phases of the contract and declaring its nature and purpose, the court said:

It apears to us to be equally clear that the Circuit Court of the United States erred in excluding the evidence
offered by the plaintiff, in restricting his damages to the wages due and unpaid at the time of the trial, and in
declining to instruct the jury as he requested.

Upon this point the authorities are somewhat conflicting; and there is little to be found in the decision of this
court, having any bearing upon it, beyond the affirmance of the general propositions that "in an action for a
personal injury the plaintiff is entitled to recover compensation, so far as it is susceptible of an estimate in
money, for the loss and damage caused to him by the defendant's negligence, including not only expenses
incurred for medical attendance, and a reasonable sum for his pain and suffering, but also a fair
recompense for the loss of what he would otherwise have earned in his trade or profession, and has been
deprived of the capacity of earning by the wrongful act of the defendant," and, "in order to assist the jury in
making such an estimate, standard life and annuity tables, showing at any age the probable duration of life,
and the present value of a life annuity, are competent evidence" (Vicksburg and M. Railroad Co. vs. Putnam,
118 U. S., 554); and that in an action for breach of contract 'the amount which would have been received if

44
the contract had been kept, is the measure of damages if the contract is broken' (Benjamin vs. Hilliard, 23
How., 149, 167).

But the recent tendency of judicial decisions in this country, in actions of contract, as well as in actions of
tort, has been towards allowing entire damages to be recovered, once for all, in a single action, and thus
avoiding the embarrassment and annoyance of repeated litigation. This especially appears by well
considered opinions in cases of agreements to furnish support or to pay wages, a few only of which need be
referred to.

The court, after discussing Parker vs. Russell (133 Mass., 74), Schell vs. Staub (7 Lea, 397), holding the doctrine just
quoted, further said:

These cases appear to this court to rest upon sound principles, and to afford correct rules for the
assessment of the plaintiff's damages in the case at bar. . . .

If these facts were proved to the satisfaction of the jury, the case would stand thus: The defendant
committed an absolute breach of the contract, at a time when the plaintiff was entitled to require
performance. The plaintiff was not bound to wait to see if the defendant would change its decision, and take
him back into its service; or to resort to successive actions for damages from time to time; or to leave the
whole of his damages to be recovered by his personal representative after his death. But he had the right to
elect to treat the contract as absolutely and finally broken by the defendant; to maintain this action, once for
all, as for a total breach of the entire contract; and to recover all that he would have received in the future, as
well as in the past, if the contract had been kept. In so doing, he would simply recover the value of the
contract to him at the time of the breach, including all the damages, past or future, resulting from the total
breach of the contract. The difficulty and uncertainty of estimating damages that the plaintiff may suffer in the
future is no greater in this action of contract than they would have been if he had sued the defendant, in an
action of tort, to recover damages for the personal injuries sustained in its service, instead of settling and
releasing those damages by the contract now sued on.

In assessing the plaintiff's damages, deduction should, of course, be made of any sum that the plaintiff might
have earned in the past or might earn in the future, as well as the amount of any loss that the defendant had
sustained by the loss of the plaintiff's services without the defendant's fault.

From the amount of damages proved in the case at bar there would have been deducted, if there had been any proof
to that effect, whatever profits plaintiff had gained up to the time of the action or might reasonably be expected to gain
during the period sued for. No evidence, however, has been introduced on that subject and we do not find it
necessary to go into that question. We are of the opinion that the great weight of authority is to the effect that the
opportunity to earn wages or profits in reduction of the damages claimed will not be presumed but must be
affirmatively shown by the defendant. (Van Winkle vs. Satterfield, 58 Ark., 617, 623, 25 S. W. Rep., 1113, 23 L. R. A.,
853; Kelley vs. Louisville and N. R. Co., 49 Ill. App., 304; Fish vs. Glass, 54 Ill. App., 655; Hamilton vs. Love, 152 Ind.,
641, 53 N. E. Rep., 181, 71 Am. St. Rep., 384; Pennsylvania Co. vs. Dolan, 6 Ind. App., 109, 32 N. E. Rep., 802, 51
Am. St. Rep., 289; Farrel vs. School District, 98 Mich., 43, 56 N. W. Rep., 1053; Allen vs. Whitlark, 99 Mich., 492, 58
N. W. Rep., 470; Chisholm vs. Preferred Bankers' L. Assur. Co., 112 Mich., 50, 70 N. W. Rep., 415;
Boland vs. Glendale Quarry Co., 127 Mo., 520, 30 S. W. Rep., 151; Bassett vs. French, 10 N. Y. Misc., 672, 31 N. Y.
Supp., 667; Heyer vs. Cunningham Piano Co., 6 Pa. Super. Ct., 504; Winkler vs. Racine Wagon and Carriage Co., 99
Wis., 184, 74 N. W. Rep., 793; Mathesius vs. Brooklyn Heights R. Co., 96 Fed. Rep., 792; Rosenberger vs. Pacific
Coast Ry. Co., 111 Cal., 313, 43 Pac. Rep., 963; Pinet vs. Montague, 103 Mich., 516, 61 N. W. Rep., 876;
Dearing vs. Pearson, 8 N. Y. Misc., 269, 276; 28 N. Y. Supp., 715, citing the text; Babcock vs. Appelton Manuf. Co.,
93 Wis., 124, 67 N. W. Rep., 33; Dunn vs Daly, 78 Cal., 640, 21 Pac. Rep., 377; Brown vs. Board of Education, 29 Ill.
App., 572; School Directors vs. Kimmel, 31 Ill. App., 537; Miller vs. Boot and Shoe Co., 26 Mo. App., 57;
Koenigkraemer vs. Missouri Glass Co., 24 Mo. App., 124; Saxonia Mining and R. Co. vs. Cook, 7 Colo., 569, 4 Pac.
Rep., 1111; Ansley vs. Jordan, 61 Ga., 482; Roberts vs. Crowley, 81 Ga., 429, 7 S. E. Rep., 740;
Hinchliffe vs. Koontz, 121 Ind., 422, 23 N. E. Rep., 271; Larkin vs. Hecksher, 51 N. J. L., 133, 16 Atl. Rep., 703, 3 L.

45
R. A., 137; Fee vs. Orient Fertilizing Co., 36 Fed. Rep., 509; Costigan vs. Mohawk, etc. R. Co., 2 Denio, 609; Howard
vs, Daly, 61 N. Y., 362, 19 Am. Rep., 285; Gillis vs. Space, 63 Barb., 177; King vs. Sturer, 44 Pa., 99, 84 Am. Dec.,
419; Griffin vs. Brooklyn Ball Club, 68 App. Div., 566, 73 N. Y. Supp., 864; Chamberlain vs. Morgan, 68 Pa., 168. See
Gazette Printing Co. vs. Morss, 60 Ind., 153; Williams vs. Chicago Coal Co., 60 Ill., 149; Sedgwick on Damages, vol.
2, sec. 667; Labatt's Master and Servant, sec. 399.)

The cause is returned to the Court of First Instance whence it came with instructions to enter a judgment in favor of
the plaintiff and against the defendant for the sum of P10,800, with costs in that instance but without costs in this.

46
G.R. No. L-10422 January 11, 1916
A. LEMOINE, plaintiff-appellant,
vs.
C. ALKAN, defendant-appellant.
Eduardo Gutierrez Repide and Felix Socias for plaintiff.
Alfredo Chicote and R. del Castillo Tirol for defendant.
MORELAND, J.:

This is an action brought to recover damages for breach of a contract for lease of services.

On the 10th day of July, 1913, the plaintiff and defendant signed a written contract whereby the defendant hired the
plaintiff, an expert automobile mechanic, to perform services as such expert mechanic in his automobile repair shop
in the city of Manila for the period of three years from the date of the contract at a salary of P350 a month. Plaintiff
entered defendant's service on the day on which the contract was executed and continued therein until he was
discharged by the defendant the latter part of August of the same year, plaintiff actually leaving defendant's service
on the 5th day of September. On the 8th of the same month this action was begun to recover, as damages for breach
of contract, the wages to which he was entitled under the contract.

The defendant presents three defenses to the action.

The first is that plaintiff was incompetent and insubordinate and that he unduly and without permission absented
himself from the repair shop during the hours when, under the contract, he should have been at work.

The second is founded on the claim that plaintiff, if he had used due diligence, would have been able to obtain a like
position in the city of Manila, it appearing by the evidence, asserts defendant, that various owners of other automobile
repair shops were anxious to obtain the services of mechanics of plaintiff's ability and that any one of them would
have hired him immediately on his discharge if he had presented himself for that purpose.

The defendant claims as his third defense that on the 6th of December, 1913, in a letter addressed to plaintiff he
offered to take him back into his employ under terms and conditions substantially the same as those specified in the
original contract of service and at the same rate of wages; and that plaintiff, without reason or justification, refused to
accept the offer. He then invokes the principle of law that where a servant has been wrongfully discharged and has
failed to obtain other employment, he must accept the offer of his original employer to receive him back in his employ
under terms and conditions which are substantially those of his previous employment and at the same rate of wages,
on pain of being unable to recover wages or damages after the date of the offer.

The court found for the defendant on his second defense but allowed plaintiff wages for three months, which the court
considered a reasonable time which ought to be conceded to him in which to obtain other employment. Both parties
appealed.

With respect to defendant's first defense, the trial court found against him on the facts; and a thorough review of the
evidence in the record leads us to agree with that conclusion. The evidence is clearly insufficient to support a finding
that plaintiff was incompetent or insubordinate or that he absented himself during working hours without permission. A
fair preponderance of the evidence shows that he was an exceptionally good mechanic, entirely competent to
perform the work set for him, that he did perform it efficiently, that he was reasonably tractable and obedient, and that
he did not absent himself from the garage during working hours except on the orders of defendant.

47
In regard to the second defense, the trial court found as a fact in the evidence that positions of like nature were, at the
time of his discharge, open to plaintiff in the city of Manila and that, with ordinary diligence, he would have been able
to obtain like employment immediately. We are in complete conformity with the finding of the trial court that plaintiff,
by the use of reasonable diligence, could, immediately on his discharge, have obtained like employment in the city of
Manila. It is clearly supported by a fair preponderance of the evidence and must accordingly be sustained. From this
finding of fact the trial court drew the conclusion that plaintiff was not entitled to recover on his complaint, except in
part, as he had failed to use the diligence required under the circumstances in seeking other employment of like
nature in the same locality.

While we agree with the findings of facts as to these alleged defenses, we do not agree with the conclusion of law
which the trial court draws therefrom, for reasons which we will set out hereafter.

The defendant asserts as a third defense that, on the 6th day of December, 1913, in a letter addressed to the plaintiff,
he offered to take him back into his employ under terms and conditions substantially the same as those specified in
the original contract and at the same rate of wages, and that plaintiff, without reason or justification, refused tom
accept the offer. He then invokes the principle of law that, where a servant has been illegally discharged and has
failed to obtain other employment, he must accept the offer of the employer who discharged him to receive him back
into his into his employ under terms and conditions substantially those of his previous employment and at the same
rate of wages on pain of having his damages on a suit for breach of contract reduced to the extent of the wages
which he would have received if he had accepted the offer. We understand that the facts on which this defense rests
are admitted by both parties. There remains only the discussion as to whether such facts constitute a defense or
whether they may be used in mitigation of damages to which plaintiff may prove himself entitled. This discussion will
also be reserved until later.

The action in this case is founded on that provision of the Civil Code which provides that "field-hands, mechanics,
artisans, and other hired laborers, for a certain time and for a certain work, shall not leave nor be dismissed, without
just cause, before the fulfillment of the contract" (art. 1586); and also that disposition of the same code which
provides that "those who, in fulfilling their obligations, are guilty of fraud, neglect or delay, or who violate the
provisions thereof, are liable for the damages caused thereby." (Art. 1101.)

An examination of the Spanish authorities relative to the right of a mechanic to bring an action for damages resulting
form a wrongful discharge discloses nothing which indicates that that law differs in any material respect from that of
English-speaking countries. Manresa in his discussion of this subject follows the usual lines with which American
lawyers and jurists are familiar. His first serious remarks, after outlining the scope of the subject, refer to that portion
of the article which seems to restrict its application to those who have agreed to work for a certain time with respect to
a certain work, the limitation, "for a certain work," seeming to indicate, says Manresa, if taken literally, that the
persons mentioned in the article may be discharged at will when they are employed generally and without reference
to any particular piece of work, even though the hiring is for a specified time. His conclusion is that the wording of the
article must not be taken so literally as to permit the perpetration of an injustice which would necessarily follow if, after
the execution of a contract of hiring for a specified time, the proprietor might, before the designated period had
prescribed, capriciously discharge the employee. He seems to think that the disjunctive "or" should take the place of
the conjunctive "and" between the words "time" and "for," making the article read "for a certain time or for a certain
work," he giving it as his opinion that that is the real meaning of the article.

Continuing the discussion, Manresa is of the opinion that the Civil Code not having specified the causes which would
justify a dismissal of the employee or the abandonment by the latter of his contract, all matters pertaining to that
question are left to the sound judgment of the courts. He adds that, along with the prohibition against wrongful
discharge found in article 1586, goes also the supplemental obligation to indemnify in case of such discharge. He is
of the opinion that there is no necessity for such a statement in article 1586 or elsewhere in the law relative to lease
of services, inasmuch as the principle which it would embody are enunciated in the law of obligations as laid down in
previous articles of the same Code. He makes some comment with respect to the amount of damages to be awarded
and adds that when, in actions based on a wrongful discharge, the evidence establishes the fact of wrongful
discharge, the employer shall be considered, in relation to the injured employee, a "debtor in bad faith."

48
Under both the Spanish and American law, then, the action based on a wrongful discharge is one to recover damages
for breach of contract.

That which defendant alleges to be his second and third defenses, even if all the facts necessary to establish the
defenses as alleged were proved, could not really be called defenses. They would more properly go to a mitigation of
damages, the defendant has not prove facts sufficient to avail himself of the benefit thereof under his so-called
second defense. He has offered no evidence showing what wages plaintiff would have received if he had obtained
one of the positions to which defendant refers. The evidence refers simply to the fact that plaintiff might have
obtained like employment in the same locality; but it does not show at what rate of wages. There is nothing in the
record showing the wages of a particular position or the usual wages paid in such employment. We understand it to
be the rule that before defendant can take advantage of the failure of plaintiff to obtain like employment, it must
appear: (1) That it is like employment, (2) that it is in the same locality; (3) that it is under substantially the same
conditions; and (4) the wages which he could have earned. We are of the opinion that defendant has successfully
established the first three conditions; but, on the other hand, he has utterly failed to established the fourth. It is clear
that the court cannot allow any sum in reduction of damages unless it has been proved; and it not appearing of record
how much plaintiff could have earned in like employment, it is impossible to determine the sum which must be
deducted from the damages proved by plaintiff.

Defendant is more successful with what he calls his third defense. It is admitted, as we have said, that about 3
months after employment, defendant offered to take him back into his employ in the same repair shop, at the same
rate of wages and substantially under the conditions named in the original contract and that plaintiff refused the offer.
He gave no reason for his refusal, but made a counter-offer in which he proposed material changes in the conditions
under which he would return and in the wages which he was to receive, he demanding a higher salary. He also
required that there be added to the contract of reemployment a penal clause in the sum of P15,000 which the
defendant would be obliged to pay in case of a wrongful discharge in addition to the damages sustained. He also
required that the defendant permit a judgment to be entered against him in the present action for the full amount of
the damages claimed. Defendant refused to accept these new conditions and the plaintiff declined to accept the offer
to reemploy.

We are of opinion that plaintiff should have accepted the offer of defendant and that, in refusing to do so he conferred
on the defendant the right to present his offer in mitigation of any damages which plaintiff might have sustained by
reason of the wrongful discharge. We are aware that it has been broken by the employer by a wrongful discharge of
the employee and that status has been recognized by both parties, the employee is not obliged to do anything more
under the original contract; that, it having been broken voluntarily by the employer, his employee is no longer under
any obligation to comply with the terms thereof. But, notwithstanding this, we believe that, under such circumstances,
the employees should accept an offer even under the old contract, as long as it does not involve a renunciation of any
right already accrued, although it is doubtful if it can be said in the case at bar that the offer was in reality one to
return to employment under the old contract but was, rather, the creation of a new contract, the terms and conditions
of which were substantially those of the old. The mere acceptance of the offer of defendant would not constitute a
waiver of his right to recover damages for the time intervening from the date of the wrongful discharge to the time
when he returned to work under the new offer, which would consist in the loss of wages for that period, and any other
damages which might have been sustained and which plaintiff could prove. We do not mean to hold that an employer
may wrongful discharge an employee an indefinite number of times and require him each time to return to work under
the same contract. There would be a legal remedy for that sort of treatment, even if an employer should be so
disregardful of his own interests as to give his employee an opportunity to begin an indefinite number of actions
against him in each one of which he could recover damages equal to or exceeding the wages which he would have
received if he had not been wrongfully discharged, together with interest and cost in each case, and possibly much
more. We believe that it is the purpose of the law to require an employee to labor if he is given the opportunity; and
that it does not permit him to remain idle and collect his wages nevertheless when he has an opportunity to return to
his former employment. The employer is the same employer when the employee is offered the opportunity to return
as he was when the original contract was made; and the conditions under which the employment is to proceed are
substantially the same. Of course, where the employer has so mistreated the employee that a self-respecting man
could not again work for him, the situation would be different. Nothing of that sort appears in this case and we are
convinced that, as matter of law, the plaintiff should have returned to service under the offer of defendant.

49
It is true, that, at the time of the offer was made, this action had been commenced. Plaintiff left defendant's service on
September 5th and began this action on the 8th. The offer was made on December 5th. We do not believe, however,
that the pendency of the action alters the situation materially. There was no condition attached to the offer requiring
the plaintiff to dismiss his action without costs or even without judgment and it is to be presumed that defendant
intended plaintiff to have the right to continue his action to final determination and obtain the damages which he had
suffered during the period intervening between the discharge and the reinstatement.

Plaintiff proved no other damages than the loss of wages. The damages in an action for wrongful discharge are prima
facie the amount of wages for the full term. These are the damages and the only damages which plaintiff proved. The
complaint alleges damages to character and reputation arising from the fact of the wrongful discharge. No evidence
was offered showing damages of that kind or the amount thereof. The amount which defendant proved in mitigation
or recoupment is equal to the amount which plaintiff proved his damages to be, with the exception of the period
between September 5th and December 5th of the same year. As a necessary result plaintiff can recover in this action
only for the three months' period. The court below allowed plaintiff his wages for the months of September, October
and November, but on a different theory from that on which we have based his right; but, whatever the theory, the
amount is correct and the judgment of the trial court is to that extent proper.

It is contended that the burden of proving that plaintiff could have procured like employment in the same locality
under similar conditions is on plaintiff. We cannot agree with this under the principles either of Spanish or American
law. Under the Spanish law, as we have seen, the employer, when he wrongfully discharges an employee, becomes,
with respect to the employee, a debtor in bad faith. On a debtor in bad faith is laid the necessity of affirmatively
establishing every fact necessary to extricate him from that position. In this necessity we find the germ of that
principle of the American law which throws on the employer in an action for wrongful discharge the burden of proving
affirmatively that if the employee had used due diligence he could, immediately on his discharged, have obtained like
employment in the same locality. (Hicks vs. Manila Hotel Co., 28 Phil. Rep., 325, and cases cited.)

The judgment, appealed from is affirmed, without special finding as to costs in this instance. So ordered.

G.R. No. 126389 July 10, 1998

SOUTHEASTERN COLLEGE INC., petitioner,

vs.

COURT OF APPEALS, JUANITA DE JESUS VDA. DE DIMAANO, EMERITA DIMAANO, REMEDIOS DIMAANO,
CONSOLACION DIMAANO and MILAGROS DIMAANO, respondents.

PURISIMA, J.:

Petition for review under Rule 45 of the Rules of Court seeking to set aside the Decision 1 promulgated on July 31,
1996, and Resolution 2 dated September 12, 1996 of the Court of Appeals 3 in CA-G.R. No. 41422, entitled "Juanita
de Jesus vda. de Dimaano, et al. vs. Southeastern College, Inc.", which reduced the moral damages awarded below
from P1,000,000.00 to P200,000.00. 4 The Resolution under attack denied petitioner's motion for reconsideration.

Private respondents are owners of a house at 326 College Road, Pasay City, while petitioner owns a four-storey
school building along the same College Road. On October 11, 1989, at about 6:30 in the morning, a powerful typhoon
"Saling" hit Metro Manila. Buffeted by very strong winds, the roof of petitioner's building was partly ripped off and
blown away, landing on and destroying portions of the roofing of private respondents' house. After the typhoon had
passed, an ocular inspection of the destroyed building was conducted by a team of engineers headed by the city

50
building official, Engr. Jesus L. Reyna. Pertinent aspects of the latter's Report 5 dated October 18, 1989 stated, as
follows:

5. One of the factors that may have led to this calamitous event is the formation of the building in
the area and the general direction of the wind. Situated in the peripheral lot is an almost U-shaped
formation of 4-storey building. Thus, with the strong winds having a westerly direction, the general
formation of the building becomes a big funnel-like structure, the one situated along College Road,
receiving the heaviest impact of the strong winds. Hence, there are portions of the roofing, those
located on both ends of the building, which remained intact after the storm.

6. Another factor and perhaps the most likely reason for the dislodging of the roofing structural
trusses is the improper anchorage of the said trusses to the roof beams. The 1/2' diameter steel
bars embedded on the concrete roof beams which serve as truss anchorage are not bolted nor
nailed to the trusses. Still, there are other steel bars which were not even bent to the trusses, thus,
those trusses are not anchored at all to the roof beams.

It then recommended that "to avoid any further loss and damage to lives, limbs and property of persons
living in the vicinity," the fourth floor of subject school building be declared as a "structural hazard."

In their Complaint 6 before the Regional Trial Court of Pasay City, Branch 117, for damages based on culpa aquiliana,
private respondents alleged that the damage to their house rendered the same uninhabitable, forcing them to stay
temporarily in others' houses. And so they sought to recover from petitioner P117,116.00, as actual damages,
P1,000,000.00, as moral damages, P300,000.00, as exemplary damages and P100,000.00, for and as attorney's
fees; plus costs.

In its Answer, petitioner averred that subject school building had withstood several devastating typhoons and other
calamities in the past, without its roofing or any portion thereof giving way; that it has not been remiss in its
responsibility to see to it that said school building, which houses school children, faculty members, and employees, is
"in tip-top condition"; and furthermore, typhoon "Saling" was "an act of God and therefore beyond human control"
such that petitioner cannot be answerable for the damages wrought thereby, absent any negligence on its part.

The trial court, giving credence to the ocular inspection report to the effect that subject school building had a
"defective roofing structure," found that, while typhoon "Saling" was accompanied by strong winds, the damage to
private respondents' houses "could have been avoided if the construction of the roof of [petitioner's] building was not
faulty." The dispositive portion of the lower court's decision 7 reads, thus:

WHEREFORE, in view of the foregoing, the Court renders judgment (sic) in favor of the plaintiff
(sic) and against the defendants, (sic) ordering the latter to pay jointly and severally the former as
follows:

a) P117,116.00, as actual damages, plus litigation expenses;

b) P1,000,000.00 as moral damages;

c) P100,000.00 as attorney's fees;

d) Costs of the instant suit.

The claim for exemplary damages is denied for the reason that the defendants (sic) did in a wanton
fraudulent, reckless, oppressive or malevolent manner.

In its appeal to the Court of Appeals, petitioner assigned as errors, 8 that:

51
I

THE TRIAL COURT ERRED IN HOLDING THAT TYPHOON "SALING", AS AN ACT OF GOD, IS
NOT "THE SOLE AND ABSOLUTE REASON" FOR THE RIPPING-OFF OF THE SMALL
PORTION OF THE ROOF OF SOUTHEASTERN'S FOUR (4) STOREY SCHOOL BUILDING.

II

THE TRIAL COURT ERRED IN HOLDING THAT "THE CONSTRUCTION OF THE ROOF OF
DEFENDANT'S SCHOOL BUILDING WAS FAULTY" NOTWITHSTANDING THE ADMISSION
THAT THERE WERE TYPHOONS BEFORE BUT NOT AS GRAVE AS TYPHOON "SALING"
WHICH IS THE DIRECT AND PROXIMATE CAUSE OF THE INCIDENT.

III

THE TRIAL COURT ERRED IN AWARDING ACTUAL AND MORAL DAMAGES AS WELL AS
ATTORNEY'S FEES AND LITIGATION EXPENSES AND COSTS OF SUIT TO DIMAANOS WHEN
THEY HAVE NOT INCURRED ACTUAL DAMAGES AT ALL AS DIMAANOS HAVE ALREADY
SOLD THEIR PROPERTY, AN INTERVENING EVENT THAT RENDERS THIS CASE MOOT AND
ACADEMIC.

IV

THE TRIAL COURT ERRED IN ORDERING THE ISSUANCE OF THE WRIT OF EXECUTION
INSPITE OF THE PERFECTION OF SOUTHEASTERN'S APPEAL WHEN THERE IS NO
COMPELLING REASON FOR THE ISSUANCE THERETO.

As mentioned earlier, respondent Court of Appeals affirmed with modification the trial court's disposition by reducing
the award of moral damages from P1,000,000.00 to P200,000.00. Hence, petitioner's resort to this Court, raising for
resolution the issues of:

1. Whether or not the award of actual damages [sic] to respondent Dimaanos on the basis of
speculation or conjecture, without proof or receipts of actual damage, [sic] legally feasible or
justified.

2. Whether or not the award of moral damages to respondent Dimaanos, with the latter having
suffered, actual damage has legal basis.

3. Whether or not respondent Dimaanos who are no longer the owner of the property, subject
matter of the case, during its pendency, has the right to pursue their complaint against petitioner
when the case was already moot and academic by the sale of the property to third party.

4. Whether or not the award of attorney's fees when the case was already moot academic [sic]
legally justified.

5. Whether or not petitioner is liable for damage caused to others by typhoon "Saling" being an act
of God.

6. Whether or not the issuance of a writ of execution pending appeal, ex-parte or without hearing,
has support in law.

52
The pivot of inquiry here, determinative of the other issues, is whether the damage on the roof of the building of
private respondents resulting from the impact of the falling portions of the school building's roof ripped off by the
strong winds of typhoon "Saling", was, within legal contemplation, due to fortuitous event? If so, petitioner cannot be
held liable for the damages suffered by the private respondents. This conclusion finds support in Article 1174 of Civil
Code, which provides:

Art 1174. Except in cases expressly specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which, though foreseen, were
inevitable.

The antecedent of fortuitous event or caso fortuito is found in the Partidas which defines it as "an event which takes
place by accident and could not have been foreseen." 9 Escriche elaborates it as "an unexpected event or act of God
which could neither be foreseen nor resisted." 10 Civilist Arturo M. Tolentino adds that "[f]ortuitous events may be
produced by two general causes: (1) by nature, such as earthquakes, storms, floods, epidemics, fires, etc. and (2) by
the act of man, such as an armed invasion, attack by bandits, governmental prohibitions, robbery, etc." 11

In order that a fortuitous event may exempt a person from liability, it is necessary that he be free from any previous
negligence or misconduct by reason of which the loss may have been occasioned. 12 An act of God cannot be
invoked for the protection of a person who has been guilty of gross negligence in not trying to forestall its possible
adverse consequences. When a person's negligence concurs with an act of God in producing damage or injury to
another, such person is not exempt from liability by showing that the immediate or proximate cause of the damages
or injury was a fortuitous event. When the effect is found to be partly the result of the participation of man whether
it be from active intervention, or neglect, or failure to act the whole occurrence is hereby humanized, and removed
from the rules applicable to acts of God. 13

In the case under consideration, the lower court accorded full credence to the finding of the investigating team that
subject school building's roofing had "no sufficient anchorage to hold it in position especially when battered by strong
winds." Based on such finding, the trial court imputed negligence to petitioner and adjudged it liable for damages to
private respondents.

After a thorough study and evaluation of the evidence on record, this Court believes otherwise, notwithstanding the
general rule that factual findings by the trail court, especially when affirmed by the appellate court, are binding and
conclusive upon this Court. 14 After a careful scrutiny of the records and the pleadings submitted by the parties, we
find exception to this rule and hold that the lower courts misappreciated the evidence proffered.

There is no question that a typhoon or storm is a fortuitous event, a natural occurrence which may be foreseen but is
unavoidable despite any amount of foresight, diligence or care. 15 In order to be exempt from liability arising from any
adverse consequence engendered thereby, there should have been no human participation amounting to a negligent
act. 16 In other words; the person seeking exoneration from liability must not be guilty of negligence. Negligence, as
commonly understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be the
failure to observe that degree of care, precaution, and vigilance which the circumstances justify demand, 17or the
omission to do something which a prudent and reasonable man, guided by considerations which ordinarily regulate
the conduct of human affairs, would
do. 18 From these premises, we proceed to determine whether petitioner was negligent, such that if it were not, the
damage caused to private respondents' house could have been avoided?

At the outset, it bears emphasizing that a person claiming damages for the negligence of another has the burden of
proving the existence of fault or negligence causative of his injury or loss. The facts constitutive of negligence must
be affirmatively established by competent evidence, 19 not merely by presumptions and conclusions without basis in
fact. Private respondents, in establishing the culpability of petitioner, merely relied on the aforementioned report
submitted by a team which made an ocular inspection of petitioner's school building after the typhoon. As the term
imparts, an ocular inspection is one by means of actual sight or viewing. 20 What is visual to the eye through, is not

53
always reflective of the real cause behind. For instance, one who hears a gunshot and then sees a wounded person,
cannot always definitely conclude that a third person shot the victim. It could have been self-inflicted or caused
accidentally by a stray bullet. The relationship of cause and effect must be clearly shown.

In the present case, other than the said ocular inspection, no investigation was conducted to determine the real cause
of the partial unroofing of petitioner's school building. Private respondents did not even show that the plans,
specifications and design of said school building were deficient and defective. Neither did they prove any substantial
deviation from the approved plans and specifications. Nor did they conclusively establish that the construction of such
building was basically flawed. 21

On the other hand, petitioner elicited from one of the witnesses of private respondents, city building official Jesus
Reyna, that the original plans and design of petitioner's school building were approved prior to its construction. Engr.
Reyna admitted that it was a legal requirement before the construction of any building to obtain a permit from the city
building official (city engineer, prior to the passage of the Building Act of 1977). In like manner, after construction of
the building, a certification must be secured from the same official attesting to the readiness for occupancy of the
edifice. Having obtained both building permit and certificate of occupancy, these are, at the very least, prima
facie evidence of the regular and proper construction of subject school building. 22

Furthermore, when part of its roof needed repairs of the damage inflicted by typhoon "Saling", the same city official
gave the go-signal for such repairs without any deviation from the original design and subsequently, authorized
the use of the entire fourth floor of the same building. These only prove that subject building suffers from no structural
defect, contrary to the report that its "U-shaped" form was "structurally defective." Having given his unqualified
imprimatur, the city building official is presumed to have properly performed his duties 23 in connection therewith.

In addition, petitioner presented its vice president for finance and administration who testified that an annual
maintenance inspection and repair of subject school building were regularly undertaken. Petitioner was even willing to
present its maintenance supervisor to attest to the extent of such regular inspection but private respondents agreed
to dispense with his testimony and simply stipulated that it would be corroborative of the vice president's narration.

Moreover, the city building official, who has been in the city government service since 1974, admitted in open court
that no complaint regarding any defect on the same structure has ever been lodged before his office prior to the
institution of the case at bench. It is a matter of judicial notice that typhoons are common occurrences in this country.
If subject school building's roofing was not firmly anchored to its trusses, obviously, it could not have withstood long
years and several typhoons even stronger than "Saling."

In light of the foregoing, we find no clear and convincing evidence to sustain the judgment of the appellate court. We
thus hold that petitioner has not been shown negligent or at fault regarding the construction and maintenance of its
school building in question and that typhoon "Saling" was the proximate cause of the damage suffered by private
respondents' house.

With this disposition on the pivotal issue, private respondents' claim for actual and moral damages as well as
attorney's fees must fail. 24 Petitioner cannot be made to answer for a purely fortuitous event. 25 More so because no
bad faith or willful act to cause damage was alleged and proven to warrant moral damages.

Private respondents failed to adduce adequate and competent proof of the pecuniary loss they actually incurred. 26 It
is not enough that the damage be capable of proof but must be actually proved with a reasonable degree of certainty,
pointing out specific facts that afford a basis for measuring whatever compensatory damages are borne. 27Private
respondents merely submitted an estimated amount needed for the repair of the roof their subject building. What is
more, whether the "necessary repairs" were caused ONLY by petitioner's alleged negligence in the maintenance of its
school building, or included the ordinary wear and tear of the house itself, is an essential question that remains
indeterminable.

54
The Court deems unnecessary to resolve the other issues posed by petitioner.

As regards the sixth issue, however, the writ of execution issued on April 1, 1993 by the trial court is hereby nullified
and set aside. Private respondents are ordered to reimburse any amount or return to petitioner any property which
they may have received by virtue of the enforcement of said writ.

WHEREFORE, the petition is GRANTED and the challenged Decision is REVERSED. The complaint of private
respondents in Civil Case No. 7314 before the trial court a quo is ordered DISMISSED and the writ of execution
issued on April 1, 1993 in said case is SET ASIDE. Accordingly, private respondents are ORDERED to return to
petitioner any amount or property received by them by virtue of said writ. Costs against the private respondents.

SO ORDERED.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. FEDERICO LOPEZ @ AMBOY


LOPEZ, accused-appellant.
DECISION

MENDOZA, J.:

55
This is an appeal from the decision [1] of the Regional Trial Court of Pangasinan (Branch 52), finding accused-
appellant guilty of two counts of murder and one count of frustrated murder and ordering him to pay a total of
P204,300.00 in damages.

The Information[2] against accused-appellant charged:

That on or about the 15th day of November, 1991, in the evening, at Brgy. Nancalabasaan, municipality of Umingan,
province of Pangasinan, New Republic of the Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused together with one John Doe, whose identity has not yet been established, armed with a short
firearm, with intent to kill, with treachery and evident premeditation, did then and there willfully, unlawfully and
feloniously attack, assault and shoot ROGELIO SELDERA and RODOLFO PADAPAT which caused their immediate
death and on the same occasion and with treachery and evident premeditation wound MARIO SELDERA on his
breast to the damage and prejudice of the heirs of Rogelio Seldera and Rodolfo Padapat and also to the damage and
prejudice of said Mario Seldera.

The prosecution presented evidence showing the following: At around 6:00 in the evening of November 15,
1991, Mario Seldera, 11, his father Rogelio Seldera, and his cousin Rodolfo Padapat worked in the riceland of a
certain Lagula in Barangay Nancalabasaan, Umingan, Pangasinan. It was harvest time and the three were hired to
bundle the palay stalks which had been cut. As it was a moonlit night, the three worked in the field until around 9:00
when they started for home taking a trail alongside the Banila river. The trail is about two feet wide only, and so the
three walked along the trail single file with Rogelio, being the oldest, leading the way, followed by his son Mario and
by Rodolfo who was last. As they reached a sloping portion in the trail, accused-appellant Federico Lopez appeared
armed with a shotgun. Accused-appellant had a companion, a dark man. He was unarmed.[3] Without uttering a word,
accused-appellant fired at the three, who slumped forward, face down. Accused-appellants companion went near the
bodies of the victims and rolled them over with his foot. Satisfied that the victims were dead, accused-appellant and
his companion left.[4]

However, Mario, the youngest in the group, was not killed, although he had been wounded in the back. As soon
as accused-appellant and his companion had left, Mario stood up and, crying, he walked to the house of his uncle,
Alfredo Padapat, the father of Rodolfo, and reported the matter. He decided not to go home as accused-appellant and
his companion went in the direction of their house. Marios mother was fetched from their house and told what had
happened to Rogelio and Rodolfo. The three then reported the incident to the barangay captain who lost no time in
accompanying them to the police in Umingan, Pangasinan.[5]

Mario was investigated by CPL Jose Almerol. Afterwards, he was taken to the Umingan Medicare Hospital
where he was treated by Dr. Suller-Santos. The boy suffered three gunshot wounds on the back, right side, each
wound measuring about .5 x 1 cm. The wounds were located vertically, the first about three centimeters from the
second and the latter about two centimeters from the third. [6] Dr. Santos issued a medical certification (Exh. E) and
referred Mario to the Eastern Pangasinan District Hospital for x-ray examination.

Mario positively identified accused-appellant as the assailant. He testified that accused-appellant wore a white,
long-sleeved shirt, blue jeans and white slippers, while his companion had a black t-shirt, black jeans and brown
slippers on.[7] He was able to recognize accused-appellant and notice the type and color of the latters clothes and
those of the latters companions because the moon was brightly shining. He knew accused-appellant very well,
because the latter used to frequent their house in Nancalabasaan to play cards with his father. In addition, Mario used
to buy cigarettes from accused-appellants store. As to the gun used, he stated that it was similar to those used by
security guards. When asked whether his father and accused-appellant had a quarrel on November 15, 1991, Mario
said he did not know.[8]

Dr. Thelma C. Busto, the rural health physician of Umingan, Pangasinan, examined the bodies of Rogelio
Seldera and Rodolfo Padapat on November 16, 1991.

Dr. Busto described Rogelios wounds as follows:[9]

56
1. Gunshot wound frontal area of head as point of entrance with exit at the occipital area, . . . thru and thru.

2. Multiple gunshot wounds in the chest and neck (9).

Her post-mortem report on Rodolfo Padapat stated:[10]

Gunshot wound in the head right parieted area of head as entrance, no exit.

According to Dr. Bustos reports, the cause of death of the victims was cerebral hemorrhage and
cardiorespiratory arrest secondary to gunshot wounds. Testifying, she said that the gunshot wounds were alike in size
and nature.Although she could not tell the type of firearm used nor determine the trajectory of the wounds, she said
the wounds could have been caused by a shotgun.[11]

Leonida Seldera, widow of the deceased Rogelio, and Alfredo Padapat, father of Rodolfo, testified on the civil
aspect of the case. The prosecution was precluded from inquiring from these witnesses about events which
transpired in the evening of November 15, 1991 because they were present during the testimony in-chief of Mario
Seldera. The defense counsel moved for their exclusion but the prosecution manifested that they would only testify
with regard to the civil aspect of the case.

Accused-appellants defense was alibi. He claimed that at around 5:00 in the afternoon of November 15, 1991,
he was in the house of his uncle, Asterio Sonaco, in Caurdanetaan, another barangay of Umingan in Pangasinan,
about three kilometers from Nancalabasaan. He had a round of drinks with four friends [12] over a dish of dog meat. At
11:00 that night, the party broke up and accused-appellant went home. He claimed that it was dark that night and that
during the party, they used a lamp for illumination.[13]

Accused-appellant stated that he has no previous quarrel with the two deceased nor with Mario Seldera. Nor
had he been to the house of Rogelio Seldera. As to the clothes he wore on the night of November 15, 1991, he
claimed he had a pair of maong pants and a t-shirt on, though he could not remember the color of the latter.[14]

On cross-examination, accused-appellant admitted that he was known as Amboy Lopez and that although a
barriomate, Rodrigo Lopez, was also called Amboy, the latter was known more as Thunder Lopez. He also said that
he had a farm in Nancalabasaan but he allegedly had not gone to the barangay proper as he only pass by the
eastern part thereof.[15]

In his counter-affidavit,[16] accused-appellant did not mention anything about cooking dog meat during the party
in Asterio Sonacos house on November 15, 1991 and that he went home at 8:00 in the evening. Accused-appellant
gave no explanation why in his testimony in court he said he went home at 11:00 in the evening and that they killed a
dog and made its meat into a dish.[17]

The defense presented Daniel Fortunato and Mario Sonaco to corroborate accused-appellants testimony on the
events which transpired in the evening of November 15, 1991. Daniel Fortunato testified that he is a barangay
councilman of Caurdanetaan, Umingan, Pangasinan. He claimed that from 4:00 in the afternoon to 11:00 in the
evening of November 15, 1991, he was with accused-appellant in a party where there were about thirteen [18] other
people, drinking gin and eating cooked dog meat. Fortunato said he and Mario Sonaco helped accused-appellant
home as the latter was too drunk. Accused-appellant was allegedly received by his wife.[19]

On cross-examination Fortunato admitted that he was not always watching accused-appellant during the party
and that it was possible that the latter may have slipped out. With regard to the distance of Caurdanetaan to the
Banila river, where the incident happened, Fortunato estimated it to be about 1 1/2 kilometers, which can be covered
in 20 minutes by walking and in about 11 minutes by running. Fortunato testified that accused-appellant had the same
height and body build as Rodrigo Thunder Lopez although the latter was darker.[20]

57
Mario Sonaco, for his part, claimed that there were less than ten [21] people present in the house of his brother,
Asterio Sonaco, in the evening of November 15, 1991. However, he corroborated Fortunatos testimony that he and
Fortunato took accused-appellant home at 11:00 oclock that night because the latter was drunk.[22]

On cross-examination, Sonaco admitted that accused-appellant is his nephew.[23] He estimated that accused-
appellants house was less than two kilometers from the Banila river. He reiterated that by taking the barangay road,
the distance could be covered in 30 minutes on foot but if one runs or uses the shorter route through the ricefields,
the travel time would be less.[24]

The defense also presented Juanito Costales, barangay captain of Caurdanetaan, who testified that around
12:00 midnight of November 15, 1991, three policemen went to his house to inform him that accused-appellant was a
suspect in a killing in the neighboring barangay of Nancalabasaan. He said he accompanied the authorities to
accused-appellants house and that when the latter came out, he smelled of liquor. When asked by the policemen
where he had been, accused-appellant allegedly answered he had been to a drinking party held that
afternoon. Apparently finding nothing unusual, Costales and the policemen left.[25]

Costales corroborated Mario Sonacos testimony that accused-appellants house is less than two kilometers from
the scene of the crime. When asked about the condition of the night on November 15, 1991, he stated that it was so
dark that the policemen had to use flashlights.[26]

Corroborating accused-appellants claim that it was pitch dark on the evening of November 15, 1991, Lorna
Gonzales, a resident of Barangay Nancalabasaan, whose house is about 100 meters from the Seldera household,
testified that at around 9:00 in the evening of that day, she heard some wailing and weeping in the house of the
Selderas, and that she and her husband learned that Rogelio Seldera had died. However, they did not go out of their
house because it was allegedly very dark, and she was afraid that her husband might be implicated in the killing. On
cross-examination, Gonzales disclosed that her house is surrounded by big camachile trees. When asked whether
these could obstruct the light from the moon, she only said: It [was] dark, sir.[27]

On January 20, 1995, the trial court rendered judgment, the dispositive portion of which reads:[28]

WHEREFORE, in virtue of the foregoing disquisitions accused Federico Lopez @ Amboy Lopez is hereby declared
GUILTY of the crime of Double Murder With Frustrated Murder beyond reasonable doubt and is hereby sentenced to
a penalty of Reclusion Perpetua relative to the treacherous killing of Rogelio Seldera, and to pay the heirs of the late
Seldera the sum of Fifty Thousand Pesos (P50,000.00) as compensatory damages, Thirty Thousand (P30,000.00) as
moral damages, likewise sentences the same accused Amboy Lopez of the penalty of Reclusion Perpetua for the
treacherous killing of Rodolfo Padapat, and to pay the heirs of the late Padapat the sum of Fifty Thousand Pesos
(P50,000.00) as compensatory damages, and the sum of Thirty Thousand Pesos (P30,000.00) as moral damages,
and to pay civil liability or actual expenses incurred during the wake and burial and other expenses incurred relative
to the interment of both deceased in the amount of Fourteen Thousand Pesos (P14,000.00) payable to the heirs of
both victims, and finally sentences accused Amboy Lopez for the crime of Frustrated Homicide for the injuries
sustained by victim Mario Seldera, with a penalty of Prision Mayor from six (6) years and one (1) day to twelve (12)
years, and to pay the widow of the late Rogelio Seldera the sum of Twenty Thousand Pesos (P20,000.00) as moral
damages, Ten Thousand Pesos (P10,000.00) exemplary damages, and P300.00 as actual damages in the form of
medical expenses. With cost de officio. Bailbond cancelled.

SO ORDERED.

In this appeal, accused-appellant alleges that:[29]

ASSIGNMENT OF ERRORS

58
(1) THE HONORABLE COURT ERRED IN GIVING FULL FAITH AND CREDIT TO THE TESTIMONY OF
MARIO [S]ELDERA;

(2) THE HONORABLE [COURT] ERRED IN NOT CONSIDERING THE TESTIMONIES OF DEFENSE
WITNESSES LORNA GONZALES AND BARANGAY CAPTAIN JUANITO COSTALES AS TO THE
CONDITION OF THE NIGHT;

(3) THAT THE HONORABLE COURT ERRED IN NOT CONSIDERING THE DEFENSE OF ALIBI PUT UP
BY THE ACCUSED;

(4) THE HONORABLE COURT ERRED IN NOT CONSIDERING THE EXISTENCE OF TWO PERSONS
SPORTING THE NAME OF AMBOY LOPEZ.

First. Accused-appellant questions the credibility of Mario Seldera. It is unbelievable, he contends, that this
witness observed even minute details, such as the length and color of the shirts worn by accused-appellant and his
companion, the color of their slippers, and the type of firearm used by accused-appellant, considering that the
shooting took place suddenly and unexpectedly.[30]

The contention has no merit. As the Solicitor General points out, Mario Seldera went through a harrowing
experience. In fact, he suffered three gunshot wounds and was given up for dead by the assailant. The memory of
the massacre was etched deeply in his memory. As this Court has many times held, the natural reaction of victims of
criminal violence is to strive to notice the appearance of their assailants and observe the manner the crime was
committed.[31]

Indeed, Marios statement that accused-appellant used a shotgun in shooting him and his companions on
November 15, 1991 is confirmed by the fact that the wounds suffered by the victims were similar to those caused by
a shotgun fired at close range. Rogelio Seldera, who was less than three meters away from accused-appellant, had
his head practically blown off. On his neck and chest were nine wounds, probably caused by pellets from the
blast.Mario, who was behind his father, sustained three vertical, relatively small wounds on the right side of his
back. The wound on Rodolfos head, on the other hand, although without an exit, is similar in size to that suffered by
Rogelio Seldera on the head.

It is argued that Mario could not have recognized accused-appellant because it was very dark on the night of
November 15, 1991.[32] This is not true. According to the Philippine Atmospheric Geophysical and Astronomical
Services Administration, there was 60% illumination from the moon over Umingan, Pangasinan at 9:00 in the evening
of November 15, 1991. In People v. Pueblas,[33] we held that a moon disc 62% full provides sufficient illumination in
sustaining the identification of the accused and convicting him of murder. In other cases, we held that the illumination
from the moon[34] and even from the stars[35] is fair and sufficient to identify perpetrators of crimes.

The Solicitor General observes that Mario had been walking under the light of the moon for sometime before the
incident so that his eyes had sufficiently adjusted to the natural illumination, so as to enable him in identifying the
accused-appellant.[36] Indeed, if accused-appellant recognized his intended victims, there is no reason why the
survivor from the ambush could not have also recognized him.

In the alternative, it is contended that even if there was fair illumination from the moon on the night in question,
nonetheless Mario Seldera could have mistaken accused-appellant for Rodrigo Thunder Lopez.[37]

Again the contention is without merit. Rodrigo Thunder Lopez may also be called Amboy Lopez in the barangay,
but it was not by name that Mario made his identification. In fact, Rodrigo Thunder Lopez was not even a suspect in
the ambush of Mario and the latters companions. As already stated, Mario identified accused-appellant based on this
witness knowledge of accused-appellant. The latter was a frequent visitor in their house and this witness used to buy
from accused-appellants store. Moreover, Rodrigo Lopez is darker and shorter than accused-appellant.

59
Indeed, Mario Seldera was very positive that it was accused-appellant who shot them. He identified accused-
appellant as their assailant upon reaching Alfredo Padapats house. He again pointed to accused-appellant as the
person who shot them when his mother arrived and again when they reported the incident to the police that same
night. The rule is that identification of the accused, when there is no improper motive for making it, should be given
full faith and credence. In the case at bar, no reason has been shown why Mario should falsely implicate accused-
appellant.

Second. It is claimed that accused-appellant was in his uncles house in Caurdanetaan at the time of the
incident. The defense of alibi will be sustained where the evidence of the prosecution is weak.[38] However, accused-
appellant himself said that Caurdanetaan is just three kilometers from Nancalabasaan. On the other hand, his
witnesses[39]themselves testified that accused-appellants house is less than two kilometers from the scene of the
crime and that the distance could be negotiated in 30 minutes by foot and even less if one runs. For alibi to prosper,
accused-appellant must show that it was physically impossible for him to be at the scene of the crime at the time of its
commission.[40] Thus, assuming that he was indeed at the party in Asterio Sonacos house, he could have easily
slipped out of the party, come back to the group, and then be at home in time for the police to find him there.

Moreover, as already stated, accused-appellant was positively identified by Mario as the triggerman. It is settled
that the defense of alibi cannot prevail over positive identification of the accused by an eyewitness who has no
improper motive to falsely testify.[41] The Court finds no reason to doubt the veracity of Marios testimony who was only
11 when he witnessed the gruesome killing of his father and cousin and barely 13 when he took the stand. He could
possibly have no other motive but to tell the truth about what he had observed.

Accused-appellants alibi is not only weak; it is also filled with inconsistencies. He said in his counter-affidavit
that he went home at 8:00 in the evening of November 15, 1991, a full hour before the shooting occurred but, in his
testimony in court, he said he went home at 11:00 in the evening. His witnesses, Daniel Fortunato and Mario Sonaco,
said there were at least ten persons in the party at the house of Asterio Sonaco on November 15, 1991, but accused-
appellant stated that there were only five.

The Court is convinced that it was accused-appellant who shot Mario Seldera, Rogelio Seldera, and Rodolfo
Padapat on November 15, 1991. It is immaterial that there is no proof of motive for the attack because this becomes
significant only where the identity of the assailant is in serious doubt. [42] But in this case, the accused has been
positively identified.

Third. The Information is formally defective as it charged more the one offense in violation of Rule 110, 13 of
the Revised Rules of Court. However, because of his failure to file a motion to quash, accused-appellant is deemed to
have waived objection based on the ground of duplicity.[43] The dispositive portion of the trial courts decision finds
accused-appellant guilty of Double Murder with Frustrated Murder, but sentences him for two separate counts of
murder and one count of frustrated homicide. We hold that accused-appellant was guilty of two counts of murder and
one count of attempted murder. Under Art. 48 of the Revised Penal Code, a complex crime is committed only when a
single act constitutes two or more grave or less grave felonies. As the victims in this case were successively shot by
accused-appellant with a shotgun, each shot necessarily constitutes one act. Accused-appellant should thus be held
liable for three separate crimes.

The lower court correctly appreciated treachery as having qualified the killings of Rogelio Seldera and Rodolfo
Padapat. The essence of treachery is the swift and unexpected attack on an unarmed victim without the slightest
provocation on the part of the victim.[44] Here, it was clearly established that the victims, when shot, were unarmed
and were peacefully walking along a trail when accused-appellant suddenly opened fire on them. The swiftness of the
shooting left them helpless to put up any form of defense.

The lower court however erred in convicting accused-appellant of frustrated homicide for the injuries inflicted on
Mario Seldera. Although it correctly appreciated the intent to kill, which can be inferred from the weapon used, the
proximity of the assailants and the location of the injuries, it should have appreciated treachery in the
attack. Treachery attended the shooting not only of Rogelio Seldera and Rodolfo Padapat but also of Mario Seldera.

60
But, with respect to Mario Seldera, the crime was not frustrated, but only attempted murder. This is the gist of
our rulings in several cases.[45] For the injuries sustained by Mario Seldera were not life threatening. Dr. Santos, the
attending physician, certified that Marios injuries would heal in seven days. [46] In fact, he was not confined at the
hospital. He was referred to the Eastern Pangasinan District Hospital only for x-ray examination of his injuries. There
is no evidence that he was given further medical attention by this hospital other than what Dr. Santos had requested.

Fourth. Certain modification should also be made with respect to the award of damages. The lower court
awarded P50,000.00 for compensatory damages and P30,000.00 for moral damages to each set of heirs of Rogelio
Seldera and Rodolfo Padapat in addition to the P14,000.00 actual damages to be divided among them. The
P50,000.00 should be treated as civil indemnity, which under prevailing jurisprudence, [47] is fixed at P50,000.00, to be
awarded without need of further proof other than the death of the victim. Further, in accordance with our rulings in
other cases,[48] the amount of moral damages should be increased to P50,000.00.

With regard to the amount of actual damages, Leonida Seldera and Alfredo Padapat testified that they could not
present any receipt for their funeral expenses because the funeral agency refused to issue one in view of an unpaid
balance. They have likewise allegedly lost the receipts for their joint expenses for the wake. Under the Civil Code
(Art. 2199), a party is entitled to compensation only for such pecuniary loss suffered by him as he has duly
proved.However, under Art. 2224, temperate damages may be recovered if it is shown that such party suffered some
pecuniary loss but the amount thereof cannot, from the nature of the case, be proved with certainty. [49] As the heirs of
the two victims clearly incurred funeral expenses, an award of P5,000.00 for each set of heirs by way of temperate
damages should be awarded, to be divided equally by the heirs of Seldera and Padapat.

For the injuries sustained by Mario Seldera, the court a quo awarded P10,000.00 moral damages, P20,000.00
exemplary damages and P300.00 actual damages for medical expenses. The first item should be disallowed for lack
of evidence to support it. The second item should likewise be deleted as under Art. 2230 of the Civil Code, exemplary
damages are awarded when the crime is committed with one or more aggravating circumstances. There was no
aggravating circumstance in this case other than the qualifying circumstance of treachery. As to the actual damages
of P300.00, as the prosecution failed to present any documentary proof for such, its award is improper. However, the
amount of P200.00 as temperate damages may be made in its place.

Actual damages representing unearned income of Rogelio Seldera and Alfredo Padapat should also be
awarded. Leonida Seldera testified that her husband was 43 years old when he was killed and that he earned
P13,000.00 a year as a farmer.[50] On the other hand, Alfredo Padapat testified that his son, Rodolfo, was then 25
years old when he died and that he was earning P5,000.00 a year also as a farmhand. [51] The formula for the
computation of unearned income is:[52]

net life gross living

earning (x) = expectancy x annual less expenses

capacity income (50% of gross

annual income)

Life expectancy is determined in accordance with the formula [53]

2
/3 x [80 - age of deceased]

Accordingly, Rogelio Selderas unearned income is:

X = 2 [80 - 43] x P13,000 - P6,500

61
3

= 24.67 x P6,500

= P160,355

Rodolfo Padapats unearned income is:

X = 2[80 - 25] x P5,000 - P2,500

= 36.67 x P2,500

= P91,675

WHEREFORE, the decision of the Regional Trial Court of Pangasinan (Branch 52) is AFFIRMED with the
following modifications:

1. For the death of Rogelio Seldera, accused-appellant is found guilty of murder and is sentenced to reclusion
perpetua and to pay the heirs of the deceased Rogelio Seldera the amount of P50,000.00 as indemnity, P50,000.00
as moral damages, P5,000.00 as temperate damages, and P160,355.00 as unearned income.

2. For the death of Rodolfo Padapat, accused-appellant is found guilty of murder and is sentenced to reclusion
perpetua and to pay the heirs of the deceased Rodolfo Padapat the amounts of P50,000.00 as civil indemnity,
P50,000.00 as moral damages, P5,000.00 as temperate damages, and P91,675.00 as unearned income.

3. For the injuries of Mario Seldera, accused-appellant is found guilty of attempted murder and is sentenced to 4
years and 2 months of prision correccional, as minimum, to 10 years of prision mayor, as maximum, and to pay Mario
Seldera P200.00 as temperate damages.

SO ORDERED.

62
[G.R. No. 128690. January 21, 1999]
ABS-CBN BROADCASTING CORPORATION, petitioners, vs. HONORABLE COURT OF APPEALS,
REPUBLIC BROADCASTING CORP., VIVA PRODUCTIONS, INC., and VICENTE DEL
ROSARIO, respondents.
DECISION
DAVIDE, JR., C.J.:

In this petition for review on certiorari, petitioners ABS-CBN Broadcasting Corp. (hereinafter ABS-CBN) seeks to
reverse and set aside the decision[1] of 31 October 1996 and the resolution[2] of 10 March 1997 of the Court of
Appeals in CA-G.R. CV No. 44125. The former affirmed with modification the decision [3] of 28 April 1993 of the
Regional Trial Court (RTC) of Quezon City, Branch 80, in Civil Case No. Q-12309. The latter denied the motion to
reconsider the decision of 31 October 1996.
The antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows:

In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement (Exh. A) whereby Viva gave ABS-CBN an
exclusive right to exhibit some Viva films. Sometime in December 1991, in accordance with paragraph 2.4 [sic] of
said agreement stating that-

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva films for TV telecast under such
terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-
CBN from the actual offer in writing.

Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, a list of
three (3) film packages (36 title) from which ABS-CBN may exercise its right of first refusal under the afore-said
agreement (Exhs. 1 par. 2, 2, 2-A and 2-B Viva). ABS-CBN, however through Mrs. Concio, can tick off only ten (10)
titles (from the list) we can purchase (Exh. 3 Viva) and therefore did not accept said list (TSN, June 8, 1992, pp. 9-
10). The titles ticked off by Mrs. Concio are not the subject of the case at bar except the film Maging Sino Ka Man.

For further enlightenment, this rejection letter dated January 06, 1992 (Exh 3 Viva) is hereby quoted:

6 January 1992

Dear Vic,

This is not a very formal business letter I am writing to you as I would like to express my difficulty in recommending
the purchase of the three film packages you are offering ABS-CBN.

63
From among the three packages I can only tick off 10 titles we can purchase. Please see attached. I hope you will
understand my position. Most of the action pictures in the list do not have big action stars in the cast. They are not for
primetime. In line with this I wish to mention that I have not scheduled for telecast several action pictures in our very
first contract because of the cheap production value of these movies as well as the lack of big action stars. As a film
producer, I am sure you understand what I am trying to say as Viva produces only big action pictures.

In fact, I would like to request two (2) additional runs for these movies as I can only schedule them in out non-
primetime slots. We have to cover the amount that was paid for these movies because as you very well know that
non-primetime advertising rates are very low. These are the unaired titles in the first contract.

1. Kontra Persa [sic]


2. Raider Platoon
3. Underground guerillas
4. Tiger Command
5. Boy de Sabog
6. lady Commando
7. Batang Matadero
8. Rebelyon

I hope you will consider this request of mine.

The other dramatic films have been offered to us before and have been rejected because of the ruling of MTRCB to
have them aired at 9:00 p.m. due to their very adult themes.

As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the other Viva movies
produced last year, I have quite an attractive offer to make.

Thanking you and with my warmest regards.

(Signed)
Charo Santos-Concio

On February 27, 1992, defendant Del Rosario approached ABS-CBNs Ms. Concio, with a list consisting of 52 original
movie titles (i.e., not yet aired on television) including the 14 titles subject of the present case, as well as 104 re-runs
(previously aired on television) from which ABS-CBN may choose another 52 titles, as a total of 156 titles, proposing
to sell to ABS-CBN airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00 of
which P30,000,000.00 will be in cash and P30,000,000.00 worth of television spots (Exh. 4 to 4-C Viva; 9 Viva).

On April 2, 1992, defendant Del Rosario and ABS-CBNs general manager, Eugenio Lopez III, met at the Tamarind
Grill Restaurant in Quezon City to discuss the package proposal of VIVA. What transpired in that lunch meeting is the
subject of conflicting versions. Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABS-CBN was
granted exclusive film rights to fourteen (14) films for a total consideration of P36 million; that he allegedly put this
agreement as to the price and number of films in a napkin and signed it and gave it to Mr. Del Rosario (Exh. D; TSN,
pp. 24-26, 77-78, June 8, 1992). On the other hand. Del Rosario denied having made any agreement with Lopez
regarding the 14 Viva films; denied the existence of a napkin in which Lopez wrote something; and insisted that what
he and Lopez discussed at the lunch meeting was Vivas film package offer of 104 films (52 originals and 52 re-runs)
for a total price of P60 million. Mr. Lopez promising [sic]to make a counter proposal which came in the form of a
proposal contract Annex C of the complaint (Exh. 1 Viva; Exh C ABS-CBN).

On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance discussed the
terms and conditions of Vivas offer to sell the 104 films, after the rejection of the same package by ABS-CBN.

On April 07, 1992, defendant Del Rosario received through his secretary , a handwritten note from Ms. Concio, (Exh.
5 Viva), which reads: Heres the draft of the contract. I hope you find everything in order, to which was attached a draft
exhibition agreement (Exh. C ABS-CBN; Exh. 9 Viva p. 3) a counter-proposal covering 53 films, 52 of which came
from the list sent by defendant Del Rosario and one film was added by Ms. Concio, for a consideration of P35
million. Exhibit C provides that ABS-CBN is granted film rights to 53 films and contains a right of first refusal to 1992
Viva Films. The said counter proposal was however rejected by Vivas Board of Directors [in the] evening of the same

64
day, April 7, 1992, as Viva would not sell anything less than the package of 104 films for P60 million pesos (Exh. 9
Viva), and such rejection was relayed to Ms. Concio.

On April 29, 1992, after the rejection of ABS-CBN and following several negotiations and meetings defendant Del
Rosario and Vivas President Teresita Cruz, in consideration of P60 million, signed a letter of agreement dated April
24, 1992, granting RBS the exclusive right to air 104 Viva-produced and/or acquired films (Exh. 7-A - RBS; Exh. 4
RBS) including the fourteen (14) films subject of the present case.[4]

On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance with a prayer for a writ of
preliminary injunction and/or temporary restraining order against private respondents Republic Broadcasting
Corporation[5] (hereafter RBS), Viva Production (hereafter VIVA), and Vicente del Rosario. The complaint was
docketed as Civil Case No. Q-92-12309.
On 28 May 1992, the RTC issued a temporary restraining order[6] enjoining private respondents from proceeding
with the airing, broadcasting, and televising of the fourteen VIVA films subject of the controversy, starting with the
film Maging Sino Ka Man, which was scheduled to be shown on private respondent RBS channel 7 at seven oclock in
the evening of said date.
On 17 June 1992, after appropriate proceedings, the RTC issued an order [7] directing the issuance of a writ of
preliminary injunction upon ABS-CBNs posting of a P35 million bond. ABS-CBN moved for the reduction of the bond,
[8]
while private respondents moved for reconsideration of the order and offered to put up a counterbond.[9]
In the meantime, private respondents filed separate answer with counterclaim. [10] RBS also set up a cross-claim
against VIVA.
On 3 August 1992, the RTC issued an order [11] dissolving the writ of preliminary injunction upon the posting by
RBS of a P30 million counterbond to answer for whatever damages ABS-CBN might suffer by virtue of such
dissolution. However, it reduced petitioners injunction bond to P15 million as a condition precedent for the
reinstatement of the writ of preliminary injunction should private respondents be unable to post a counterbond.
At the pre-trial[12] on 6 August 1992, the parties upon suggestion of the court, agreed to explore the possibility of
an amicable settlement. In the meantime, RBS prayed for and was granted reasonable time within which to put up
a P30 million counterbond in the event that no settlement would be reached.
As the parties failed to enter into an amicable settlement, RBS posted on 1 October 1992 a counterbond, which
the RTC approved in its Order of 15 October 1992.[13]
On 19 October 1992, ABS-CBN filed a motion for reconsideration[14] of the 3 August and 15 October 1992
Orders, which RBS opposed.[15]
On 29 October, the RTC conducted a pre-trial.[16]
Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a
petition[17] challenging the RTCs Order of 3 August and 15 October 1992 and praying for the issuance of a writ of
preliminary injunction to enjoin the RTC from enforcing said orders. The case was docketed as CA-G.R. SP No.
29300.
On 3 November 1992, the Court of Appeals issued a temporary restraining order [18] to enjoin the airing,
broadcasting, and televising of any or all of the films involved in the controversy.
On 18 December 1992, the Court of Appeals promulgated a decision [19] dismissing the petition in CA-G.R. SP
No. 29300 for being premature. ABS-CBN challenged the dismissal in a petition for review filed with this Court on 19
January 1993, which was docketed s G.R. No. 108363.
In the meantime the RTC received the evidence for the parties in Civil Case No. Q-92-12309. Thereafter, on 28
April 1993, it rendered a decision[20] in favor of RBS and VIVA and against ABS-CBN disposing as follows:

WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is rendered in favor of defendants
and against the plaintiff.

(1) The complaint is hereby dismissed;


(2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:

65
a) P107,727.00 the amount of premium paid by RBS to the surety which issued defendants RBSs
bond to lift the injunction;
b) P191,843.00 for the amount of print advertisement for Maging Sino Ka Man in various
newspapers;
c) Attorneys fees in the amount of P1 million;
d) P5 million as and by way of moral damages;
e) P5 million as and by way of exemplary damages;
(3) For the defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way of reasonable
attorneys fees.
(4) The cross-claim of defendant RBS against defendant VIVA is dismissed.
(5) Plaintiff to pay the costs.
According to the RTC, there was no meeting of minds on the price and terms of the offer. The alleged
agreement between Lopez III and Del Rosario was subject to the approval of the VIVA Board of Directors, and said
agreement was disapproved during the meeting of the Board on 7 April 1992. Hence, there was no basis for ABS-
CBNs demand that VIVA signed the 1992 Film Exhibition Agreement. Furthermore, the right of first refusal under the
1990 Film Exhibition Agreement had previously been exercised per Ms. Concios letter to Del Rosario ticking off ten
titles acceptable to them, which would have made the 1992 agreement an entirely new contract.
On 21 June 1993, this Court denied[21] ABS-CBNs petition for review in G.R. No. 108363, as no reversible error
was committed by the Court of Appeals in its challenged decision and the case had become moot and academic in
view of the dismissal of the main action by the court a quo in its decision of 28 April 1993.
Aggrieved by the RTCs decision, ABS-CBN appealed to the Court of Appeals claiming that there was a
perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject
films.Private respondents VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional
attorneys fees.
In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the contract between ABS-
CBN and VIVA had not been perfected, absent the approval by the VIVA Board of Directors of whatever Del Rosario,
its agent, might have agreed with Lopez III. The appellate court did not even believe ABS-CBNs evidence that Lopez
III actually wrote down such an agreement on a napkin, as the same was never produced in court. It likewise rejected
ABS-CBNs insistence on its right of first refusal and ratiocinated as follows:

As regards the matter of right of first refusal, it may be true that a Film Exhibition Agreement was entered into
between Appellant ABS-CBN and appellant VIVA under Exhibit A in 1990 and that parag. 1.4 thereof provides:

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA films for TV telecast under such
terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-
CBN within a period of fifteen (15) days from the actual offer in writing (Records, p. 14).

[H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall still be subjected to such terms as
may be agreed upon by the parties thereto, and that the said right shall be exercised by ABS-CBN within fifteen (15)
days from the actual offer in writing.

Said parag. 1.4 of the agreement Exhibit A on the right of first refusal did not fix the price of the film right to the
twenty-four (24) films, nor did it specify the terms thereof. The same are still left to be agreed upon by the parties.

In the instant case, ABS-CBNs letter of rejection Exhibit 3 (Records, p. 89) stated that it can only tick off ten (10)
films, and the draft contract Exhibit C accepted only fourteen (14) films, while parag. 1.4 of Exhibit A speaks of the
next twenty-four (24) films.

The offer of VIVA was sometime in December 1991, (Exhibits 2, 2-A, 2-B; Records, pp. 86-88; Decision, p. 11,
Records, p. 1150), when the first list of VIVA films was sent by Mr. Del Rosario to ABS-CBN. The Vice President of
ABS-CBN, Mrs. Charo Santos-Concio, sent a letter dated January 6, 1992 (Exhibit 3, Records, p. 89) where ABS-
CBN exercised its right of refusal by rejecting the offer of VIVA. As aptly observed by the trial court, with the said letter

66
of Mrs. Concio of January 6, 1992, ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen (15)
day period from February 27, 1992 (Exhibit 4 to 4-C) when another list was sent to ABS-CBN after the letter of Mrs.
Concio, still the fifteen (15) day period within which ABS-CBN shall exercise its right of first refusal has already
expired.[22]

Accordingly, respondent court sustained the award factual damages consisting in the cost of print
advertisements and the premium payments for the counterbond, there being adequate proof of the pecuniary loss
which RBS has suffered as a result of the filing of the complaint by ABS-CBN. As to the award of moral damages, the
Court of Appeals found reasonable basis therefor, holding that RBSs reputation was debased by the filing of the
complaint in Civil Case No. Q-92-12309 and by the non-showing of the film Maging Sino Ka Man. Respondent court
also held that exemplary damages were correctly imposed by way of example or correction for the public good in
view of the filing of the complaint despite petitioners knowledge that the contract with VIVA had not been perfected. It
also upheld the award of attorneys fees, reasoning that with ABS-CBNs act of instituting Civil Case No. Q-92-12309,
RBS was unnecessarily forced to litigate. The appellate court, however, reduced the awards of moral damages to P 2
million, exemplary damages to P2 million, and attorneys fees to P500,000.00.
On the other hand, respondent Court of Appeals denied VIVA and Del Rosarios appeal because it was RBS and
not VIVA which was actually prejudiced when the complaint was filed by ABS-CBN.
Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case, contending that the
Court of Appeals gravely erred in
I
RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER AND PRIVATE
RESPONDENT VIVA NOTWITHSTANDING PREPONFERANCE OF EVIDENCE ADDUCED BY
PETITIONER TO THE CONTRARY.
II
IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE RESPONDENT
RBS.
III
IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS.
IV
IN AWARDING ATORNEYS FEES OF RBS.
ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four titles under the 1990
Film Exhibition Agreement, as it had chosen only ten titles from the first list. It insists that we give credence to Lopezs
testimony that he and Del Rosario met at the Tamarind Grill Restaurant, discussed the terms and conditions of the
second list (the 1992 Film Exhibition Agreement) and upon agreement thereon, wrote the same on a paper napkin. It
also asserts that the contract has already been effective, as the elements thereof, namely, consent, object, and
consideration were established. It then concludes that the Court of Appeals pronouncements were not supported by
law and jurisprudence, as per our decision of 1 December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals,
[23]
which cited Toyota Shaw, Inc. v. Court of Appeals;[24] Ang Yu Asuncion v. Court of Appeals,[25] and Villonco Realty
Company v. Bormaheco, Inc.[26]
Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. RBS spent for the premium on
the counterbond of its own volition in order to negate the injunction issued by the trial court after the parties had
ventilated their respective positions during the hearings for the purpose. The filing of the counterbond was an option
available to RBS, but it can hardly be argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS
had another available option, i.e., move for the dissolution of the injunction; or if it was determined to put up a
counterbond, it could have presented a cash bond. Furthermore under Article 2203 of the Civil Code, the party
suffering loss injury is also required to exercise the diligence of a good father of a family to minimize the damages
resulting from the act or omission. As regards the cost of print advertisements, RBS had not convincingly established
that this was a loss attributable to the non-showing of Maging Sino Ka Man; on the contrary, it was brought out during
trial that with or without the case or injunction, RBS would have spent such an amount to generate interest in the film.
ABS-CBN further contends that there was no other clear basis for the awards of moral and exemplary
damages. The controversy involving ABS-CBN and RBS did not in any way originate from business transaction
between them. The claims for such damages did not arise from any contractual dealings or from specific acts
committed by ABS-CBN against RBS that may be characterized as wanton, fraudulent, or reckless; they arose by

67
virtue only of the filing of the complaint. An award of moral and exemplary damages is not warranted where the
record is bereft of any proof that a party acted maliciously or in bad faith in filing an action. [27] In any case, free resort
to courts for redress of wrongs is a matter of public policy. The law recognizes the right of every one to sue for that
which he honestly believes to be his right without fear of standing trial for damages where by lack of
sufficient evidence, legal technicalities, or a different interpretation of the laws on the matter, the case would lose
ground.[28] One who, makes use of his own legal right does no injury.[29] If damage results from filing of the complaint,
it is damnum absque injuria.[30] Besides, moral damages are generally not awarded in favor of a juridical person,
unless it enjoys a good reputation that was debased by the offending party resulting in social humiliation.[31]
As regards the award of attorneys fees, ABS-CBN maintains that the same had no factual, legal, or equitable
justification. In sustaining the trial courts award, the Court of Appeals acted in clear disregard of the doctrine laid
down in Buan v. Camaganacan[32] that the text of the decision should state the reason why attorneys fees are being
awarded; otherwise, the award should be disallowed. Besides, no bad faith has been imputed on, much less proved
as having been committed by, ABS-CBN. It has been held that where no sufficient showing of bad faith would be
reflected in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause,
attorneys fees shall not be recovered as cost.[33]
On the other hand, RBS asserts that there was no perfected contract between ABS-CBN and VIVA absent
meeting of minds between them regarding the object and consideration of the alleged contract. It affirms that ABS-
CBNs claim of a right of first refusal was correctly rejected by the trial court. RBS insists the premium it had paid for
the counterbond constituted a pecuniary loss upon which it may recover. It was obliged to put up the counterbond due
to the injunction procured by ABS-CBN. Since the trial court found that ABS-CBN had no cause of action or valid
claim against RBS and, therefore not entitled to the writ of injunction, RBS could recover from ABS-CBN the premium
paid on the counterbond. Contrary to the claim of ABS-CBN, the cash bond would prove to be more expensive, as the
loss would be equivalent to the cost of money RBS would forego in case the P30 million came from its funds or was
borrowed from banks.
RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled showing of the
film Maging Sino Ka Man because the print advertisements were out to announce the showing on a particular day
and hour on Channel 7, i.e., in its entirety at one time, not as series to be shown on a periodic basis. Hence, the print
advertisements were good and relevant for the particular date of showing, and since the film could not be shown on
that particular date and hour because of the injunction, the expenses for the advertisements had gone to waste.
As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the case and secured injunctions
purely for the purpose of harassing and prejudicing RBS. Pursuant then to Articles 19 and 21 of the Civil Code, ABS-
CBN must be held liable for such damages. Citing Tolentino,[34] damages may be awarded in cases of abuse of rights
even if the done is not illicit, and there is abuse of rights where a plaintiff institutes an action purely for the purpose of
harassing or prejudicing the defendant.
In support of its stand that a juridical entity can recover moral and exemplary damages, private respondent RBS
cited People v. Manero,[35] where it was stated that such entity may recover moral and exemplary damages if it has a
good reputation that is debased resulting in social humiliation. It then ratiocinates; thus:

There can be no doubt that RBS reputation has been debased by ABS-CBNs acts in this case. When RBS was not
able to fulfill its commitment to the viewing public to show the film Maging Sino Ka Man on the scheduled dates and
times (and on two occasions that RBS advertised), it suffered serious embarrassment and social humiliation. When
the showing was cancelled, irate viewers called up RBS offices and subjected RBS to verbal abuse (Announce kayo
ng announce, hindi ninyo naman ilalabas, nanloloko yata kayo) (Exh. 3-RBS, par.3). This alone was not something
RBS brought upon itself. It was exactly what ABS-CBN had planted to happen.

The amount of moral and exemplary damages cannot be said to be excessive. Two reasons justify the amount of the
award.

The first is that the humiliation suffered by RBS, is national in extent. RBS operations as a broadcasting company is
[sic] nationwide. Its clientele, like that of ABS-CBN, consists of those who own and watch television. It is not an
exaggeration to state, and it is a matter of judicial notice that almost every other person in the country watches
television. The humiliation suffered by RBS is multiplied by the number of televiewers who had anticipated the
showing of the film, Maging Sino Ka Man on May 28 and November 3, 1992 but did not see it owing to the
cancellation. Added to this are the advertisers who had placed commercial spots for the telecast and to whom RBS
had a commitment in consideration of the placement to show the film in the dates and times specified.

68
The second is that it is a competitor that caused RBS suffer the humiliation. The humiliation and injury are far greater
in degree when caused by an entity whose ultimate business objective is to lure customers (viewers in this case)
away from the competition.[36]

For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial court and the Court of
Appeals do not support ABS-CBNs claim that there was a perfected contract. Such factual findings can no longer be
disturbed in this petition for review under Rule 45, as only questions of law can be raised, not questions of fact. On
the issue of damages and attorneys fees, they adopted the arguments of RBS.
The key issues for our consideration are (1) whether there was a perfected contract between VIVA and ABS-
CBN, and (2) whether RBS is entitled to damages and attorneys fees. It may be noted that that award of attorneys
fees of P212,000 in favor of VIVA is not assigned as another error.
I
The first issue should be resolved against ABS-CBN. A contract is a meeting of minds between two persons
whereby one binds himself to give something or render some service to another [37] for a consideration. There is no
contract unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the
subject of the contract; and (3) cause of the obligation, which is established.[38] A contract undergoes three stages:
(a) preparation, conception, or generation, which is the period of negotiation and bargaining, ending at the
moment of agreement of the parties;
(b) perfection or birth of the contract, which is the moment when the parties come to agree on the terms of
the contract; and
(c) consummation or death, which is the fulfillment or performance of the terms agreed upon in the
contract.[39]
Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is
concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a
contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute
and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any
sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is
a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the
offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of
the offer annuls the offer.[40]
When Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the
package of films, said package of 104 VIVA films was VIVAs offer to ABS-CBN to enter into a new Film Exhibition
Agreement. But ABS-CBN, sent through Ms. Concio, counter-proposal in the form a draft contract proposing
exhibition of 53 films for a consideration of P35 million. This counter-proposal could be nothing less than the counter-
offer of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no
acceptance of VIVAs offer, for it was met by a counter-offer which substantially varied the terms of the offer.
ABS-CBNs reliance in Limketkai Sons Milling, Inc. v. Court of Appeals [41] and Villonco Realty Company v.
Bormaheco, Inc.,[42] is misplaced. In these cases, it was held that an acceptance may contain a request for certain
changes in the terms of the offer and yet be a binding acceptance as long as it is clear that the meaning of the
acceptance is positively and unequivocally to accept the offer, whether such request is granted or not. This ruling
was, however, reversed in the resolution of 29 March 1996,[43] which ruled that the acceptance of an offer must be
unqualified and absolute, i.e., it must be identical in all respects with that of the offer so as to produce consent or
meetings of the minds.
On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised counter-offer were not
material but merely clarificatory of what had previously been agreed upon. It cited the statement in Stuart v. Franklin
Life Insurance Co.[44] that a vendors change in a phrase of the offer to purchase, which change does not essentially
change the terms of the offer, does not amount to a rejection of the offer and the tender of a counter-offer. [45]However,
when any of the elements of the contract is modified upon acceptance, such alteration amounts to a counter-offer.
In the case at bar, ABS-CBN made no unqualified acceptance of VIVAs offer hence, they underwent period of
bargaining. ABS-CBN then formalized its counter-proposals or counter-offer in a draft contract. VIVA through its
Board of Directors, rejected such counter-offer. Even if it be conceded arguendo that Del Rosario had accepted the
counter-offer, the acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific
authority to do so.

69
Under the Corporation Code,[46] unless otherwise provided by said Code, corporate powers, such as the power
to enter into contracts, are exercised by the Board of Directors. However, the Board may delegate such powers to
either an executive committee or officials or contracted managers. The delegation, except for the executive
committee, must be for specific purposes.[47] Delegation to officers makes the latter agents of the corporation;
accordingly, the general rules of agency as to the binding effects of their acts would apply. [48] For such officers to be
deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to
do so. that Del Rosario did not have the authority to accept ABS-CBNs counter-offer was best evidenced by his
submission of the draft contract to VIVAs Board of Directors for the latters approval. In any event, there was between
Del Rosario and Lopez III no meeting of minds. The following findings of the trial court are instructive:

A number of considerations militate against ABS-CBNs claim that a contract was perfected at that lunch meeting on
April 02, 1992 at the Tamarind Grill.

FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the price and the number of
films, which he wrote on a napkin. However, Exhibit C contains numerous provisions which were not discussed at the
Tamarind Grill, if Lopez testimony was to be believed nor could they have been physically written on a napkin. There
was even doubt as to whether it was a paper napkin or cloth napkin. In short what were written in Exhibit C were not
discussed, and therefore could not have been agreed upon, by the parties. How then could this court compel the
parties to sign Exhibit C when the provisions thereof were not previously agreed upon?

SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the contract was 14 films. The
complaint in fact prays for delivery of 14 films. But Exhibit C mentions 53 films as its subject matter. Which is
which? If Exhibit C reflected the true intent of the parties, then ABS-CBNs claim for 14 films in its complaint is false or
if what it alleged in the complaint is true, then Exhibit C did not reflect what was agreed upon by the parties.This
underscores the fact that there was no meeting of the minds as to the subject matter of the contract, so as to
preclude perfection thereof. For settled is the rule that there can be no contract where there is no object certain which
is its subject matter (Art. 1318, NCC).

THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. D) States:

We were able to reach an agreement. VIVA gave us the exclusive license to show these fourteen (14) films, and we
agreed to pay Viva the amount of P16,050,000.00 as well as grant Viva commercial slots worth P19,950,000.00. We
had already earmarked this P16,050,000.00.

which gives a total consideration of P36 million (P19,951,000.00 plus P16,050,000.00 equals P36,000,000.00).

On cross-examination Mr. Lopez testified:

Q What was written in this napkin?


A The total price, the breakdown the known Viva movies, the 7 blockbuster movies and the other 7 Viva movies
because the price was broken down accordingly. The none [sic] Viva and the seven other Viva movies and
the sharing between the cash portion and the concerned spot portion in the total amount of P35 million
pesos.

Now, which is which? P36 million or P35 million? This weakens ABS-CBNs claim.

FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit C to Mr. Del Rosario with a
handwritten note, describing said Exhibit C as a draft. (Exh. 5 Viva; tsn pp. 23-24, June 08, 1992). The said draft has
a well defined meaning.

Since Exhibit C is only a draft, or a tentative, provisional or preparatory writing prepared for discussion, the terms and
conditions thereof could not have been previously agreed upon by ABS-CBN and Viva. Exhibit C could not therefore
legally bind Viva, not having agreed thereto. In fact, Ms. Concio admitted that the terms and conditions embodied in
Exhibit C were prepared by ABS-CBNs lawyers and there was no discussion on said terms and conditions.

As the parties had not yet discussed the proposed terms and conditions in Exhibit C, and there was no evidence
whatsoever that Viva agreed to the terms and conditions thereof, said document cannot be a binding contract. The

70
fact that Viva refused to sign Exhibit C reveals only two [sic] well that it did not agree on its terms and conditions, and
this court has no authority to compel Viva to agree thereto.

FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at the Tamarind Grill was only
provisional, in the sense that it was subject to approval by the Board of Directors of Viva. He testified:

Q Now, Mr. Witness, and after that Tamarinf meeting the second meeting wherein you claimed that you have the
meeting of the minds between you and Mr. Vic del Rosario, what happened?
A Vic Del Rosario was supposed to call us up and tell us specifically the result of the discussion with the Board of
Directors.
Q And you are referring to the so-called agreement which you wrote in [sic] a piece of paper?
A Yes, sir.
Q So, he was going to forward that to the board of Directors for approval?
A Yes, sir (Tsn, pp. 42-43, June 8, 1992)
Q Did Mr. Del Rosario tell you that he will submit it to his Board for approval?
A Yes, sir. (Tsn, p. 69, June 8, 1992).

The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario had no authority to bind Viva to
a contract with ABS-CBN until and unless its Board of Directors approved it. The complaint, in fact, alleges that Mr.
Del Rosario is the Executive Producer of defendant Viva which is a corporation. (par. 2, complaint). As a mere agent
of Viva, Del Rosario could not bind Viva unless what he did is ratified by its Directors. (Vicente vs.Geraldez, 52 SCRA
210; Arnold vs. Willets and Paterson, 44 Phil. 634). As a mere agent, recognized as such by plaintiff, Del Rosario
could not be held liable jointly and severally with Viva and his inclusion as party defendant has no legal
basis. (Salonga vs. Warner Barnes [sic],COLTA, 88 Phil. 125; Salmon vs. Tan, 36 Phil. 556).

The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what was supposed to
have been agreed upon at the Tamarind Grill between Mr. Lopez and Del Rosario was not a binding agreement. It is
as it should be because corporate power to enter into a contract is lodged in the Board of Directors. (Sec. 23,
Corporation Code). Without such board approval by the Viva board, whatever agreement Lopez and Del Rosario
arrived at could not ripen into a valid binding upon Viva (Yao Ka Sin Trading vs. Court of Appeals, 209 SCRA
763). The evidence adduced shows that the Board of Directors of Viva rejected Exhibit C and insisted that the film
package for 104 films be maintained (Exh. 7-1 Cica).[49]

The contention that ABS-CBN had yet to fully exercise its right of first refusal over twenty-four films under the
1990 Film Exhibition Agreement and that the meeting between Lopez and Del Rosario was a continuation of said
previous contract is untenable. As observed by the trial court, ABS-CBNs right of first refusal had already been
exercised when Ms. Concio wrote to Viva ticking off ten films. Thus:

[T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent, was for an entirely
different package. Ms. Concio herself admitted on cross-examination to having used or exercised the right of
first refusal. She stated that the list was not acceptable and was indeed not accepted by ABS-CBN, (Tsn, June
8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the right of first refusal may have been already
exercised by Ms. Concio (as she had). (TSN, June 8, 1992, pp. 71-75). Del Rosario himself knew and
understand [sic] that ABS-CBN has lost its right of first refusal when his list of 36 titles were rejected (Tsn, June
9, 1992, pp. 10-11).[50]

II
However, we find for ABS-CBN on the issue of damages. We shall first take up actual damages. Chapter 2, Title
XVIII, Book IV of the Civil Code is the specific law on actual or compensatory damages. Except as provided by law or
by stipulation, one is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he
has duly proved.[51] The indemnification shall comprehend not only the value of the loss suffered, but also that of the
profits that the obligee failed to obtain.[52] In contracts and quasi-contracts the damages which may be awarded are
dependent on whether the obligor acted with good faith or otherwise. In case of good faith, the damages recoverable
are those which are the natural and probable consequences of the breach of the obligation and which the parties

71
have foreseen or could have reasonably foreseen at the time of the constitution of the obligation. If the obligor acted
with fraud, bad faith, malice, or wanton attitude, he shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation. [53] In crimes and quasi-delicts, the defendants shall be liable for all
damages which are the natural and probable consequences of the act or omission complained of, whether or not
such damages have been foreseen or could have reasonably been foreseen by the defendant.[54]
Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or
permanent personal injury, or for injury to the plaintiffs business standing or commercial credit.[55]
The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasi-delict. It arose
from the fact of filing of the complaint despite ABS-CBNs alleged knowledge of lack of cause of action. Thus
paragraph 12 of RBSs Answer with Counterclaim and Cross-claim under the heading COUNTERCLAIM specifically
alleges:
12. ABS-CBN filed the complaint knowing fully well that it has no cause of action against RBS. As a result
thereof, RBS suffered actual damages in the amount of P6,621,195.32.[56]
Needless to state the award of actual damages cannot be comprehended under the above law on actual
damages. RBS could only probably take refuge under Articles 19, 20, and 21 of the Civil Code, which read as follows:

ART. 19. Every person must, in the exercise of hid rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

ART. 20. Every person who, contrary to law, wilfully or negligently causes damage to another shall indemnify the
latter for the same.

ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage.

It may further be observed that in cases where a writ of preliminary injunction is issued, the damages which the
defendant may suffer by reason of the writ are recoverable from the injunctive bond. [57] In this case, ABS-CBN had not
yet filed the required bond; as a matter of fact, it asked for reduction of the bond and even went to the Court of
Appeals to challenge the order on the matter. Clearly then, it was not necessary for RBS to file a counterbond.Hence,
ABS-CBN cannot be held responsible for the premium RBS paid for the counterbond.
Neither could ABS-CBN be liable for the print advertisements for Maging Sino Ka Man for lack of sufficient legal
basis. The RTC issued a temporary restraining order and later, a writ of preliminary injunction on the basis of its
determination that there existed sufficient ground for the issuance thereof. Notably, the RTC did not dissolve the
injunction on the ground of lack of legal and factual basis, but because of the plea of RBS that it be allowed to put up
a counterbond.
As regards attorneys fees, the law is clear that in the absence of stipulation, attorneys fees may be recovered
as actual or compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code.[58]
The general rule is that attorneys fees cannot be recovered as part of damages because of the policy that no
premium should be placed on the right to litigate. [59] They are not to be awarded every time a party wins a suit. The
power of the court t award attorneys fees under Article 2208 demands factual, legal, and equitable justification.
[60]
Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still
attorneys fees may not be awarded where no sufficient showing of bad faith could be reflected in a partys persistence
in a case other than an erroneous conviction of the righteousness of his cause.[61]
As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code. Article 2217 thereof
defines what are included in moral damages, while Article 2219 enumerates the cases where they may be
recovered. Article 2220 provides that moral damages may be recovered in breaches of contract where the defendant
acted fraudulently or in bad faith. RBSs claim for moral damages could possibly fall only under item (10) of Article
2219, thereof which reads:

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.

Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered
and not to impose a penalty on the wrongdoer.[62] The award is not meant to enrich the complainant at the expense of
the defendant, but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate the

72
moral suffering he has undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status
quo ante, and should be proportionate to the suffering inflicted.[63] Trial courts must then guard against the award of
exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was
due to passion, prejudice, or corruption or the part of the trial court.[64]
The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and
having existence only in legal contemplation, it has no feelings, no emotions, no senses. It cannot, therefore,
experience physical suffering and mental anguish, which can be experienced only by one having a nervous system.
[65]
The statement in People v. Manero[66] and Mambulao Lumber Co. v. PNB [67] that a corporation may recover moral
damages if it has a good reputation that is debased, resulting in social humiliation is an obiter dictum. On this score
alone the award for damages must be set aside, since RBS is a corporation.
The basic law on exemplary damages is Section 5 Chapter 3, Title XVIII, Book IV of the Civil Code. These are
imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or
compensatory damages.[68] They are recoverable in criminal cases as part of the civil liability when the crime was
committed with one or more aggravating circumstances; [69] in quasi-delicts, if the defendant acted with gross
negligence;[70] and in contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.[71]
It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasi-contract, delict, or
quasi-delict. Hence, the claims for moral and exemplary damages can only be based on Articles 19, 20, and 21 of the
Civil Code.
The elements of abuse of right under Article 19 are the following: (1) the existence of a legal right or duty, (2)
which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the
general sanction for all provisions of law which do not especially provide for their own sanction; while Article 21 deals
with acts contra bonus mores, and has the following elements: (1) there is an act which is legal, (2) but which is
contrary to morals, good custom, public order, or public policy, and (3) and it is done with intent to injure.[72]
Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies a conscious
and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. [73] Such must be substantiated
by evidence.[74]
There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly convinced of the
merits of its cause after it had undergone serious negotiations culminating in its formal submission of a draft
contract. Settled is the rule that the adverse result of an action does not per se make the action wrongful and subject
the actor to damages, for the law could not have meant impose a penalty on the right to litigate. If damages result
from a persons exercise of a right, it is damnum absque injuria.[75]
WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R.
CV No. 44125 is hereby REVERSED except as to unappealed award of attorneys fees in favor of VIVA Productions,
Inc.
No pronouncement as to costs.
SO ORDERED.

73
G.R. No. L-37633 January 31, 1975
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
FELICISIMO MEDROSO, JR., accused-appellant.
MUOZ PALMA, J.:
The only question or issue involved in this appeal is the correctness of the judgment rendered by the Court of First
Instance of Camarines Sur in Criminal Case No. 403 wherein accused-appellant, Felicisimo Medroso Jr., on a plea of
guilty, was convicted of "Homicide through reckless imprudence" and sentenced

to suffer the penalty of, from TWO (2) YEARS, FOUR (4) MONTHS and ONE (1) DAY, as minimum,
to SIX (6) YEARS, as maximum, of prision correccional and ordered to pay the heirs of the
deceased in the sum of P12,000.00 as actual damages, P4,000.00 as moral damages and
P4,000.00 as exemplary damages, Philippine currency, and to pay the cost of this proceeding. (p.
11, Rollo)

Sometime on August 6, 1971, the Provincial Fiscal of Camarines Sur filed with the local Court of First Instance an
Information accusing the herein appellant, Felicisimo Medroso Jr., of "Homicide through reckless imprudence" alleged
to have been committed as follows:

That on or about the 16th of May, 1971, in the barrio of San Roque, municipality of Bombon,
province of Camarines Sur, Philippines, and within the jurisdiction of this Honorable Court, the said
accused without any license to drive motor vehicles issued by competent authority, did then and
there wilfully and unlawfully manage and operate a BHP dump truck bearing Plate No. 7329, S.
1969 and with BHP truck No. 14-H3-12P and while passing along the said barrio in a negligent,
careless and imprudent manner, without due regard to traffic laws, rules and regulations to prevent
accident to persons and damage to property, caused by such negligence and imprudence, said
truck driven and operated by him to bump and hit one Iigo Andes thereby causing his death. (p.
4, Rollo)

The case was called for trial on July 18, 1972, on which date appellant with the assistance of his counsel pleaded
guilty to the charge with two mitigating circumstances in his favor, viz: plea of guilty and voluntary surrender, to which
the prosecuting fiscal offered no objection.

74
In its decision, the trial court, presided by Hon. Delfin Vir Sunga, after appreciating the above-mentioned mitigating
circumstances and considering as an aggravating circumstance the fact that appellant drove the vehicle in question
without a license, sentenced the accused as indicated above.

Not content with the penalty imposed, accused appealed to the Court of Appeals.

On September 19, 1973, the Appellate Court, through its Second Division at the time, certified the case to this Court
on the ground that the appeal covers pure questions of law.

Appellant is charged with homicide thru reckless imprudence for which the penalty provided for in Paragraph 6, sub-
section 2 of Article 365 of the Revised Penal Code is prision correccional in its medium and maximum periods or from
two years, four months and one day to six years.

Appellant now contends that inasmuch as he has two mitigating circumstances in his favor without any aggravating
circumstance, as driving without a license is not to be considered such, he is entitled to a penalty one degree lower
than that prescribed by law pursuant to Article 64 of the Revised Penal Code 1 or, arresto mayor in its maximum
period to correct in its minimum period, that is, from "four months and one day to two years, four months and one
day," and that applying the Indeterminate Sentence Law, the trial court should have imposed a minimum within the
penalty still one degree lower, which is arresto mayor minimum and medium periods (1 month and 1 day to 4 months)
and to a maximum of not more than two years, four months, and one day of prision correccional.

Appellant's proposition would indeed be correct if he were charged with any of the offenses penalized in the Revised
Penal Code other than Article 365 thereof, But because appellant is accused under Article 365, he is not entitled as a
matter of right to the provisions of Article 64 of the Code.

Paragraph 5 of Article 365 expressly states that in the imposition of the penalties provided for in the Article, the courts
shall exercise their sound discretion without regard to the rules prescribed in Article 64. 2 The rationale of the law can
be found in the fact that in quasi-offenses penalized under Article 365, the carelessness, imprudence or negligence
which characterizes the wrongful act may vary from one situation to another, in nature, extent, and resulting
consequences, and in order that there may be a fair and just application of the penalty, the courts must have ample
discretion in its imposition, without being bound by what We may call the mathematical formula provided for in Article
64 of the Revised Penal Code. On the basis of this particular provision, the trial court was not bound to apply
paragraph 5 of Article 64 in the instant case even if appellant had two mitigating circumstances in his favor with no
aggravating circumstance to offset them.

In People vs. Agito, 1958, 103 Phil. 526, the accused, Simplicio Agito, was charged with triple homicide and serious
physical injuries thru reckless imprudence before the Court of First Instance of Negros Occidental of Mindoro. He
pleaded guilty and the trial court, applying Article 365, paragraph 6, sub-section 2 of the Revised Penal Code,
sentenced him to suffer an indeterminate penalty from one year and one day to three years, six months and twenty
one days of prison correccional. The accused appealed questioning the propriety of the penalty imposed and
appellant contended inter alia that the trial court erred in not considering the mitigating circumstance of plea of guilty
so as to reduce the penalty to a minimum period. This contention was held by this Court to be untenable for to uphold
it would be contrary to Article 365, paragraph 5, of the Revised Penal Code as amended by R.A. 384 which provides
that "(I)n the imposition of these penalties (referring to the penalties defined in Article 365), the courts shall exercise
their sound discretion without regard to the rules prescribed in Article 64." (Portion in parenthesis supplied)

In the case now before Us, the penalty for homicide thru reckless imprudence with violation of the Automobile Law
is prision correccional in its medium and maximum periods with a duration from two years, four months, and one day
to six years. Applying the Indeterminate Sentence Law to which appellant is entitled 3 the imposable penalty covers
a minimum to be taken from the penalty one degree lower than that prescribed by law or arresto mayor in its
maximum period to prision correccional in its minimum period, i.e. four months and one day to two years and four
months, and a maximum to be taken in turn from the penalty prescribed for the offense the duration of which is from
two years, four months and one day to six years. The determination of the minimum and maximum terms is left

75
entirely to the discretion of the trial court, the exercise of which will not be disturbed on appeal unless there is a clear
abuse. 4

The penalty imposed by the trial court is well within the periods we have given above except for the one day excess
in the minimum thereof. The minimum of the indeterminate sentence given by His Honor the trial Judge should have
been "two years and four months of prision correccional" instead of "two years, four months and one day", because
with the addition of one day the minimum term fell within the range of the penalty prescribed for the offense in
contravention of the provisions of the Indeterminate Sentence Law. On this score, there is need to correct the
minimum of the indeterminate penalty imposed by the court a quo.

As regards the second issue raised by appellant, We do not find any reversible error in the judgment awarding to the
heirs of the deceased P4,000.00 as moral damages and another P4,000.00 as exemplary damages in addition to
P12,000.00 byway of actual damages.

Moral damages compensate for mental anguish, serious anxiety and moral shock suffered by the victim or his family
as the proximate result of the wrongful act, 5 and they are expressly recoverable where a criminal offense result in
physical injuries as in the instant case before Us which in fact culminated in the death of the victim. 6

In People vs. Pantoja, L-18793, Oct. 11, 1968, 25 SCRA 468, this Court fixed the sum of P12,000.00 as
compensatory damages for a death caused by a crime (Art. 2206 of the Civil Code) and it was there stated that, in
proper cases, the courts may adjudge additional sums by way of moral damages and exemplary damages.

The determination of the amount which would adequately compensate the victim or his family in a criminal case of
this nature is left to the discretion of the trial judge whose assessment will not be disturbed on appeal unless there is
a manifest showing that the same is arbitrary or excessive, for it has been said that "(T)here can be no exact or
uniform rule for measuring the value of a human life and the measure of damages cannot be arrived at by precise
mathematical calculation, but the amount recoverable depends on the particular facts and circumstances of each
case." (25 C.J.S., 1241, cited in Alcantara vs. Surro, et al., 93 Phil. 472, 477)

With respect to the exemplary damages awarded by the trial court, the same are justified by the fact that the herein
appellant without having been issued by competent authority a license to drive a motor vehicle, wilfully operated a
BHP dump truck and drove it in a negligent and careless manner as a result of which he hit a pedestrian who died
from the injuries sustained by him. Exemplary damages are corrective in nature and are imposed by way of example
or correction for the public good (Art. 2229, Civil Code), and the situation before Us calls for the imposition of this kind
of damages to deter others from taking into their hands a motor vehicle without being qualified to operate it on the
highways thereby converting the vehicle into an instrument of death.

WHEREFORE, the appealed decision is hereby MODIFIED in that the minimum term is reduced by one day. The
herein appellant is sentenced therefore to an indeterminate penalty ranging from TWO (2) YEARS and FOUR (4)
MONTHS of prision correccional as minimum to SIX (6) YEARS also of prision correccional as maximum. In all other
respects, the decision stands. Without pronouncement as to costs.

76
G.R. No. 90255 January 23, 1991
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ALBERTO M. RODRIGUEZ, accused-appellant.

MELENCIO-HERRERA, J.:

Accused, Alberto M. Rodriguez, was convicted by the Regional Trial Court of Pasig, Metro Manila, Branch 156, sitting
as a Special Criminal Court, 1 of the crime of Murder and sentenced to suffer the penalty of reclusion perpetua. He
now seeks a reversal of said judgment.

At around six o'clock in the morning of December 19, 1987, the dead body of Reynaldo Osal, 20 years old, a security
guard, was found lying dead by the roadside at Morgan St., Phase I, Rancho Estate Subdivision, Barangay
Concepcion, Marikina. The body bore a gunshot wound on the head. It was when the victim's aunt, Leticia Osal,
executed a written sworn statement (Exhs. A & A-1) implicating the accused, Alberto Rodriguez, as the culprit, that
the accused was arrested and thereafter charged with Murder.

In substance, the testimonies of the following persons, among others, were presented by the prosecution:

Leticia Osal the aunt of the victim, testified that the accused and the victim were once her tricycle drivers. Upon
discovery by the victim that she was carrying on an illicit relationship with the accused, she sold all her tricycles after

77
which both the accused and the victim left her place. The accused looked for another tricycle to drive while the victim
was employed as one of the three security guards at the Rancho Estate Subdivision.

On December 18, 1987, at around 9:30 in the evening, Leticia was at the house of the accused chatting with the
latter's wife, who was her friend. A little later, she requested the accused to take her home. Along the way, the
accused informed her of his intention to talk to her nephew, the victim, who was then guarding Gate 4 of the Rancho
Estate Subdivision at Champagnat Street. Upon being summoned by her, Reynaldo went out of his post and it was
then when the accused suddenly held Reynaldo by the arms and dragged him to a darker portion of the area, about
twenty meters away from her. At that point in time she could not see them any more because of the darkness.
Subsequently, she heard a gunshot coming from the direction where the two had proceeded. Frightened, she
immediately went home. It was the following day when she learned of the death of her nephew.

Paquito Pelaria a jeepney driver, residing at Milagrosa Village, Antipolo, Rizal. He declared that while driving home
on December 18, 1987 at around 10:00 in the evening along Molave St., Rancho Estate Subdivision, he saw, through
the light of his vehicle, a half-naked man being pulled and pacified by a woman who was shouting "Huwag, huwag!"
That man, however, released himself from her hold and proceeded towards Gate 4 of the subdivision where he saw a
security guard. When shown pictures of the victim (Exhs. F-1, F-4, F-6 & F-9), he identified the latter as the person
guarding said gate that night. Continuing, the witness narrated that instead of passing through Gate 4, since the man
and the woman were in the middle of Champagnat Street, he passed through the Marist School. When he returned
using the same route, he saw the man, now wearing a T-shirt, and the woman sitting beside him on a gutter and
talking to each other at the corner of Molave Street. On being presented with a line-up when he executed his sworn
statement and also during the trial, he positively identified the accused as the man he was referring to. During the
trial, he also identified Leticia as the woman in the company of the man that evening.

Amado Perez also a security guard at the same subdivision, a close friend, compadre and roommate of the victim,
testified that the latter, prior to his death, had related to him his knowledge of the illicit relationship between the
accused and his aunt. On one occasion, the victim even told him about threats to kill him should he divulge the
secret. On December 18, 1987, they had the same shift, from 6:00 p.m. to 6:00 a.m. . The victim proceeded to Gate 4
located at Champagnat Street while he stayed at his post at Colt Street. At around 9:00 in the evening, he noticed
that the victim was not around, having failed to appear at the main gate after closing the gates as was usually done.
He tried to look for the victim in the area but failed to locate him. The next day, he learned of his friend's death. He
also testified that each security guard was given a.38 caliber service gun.

Rogelio Colangan another security guard at the Rancho Estate Subdivision, corroborrated Perez's testimony.

Patrolman Efren Jota the police investigator, arrived at the conclusion that the victim was dragged to the place
where his dead body was found a half kilometer away from Gate 4 because the shoes were off the victim's feet.

Dr. Desiderio A. Moraleda the medico-legal officer who conducted the necropsy examination on the victim's body,
testified that the cause of the victim's death was "hemorrhagic shock as a result of gunshot wound on the head." He
discovered two injuries consisting of an abrasion on the forehead and a gunshot wound on the left side of the
forehead, which lacerated the brain and fractured the skull. A .38 caliber slug (Exh. M) was recovered embedded at
the back of the victim's head. He found no gunpowder burns around the entrance wound nor was there any sign of
struggle on the victim's body.

For the defense, it tried to recall Leticia Osal to the stand as its own witness but when it appeared to the Court a
quo that she was making untruthful statements, she was barred from testifying further. She attempted to recant her
previous testimony as a prosecution witness by denying that she and the accused ever went to the Rancho Estate
Subdivision on that fateful night or that she was involved in any illicit relationship with the accused.

The defense also tried to establish alibi through the testimonies of several witnesses, namely:

Rosalia de Guzman who declared that on December 18, 1987, she was at the house of the accused purposely to
seek financial help from the latter's wife. There she saw Leticia Osal, Isabelita Magpayo and Oscar Magpayo. The
latter was outside the house helping the accused repair his tricycle. She left the house at around 11:00 in the evening
together with Leticia Osal.

78
Oscar Magpayo a neighbor of the accused testified that on the night of December 18, 1987, he assisted the
accused in repairing the latter's tricycle from 7:00 to about 11:00 in the evening. When he left, the accused was still
repairing his tricycle.

Isabelita Magpayo the wife of Oscar Magpayo, corroborated Rosalia's testimony that she was at the house of the
accused on the night in question from 7:00 until 11:00 when she and her husband left ahead of Leticia Osal and
Rosalia de Guzman.

After evaluating the conflicting evidence before it, and largely on the basis of circumstantial evidence since there was
no witness to the actual occurrence, the Trial Court meted out conviction after appreciating the qualifying
circumstance of evident premeditation and the generic aggravating circumstance of nocturnity, sentenced the
accused to reclusion perpetua, and ordered him to indemnify the heirs of Reynaldo Osal in the amount of
P30,000.00, to pay the sum of P7,000.00 as expenses incident to the burial, and the further sum of P10,000.00 as
moral damages.

This appeal faults the Trial Court:

1. . . . in giving credence to the testimony of Leticia Osal and in not allowing her to recant her earlier
testimony.

2. . . . in giving credence to the testimony of prosecution witness Paquito Pelaria.

3. . . . in appreciating the facts of the case.

4. . . . in convicting the accused despite the failure of the prosecution to prove his guilt with moral certainty.

We find that credence was properly given to Leticia's testimony for the prosecution rather than to her recanted
declarations for the defense. Her testimony that she and the accused had gone to the crime scene is corroborated by
another prosecution witness, Paquito Pelaria, when the latter positively identified the accused and Leticia as the ones
he saw near Gate 4 in the evening of December 18, 1987. Further, Leticia's testimony that the accused had dragged
the victim to the site of the crime was also affirmed by Patrolman Efren Jota's declaration that the victim was, indeed,
dragged since the latter's shoes were found removed from his feet (TSN, March 23, 1988, p. 17). Too, her testimony
regarding the place where the victim was dragged approximates the site where the body was found (TSN, July 4,
1988, p. 3; Exh. I-1). There is sufficient evidence, therefore, to buttress Leticia's testimony for the prosecution
compared to her bare denials for the defense.

The accused further maintains that the Trial Court committed grave injustice when it prevented Leticia from retracting
her earlier testimony as a prosecution witness. What actually transpired, however, was that she was recalled and
allowed to testify for the defense but was cut short by the Trial Court because of her "untruthful statements." Note
should be taken of the fact that the recall of a witness is discretionary with a Trial Court. It was in the exercise of that
discretion that the Trial Court barred her from continuing further with her testimony for the defense as in the mind of
said Court, her untruthful statements were prejudicial to the interests of justice. Actually, however, the defense has no
cause to complain for Leticia's testimony was recorded; her retraction was evident; and in the last analysis, the Trial
Court gave no credence thereto, in the light of other testimonial evidence. The rule remains that a testimony solemnly
given in Court should not be lightly set aside and that before this can be done, both the previous testimony and the
subsequent one should be carefully compared. This task the Trial Court had aptly discharged.

The attacks of the defense against the credibility of prosecution witness, Paquito Pelaria, are similarly without merit. It
avers that said witness could not have passed through Gate 4 of the Rancho Estate Subdivision because the gates
close at 9:00 P.M. Paquito did not state, however, that he passed through Gate 4 the night of the incident. What he
testified to was that since the street leading to the gate was blocked by the accused and Leticia, he could not drive
through and instead took another street (TSN, pp. 6-7, November 10, 1988). Thus, whether or not said Gate 4 was
closed at the time of the incident is of no vital significance.

But the defense further submits that Paquito's testimony to the effect that the accused and Leticia were blocking the
street and that he saw them approximately half an hour later conversing near the scene of the crime, is contrary to
human experience. That is not necessarily so. Leticia's act in trying to hold back the accused from inflicting harm on
her nephew is understandable. That it happened in a public street is neither improbable. Incidents like this are not of

79
uncommon occurrence. That the accused and Leticia were seen by Paquito seated on a gutter conversing
approximately half an hour later neither affects the latter's credibility as the two could have been so overcome
themselves that they sat limp in disbelief. It can not be construed therefrom that they had intentionally lingered in the
vicinity of the crime scene, thereby proving the accused's innocence.

The admission by Paquito that he did not actually see the victim that night neither affects his credibility. As
satisfatorily explained by him, he used to see the victim guarding Gate 4 prior to December 17, 1987 whenever he
customarily passed through the same, such that when shown pictures of the victim, he readily identified the latter as
the person usually guarding that post.

No error can thus be attributed to the Trial Court in its appreciation of the facts of the case.1wphi1 Its findings and
conclusions are duly supported by the evidence on record. The defense of alibi presented by the accused can not be
made to prevail over Leticia's own declaration that they had gone to the Rancho Estate Subdivision, and Paquito's
affirmative identification, particularly considering that the latter was an impartial witness who has not been shown to
have had any cause for testifying against the accused. The same can not be said of the defense witnesses.
Moreover, the accused has failed to demonstrate by evidence that it was physically impossible for him to have been
at the situs of the crime at the time of the incident.

While the records reveal that there was no eyewitness to the actual killing, the circumstantial evidence attendant and
relied upon by the Trial Court is sufficient for conviction. There is more than one circumstance. The facts from which
the inferences are derived are proven. The combination of all circumstances is such as to produce a conviction
beyond reasonable doubt (Rule 133, Section 4, Rules of Court [1964]).

The judgment of the Court a quo, however, has to be modified in so far as it holds that the circumstances of evident
premeditation and nocturnity are present. No direct and positive evidence has been shown as to the time when
accused conceived to kill his victim. It is even doubtful whether there was a predetermined intent to kill. When he
decided to see the victim his purpose was merely to talk to him. He was unarmed as he sallied forth.

Neither is there any convincing showing that the accused had purposely sought nighttime in order to facilitate the
commission of the crime or to prevent its discovery or to evade his capture.

Under the circumstances, and as recommended by the Solicitor General, the accused can be convicted only of
Homicide, punishable by reclusion temporal, in its medium period, absent any modifying circumstances.

WHEREFORE, modifying the judgment of the Court a quo, the accused, Alberto A. Rodriguez, is hereby sentenced to
suffer an indeterminate penalty of eight (8) years and one (1) day of prision mayor, as minimum, to fourteen (14)
years, eight (8) months and one (1) day of reclusion temporal, as maximum; to indemnify the heirs of the victim in the
amount of P50,000.00 consonant with recent case law; to pay the sum of P7,000.00 as expenses incident to the
burial of the victim; and to pay the costs.

SO ORDERED.

[G.R. No. 121203. April 12, 2000]


THE PEOPLE OF THE PHILIPPINES, plaintiff and appellee, vs. DOMINADOR ASPIRAS alias
"BOY", accused-appellant.HATOL
DECISION
QUISUMBING, J.:

This is an appeal from the decision [1] dated April 24, 1995 of the Regional Trial Court of Urdaneta, Pangasinan,
Branch 47 in Criminal Case No. U-6553, convicting accused-appellant Dominador Aspiras of the crime of MURDER
qualified by treachery, and sentencing him to suffer the penalty of reclusion perpetua with all its accessory penalties,
to pay the heirs of the victim P50,000.00 for indemnity; P50,000.00 for moral and exemplary damages; P82,250.00
for actual damages; P1,421,200.00 for expected or future income; and to pay the costs.

At the time of the incident, appellant Dominador Aspiras was a Police Officer 3 (PO3), assigned at Pilar Village
Detachment in Las Pias, Metro Manila. The victim, Renato Lumague, was a crusher general supervisor of the
Northern Cement Corporation and a supporter of NPC-KBL political party.

80
As gleaned from the records, the pertinent facts are as follows:

In the evening of April 6, 1992, the NPC-KBL party held a political rally at the plaza of Bonapal, Bobonan, Pozorrubio,
Pangasinan. The candidates for mayor and vice mayor, Artemio R. Saldivar and Felimon Reyes, respectively, were
present together with the eight candidates for councilors, as well as Victor Juguilon, [2] Juanito Caballero, and Renato
Lumague,[3] who were supporters of the party. About 100 to 200 people attended the rally. Between ten and eleven
oclock in the evening, Renato Lumague, was on stage, delivering a speech. Suddenly, a man appeared in front of
Renato Lumague and shot him three times. He died instantly.

On April 9, 1992, Gilda Lumague, the widow of the victim, filed a complaint with the Philippine National Police of
Pozorrubio Pangasinan, against appellant Dominador Aspiras for the death of her husband. Juanito Caballero
executed an affidavit to support the complaint.

In an information dated August 11,1992, Assistant Provincial Prosecutor Emiliano M. Matro accused Dominado
Aspiras alias "Boy" of the crime of murder, committed as follows:

"That on or about the 6th day of April, 1992 in the evening at Sitio Bonapal, Barangay Bobonan,
municipality of Pozorrubio, province of Pangasinan, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused, with intent to kill, being then armed with a Caliber .45
pistol, with treachery and evident premeditation, did then and there wilfully, unlawfully, and
feloniously shoot one Renato Lumague, inflicting upon him multiple gunshot wounds on the vital
parts of his body, which caused his instantaneous death, to the damage and prejudice of the heirs
of said Renato Lumague.[4]

On arraignment, accused pleaded not guilty. Trial then ensued.

At the hearing of the case, the prosecution presented Juanito Caballero and Victor Juguilon, the two eyewitnesses;
Dr. Francisco Llamas, the medico-legal who conducted the autopsy; Casiano Cabalan, the Personnel Manager of the
Northern Cement Corporation; and Geraldine Lumague, the victims daughter who testified in place of her mother.

Juanito Caballero and Victor Joguilon, who were both spectators and seated near the stage, stated that they
witnessed the shooting incident. They categorically identified the appellant who shot the victim, Renato Lomague,
who was three (3) meters away. The accused went directly infront of the stage where the victim was speaking and
pulled the trigger. The accused after shooting the victim placed his gun on his waist, raised both his hands to the
people and left the place. The victim was brought to the hospital but died. The police arrived later on and conducted
investigation of the incident.

To rebut the version of the prosecution, appellant presented his evidence, which included his own testimony and
those of Gabriel Viernes, Gavino Sababan Jr., Segundino Palisoc, Maj. Lazaro Lim, and Josephine Terry.

Appellant testified that during the whole day of April 6, 1992, he was on tour of duty with SPO2 Gavino Sababan, Jr.,
and PO2 Esteban Liu as team leader and driver, respectively, at Las Pias, Metro Manila. He claimed that, with the
other members of the crew in Mobile Car 962, he usually stood-by at the Shell Station, in Almanza, Las Pias, Metro
Manila, which is considered a "choke point". Here the police usually stood-by for police visibility. At 8:00 oclock in the
morning of April 6, they arrived from their detachment, about one (1) kilometer away from the "choke point", and they
proceeded to the Shell Station to start their tour of duty. At 12:00 noon, they took their lunch at the detachment, then
they returned to their "choke point" assignment where they stood-by up to midnight.

Their activities on that particular date, April 6, were recorded on a Record Book marked as Exh. "5". The activities of
the appellant on April 5 and 7, 1992 were also recorded on said book. Appellant filled up the entries in the logbook but
it was signed by the team leader, SPO2 Gavino Sababan. These were facts corroborated by Gavino Sababan, SPO3

81
Segundino Palisoc and Chief Inspector Major Lazaro Lim, all members of the PNP, Las Pias Police Station, Las Pias,
Metro Manila.

According to appellant, one week after April 6, 1992, he learned that he was a suspect when he read about it in a
tabloid newspaper. Appellant was called by his superior regarding the incident and was directed to submit an affidavit.
On June 20, 1992, he was arrested and incarcerated at Camp Bagong Diwa, Bicutan, Taguig, Metro Manila. On
September 5,1992, he filed his bailbond and was then released.

Witness Juanito Caballero, according to appellant, had a motive to implicate him in the crimes as they had a fistfight
the first week of January 1991, in Pangasinan over some parcels of land owned by Engracio Aspiras and Brigida
Aspiras. Said parcels were transferred by Caballero in his name. But appellant and the other relatives contested the
transfer made by Caballero.[5]

On April 24, 1995, the trial court promulgated its decision, disposing as follows:

"WHEREFORE, the Court finds the accused DOMINADOR ASPIRAS alias "boy" GUILTY beyond
reasonable doubt of the crime of MURDER qualified by treachery and there being no mitigating or
aggravating circumstance, hereby sentences him to suffer the penalty of RECLUSION PERPETUA
with all its accessory penalties, and for the death of the victim RENATO LOMAGUE, to pay the
heirs of said deceased as follows:

1. PhP 50,000.00 for indemnity;

2. PhP 50,000.00 for moral and exemplary damages;

3. PhP 82,250.00 for actual damages;

4. PhP 1,421,200.00 for expected or future income; and

5. To pay the costs.

SO ORDERED."[6]

Hence this appeal, wherein appellant avers that the trial court erred:

IN NOT ACQUITTING THE ACCUSED OF THE CRIME OF MURDER ON THE GROUND OF


REASONABLE DOUBT.[7]

II

IN GIVING CREDENCE TO THE TESTIMONIES OF THE PROSECUTION EYEWITNESSES


DESPITE THEIR INCREDIBILITY AND IMPROBABILIITES.[8]

III

IN AWARDING VICTIMS HEIRS INDEMNITY FOR CIVIL DAMAGES.[9]

Primarily, appellant questions the credibility of the witnesses. Appellant alleges that the prosecution was not able to
show beyond reasonable doubt that he committed the crime of murder because the judge merely based his finding of

82
guilt on the testimony of the two eyewitnesses, whose testimony the judge did not hear or whose demeanor he did
not observe. We find this proposition unacceptable. Judge Joven F. Costales, who took over the case from Judge
Romulo E. Abalos had the full record before him, including the transcript of stenographic notes, which he studied. The
efficacy of a decision is not necessarily impaired by the fact that its writer only took over from a colleague who had
earlier presided at the trial.[10]

Here we take particular note of the fact that prosecution witnesses Juanito Caballero and Victor Joquilon testified that
they personally saw the person who shot the victim they identified the appellant as that triggerman. Thus we find in
the transcript of stenographic notes the following testimonies:

Direct Examination of Juanito Caballero:

Q: .......Now. Mr. Witness, on April 6,1992, particularly in the evening thereof, do you remember
where you were?

A: .......Yes, I know.

Q:.......Will you please tell the Honorable Court where were you on the said date?

A:.......I was in Plaza Bonapal sir.

xxx

Q: .......Will you please tell the Honorable Court why were you at the Plaza Bonapal, Pozorrubio,
Pangasinan on April 6, 1992?

A: .......We hold a meeting with the mayoralty candidate Artemio Zaldivar and his Vice Mayor
Felimon Reyes, sir.

Q: .......What kind of meeting was this?

A:.......A political meeting sir.

xxx

Q:.......Up to what time did the political meeting last, Mr. Witness?

A:.......The political meeting was disturbed between 10:00 and 11:00 oclock in the evening when
there was an unusual incident that happened.

Q:.......Now you said that there was an unusual incident that cause the disturbance of the political
meeting, will you please tell the court Mr. Witness what was the unusual incident that happened?

A:.......There was someone who was shot sir.

Q:.......Will you tell the Honorable Court who was that someone that was shot?

A:.......Renato Lomague sir.

Q:.......What was Renato Lomague doing before he was shot?

83
A:.......He was delivering a speech sir.

Q:.......At what particular place was Renato Lomague delivering a speech?

A:.......At the stage sir.

Q:.......At the stage of the Plaza Bonapal?

A: .......Yes sir.

xxx

Q:.......What about you in relation to the place where Renato Lomague was delibering (sic) a
speech. Where were you?

A:.......I was not far away when Renato Lomague was delivering a speech, because I was just
below the stage sir.

Q:.......Will you please tell the Honorable Court how high is the stage, Mr. Witness?

A:.......More or less one (1) meter sir.

xxx

Q:.......You said a while ago that Renato Lomague was shot while delivering a speech on the stage,
will you please tell the Honorable Court who shot Renato Lomague?

A:.......It was Dominador Aspiras, sir.

Q:.......Is he the same Dominador Aspiras who is the accused in this case?

A: .......Yes sir.

Direct Examination of Victor Juguillon:

Q:.......Mr. Witness, do you remember where were you on the evening of April 6,1992?

A:.......Yes,sir.

Q: .......Could you tell us where where (sic) you?

A:.......As one of the candidates for councilor last election, we were in Brgy. Bonapal, Madam.

xxx

Q:.......You testified that you were in Bonapal, Mr. Witness. Could you tell us where particularly in
Bonapal?

A:.......At the place where the meeting was being held, Madam.

84
Q:.......What meeting was that?

A:.......Political meeting or rally, because that was the time for campaigning period, Madam.

Q:.......What were you doing at that meeting?

A:.......Because I was one of the candidates, that is why I was there, Madam.

Q:.......While you were attending the meeting, was there any unusual incident that happened?

A:.......There was Madam.

Q:.......Can you tell us what this unusual incident was?

A:.......There was someone who was shot at, Madam.

Q:.......Do you know that person who was shot at?

A:.......Yes, madam.

Q:.......Who was the person who was shot?

A:.......Renato Lumague, Madam.

Q:.......How do you know Renato Lumague?

A:.......I know Renato Lumague because he frequents the town proper and he was an employee of
the NCC, Madam.

Q:.......Where were you at the time Renato Lumague was shot?

A:.......I was seated at the row of chairs behind the row where the witness Caballero was seated
and that was beside the stage, Madam.

xxx

Q:.......From where you were seated, what could you see?

A:.......From the place where I was seated, I could see the people around that place and there were
may people, Madam.

Q:.......How far were you from the stage?

A:.......About two (2) meters, Madam.

Q:.......What was Renato Lumague doing at the time when he got shot?

A:.......He was speaking at the stage, Madam.

A:.......Do you know who shot Renator Lumague?

85
A:.......Yes, sir.

Q:.......Can you tell us who shot Renato Lumague?

A. .......Yes, sir, it was Dominador Aspiral (sic) alias Boy, Madam.

Worth stressing, it has been established at the trial that the two eyewitnesses were familiar with the appellant. Juanito
Caballero knew him for the former grew up with the latters family. [11] Victor Juguillon also knew him well, for Victor
used to visit the barrio where appellant lived, while the latter frequently visited the town proper where Victor resided.
[12]
Furthermore, Victors cousin was married to one of the Aspirases. [13] During the actual shooting incident, both
eyewitnesses were seated at the eastern side of the stage, where they had a good view of the people in the
basketball court.[14] They were only about 3 to 5 meters away from the assailant, [15] and could easily see the assailants
face. Lastly, there were seven to eight electric bulbs illuminating the meeting area. [16] With the use of a sketch,
marked as Exhibit "1" for the defense, Victor showed that there was one bulb at the middle of the stage, one at the
center of the basketball court, and "others from the center connecting the bulb." [17] With this illumination, considering
where the victim and the assailant were, Victor and Juanito could clearly see appellants face.

The autopsy conducted by Dr. Llamas, the medico-legal officer, corroborated the testimony of the two eyewitnesses.
Dr. Llamas said that there were three bullets that entered the body of the victim. [18] This supports the testimony of
Juanito and Victor that they heard three gun reports.[19]

Dr. Llamas described the wounds of the victim and calculated the approximate position of the assailant. Gunshot
wound no. 1 showed that the victim was hit at the abdomen and the assailant was in front of the former; [20] and that it
was possible the bullet split into two, one imbeded the vertebra bone and the other exited in wound no. 6. Gunshot
wound no. 2, showed that the bullet entered the arm and exited in the armpit, which caused wound no. 3. [21] Wound
no. 4, was the entrance of a bullet which exited in the right shoulder, producing wound no. 7.[22] Wound no. 5 exited in
wound no. 8 at the chest, right level of the 6th rib along the mid axillary line. [23] Wounds no. 2, 4 and 5, showed the
assailant was at the left side of the victim.[24] These findings are in harmony with the testimony of the two
eyewitnesses that assailant was in front of the victim when the former shot the latter; [25] that the victim rolled down
after the first shot towards the western portion of the stage; [26] and that before assailant fired the third shot, he took
one step forward.[27]

Dr. Llamas said that he could not determine whether the assailant fired the gun at close range because of the
absence of powder burns. However, he estimated the distance between the assailant and the victim to be more than
30 inches.[28] This concurs with the testimony of Juanito and Victor that appellant was more or less three meters away
from the victim when the former shot the latter.[29]

Appellants alibi was that on April 6, 1992, between 10 and 11 p.m., he was at Almanza Shell station, Pilar Village, Las
Pias performing his duty as police officer.[30] To support this, he submitted the police logbook as Exhibit "5" to show his
whereabouts and activities on the said date. Further, he presented his fellow police officers to corroborate his
testimony.

Alibi may be appreciated if the following requisites are present: a) proof of his presence at another place at the time
of the perpetration of the offense, and b) impossibility for him to be at the scene of the crime. [31] But the
inconsistencies between the entries in the logbook and the testimony of the four police officers, cast doubt on
appellants alibi. First, SPO3 Palisoc and Major Lim testified that on April 6,1992, between 10 and 11 p.m., they
conducted an inspection to check on the police personnel manning the Almanza choke point. [32] This was not in the
logbook. Palisoc claimed that this was entered in the journal; [33] however, defense did not care to present the journal
in court. Secondly, Palisoc testified that it was standard operating procedure for the mobile crew to make periodic
calls to inform the base of their whereabouts. If they dont call after thirty minutes, Palisoc would make the call himself.
[34]
No such calls were entered in the logbook. Thirdly, Palisoc also testified that on the evening of April 6, at 7 p.m.,
the members of Pilar Detachment, including appellant had dinner with Barangay Councilman Arthur Tanjuanco.

86
[35]
However this was not entered in the logbook. If it were true that they had dinner, this would have appeared in the
logbook, like when the crew had lunch.[36] Instead, we only found the following:

1600 H.......10-20.......400 Base for gas up.

1700 H.......10-20.......Almanza Shell 10-12

2400 H.......10-20.......962 Base Situation peaceful 10-12[37]

When asked to explain the above, appellant said that at 4 oclock in the afternoon, they were at Fort Bonifacio to gas
up. Then, from 5 oclock up to 12 midnight, they were on stand-by at Almanza Shell. As correctly observed by the trial
court, the logbook lacked the important details to bolster the alibi.

Most of Palisocs testimony was based on what was entered in the logbook by appellant. [38] It was not based on
Palisocs personal knowledge of the activities of the mobile crew on April 6,1992.

In People vs. Domenden, 6 SCRA 343, we observed that because of the close relationship and camaraderie that
developed among the accused and his witnesses as members of the same police force, the latter could not be
expected to testify truthfully.

In our view, appellant failed to prove convincingly that he was at the Almanza "choke point" at Las Pinas, Metro
Manila, on the night of April 6,1992. Note that it was not physically impossible for him to be at the scene of the crime,
especially since Pozorrubio, Pangasinan, is only 4 hours away from Manila. Pertinently, in People vs. Mallari, G.R.
No. 104891, 311 Phil. 133 (1995), this Court did not appreciate the defense of alibi where the killing took place in
Olongapo City, though the accused was allegedly in Baguio City.

Appellant questions the credibility and impartiality of the two eyewitnesses: First, he avers prosecution eyewitness
Juanito Caballero was biased because bad blood existed between them. Second, he claims Juanito and Victor had
conflicting testimonies on the demeanor of the assailant when leaving the scene of the crime. Third, he posits it was
unbelievable that Juanito and Victor only stayed in their benches and did not seek any cover or protection despite
their proximate location from the assailant. Last, he states it was improbable that no policeman arrived after the
incident.

Indeed, as testified to by appellant and corroborated by Josephine Terry, a defense witness, on January 1991,
appellant and Juanito Caballero had a fist fight over a piece of land. In that fight appellant had outboxed and mauled
the latter.[39] But in People vs. Sadiangabay, 220 SCRA 551 (1993), we held that the credibility of a witness could not
be affected by an alleged grudge where said witness was not discredited on cross-examination. In this case,
appellant failed to touch upon the alleged grudge, during the cross-examination of Juanito Caballero. The matter was
only mentioned by Dominador and Josephine during their direct examination.

Appellant also suggests that Juanito Caballeros testimony conflicts with that of Victor Juguillon. Juanito testified that
the assailant walked calmly,[40] while Victor said that the assailant walked fast. [41] But this inconsistency is on minor
and insignificant point. Sometimes such minor inconsistencies even enhance the veracity of the testimony of a
witness as they erase any suspicion of a rehearsed declaration.[42]

Likewise appellant suggests that the testimony of the eyewitnesses that they only stayed in their benches and did not
seek any cover or protection, diminishes their reliability. However, different people react differently to a given type of
situation and there is no standard form of behavioral response when one is confronted with a startling, strange or
frightful experience.[43] It is true that most of the people at the political rally scampered away when they heard the
gunshots, but it was also true that others, like Juanito Caballero and Victor Juguillon,[44] did not run away.

87
Again, appellant suggests that policemen did not arrive at the scene of the crime. But Juanito Caballero testified that
policemen stationed at Pozorrubio, Pangasinan, responded to his report by going to Plaza Bonapal [45] and conducted
their investigation. Thus, all told, we cannot agree with appellants claim that the testimony of prosecution witnesses
lacked credibility so that he should be acquitted. On the contrary, the wealth of details in their testimony convince us
that the appellant is the perpetrator of the crime charged.

Lastly, we now focus on the award of civil indemnity and other damages in favor of the heirs of the deceased, as
follows:

1. P50,000.00 for indemnity;

2. P50,000.00 for moral and exemplary damages;

3. P82,250.00 for actual damages;

4. P1,421,200.00 for expected or future income.

Note that with regard to actual damages, only actual expenses duly supported by receipts may be granted. [46] Among
the actual expenses allegedly incurred by the family of the victim, only those for funeral expenses (P17,000.00),
materials for gravestone (P1,308.00) and the funeral mass (P250.00) were supported by receipts. Further, it was
shown that the funeral expenses were shouldered by Northern Cement Corporation.[47] Consequently, the award to
the heirs concerning actual expenses must be limited only to those they incurred for gravestone and mass services,
amounting to P1,558.00.

As to the computation of expected or future income by multiplying the years for which the victim could have worked
with his employer were it not for his death (11 years) by his annual gross earnings, we find that the correct formula for
computing the loss of earning capacity is follows: 2/3 x (80 - age of victim at the time of death) x (reasonable portion
of the annual net income which would have been received as support by heirs).[48] The age of the victim at the time of
his death was 48.[49] He was receiving a monthly salary of P7,610.00, and yearly benefits in the amount of
P38,000.00.[50] Hence, his annual gross income is P129,320.00. Net income is 50% of the gross annual income, in
the absence of proof showing the deceaseds living expenses.[51] Hence, we find that:

net earning capacity.......=.......2(80 - 48) x (P129,320 64,660)

...................................................3

.....................................=....... 2(32)....... x 64,660

..................................................3

.....................................=.......21.33 x 64,660

.....................................=.......P1,379,197.80

The award of P1,421,200 should therefore be reduced to P1,379,197.80 only.

Although appellant did not raise the qualifying circumstance of treachery as an issue, we find it proper to mention at
this point that the trial court did not err when it ruled that such circumstance attended the killing of Renato Lumague.
As shown above, appellant shot the victim while delivering a speech during a political rally. The act was so swift that
the victim did not have the opportunity to defend himself. Such swift and unexpected attack on an unarmed victim,
without the slightest provocation on the part of the latter,[52] is the essence of treachery.

88
WHEREFORE, the appeal is DENIED. The decision of the Regional Trial Court of Urdaneta, Pangasinan, Branch 47,
in Criminal Case No. U-6553, finding accused-appellant Dominador Aspiras GUILTY beyond reasonable doubt of the
crime of MURDER qualified by treachery, and sentencing him to suffer the penalty of reclusion perpetua with all its
accessory penalties, is AFFIRMED. The award for damages which should be paid by appellant to the heirs of the
victim is MODIFIED as follows:

1........PhP 50,000.00 for indemnity;

2........PhP 50,000.00 for moral and exemplary damages;

3........PhP 1,558.00 for actual damages;

4........PhP 1,379,197.80 for loss of the victims expected or future income.

Costs against appellant.

SO ORDERED.

G.R. No. 81026 April 3, 1990


PAN MALAYAN INSURANCE CORPORATION, petitioner,
vs.
COURT OF APPEALS, ERLINDA FABIE AND HER UNKNOWN DRIVER, respondents.
Regulus E. Cabote & Associates for petitioner.
Benito P. Fabie for private respondents.

CORTES, J.:

Petitioner Pan Malayan Insurance Company (PANMALAY) seeks the reversal of a decision of the Court of Appeals
which upheld an order of the trial court dismissing for no cause of action PANMALAY's complaint for damages against
private respondents Erlinda Fabie and her driver.

The principal issue presented for resolution before this Court is whether or not the insurer PANMALAY may institute
an action to recover the amount it had paid its assured in settlement of an insurance claim against private
respondents as the parties allegedly responsible for the damage caused to the insured vehicle.

On December 10, 1985, PANMALAY filed a complaint for damages with the RTC of Makati against private
respondents Erlinda Fabie and her driver. PANMALAY averred the following: that it insured a Mitsubishi Colt Lancer
car with plate No. DDZ-431 and registered in the name of Canlubang Automotive Resources Corporation
[CANLUBANG]; that on May 26, 1985, due to the "carelessness, recklessness, and imprudence" of the unknown
driver of a pick-up with plate no. PCR-220, the insured car was hit and suffered damages in the amount of
P42,052.00; that PANMALAY defrayed the cost of repair of the insured car and, therefore, was subrogated to the
rights of CANLUBANG against the driver of the pick-up and his employer, Erlinda Fabie; and that, despite repeated
demands, defendants, failed and refused to pay the claim of PANMALAY.

Private respondents, thereafter, filed a Motion for Bill of Particulars and a supplemental motion thereto. In compliance
therewith, PANMALAY clarified, among others, that the damage caused to the insured car was settled under the "own
damage", coverage of the insurance policy, and that the driver of the insured car was, at the time of the accident, an
authorized driver duly licensed to drive the vehicle. PANMALAY also submitted a copy of the insurance policy and the
Release of Claim and Subrogation Receipt executed by CANLUBANG in favor of PANMALAY.

89
On February 12, 1986, private respondents filed a Motion to Dismiss alleging that PANMALAY had no cause of action
against them. They argued that payment under the "own damage" clause of the insurance policy precluded
subrogation under Article 2207 of the Civil Code, since indemnification thereunder was made on the assumption that
there was no wrongdoer or no third party at fault.

After hearings conducted on the motion, opposition thereto, reply and rejoinder, the RTC issued an order dated June
16, 1986 dismissing PANMALAY's complaint for no cause of action. On August 19, 1986, the RTC denied
PANMALAY's motion for reconsideration.

On appeal taken by PANMALAY, these orders were upheld by the Court of Appeals on November 27, 1987.
Consequently, PANMALAY filed the present petition for review.

After private respondents filed its comment to the petition, and petitioner filed its reply, the Court considered the
issues joined and the case submitted for decision.

Deliberating on the various arguments adduced in the pleadings, the Court finds merit in the petition.

PANMALAY alleged in its complaint that, pursuant to a motor vehicle insurance policy, it had indemnified
CANLUBANG for the damage to the insured car resulting from a traffic accident allegedly caused by the negligence
of the driver of private respondent, Erlinda Fabie. PANMALAY contended, therefore, that its cause of action against
private respondents was anchored upon Article 2207 of the Civil Code, which reads:

If the plaintiffs property has been insured, and he has received indemnity from the insurance company for
the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall
be subrogated to the rights of the insured against the wrongdoer or the person who has violated the
contract. . . .

PANMALAY is correct.

Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property is
destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon
payment to the assured, will be subrogated to the rights of the assured to recover from the wrongdoer to the extent
that the insurer has been obligated to pay. Payment by the insurer to the assured operates as an equitable
assignment to the former of all remedies which the latter may have against the third party whose negligence or
wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any privity of
contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer
[Compania Maritima v. Insurance Company of North America, G.R. No. L-18965, October 30, 1964, 12 SCRA 213;
Fireman's Fund Insurance Company v. Jamilla & Company, Inc., G.R. No. L-27427, April 7, 1976, 70 SCRA 323].

There are a few recognized exceptions to this rule. For instance, if the assured by his own act releases the
wrongdoer or third party liable for the loss or damage, from liability, the insurer's right of subrogation is defeated
[Phoenix Ins. Co. of Brooklyn v. Erie & Western Transport, Co., 117 US 312, 29 L. Ed. 873 (1886); Insurance
Company of North America v. Elgin, Joliet & Eastern Railway Co., 229 F 2d 705 (1956)]. Similarly, where the insurer
pays the assured the value of the lost goods without notifying the carrier who has in good faith settled the assured's
claim for loss, the settlement is binding on both the assured and the insurer, and the latter cannot bring an action
against the carrier on his right of subrogation [McCarthy v. Barber Steamship Lines, Inc., 45 Phil. 488 (1923)]. And
where the insurer pays the assured for a loss which is not a risk covered by the policy, thereby effecting "voluntary
payment", the former has no right of subrogation against the third party liable for the loss [Sveriges Angfartygs
Assurans Forening v. Qua Chee Gan, G. R. No. L-22146, September 5, 1967, 21 SCRA 12].

None of the exceptions are availing in the present case.

The lower court and Court of Appeals, however, were of the opinion that PANMALAY was not legally subrogated
under Article 2207 of the Civil Code to the rights of CANLUBANG, and therefore did not have any cause of action
against private respondents. On the one hand, the trial court held that payment by PANMALAY of CANLUBANG's
claim under the "own damage" clause of the insurance policy was an admission by the insurer that the damage was
caused by the assured and/or its representatives. On the other hand, the Court of Appeals in applying the ejusdem
generis rule held that Section III-1 of the policy, which was the basis for settlement of CANLUBANG's claim, did not

90
cover damage arising from collision or overturning due to the negligence of third parties as one of the insurable risks.
Both tribunals concluded that PANMALAY could not now invoke Article 2207 and claim reimbursement from private
respondents as alleged wrongdoers or parties responsible for the damage.

The above conclusion is without merit.

It must be emphasized that the lower court's ruling that the "own damage" coverage under the policy implies damage
to the insured car caused by the assured itself, instead of third parties, proceeds from an incorrect comprehension of
the phrase "own damage" as used by the insurer. When PANMALAY utilized the phrase "own damage" a phrase
which, incidentally, is not found in the insurance policy to define the basis for its settlement of CANLUBANG's
claim under the policy, it simply meant that it had assumed to reimburse the costs for repairing the damage to the
insured vehicle [See PANMALAY's Compliance with Supplementary Motion for Bill of Particulars, p. 1; Record, p. 31].
It is in this sense that the so-called "own damage" coverage under Section III of the insurance policy is differentiated
from Sections I and IV-1 which refer to "Third Party Liability" coverage (liabilities arising from the death of, or bodily
injuries suffered by, third parties) and from Section IV-2 which refer to "Property Damage" coverage (liabilities arising
from damage caused by the insured vehicle to the properties of third parties).

Neither is there merit in the Court of Appeals' ruling that the coverage of insured risks under Section III-1 of the policy
does not include to the insured vehicle arising from collision or overturning due to the negligent acts of the third party.
Not only does it stem from an erroneous interpretation of the provisions of the section, but it also violates a
fundamental rule on the interpretation of property insurance contracts.

It is a basic rule in the interpretation of contracts that the terms of a contract are to be construed according to the
sense and meaning of the terms which the parties thereto have used. In the case of property insurance policies, the
evident intention of the contracting parties, i.e., the insurer and the assured, determine the import of the various terms
and provisions embodied in the policy. It is only when the terms of the policy are ambiguous, equivocal or uncertain,
such that the parties themselves disagree about the meaning of particular provisions, that the courts will intervene. In
such an event, the policy will be construed by the courts liberally in favor of the assured and strictly against the
insurer [Union Manufacturing Co., Inc. v. Philippine Guaranty Co., Inc., G.R., No. L-27932, October 30, 1972, 47
SCRA 271; National Power Corporation v. Court of Appeals, G.R. No. L-43706, November 14, 1986, 145 SCRA 533;
Pacific Banking Corporation v. Court of Appeals, G.R. No. L-41014, November 28, 1988, 168 SCRA 1. Also Articles
1370-1378 of the Civil Code].

Section III-1 of the insurance policy which refers to the conditions under which the insurer PANMALAY is liable to
indemnify the assured CANLUBANG against damage to or loss of the insured vehicle, reads as follows:

SECTION III LOSS OR DAMAGE

1. The Company will, subject to the Limits of Liability, indemnify the Insured against loss of or damage to the
Scheduled Vehicle and its accessories and spare parts whilst thereon:

(a) by accidental collision or overturning, or collision or overturning consequent upon mechanical


breakdown or consequent upon wear and tear;

(b) by fire, external explosion, self ignition or lightning or burglary, housebreaking or theft;

(c) by malicious act;

(d) whilst in transit (including the processes of loading and unloading) incidental to such transit by
road, rail, inland, waterway, lift or elevator.

xxx xxx xxx

[Annex "A-1" of PANMALAY's Compliance with Supplementary Motion for Bill of Particulars; Record, p. 34;
Emphasis supplied].

91
PANMALAY contends that the coverage of insured risks under the above section, specifically Section III-1(a), is
comprehensive enough to include damage to the insured vehicle arising from collision or overturning due to the fault
or negligence of a third party. CANLUBANG is apparently of the same understanding. Based on a police report
wherein the driver of the insured car reported that after the vehicle was sideswiped by a pick-up, the driver thereof
fled the scene [Record, p. 20], CANLUBANG filed its claim with PANMALAY for indemnification of the damage
caused to its car. It then accepted payment from PANMALAY, and executed a Release of Claim and Subrogation
Receipt in favor of latter.

Considering that the very parties to the policy were not shown to be in disagreement regarding the meaning and
coverage of Section III-1, specifically sub-paragraph (a) thereof, it was improper for the appellate court to indulge in
contract construction, to apply the ejusdem generis rule, and to ascribe meaning contrary to the clear intention and
understanding of these parties.

It cannot be said that the meaning given by PANMALAY and CANLUBANG to the phrase "by accidental collision or
overturning" found in the first paint of sub-paragraph (a) is untenable. Although the terms "accident" or "accidental" as
used in insurance contracts have not acquired a technical meaning, the Court has on several occasions defined
these terms to mean that which takes place "without one's foresight or expectation, an event that proceeds from an
unknown cause, or is an unusual effect of a known cause and, therefore, not expected" [De la Cruz v. The Capital
Insurance & Surety Co., Inc., G.R. No. L-21574, June 30, 1966, 17 SCRA 559; Filipino Merchants Insurance Co., Inc.
v. Court of Appeals, G.R. No. 85141, November 28, 1989]. Certainly, it cannot be inferred from jurisprudence that
these terms, without qualification, exclude events resulting in damage or loss due to the fault, recklessness or
negligence of third parties. The concept "accident" is not necessarily synonymous with the concept of "no fault". It
may be utilized simply to distinguish intentional or malicious acts from negligent or careless acts of man.

Moreover, a perusal of the provisions of the insurance policy reveals that damage to, or loss of, the insured vehicle
due to negligent or careless acts of third parties is not listed under the general and specific exceptions to the
coverage of insured risks which are enumerated in detail in the insurance policy itself [See Annex "A-1" of
PANMALAY's Compliance with Supplementary Motion for Bill of Particulars, supra.]

The Court, furthermore. finds it noteworthy that the meaning advanced by PANMALAY regarding the coverage of
Section III-1(a) of the policy is undeniably more beneficial to CANLUBANG than that insisted upon by respondents
herein. By arguing that this section covers losses or damages due not only to malicious, but also to negligent acts of
third parties, PANMALAY in effect advocates for a more comprehensive coverage of insured risks. And this, in the
final analysis, is more in keeping with the rationale behind the various rules on the interpretation of insurance
contracts favoring the assured or beneficiary so as to effect the dominant purpose of indemnity or payment
[See Calanoc v. Court of Appeals, 98 Phil. 79 (1955); Del Rosario v. The Equitable Insurance and Casualty Co., Inc.,
G.R. No. L-16215, June 29, 1963, 8 SCRA 343; Serrano v. Court of Appeals, G.R. No. L-35529, July 16, 1984, 130
SCRA 327].

Parenthetically, even assuming for the sake of argument that Section III-1(a) of the insurance policy does not cover
damage to the insured vehicle caused by negligent acts of third parties, and that PANMALAY's settlement of
CANLUBANG's claim for damages allegedly arising from a collision due to private respondents' negligence would
amount to unwarranted or "voluntary payment", dismissal of PANMALAY's complaint against private respondents for
no cause of action would still be a grave error of law.

For even if under the above circumstances PANMALAY could not be deemed subrogated to the rights of its assured
under Article 2207 of the Civil Code, PANMALAY would still have a cause of action against private respondents. In
the pertinent case of Sveriges Angfartygs Assurans Forening v. Qua Chee Gan, supra., the Court ruled that the
insurer who may have no rights of subrogation due to "voluntary" payment may nevertheless recover from the third
party responsible for the damage to the insured property under Article 1236 of the Civil Code.

In conclusion, it must be reiterated that in this present case, the insurer PANMALAY as subrogee merely prays that it
be allowed to institute an action to recover from third parties who allegedly caused damage to the insured vehicle, the
amount which it had paid its assured under the insurance policy. Having thus shown from the above discussion that
PANMALAY has a cause of action against third parties whose negligence may have caused damage to
CANLUBANG's car, the Court holds that there is no legal obstacle to the filing by PANMALAY of a complaint for
damages against private respondents as the third parties allegedly responsible for the damage. Respondent Court of
Appeals therefore committed reversible error in sustaining the lower court's order which dismissed PANMALAY's
complaint against private respondents for no cause of action. Hence, it is now for the trial court to determine if in fact

92
the damage caused to the insured vehicle was due to the "carelessness, recklessness and imprudence" of the driver
of private respondent Erlinda Fabie.

WHEREFORE, in view of the foregoing, the present petition is GRANTED. Petitioner's complaint for damages against
private respondents is hereby REINSTATED. Let the case be remanded to the lower court for trial on the merits.

SO ORDERED.

[G.R. No. 120592. March 14, 1997]


TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and EMMANUEL NOEL A. CRUZ, respondents.

DECISION

REGALADO, J.:

Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel Noel A. Cruz, head of
the E.N.A. Cruz and Associates law firm, entered into a retainer agreement on February 26, 1987 whereby the former
obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration of the law firms undertaking to
render the services enumerated in their contract.[1] Parenthetically, said retainer agreement was terminated by the
union on April 4, 1990.[2]

During the existence of that agreement, petitioner union referred to private respondent the claims of its
members for holiday, mid-year and year-end bonuses against their employer, Traders Royal Bank (TRB). After the
appropriate complaint was filed by private respondent, the case was certified by the Secretary of Labor to the
National Labor Relations Commission (NLRC) on March 24, 1987 and docketed as NLRC-NCR Certified Case No.
0466.[3]

On September 2, 1988, the NLRC rendered a decision in the foregoing case in favor of the employees,
awarding them holiday pay differential, mid-year bonus differential, and year-end bonus differential. [4]The NLRC,
acting on a motion for the issuance of a writ of execution filed by private respondent as counsel for petitioner union,
raffled the case to Labor Arbiter Oswald Lorenzo.[5]

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However, pending the hearing of the application for the writ of execution, TRB challenged the decision of the
NLRC before the Supreme Court. The Court, in its decision promulgated on August 30, 1990,[6]modified the decision
of the NLRC by deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday
pay differential.[7]

The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the
amount of P175,794.32. Petitioner never contested the amount thus found by TRB. [8] The latter duly paid its
concerned employees their respective entitlement in said sum through their payroll.[9]

After private respondent received the above decision of the Supreme Court on September 18, 1990, [10] he
notified the petitioner union, the TRB management and the NLRC of his right to exercise and enforce his attorneys
lien over the award of holiday pay differential through a letter dated October 8, 1990.[11]

Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for the determination
of his attorneys fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB
at P175,794.32, or the amount of P17,579.43, be declared as his attorneys fees, and that petitioner union be ordered
to pay and remit said amount to him.[12]

The TRB management manifested before the labor arbiter that they did not wish to oppose or comment on
private respondents motion as the claim was directed against the union, [13] while petitioner union filed a comment and
opposition to said motion on July 15, 1991.[14] After considering the position of the parties, the labor arbiter issued an
order[15] on November 26, 1991 granting the motion of private respondent, as follows:

WHEREFORE, premises considered, it is hereby ordered that the TRADERS ROYAL BANK EMPLOYEES UNION
with offices at Kanlaon Towers, Roxas Boulevard is hereby ordered (sic) to pay without delay the attorneys fees due
the movant law firm, E.N.A. CRUZ and ASSOCIATES the amount of P17,574.43 or ten (10%) per cent of
the P175,794.32 awarded by the Supreme Court to the members of the former.

This constrained petitioner to file an appeal with the NLRC on December 27, 1991, seeking a reversal of that order.[16]

On October 19, 1994, the First Division of the NLRC promulgated a resolution affirming the order of the labor
arbiter.[17] The motion for reconsideration filed by petitioner was denied by the NLRC in a resolution dated May 23,
1995,[18] hence the petition at bar.

Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction in
upholding the award of attorneys fees in the amount of P17,574.43, or ten percent (10%) of theP175,794.32 granted
as holiday pay differential to its members, in violation of the retainer agreement; and that the challenged resolution of
the NLRC is null and void,[19] for the reasons hereunder stated.

Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorneys fees, it
contends that the award for attorneys fees should have been incorporated in the main case and not after the
Supreme Court had already reviewed and passed upon the decision of the NLRC. Since the claim for attorneys fees
by private respondent was neither taken up nor approved by the Supreme Court, no attorneys fees should have been
allowed by the NLRC.

Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of attorneys fees, as said
act constituted a modification of a final and executory judgment of the Supreme Court which did not award attorneys
fees. It then cited decisions of the Court declaring that a decision which has become final and executory can no
longer be altered or modified even by the court which rendered the same.

On the other hand, private respondent maintains that his motion to determine attorneys fees was just an
incident of the main case where petitioner was awarded its money claims. The grant of attorneys fees was the

94
consequence of his exercise of his attorneys lien. Such lien resulted from and corresponds to the services he
rendered in the action wherein the favorable judgment was obtained. To include the award of the attorneys fees in the
main case presupposes that the fees will be paid by TRB to the adverse party. All that the non-inclusion of attorneys
fees in the award means is that the Supreme Court did not order TRB to pay the opposing party attorneys fees in the
concept of damages. He is not therefore precluded from filing his motion to have his own professional fees
adjudicated.

In view of the substance of the arguments submitted by petitioner and private respondent on this score, it
appears necessary to explain and consequently clarify the nature of the attorneys fees subject of this petition, in order
to dissipate the apparent confusion between and the conflicting views of the parties.

There are two commonly accepted concepts of attorneys fees, the so-called ordinary and extraordinary.[20] In its
ordinary concept, an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal services
he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with
the client.

In its extraordinary concept, an attorneys fee is an indemnity for damages ordered by the court to be paid by the
losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such
as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have
agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.

It is the first type of attorneys fees which private respondent demanded before the labor arbiter. Also, the
present controversy stems from petitioners apparent misperception that the NLRC has jurisdiction over claims for
attorneys fees only before its judgment is reviewed and ruled upon by the Supreme Court, and that thereafter the
former may no longer entertain claims for attorneys fees.

It will be noted that no claim for attorneys fees was filed by private respondent before the NLRC when it acted
on the money claims of petitioner, nor before the Supreme Court when it reviewed the decision of the NLRC. It was
only after the High Tribunal modified the judgment of the NLRC awarding the differentials that private respondent filed
his claim before the NLRC for a percentage thereof as attorneys fees.

It would obviously have been impossible, if not improper, for the NLRC in the first instance and for the Supreme
Court thereafter to make an award for attorneys fees when no claim therefor was pending before them. Courts
generally rule only on issues and claims presented to them for adjudication. Accordingly, when the labor arbiter
ordered the payment of attorneys fees, he did not in any way modify the judgment of the Supreme Court.

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No.
0466, private respondents present claim for attorneys fees may be filed before the NLRC even though or, better
stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for
attorneys fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a
separate action.[21]

With respect to the first situation, the remedy for recovering attorneys fees as an incident of the main action may
be availed of only when something is due to the client. [22] Attorneys fees cannot be determined until after the main
litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorneys
fees only arises when something has been recovered from which the fee is to be paid.[23]

While a claim for attorneys fees may be filed before the judgment is rendered, the determination as to the
propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the
lawyers claim for attorneys fees may arise has become final. Otherwise, the determination to be made by the courts
will be premature.[24] Of course, a petition for attorneys fees may be filed before the judgment in favor of the client is
satisfied or the proceeds thereof delivered to the client.[25]

95
It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for
professional fees. Hence, private respondent was well within his rights when he made his claim and waited for the
finality of the judgment for holiday pay differential, instead of filing it ahead of the awards complete resolution. To
declare that a lawyer may file a claim for fees in the same action only before the judgment is reviewed by a higher
tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements of this
Court.

Assailing the rulings of the labor arbiter and the NLRC, petitioner union insists that it is not guilty of unjust
enrichment because all attorneys fees due to private respondent were covered by the retainer fee of P3,000.00 which
it has been regularly paying to private respondent under their retainer agreement. To be entitled to the additional
attorneys fees as provided in Part D (Special Billings) of the agreement, it avers that there must be a separate mutual
agreement between the union and the law firm prior to the performance of the additional services by the latter. Since
there was no agreement as to the payment of the additional attorneys fees, then it is considered waived.

En contra, private respondent contends that a retainer fee is not the attorneys fees contemplated for and
commensurate to the services he rendered to petitioner. He asserts that although there was no express agreement
as to the amount of his fees for services rendered in the case for recovery of differential pay, Article 111 of the Labor
Code supplants this omission by providing for an award of ten percent (10%) of a money judgment in a labor case as
attorneys fees.

It is elementary that an attorney is entitled to have and receive a just and reasonable compensation for services
performed at the special instance and request of his client. As long as the lawyer was in good faith and honestly
trying to represent and serve the interests of the client, he should have a reasonable compensation for such services.
[26]
It will thus be appropriate, at this juncture, to determine if private respondent is entitled to an additional
remuneration under the retainer agreement[27] entered into by him and petitioner.

The parties subscribed therein to the following stipulations:

xxx

The Law Firm shall handle cases and extend legal services under the parameters of the following terms and
conditions:

A. GENERAL SERVICES

1. Assurance that an Associate of the Law Firm shall be designated and be available on a day-to-
day basis depending on the Unions needs;

2. Legal consultation, advice and render opinion on any actual and/or anticipatory situation
confronting any matter within the clients normal course of business;

3. Proper documentation and notarization of any or all transactions entered into by the Union in
its day-to-day course of business;

4. Review all contracts, deeds, agreements or any other legal document to which the union is a
party signatory thereto but prepared or caused to be prepared by any other third party;

5. Represent the Union in any case wherein the Union is a party litigant in any court of law or
quasi-judicial body subject to certain fees as qualified hereinafter;

96
6. Lia(i)se with and/or follow-up any pending application or any papers with any government
agency and/or any private institution which is directly related to any legal matter referred to
the Law Firm.

B. SPECIAL LEGAL SERVICES

1. Documentation of any contract and other legal instrument/documents arising and/or required
by your Union which do not fall under the category of its ordinary course of business activity
but requires a special, exhaustive or detailed study and preparation;

2. Conduct or undertake researches and/or studies on special projects of the Union;

3. Render active and actual participation or assistance in conference table negotiations with TRB
management or any other third person(s), juridical or natural, wherein the presence of counsel
is not for mere consultation except CBA negotiations which shall be subject to a specific
agreement (pursuant to PD 1391 and in relation to BP 130 & 227);

4. Preparation of Position Paper(s), Memoranda or any other pleading for and in behalf of the
Union;

5. Prosecution or defense of any case instituted by or against the Union; and,

6. Represent any member of the Union in any proceeding provided that the particular member
must give his/her assent and that prior consent be granted by the principal officers. Further,
the member must conform to the rules and policies of the Law Firm.

C. FEE STRUCTURE

In consideration of our commitment to render the services enumerated above when required or necessary,
your Union shall pay a monthly retainer fee of THREE THOUSAND PESOS (PHP 3,000.00), payable in
advance on or before the fifth day of every month.

An Appearance Fee which shall be negotiable on a case-to-case basis.

Any and all Attorneys Fees collected from the adverse party by virtue of a successful litigation shall belong
exclusively to the Law Firm.

It is further understood that the foregoing shall be without prejudice to our claim for reimbursement of all out-
of-pocket expenses covering filing fees, transportation, publication costs, expenses covering reproduction or
authentication of documents related to any matter referred to the Law Firm or that which redound to the
benefit of the Union.

D. SPECIAL BILLINGS

In the event that the Union avails of the services duly enumerated in Title B, the Union shall pay the Law
Firm an amount mutually agreed upon PRIOR to the performance of such services. The sum agreed upon
shall be based on actual time and effort spent by the counsel in relation to the importance and magnitude of
the matter referred to by the Union. However, charges may be WAIVED by the Law Firm if it finds that time
and efforts expended on the particular services are inconsequential but such right of waiver is duly reserved
for the Law Firm.

97
xxx

The provisions of the above contract are clear and need no further interpretation; all that is required to be done
in the instant controversy is its application. The P3,000.00 which petitioner pays monthly to private respondent does
not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As
stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firms
commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of
the retainer agreement.

The difference between a compensation for a commitment to render legal services and a remuneration for legal
services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may
pay his lawyer. These are a general retainer, or a retaining fee, and a special retainer.[28]

A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel
for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal
action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays
the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are
paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that the lawyer is
deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a
compensation for lost opportunities.

A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A
client may have several cases demanding special or individual attention. If for every case there is a separate and
independent contract for attorneys fees, each fee is considered a special retainer.

As to the first kind of fee, the Court has had the occasion to expound on its concept in Hilado vs. David[29] in this
wise:

There is in legal practice what is called a retaining fee, the purpose of which stems from the realization that the
attorney is disabled from acting as counsel for the other side after he has given professional advice to the opposite
party, even if he should decline to perform the contemplated services on behalf of the latter. It is to prevent undue
hardship on the attorney resulting from the rigid observance of the rule that a separate and independent fee for
consultation and advice was conceived and authorized. A retaining fee is a preliminary fee given to an attorney or
counsel to insure and secure his future services, and induce him to act for the client. It is intended to remunerate
counsel for being deprived, by being retained by one party, of the opportunity of rendering services to the other and of
receiving pay from him, and the payment of such fee, in the absence of an express understanding to the contrary, is
neither made nor received in payment of the services contemplated; its payment has no relation to the obligation of
the client to pay his attorney for the services for which he has retained him to perform. (Emphasis supplied).

Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm
refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firms pledge, or as expressly
stated therein, its commitment to render the legal services enumerated. The fee is not payment for private
respondents execution or performance of the services listed in the contract, subject to some particular qualifications
or permutations stated there.

Generally speaking, where the employment of an attorney is under an express valid contract fixing the
compensation for the attorney, such contract is conclusive as to the amount of compensation. [30] We cannot, however,
apply the foregoing rule in the instant petition and treat the fixed fee of P3,000.00 as full and sufficient consideration
for private respondents services, as petitioner would have it.

We have already shown that the P3,000.00 is independent and different from the compensation which private
respondent should receive in payment for his services. While petitioner and private respondent were able to fix a fee

98
for the latters promise to extend services, they were not able to come into agreement as to the law firms actual
performance of services in favor of the union. Hence, the retainer agreement cannot control the measure of
remuneration for private respondents services.

We, therefore, cannot favorably consider the suggestion of petitioner that private respondent had already
waived his right to charge additional fees because of their failure to come to an agreement as to its payment.

Firstly, there is no showing that private respondent unequivocally opted to waive the additional charges in
consonance with Part D of the agreement. Secondly, the prompt actions taken by private respondent, i.e., serving
notice of charging lien and filing of motion to determine attorneys fees, belie any intention on his part to renounce his
right to compensation for prosecuting the labor case instituted by the union. And, lastly, to adopt such theory of
petitioner may frustrate private respondents right to attorneys fees, as the former may simply and unreasonably
refuse to enter into any special agreement with the latter and conveniently claim later that the law firm had
relinquished its right because of the absence of the same.

The fact that petitioner and private respondent failed to reach a meeting of the minds with regard to the payment
of professional fees for special services will not absolve the former of civil liability for the corresponding remuneration
therefor in favor of the latter.

Obligations do not emanate only from contracts.[31] One of the sources of extra-contractual obligations found in
our Civil Code is the quasi-contract premised on the Roman maxim that nemo cum alterius detrimento locupletari
protest. As embodied in our law,[32] certain lawful, voluntary and unilateral acts give rise to the juridical relation of
quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.

A quasi-contract between the parties in the case at bar arose from private respondents lawful, voluntary and
unilateral prosecution of petitioners cause without awaiting the latters consent and approval.Petitioner cannot deny
that it did benefit from private respondents efforts as the law firm was able to obtain an award of holiday pay
differential in favor of the union. It cannot even hide behind the cloak of the monthly retainer of P3,000.00 paid to
private respondent because, as demonstrated earlier, private respondents actual rendition of legal services is not
compensable merely by said amount.

Private respondent is entitled to an additional remuneration for pursuing legal action in the interest of petitioner
before the labor arbiter and the NLRC, on top of the P3,000.00 retainer fee he received monthly from petitioner. The
law firms services are decidedly worth more than such basic fee in the retainer agreement. Thus, in Part C thereof on
Fee Structure, it is even provided that all attorneys fees collected from the adverse party by virtue of a successful
litigation shall belong exclusively to private respondent, aside from petitioners liability for appearance fees and
reimbursement of the items of costs and expenses enumerated therein.

A quasi-contract is based on the presumed will or intent of the obligor dictated by equity and by the principles of
absolute justice. Some of these principles are: (1) It is presumed that a person agrees to that which will benefit him;
(2) Nobody wants to enrich himself unjustly at the expense of another; and (3) We must do unto others what we want
them to do unto us under the same circumstances.[33]

As early as 1903, we allowed the payment of reasonable professional fees to an interpreter, notwithstanding the
lack of understanding with his client as to his remuneration, on the basis of quasi-contract. [34]Hence, it is not
necessary that the parties agree on a definite fee for the special services rendered by private respondent in order that
petitioner may be obligated to pay compensation to the former. Equity and fair play dictate that petitioner should pay
the same after it accepted, availed itself of, and benefited from private respondents services.

We are not unaware of the old ruling that a person who had no knowledge of, nor consented to, or protested
against the lawyers representation may not be held liable for attorneys fees even though he benefited from the

99
lawyers services.[35] But this doctrine may not be applied in the present case as petitioner did not object to private
respondents appearance before the NLRC in the case for differentials.

Viewed from another aspect, since it is claimed that petitioner obtained respondents legal services and
assistance regarding its claims against the bank, only they did not enter into a special contract regarding the
compensation therefor, there is at least the innominate contract of facio ut des (I do that you may give). [36] This rule of
law, likewise founded on the principle against unjust enrichment, would also warrant payment for the services of
private respondent which proved beneficial to petitioners members.

In any case, whether there is an agreement or not, the courts can fix a reasonable compensation which lawyers
should receive for their professional services.[37] However, the value of private respondents legal services should not
be established on the basis of Article 111 of the Labor Code alone. Said article provides:

ART. 111. Attorneys fees. - (a) In cases of unlawful withholding of wages the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of the wages recovered.

xxx

The implementing provision[38] of the foregoing article further states:

Sec. 11. Attorneys fees. - Attorneys fees in any judicial or administrative proceedings for the recovery of wages shall
not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

In the first place, the fees mentioned here are the extraordinary attorneys fees recoverable as indemnity for
damages sustained by and payable to the prevailing part. In the second place, the ten percent (10%) attorneys fees
provided for in Article 111 of the Labor Code and Section 11, Rule VIII, Book III of the Implementing Rules is the
maximum of the award that may thus be granted. [39] Article 111 thus fixes only the limit on the amount of attorneys
fees the victorious party may recover in any judicial or administrative proceedings and it does not even prevent the
NLRC from fixing an amount lower than the ten percent (10%) ceiling prescribed by the article when circumstances
warrant it.[40]

The measure of compensation for private respondents services as against his client should properly be
addressed by the rule of quantum meruit long adopted in this jurisdiction. Quantum meruit, meaning as much as he
deserves, is used as the basis for determining the lawyers professional fees in the absence of a contract, [41] but
recoverable by him from his client.

Where a lawyer is employed without a price for his services being agreed upon, the courts shall fix the amount
on quantum meruit basis. In such a case, he would be entitled to receive what he merits for his services.[42]

It is essential for the proper operation of the principle that there is an acceptance of the benefits by one sought
to be charged for the services rendered under circumstances as reasonably to notify him that the lawyer performing
the task was expecting to be paid compensation therefor. The doctrine of quantum meruit is a device to prevent
undue enrichment based on the equitable postulate that it is unjust for a person to retain benefit without paying for it.
[43]

Over the years and through numerous decisions, this Court has laid down guidelines in ascertaining the real
worth of a lawyers services. These factors are now codified in Rule 20.01, Canon 20 of the Code of Professional
Responsibility and should be considered in fixing a reasonable compensation for services rendered by a lawyer on
the basis of quantum meruit. These are: (a) the time spent and the extent of services rendered or required; (b) the
novelty and difficulty of the questions involved; (c) the importance of the subject matter; (d) the skill demanded; (e)
the probability of losing other employment as a result of acceptance of the proffered case; (f) the customary charges
for similar services and the schedule of fees of the IBP chapter to which the lawyer belongs; (g) the amount involved

100
in the controversy and the benefits resulting to the client from the services; (h) the contingency or certainty of
compensation; (i) the character of the employment, whether occasional or established; and (j) the professional
standing of the lawyer.

Here, then, is the flaw we find in the award for attorneys fees in favor of private respondent. Instead of adopting
the above guidelines, the labor arbiter forthwith but erroneously set the amount of attorneys fees on the basis of
Article 111 of the Labor Code. He completely relied on the operation of Article 111 when he fixed the amount of
attorneys fees at P17,574.43.[44] Observe the conclusion stated in his order.[45]

xxx

FIRST. Art. 111 of the Labor Code, as amended, clearly declares movants right to a ten (10%) per cent of the award
due its client. In addition, this right to ten (10%) per cent attorneys fees is supplemented by Sec. 111, Rule VIII, Book
III of the Omnibus Rules Implementing the Labor Code, as amended.

xxx

As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorneys fees in the
nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone
standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it
limits the maximum allowable amount of attorneys fees, it does not direct the instantaneous and automatic award of
attorneys fees in such maximum limit.

It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar,
involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the
principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorneys
fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in
assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on
the matter and for the resolution of private respondents fees.

It is axiomatic that the reasonableness of attorneys fees is a question of fact. [46] Ordinarily, therefore, we would
have remanded this case for further reception of evidence as to the extent and value of the services rendered by
private respondent to petitioner. However, so as not to needlessly prolong the resolution of a comparatively simple
controversy, we deem it just and equitable to fix in the present recourse a reasonable amount of attorneys fees in
favor of private respondent. For that purpose, we have duly taken into account the accepted guidelines therefor and
so much of the pertinent data as are extant in the records of this case which are assistive in that regard. On such
premises and in the exercise of our sound discretion, we hold that the amount of P10,000.00 is a reasonable and fair
compensation for the legal services rendered by private respondent to petitioner before the labor arbiter and the
NLRC.

WHEREFORE, the impugned resolution of respondent National Labor Relations Commission affirming the order
of the labor arbiter is MODIFIED, and petitioner is hereby ORDERED to pay the amount of TEN THOUSAND
PESOS (P10,000.00) as attorneys fees to private respondent for the latters legal services rendered to the former.

SO ORDERED.

101
G.R. No. 73886 January 31, 1989
JOHN C. QUIRANTE and DANTE CRUZ, petitioners,
vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, MANUEL C. CASASOLA, and
ESTRELLITA C. CASASOLA, respondents.
REGALADO, J.:

This appeal by certiorari seeks to set aside the judgment' 1 of the former Intermediate Appellate Court promulgated on
November 6, 1985 in AC-G.R. No. SP-03640, 2 which found the petition for certiorari therein meritorious, thus:

Firstly, there is still pending in the Supreme Court a petition which may or may not ultimately result
in the granting to the Isasola (sic) family of the total amount of damages given by the respondent
Judge. Hence the award of damages confirmed in the two assailed Orders may be premature.
Secondly, assuming that the grant of damages to the family is eventually ratified, the alleged
confirmation of attorney's fees will not and should not adversely affect the non-signatories thereto.

WHEREFORE, in view of the grave abuse of discretion (amounting to lack of jurisdiction)


committed by the respondent Judge, We hereby SET ASIDE his questioned orders of March 20,
1984 and May 25, 1984. The restraining order previously issued is made permanent. 3

The challenged decision of respondent court succinctly sets out the factual origin of this case as follows:

... Dr. Indalecio Casasola (father of respondents) had a contract with a building contractor named
Norman GUERRERO. The Philippine American General Insurance Co. Inc. (PHILAMGEN, for
short) acted as bondsman for GUERRERO. In view of GUERRERO'S failure to perform his part of
the contract within the period specified, Dr. Indalecio Casasola, thru his counsel, Atty. John
Quirante, sued both GUERRERO and PHILAMGEN before the Court of first Instance of Manila,
now the Regional Trial Court (RTC) of Manila for damages, with PHILAMGEN filing a cross-claim
against GUERRERO for indemnification. The RTC rendered a decision dated October 16,
1981. ... 4

In said decision, the trial court ruled in favor of the plaintiff by rescinding the contract; ordering GUERRERO and
PHILAMGEN to pay the plaintiff actual damages in the amount of P129,430.00, moral damages in the amount of
P50,000.00, exemplary damages in the amount of P40,000.00 and attorney's fees in the amount of P30,000.00;
ordering Guerrero alone to pay liquidated damages of P300.00 a day from December 15, 1978 to July 16, 1979; and
ordering PHILAMGEN to pay the plaintiff the amount of the surety bond equivalent to P120,000.00. 5 A motion for
reconsideration filed by PHILAMGEN was denied by the trial court on November 4, 1982. 6

Not satisfied with the decision of the trial court, PHILAMGEN filed a notice of appeal but the same was not given due
course because it was allegedly filed out of time. The trial court thereafter issued a writ of execution. 7

102
A petition was filed in AC-G.R. No. 00202 with the Intermediate Appellate Court for the quashal of the writ of
execution and to compel the trial court to give due course to the appeal. The petition was dismissed on May 4,
1983 8 so the case was elevated to this Court in G.R. No. 64334. 9 In the meantime, on November 16, 1981, Dr.
Casasola died leaving his widow and several children as survivors. 10

On June 18, 1983, herein petitioner Quirante filed a motion in the trial court for the confirmation of his attorney's fees.
According to him, there was an oral agreement between him and the late Dr. Casasola with regard to his attorney's
fees, which agreement was allegedly confirmed in writing by the widow, Asuncion Vda. de Casasola, and the two
daughters of the deceased, namely Mely C. Garcia and Virginia C. Nazareno. Petitioner avers that pursuant to said
agreement, the attorney's fees would be computed as follows:

A. In case of recovery of the P120,000.00 surety bond, the attorney's fees of the undersigned counsel (Atty. Quirante)
shall be P30,000.00.

B. In case the Honorable Court awards damages in excess of the P120,000.00 bond, it shall be divided equally
between the Heirs of I. Casasola, Atty. John C. Quirante and Atty. Dante Cruz.

The trial court granted the motion for confirmation in an order dated March 20, 1984, despite an opposition thereto. It
also denied the motion for reconsideration of the order of confirmation in its second order dated May 25, 1984. 11

These are the two orders which are assailed in this case. Well settled is the rule that counsel's claim for attorney's
fees may be asserted either in the very action in which the services in question have been rendered, or in a separate
action. If the first alternative is chosen, the Court may pass upon said claim, even if its amount were less than the
minimum prescribed by law for the jurisdiction of said court, upon the theory that the right to recover attorney's fees is
but an incident of the case in which the services of counsel have been rendered ." 12 It also rests on the assumption
that the court trying the case is to a certain degree already familiar with the nature and extent of the lawyer's services.
The rule against multiplicity of suits will in effect be subserved. 13

What is being claimed here as attorney's fees by petitioners is, however, different from attorney's fees as an item of
damages provided for under Article 2208 of the Civil Code, wherein the award is made in favor of the litigant, not of
his counsel, and the litigant, not his counsel, is the judgment creditor who may enforce the judgment for attorney's
fees by execution. 14 Here, the petitioner's claims are based on an alleged contract for professional services, with
them as the creditors and the private respondents as the debtors.

In filing the motion for confirmation of attorney's fees, petitioners chose to assert their claims in the same action. This
is also a proper remedy under our jurisprudence. Nevertheless, we agree with the respondent court that the
confirmation of attorney's fees is premature. As it correctly pointed out, the petition for review on certiorari filed by
PHILAMGEN in this Court (G.R. No. 64834) "may or may not ultimately result in the granting to the Isasola (sic)
family of the total amount of damages" awarded by the trial court. This especially true in the light of subsequent
developments in G.R. No. 64334. In a decision promulgated on May 21, 1987, the Court rendered judgment setting
aside the decision of May 4, 1983 of the Intermediate Appellate Court in AC-G.R. No. 00202 and ordering the
respondent Regional Trial Court of Manila to certify the appeal of PHILAMGEN from said trial court's decision in Civil
Case No. 122920 to the Court of Appeal. Said decision of the Court became final and executory on June 25, 1987.

Since the main case from which the petitioner's claims for their fees may arise has not yet become final, the
determination of the propriety of said fees and the amount thereof should be held in abeyance. This procedure gains
added validity in the light of the rule that the remedy for recovering attorney's fees as an incident of the main action
may be availed of only when something is due to the client. Thus, it was ruled that:

... an attorney's fee cannot be determined until after the main litigation has been decided and the
subject of recovery is at the disposition of the court. The issue over attorney's fee only arises when
something has been recovered from which the fee is to be paid. 15

103
It is further observed that the supposed contract alleged by petitioners as the basis for their fees provides that the
recovery of the amounts claimed is subject to certain contingencies. It is subject to the condition that the fee shall be
P30,000.00 in case of recovery of the P120,000.00 surety bond, plus an additional amount in case the award is in
excess of said P120,000.00 bond, on the sharing basis hereinbefore stated.

With regard to the effect of the alleged confirmation of the attorney's fees by some of the heirs of the deceased. We
are of the considered view that the orderly administration of justice dictates that such issue be likewise determined by
the court a quo inasmuch as it also necessarily involves the same contingencies in determining the propriety and
assessing the extent of recovery of attorney's fees by both petitioners herein. The court below will be in a better
position, after the entire case shall have been adjudicated, inclusive of any liability of PHILAMGEN and the respective
participations of the heirs of Dr. Casasola in the award, to determine with evidentiary support such matters like the
basis for the entitlement in the fees of petitioner Dante Cruz and as to whether the agreement allegedly entered into
with the late Dr. Casasola would be binding on all his heirs, as contended by petitioner Quirante.

We, therefore, take exception to and reject that portion of the decision of the respondent court which holds that the
alleged confirmation to attorney's fees should not adversely affect the non-signatories thereto, since it is also
premised on the eventual grant of damages to the Casasola family, hence the same objection of prematurity obtains
and such a holding may be pre-emptive of factual and evidentiary matters that may be presented for consideration by
the trial court.

WHEREFORE, with the foregoing observation, the decision of the respondent court subject of the present recourse is
hereby AFFIRMED.

G.R. No. L-25414 July 30, 1971


LEOPOLDO ARANETA, petitioner,
vs.
BANK of AMERICA, 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.

104
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.

105
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

106
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.

107
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.

G.R. No. 79644 May 11, 1988

LORENZO SHIPPING CORPORATION, petitioner,


vs.
THE HONORABLE COURT OF APPEALS AND FILIPINAS PORT SERVICES, INC., respondents.

Abad & Associates for petitioner.

Yap Law Office for private respondent.

PADILLA, J.:

Petition for review on certiorari of the decision * of the Court of Appeals dated 19 August 1987 in CA-G.R. CV No.
07538 entitled "Filipinas Port Services, Inc., plaintiff-appellee vs. Lorenzo Shipping Corporation, defendant-appellant,"
which affirmed the decision ** of the Regional Trial Court of Davao City, Branch IX in Civil Case No. 14678 ordering
the herein petitioner to pay private respondent the sum of P375,263.05 as stevedoring charges and arrastre fees,
with legal rate of interest from the date of last demand on 16 July 1981, until fully paid, 25% of such principal sum of
P375,263.05 as and for attorneys fees, and P5,000.00 as litigation expenses, plus cost.

Petitioner Lorenzo Shipping, carrying passengers and cargoes from prot to prot. When loading or unloading cargo at
the Sta. Ana pier and Sasa wharf in the Port Authority (PPA) to avail itself exclusively of the arrastre and stevedoring
services of respondent Filipinas Port Services, Inc., subject to the fpayment of fees provided by PPA rules. 1

108
Respondent Filipinas Port Services, Inc., (Filport, for short) is a domestic corporation engaged in stevedoring and
arrastre services and is the exclusive cargo handling operator-contractor for all inter island vessels calling at the port
of Davao City, including those owned and operated by petitioner. 2

Sometime in October 1981, respondent Filport filed a complaint for sum of money against herein petitioner, alleging
that as of 31 May 1981, petitioner corporation's outstanding account for stevedoring, handling and other services
rendered to it by respondent amounted to P375,263.05, itemized as follows:

Stevedoring bills P346,725.21

Contractor's tax 101.25 P346,826.46

Handling bills 1,253.49

Contractor's tax 27.40

Standby time fees 20,886.40

Forklift rentals 1,330.00

Shifting cargoes 4,939.30

Total P375,263.05

and that, despite repeated demands, petitioner corporation failed and refused to pay the account, thus prompting
Filport to file the case, and praying that judgment be rendered ordering petitioner corporation to pay:

1. the amount of P 375,263.05 with interest at 15% per annum from July 16, 1981 when the last written demand was
made against defendant corporation until the account is fully paid;

2. the further sum equivalent to 25% of the principal amount of P 375,263.05 as reimbursement for attorney's fees;

3. and granting such other reliefs as are just and equitable under the premises.

On 22 January 1985, the court a quo rendered judgment adverse to the petitioner. 3 On appeal to the Court of
Appeals, the assailed decision was affirmed in toto. 4 Hence, this petition for review.

The present petition questions only the stevedoring charge of P232,632.00 for ten-footer containers. The balance of
P142,631.05 representing arrastre and other charges is admitted by petitioner to be due from it to respondent Filport.
Issues raised are:

One. Whether or not the pertinent rules and regulations of the PPA authorized respondent
stevedoring company to apply the handling- rate for 20-footer containers to petitioner's 10-footer
containers.

Two. Whether or not respondent company is entitled to the award of attorney's fees of 25% of the
principal claim plus litigation expenses of P5,000.00. 5

Contrary to the rulings of the court a quo and the Court of Appeals, petitioner takes the stand that PPA Admir)istrative
Order 08-79 does not apply to 10-footer containers . 6 The pertinent portion of said order reads:

109
PPA ADMINISTRATIVE ORDER No. 08-79

TO: Port Managers/officers-in-Charge PMU Finance Officers Shipping Companies/Agents Arrastre-


Stevedoring Contractors Owners/Shippers/Consignees of Goods and Other Port Users Concerned
in all Ports

SUBJECT: Prescribing Arrastre and Stevedoring Rates for Containers Handlings in the Domestic
Operations at the Outports

-----------------------------------------------------------------------------------

In line with the provisions of Section 20, Presidential Decree No. 857, the Revised Charter of the
Philippine Ports Authority dated December 23, 1975, which authorizes the fixing of rates, charges
or fees for articles/goods being handled in ports where no rates are yet established, and in relation
to CAO 4-76 of the Bureau of Customs dated October 20, 1975 covering arrabtre charges on
containers/containerized cargo handled in North Harbor, Manila, and considering the upsurge of
operating expenses in cargo handling, and the need to rationalize and establish rates on container
handlings in order to accelerate growth of our container trade, the following stevedoring and
arrastre rates are hereby prescribed for domestic operations in all ports including North Harbor,
Manila:

A. STEVEDORING RATE

Per ISO container loaded or empty on self-sustaining vessel....

P40.00

On non self-sustaining vessel, if quay-dock crane or any lifting equipment is supplied and used by
operator/contractor, the use of same is chargeable against shipping companies/agents.

Petitioner argues that the term 'per ISO container" embodied in said PPA Administrative Order 08-79 should be
understood in the fact of an earlier PPA Administrative Order No.06-78 Section 1, Article I, of which provides:

PPA ADMINISTRATIVE ORDER NO. 6

Series of 1978

SUBJECT: RULES AND REGULATIONS GOVERNING CON CONTAINER OPERATIONS AT THE NORTH
HARBOR, PORT OF MANILA

TO: ALL NORTH HARBOR PORT USERS AND OTHERS CONCERNED

Pursuant to Section 2(a), 6(a), (ii), 26, 27, 39 and 43 of Presidential Decree No. 857, otherwise
known as the Revised Charter of the Philippine Ports Authority, in relation to Section 551 of the
R`evised Administrative Code of the Philippines, and in order to achieve efficiency in the
management and supervision of container-containerized cargo-handling operations and to regulate,
monitor and control contamer movements Within the Port Zone, the following rules and regulations
are hereby prescribed for the proper guidance of all concemed.

ARTICLE I PRELIMINARY PROVISIONS

110
Section 1. Definition of Terms. -For purposes of these rules and regulations, the terms used herein
shall be interpreted to mean as follows:

a) Container Any structure designed to contain, carry and keep articles, materials and products
together inside a hold in the form of boxes, tanks, and the like "The for singular or unit handling and
transport, generally having an internal volume or capacity of not less than one (1) cubic meter.
Containers are further defined according to their uses as dry cargo, refrigerated, liquid bulk,
platform, open top, solid bulk, ventilated, etc.

b) Containerized/Container cargo Cargoes packed inside a container for easy handling or


transporting of the same as a unit.

c) Marshalling Yard A designated open storage area within the container terminal where
containers are stocked systematically in preparation for loading aboard the container ship.

d) Stuffing the loading operations of cargoes inside the contamers.

e) Stripping The unloading operations of cargoes outside the containers.

f) Class "A" Containers 20, 35, 40 footer containers as per International Shipping
Organization (ISO)

g) Class "B" Container Containers owned by the shipping lines, the measurements/sizes of
which do not fall under the ISO standard.

Petitioner contends that, on the basis of the foregoing PPA administrative orders, 10-footer containers or less than
20-footer containers are not included under Class "A" and, hence, no stevedoring rate can be prescribed on them. 8

Petitioner's arguments have been thoroughly and exhaustively examined by the court a quo and the Court of
Appeals. In ruling for the respondent Filport, the court a quo aptly said:

... The problem and confusion accordingly cropped-up when defendant interpreted the provisions of
said Administrative order in relation to the earlier issued Administrative Order No. 06-78 dated May
24, 1 978, which should not allegedly be the case since the latter applies specifically only to
container operations at the North Harbor, Port of Mardla and certainly, as the Court observed, the
rates provided in each Administrative Orders (Exhs. "1" and "3" or "C") are not uniform. The same
problem or confusion would not have happened also if defendant only considered PPA
Memorandum Circular No. 06-81 dated April 11, 1981 which clarified the term 'ISO Container,' its
designation, height, width, length and weight having been stated supra. In billing defendant for
stevedoring and arrastre services indicated in Exhs. "0" to "0-42" which support the computation
appearing in defendant's Statement of Account (Exh. 'A'), plaintiff relied on PPA Memorandum
Circular No. 004, PMU Davao dated May 21, 1979 (Exh. "B"), which circularized that all rates in
container handling for domestic operation in all ports shall be based on PPA Administrative Order
No. 08-79 dated March 12, 1979. Under said administrative order, the rates for stevedoring and
arrastre services were general for all ISO containers. It did not classify or provide the dimensions of
containers for said rates to be made applicable. On the other hand, if the rates were subsequently
increased, they were based on subsequently issued administrative orders, thus, it cannot be said
that the rates charged by plaintiff for itq ten-footer containers of "mini vans" were illegal and
unauthorized ...

xxx xxx xxx

111
After a careful and painstaking evaluation of all the issues and arguments raised by both parties,
taken together with their respective testimonial and documentary evidences, it is the Court's
considered view and opinion, as fact so holds-, that plaintiffs version is more credible and duly
supported by evidence. Just to recapitulate, plaintiffs rates for stevedoring and arrastre services
which were imposed at the time when PPA has not yet come up with rates specifically applicable
for ten-footers and below were not merely imposed by plaintiff on its own free will but were based
on PPAS administrative Order No. 08-79 of March 12, 1979, which prescribed the rates in container
handling for domestic operations in all ports, including North Harbor, Port of Manila, and the Port of
Davao as well. If the rates were later on increased, again, they were based on specific PPA
administrative Orders, leaving however, the rates specifically applicable to ten-footer containers
and below unresolved, until on October 15, 1981, when PPA issued Administrative Order No. 11A-
81, which finally prescribed the rates applicable to ten-footer containers and below but at the same
time however, provided for a non-retroactivity clause. So that, even assuming arguendo that
plaintiff erred in its imposition of the rates for defendant's 10-footer containers which the latter, just
the same, failed to prove by competent evidence like proofs to the effect that other shipping
corporation services by plaintiff are also questioning the rates which the plaintiff imposed for ten-
footer containers, the defendant has no other alternative but pay or settle its outstanding account
with the plaintiff, the said administrative order being clear and decisive to this effect. Defendant's
claim of alleged invalidity of PPA Memorandum Circular No. 06-81 dated April 22, 1981 (Exh. "M"),
which could have then long settled the problem existing between the parties since it once and for
all clarified the term "ISO Containers," cannot be given any merit since it constitutes a collateral
attack on the validity of said memorandum circular which cannot be allowed in the case at bar. On
the contrary, since it has not been revoked, modified, recalled or declared as null and void by the
PPA Board itself, the same stands in full force and effect and the rates imposed on the basis of said
clarification should, by legal implication, be also considered legal, valid and authorized. From the
totality of plaintiff s evidences, the Court sees no cogent or compelling reasons to disturb the
computation made by plaintiff on defendant's outstanding account for stevedoring and arrastre
services, which as of May 31, 1981, stood at P375,263.05 (Exh. "A").<re||an1w> The Court is
in full accord with plaintiff s view and position and on the basis of all the foregoing considerations
finds, and so holds, that it has fully established its cause of action against defendant by
preponderance of evidence. 9

Likewise, the Court of Appeals in affirming the decision of the court a quo, made the following proper observations:

... PPA, Administrative Order No. 06-78 (Exh. 1) as its subject indicates applies only to container
operations at the North Harbor, Port of Manila. Upon the other hand, PPA Administrative Order No.
08-79 (Exh. C) prescribes the arrastre and stevedoring rates for container handling in the domestic
operations in all ports. It does not make any distinction on the size of the container nor does it
make any reference to any previous administrative order for its understanding. For not making any
distinction as to size, some quarters may find fault on its wisdom but that is a matter addressed to
the Philippine Port Authority. PPA Administrative Order No. 08-79 is however clear by itself and
hence ought to be enforced even by judicial authorities. To be sure, the interpretation suggested by
defendant- appellant will, by its own admission, result in a legal status, a situation abhorred by rules
of legal hermeneutics. Since the stevedoring rate of plaintiff-appellee is sanctioned by PPA
Administrative Order No. 08-79, it follows that the trial court was correct when it refused to apply
the general principles of fairness, justice and equity in fixing the stevedoring rate due and owing to
the plaintiffi-appellee. 10

The other contentions in the instant petition have been carefully discussed and disposed of by the decisions of the
court a quo and the Court of Appeals. We find no reversible error in the findings of fact and conclusions of law of the
trial and appellate courts. Accordingly, the assailed decision of respondent court should be sustained.

112
However, on the issue of attorney's fees, we are constrained to reduce the award, for being grossly excessive. An
award of 10% of the amount of P375,263.05 is reasonable.

WHEREFORE, the petition is DENIED. As modified, the decision under review is hereby AFFIRMED. With costs
against the petitioner.

SO ORDERED.

G.R. No. L-5637 November 23, 1910


FRANCISCO GONZALEZ QUIROS, judgment-creditor and appellant,
vs.
CARLOS PALANCA TAN-GUINLAY, judgment-debtor and appellee.
TORRES, J.:

Case No. 1376 having been prosecuted in the Court of First Instance of this city Francisco Gonzalez Quiros against
Carlos Palanca Tan-Guinlay, for the collection of a certain sum of money, and judgment adverse to the plaintiff having
been rendered therein and an appeal taken, this court, in its decision handed down on March 3, 1906, 1 found that the
plaintiff was entitled to judgment for the sum of P7,981.80, with interest at the rate of 6 per cent per annum from the
1st day of January, 1894, until the amount should be paid, and the costs of the suit. The judgment of the court below
was reversed, and the case remanded with instructions to enter judgment for the plaintiff for the amount and interest
mentioned. No costs were allowed to either party in this court. (Pp. 449 to 456, second part of the record.)

The instructions given in that decision were complied with by the judge of First Instance and carried out in the
following terms:

This matter is today before this court, having been remanded by the Supreme Court of the Philippine
Islands, before which an appeal was taken from a judgment rendered in this lower court by the Hon. William
J. Rohde, on December 17, 1903. The judgment appealed from was reversed and the Supreme Court
ordered this court to render another judgment for the plaintiff for an amount different from that contained in
the said judgment appealed from, to wit, the sum of 7,981.80 pesos, with interest at the rate of 6 per cent
per annum from the 1st day of January, 1894, and for the costs of this Court of First Instance. It does not
clearly appear whether the sum specified in the said decision is in Philippine currency, [or in another
currency, but, taking into consideration the date on] which the transactions, the subject of this action, were
carried on, this court finds that the sums mentioned are in Mexican currency, and further that the value of 1
peso Mexican currency is the equivalent of 1 peso Philippine currency.

Let judgment be entered for the plaintiff and against the defendant for the sum of P7,981.80 pesos Mexican
currency, equivalent to P7,981.80 Philippine currency, with interest thereon at the rate of 6 per cent per
annum, from the 1st day of January, 1894, and for the costs of this instance. Manila, P. I., April 18, 1906.
(Signed) A. S. Crossfied, judge.

Since then, at the instance of the plaintiff, supplementary proceedings were instituted for the fulfillment and execution
of the said judgment, though without results, as no property was found belonging to the debtor upon which to levy an
attachment. As an outcome of these proceedings another suit was brought against the said judgment-debtor, Tan-

113
Guinlay, and the firm of German & Co., Ltd., since the plaintiff Quiros alleged that this firm owed the said Tan-Guinlay
the sum of P7,741.17 with interest, and he prayed that this amount be applied to the payment of the said executory
judgment against Tan-Guinlay. The matter having been brought before this court on appeal, it was found in a decision
handed down on January 27, 1909, that as the plaintiff Quiros had not proved that German & Co. owed any sum
whatever to Tan-Guinlay, it was proper to affirm as it did affirm the judgment appealed from, with the costs of this
instance against the appellant. (Trial record, pp. 776 to 782.)

At this stage of the case the judgment-creditor, Gonzalez Quiros, stated to the court in writing that he had learned that
the judgment-debtor, Tan-Guinlay, was the owner of a part of the capital belonging to the partnership of Song Fo &
Co. and also had a 40 per cent interest in its profits from July, 1903, and that the other partners, Yap Chuy Pun,
Lorenzo Yap Caong, Song Fo, and Jose Cembrano To Lo, were concealing the said interest of the judgment-debtor in
connivance with him; wherefore, in order to ascertain what share and interest Tan-Guinlay might have in the said
partnership, he prayed that the proper investigation be made, and the court issued the following order:

It is ordered that each one and all of the partners, Yap Chuy Pun, Lorenzo Yap Caong, Song Fo, Jose
Cembrano To Lo, and Carlos Palanca Tan-Guinlay, above mentioned, shall appear before Mr. Thomas
Aitken, a practicing attorney and notary public of this city., at the latter's office in the upper story of No. 6
Escolta, who has been appointed as a reference to take all the evidence authorized by this order, on
November 16, 1908, at 8 o'clock in the morning, in order that they may, respectively, then and there testify
under oath with respect to any property belonging to the said defendant Tan-Guinlay which any of them may
have in his possession or under his control, and they shall bring with them all the account books of the said
Song Fo & Co. and the inventories and the balance sheets of the same for the years from 1903 to 1908,
both inclusive, and shall submit each one and all of these records to an examination by the plaintiff and his
attorney in so far as the said books, inventories, and balance sheets are subject to examination under the
law.

It is further ordered that Jose Delgado, the Reverend Father Jorge Municha, and the bookkeeper of the said
company shall appear at the time and place mentioned and testify in the case as witnesses, and meanwhile
all the property of whatever nature belonging to the said defendant, Tan-Guinlay, which may be in the
possession or under the control of the said partners or any of them shall be affected by this order, and none
of the latter, nor the said defendant himself, shall have right to sell, assign, or transfer his interest or share in
the said property, wholly or in part, until the issuance of a new order in this matter.

A copy of this order shall be delivered with the least possible delay to the partners before-mentioned and to
the defendant himself, together with a copy of the affidavit and petition by reason of which this order is
issued, and the said Jose Delgado, the Reverend Father Jorge Municha, and the bookkeeper of the
partnership of Song Fo & Co. shall be summoned to appear and testify at the time and place aforesaid. So
ordered. Manila, November 13, 1908. By the court. (Signed) Charles S. Lobingier, judge.

By a motion of January 19, 1909, the judgment-creditor Gonzalez Quiros, after having stated to the court that all the
facts set forth in his affidavit were fully proven before the referee, Thomas D. Aitken, and that the said partnerhip of
Song Fo & Co. had in its possession a sufficient sum to cover the amount of the judgment and costs to the payment
of which the judgment-debtor Tan-Guinlay was sentenced, prayed that the said firm be ordered to pay, in cash, that
approximate sum of P16,000, with interest thereon up to the 30th of January, and that, should it fail to make such
payment, its property be attached, sufficient to cover the said sum and the costs.

The proceedings of investigation solicited by Gonzalez Quiros having been had before the reference Aitken, the latter
rendered the following report thereupon:

In conformity with the order issued by the said court on November 13, 1908, the undersigned began the
work of hearing and taking the testimony of the witnesses mentioned in the said order and continued so to
do from day to day until he had heard all the witnesses summoned. The plaintiff at the beginning was
represented by attorney C. W. Ney who, during the proceedings, withdrew from his representation of the

114
said plaintiff, after which withdrawal the latter proceeded in his own behalf. The defendant was represented
by the attorney Alfredo Chicote.

The first witness, Jose Delgado, testified that the defendant lived in the house of Song Fo & Co., but that he
had no direct knowledge of the defendant's connections with the said company. The witness Uy Se Chiong
testified that he was Song Fo & Co.'s bookkeeper and that the said Carlos Palanca Tan-Guinlay was an
employee of the said company, at a salary of P40 per month, and that during the years 1904, 1905, 1907
and 1908, the said defendant collected from and owed to the aforementioned company the following sums,
respectively: P4,675, P6,773.24, P509.33, and P551.48; but that, to his best knowledge and belief, the
defendant had no interest as a partner in the business of Song Fo & Co.

The witnesses Lorenzo Yap Caong and Song Fo testified that the defendant was a manager of the company,
under salary, and that he had no interest in the said company as a partner.

Julio Rafael, Patricio Ubeda Gallego and Felipe Buntoy testified that they were interested in the Zorrilla
Theater and that Song Fo was one of the capitalist partners, the owners of the said theater; but their
testimony in no manner showed that the defendant, Carlos Palanca Tan-Guinlay, had any interest whatever
in the said theater.

It is unnecessary to discuss whether the testimony of the various witnesses is or not satisfactory, for the
reason that any contradictions or falsehoods or other reasons which may exists for not believing any of the
said witnesses, can be no grounds for concluding that the defendant has any partnership rights in the
business of Song Fo & Co., or in the Zorilla Theater.

On this account, after a careful examination of all the testimony taken in this proceeding, it is impossible to
arrive at any other conclusion than that the plaintiff has utterly failed to prove that the defendant, Carlos
Palanca Tan-Guinlay, has any interest whatever in the concern of Song Fo & Co., the Zorilla Theater, or any
other business. Manila, Philippine Islands, March 2, 1909. (Signed) Thos. D. Aitken, referee.

I received a copy of the foregoing. (Signed) Alfredo Chicote, for Chicote and Miranda.

I received a copy of the foregoing. (Signed) Quiros.

By a written petition of March 10, 1909, the judgment creditor Quiros stated to the court that he had received a copy
of the report rendered in the matter by the referee, Thomas Aitken; that this report was contrary in all its parts to the
evidence produced before the same party, and that, in view of the allegations therein set forth, he relied upon his
previous petition presented on the 20th of January (p. 795 of the trial record), and asked for what he had therein
requested; wherefore the judge, by an order of March 12, 1909, stated that he was of the opinion that the referee's
report, finding that the evidence was insufficient to show that the defendant had such interest as was claimed by the
plaintiff, was justified by the evidence and he therefore confirmed the said report, since it was not shown that the said
defendant had any interest in the partnership of Song Fo & Co., as alleged in the plaintiff's affidavit and petition.

The judgment-creditor, Gonzalez Quiros, being notified of this ruling of March 12, excepted thereto by a written
motion presented on March 15, 1909, and prayed for a review of all the proceedings had and of the documents filed
during the trial, in consideration of the reason set forth in his motion, notice of which was given to the judgment-
debtor, Palanca Tan-Guinlay; but the judge, after considering the said motion and having heard the plaintiff in his own
behalf, declared by an order of the 22nd of the same month of March, that he did not find sufficient reason for
changing the previous order, and that he therefore denied the review solicited. (Trial record, fifth part, p. 986.)

In view of this denial the judgment creditor, Gonzalez Quiros, by a motion of the 24th of the said month of March,
prayed that the manager and administrator of the partnership of Song Fo & Co. be ordered to file with the court,
within two days, an abstract of the credit and debit accounts credited to and charged against Carlos Palanca Tan-

115
Guinlay, the general manager of the said firm, on its books, from July, 1903, together with its commercial books, for
the purpose of ascertaining what balances the judgment debtor had, and that such books be examined by the
translator, the friar Jorge Municha. He also prayed that Patricio Ubeda, the manager of the firm of Patricio Ubeda &
Co., should file an exact copy of the balance sheet drawn up by the latter, so that it might be positively known what
profits pertained to the firm of Song Fo & Co. and to its general manager, Carlos Palanca Tan-Guinlay, the judgment
debtor.

By another written motion of the following day, March 25, he prayed that the said judgment debtor should exhibit in
court the books of the said company showing the entries of the sums delivered to its partner, Lorenzo Yap Caong,
during the months of November and December, 1908, and January and February, 1909; and that the parties named
in the motion be summoned and required to testify under oath in answer to such questions as should be asked them
by the petitioner. A copy of these documents was delivered to the judgment-debtor for the purpose of a hearing upon
the motion on a day set.

At this stage of the proceedings Thomas D. Aitken, by a motion presented April 7, petitioned the court that it fix, in an
order, his fees as referee in the sum of P450, in accordance with section 788 of the Code of Civil Procedure, and that
this amount be considered as costs against the plaintiff Gonzalez Quiros, stating that an execution might issue
against the same for the collection of said sum as costs. (Trial record, fifth part, p. 997.)

The judgment-creditor, being notified of this motion of the referee Aitken, asked, by a written counter-petition of April
13, 1909, and for the reasons therein set forth, that the aforementioned referee's petition be disallowed, since, in
case he had any right to such fees, their payment was incumbent upon the judgment-debtor, the Chinaman Tan-
Guinlay; and that instead of allowing the referee's petition, consideration be given to the plaintiff's counter-petition for
the sum of P325, as an indemnity for the conduct observed by the defendant and for the latter's five months delay,
leaving it to the discretion of the judge to take such action as the law demanded with respect to the alteration of the
stenographic notes and the important concealments which he made in the report presented on the 4th of March,
1909.

The referee Aitken being notified of the preceding petition, in a writing found on page 1005 of the record absolutely
denied the plaintiff's allegation that the stenographic notes had been changed except in so far as they were corrected
by the witnesses themselves, and that, furthermore, such corrections were made in them in the presence of the
judgment creditor. And, in view of the fact that, as he alleged, the documents exhibited contained malicious
falsehoods and were of an insulting nature toward the referee, he asked that the judgment creditor Quiros be
reprimanded and punished for contempt.

In view of the preceding motions the judge, by an order of April 29, 1909, and for the reasons therein expressed,
warned the plaintiff that he must refrain from filing papers containing false and incongruous statements, else they
would be stricken out pursuant to section 107 of the Code of Civil Procedure; and he overruled the petitions
presented by the judgment-creditor in the latter's two previous motions, stating that the plaintiff must not expect that
he would be permitted to incur further costs in such proceedings until he had paid the fees of the referee, which fees
the clerk of the court was directed to tax in accordance with section 792 of the Code of Civil Procedure, in connection
with section 791 of the same. (Trial record, sixth part, pp. 1018, 1019.)

The judgment-creditor, Gonzalez Quiros, being notified of this order took exception thereto, by a writing of May 4,
1909, and asked, for the reasons therein stated, that the report of the referee Aitken be set aside, that his counter-
petition of April 13 be considered, and that, in case the fees of the said referee were allowable they be left until the
conclusion of the case in accordance with the law. He also asked for a review of all the proceedings had, for the
purpose of executing the judgment rendered in this case. After the costs had been fixed (p. 1024 of the record),
without opposition on the part of the judgment-creditor, they were approved by the clerk of the court (back of p. 1024
of the record), and the judge, by an order of May 8, 1909, overruled the motion presented by the judgment creditor
Quiros. (Trial record, sixth part, p. 1025.)

116
By a writing of June 26, 1909, the judgment-creditor, Gonzalez Quiros, petitioned that the referee Aitken should rectify
his report presented on the 4th of March of the same year and render a new and correct one, and also that the said
referee's petition, with regard to the fixing of the costs, be denied and that he be compelled to comply with his duty
without allowance of any other action or rights than those stipulated between him and Ney.

The judge, by an order of July 26, 1909, denied the plaintiff's petition relative to the correction by Aitken of his
previous report, as well as all the other petitions contained in his motion of June 26. (Trial record, sixth part, p. 1045.)

The judgment-creditor, Gonzalez Quiros, being notified of this order, excepted thereto on the 28th of July, and asked
the court to order a review of all the proceedings had and the execution of the judgment rendered in this case. This
motion, which was notified to the contrary party, was overruled by an order of the 31st of the same month of July.
(Trial record, sixth part, p. 152.)

The judgment-creditor being notified of his last ruling, took exception, by a writing of August 6th, to each and all of the
rulings made on the motions which he had presentenced since the presentation of the referee's report on March 4,
last, and prayed the court to allow him a delay for the filing of the necessary bill of exceptions, which motion was
granted by order of August 14, 1909, and on the bill of exceptions being presented, it was certified and forwarded to
this court.

For the purpose of the fulfillment and execution of the judgment rendered in this case in favor of the creditor
Gonzalez Quiros, and in order to ascertain and prove whether the judgment-debtor, Palanca Tan-Guinlay, really had
any interest or share in the partnership denominated Song Fo & Co. the court ordered, at the instance of the said
judgment-creditor, the institution of various supplementary proceedings, involving the examination of several
witnesses, and appointed for this purpose Attorney Thomas Aitken as referee. In view of the report of the
investigation submitted by this referee, and the statements made by the judgment-creditor, the judge, by an order of
March 12, 1909, and for the reasons therein set forth, approved or confirmed the said report.

This order brought the aforementioned investigations to an end, by accepting the finding of the referee in his said
report that, from the proceedings had, it was not proved that the judgment-debtor Palanca Tan-Guinlay had a share or
interest in the partnership of Song Fo & Co. or in any business carried on by the same; and notwithstanding that the
judgment-creditor, Gonzalez Quiros, by a motion of March 15th, excepted to the said order and at the same time
asked for a review of all the proceedings had and of the documents presented, he did not file the required bill of
exceptions for the proper action to be taken thereon, nor did he take exception to the order of the 22nd of the same
month of March. The review requested was disallowed on account of there not being a sufficient reason for charging
the previous order.

"Exceptions may be taken," recites section 141 of the Code of Civil Procedure, "to any other ruling order, or judgment
of the court made during the pendency of the action in the Court of First Instance."

Section 143 of the same code, among other provisions, prescribes as follows:

The party desiring to prosecute the bill of exceptions shall so inform the court at the time of the rendition of
final judgment, or as soon thereafter as may be practicable and before the ending of the term of court at
which final judgment is rendered, and the judge shall enter a memorandum to that effect upon his minutes
and order a like memorandum to be made by the clerk upon the docket of the court among the other entries
relating to the action. Within ten days after the entry of the memorandum aforesaid, the excepting party shall
cause to be presented to the judge a brief statement of the facts of the case sufficient to show the bearing of
the rulings, orders, or judgments excepted to, and a specific statement of each ruling, order, or judgment
that has been excepted to, for allowance by the judge.

The record does not show that the judgment creditor, who excepted to the said final order of March 12, 1909,
presented the necessary bill of exceptions within the ten days specified by law for its admission and prosecution, and

117
furthermore the said order having been confirmed by another of the 22nd of the same month, the judgment-creditor
Quiros made no objection whatever to this second order, which was ostensibly assented to, inasmuch as in
subsequent motions of the 24th and 25th he asked that other proceedings be instituted conducive to the same
purpose sought by the commission intrusted to attorney Aitken.

The judgment-creditor himself, by a motion August 6, 1909, took exception to and appealed from each and all of the
judicial orders issued on the subject of his written motions presented since the submission of the referee's report on
the 4th of the month of March aforementioned. May it be understood that exception to and appeal from the two said
orders of March 12 and 22, approving the impugned report of the referee, was taken, at the end of four months and
twenty-four days contrary to the provision of the law providing that exceptions must be taken as soon as possible?
The impropriety of the untimely appeal made from the two said orders of the month of March is evident.

The order of April 29, 1909, disallowing the prosecution of other new supplementary proceedings for the same
purpose, that of ascertaining the share of the judgment-debtor in the aforesaid Chinese partnership of Song Fo, was
likewise excepted to, by a writing of the 4th of May Following, wherein at the same time the judgment-creditor asked
that the said referee's report be set aside and his counter-petition be considered; but he did not file the required bill of
exceptions within the period fixed by law for its approval and prosecution.

Can the said order of April 29, 1909, be considered as excepted to and appealed from by the appeal taken in the
writing before mentioned under date of August 6, 1909 after the lapse of three months and six days? The
impropriety of the said appeal is also unquestionable, on account of its not having been entered in due time.

With respect to the order of May 8, 1909, disallowing the judgment-creditor's petition to set aside the referee's report
before mentioned, that of the 26th of July following, denying the prayer made by the said judgment-creditor that the
said referee rectify his previous report and render another new and correct one, and that of the 31st of the same
month of July, denying the judgment-creditor's petition that the court order a review of all the proceedings had, are all
judicial orders from which no appeal whatever lies, as they are in denegation of petitions tending to weaken or
destroy the final orders of the 12th and 22d of March, 1909, which would be the subject of discussion and opposition,
notwithstanding the irrevocable character with which they are vested, were the appeals entered against them
admitted.

If the appeals taken by the judgment-creditor were allowed, it would give rise to the question whether the judge ought
or ought not to have granted the petition to set aside or to rectify the referee's report, already approved by final
orders, the petition that the said referee render another more exact report, and that made asking for a review of the
proceedings had by the latter, already denied by another previous order which was also final, none of which could
under any consideration be permitted, as it would be contrary to the law, which upholds the sanctity of all rulings that
have become res adjudicata.

It was not proved that the aforementioned orders of the 12th and 22nd of March, and the 29th of April, were null and
void or that they had not acquired a final character, and therefore the subsequent orders of the 8th of May and the
26th and 31st of July, issued in consequence of the preceding orders, which were already of themselves irrevocable,
can not be appealed.

For the foregoing reasons, the appeals entered by the judgment-creditor Francisco Gonzalez Quiros from the said
orders are declared to be improper, and therefore the bill of exceptions forwarded to this court should not have been
prosecuted. The costs are taxed against the appellant. So ordered.

G.R. No. L-19407 November 23, 1966

118
JUANA SOBERANO and JOSE B. SOBERANO, plaintiffs-appellants,
vs.
MANILA RAILROAD COMPANY, through the Acting General Manager, Colonel Salvador T. Villa;
THE BENGUET AUTO LINE, through the Superintendent, Mr. Casiano Rivera; and SANTIAGO
CACCAM, Driver, defendants-appellees.
CASTRO, J.:
This is an appeal, purely on questions of law, from a decision of the Court of First Instance of Baguio City, ordering
the defendant Manila Railroad Company to pay the plaintiffs Juana Soberano and her husband Jose Soberano the
sum of P5,070.60, with legal interest from June 6, 1956, the date of the filing of the complaint, and to pay the costs.

In the morning of March 8, 1955 in Cabugao, Ilocos Sur, Juana Soberano boarded bus No. 155, with plate No. TPU-
5994, of the Benguet Auto Line (BAL), a subsidiary of the Manila Railroad Co. (MRR), 1 driven by Santiago Caccam,
bound for Baguio City. In that trip, Juana brought with her 3,024 chicken eggs to be sold in Baguio City, and some
personal belongings which she needed in that trip. About three kilometers away from Baguio City, along the Naguilian
road, the bus hit a stone embankment, causing it to fall into a 65-foot deep precipice, resulting in death to two of its
passengers and serious physical injuries to Juana and loss and destruction of all her belongings.

From the scene of the accident, Juana was brought to the Baguio General Hospital. Radiologist Dr. Hector Lopez
after examining her injuries, certified that she sustained comminuted fracture in the left mandible near the articulation,
cracked fracture in the right temporal bone, crushed fractures, both scapular, and fracture in the 2nd, 3rd and 4th ribs.
She was confined in that hospital until April 14, 1955, when she was transferred to the National Orthopedic Hospital,
whereat she stayed until June 6, 1955 when she was discharged. She was also treated by Dr. Luis Martinez of the V.
Luna Hospital, and Dr. J.V. de los Santos, both orthopedists, and late by Dr. J. O. Floirendo, an EENT specialist, for
"visual and other defects."

Santiago Caccam was thereafter charged in the Court of First Instance of Baguio City with the crime of double
homicide and serious physical injuries thru reckless imprudence. He pleaded guilty to the crime of double homicide
and serious physical injuries thru simple imprudence and was sentenced accordingly. Juana Soberano did not
intervene in the criminal case because she filed a formal reservation to institute a separate civil action for damages
and indemnity against the MRR and the BAL.

Because of the loss of the eggs and the destruction of the personal effects that Juana brought with her in that trip,
Jose Soberano, her husband, demanded from the defendant companies the value thereof amounting to P370.66
(exh. C-3), of which sum the MRR paid P300 (exh. 2). The MRR also paid the daily expenses, allowances,
subsistence, hospitalization, medical fees and medicines of Juana Soberano, as well as the service fees of her
caretaker. The MRR has paid a total sum of P4,219 (exhs. 3 & 4). Later the MRR offered to settle the case
extrajudicially, tendering to the Soberanos the additional sum of P5,000. The offer was rejected, and the Soberanos
filed the present action against the defendant companies and Caccam, to recover from them damages in the total
sum of P76,757.76.2 The defendant companies in due time filed their answer to the complaint with counterclaim for
damages by way of attorney's fees, and praying that the complaint against them be dismissed, or, in the alternative,
that the court approve their offer of settlement. The Soberanos filed a reply to the counterclaim and prayed for its
dismissal.

After due trial, the lower court rendered the decision appealed from, dismissing at the same time the complaint
against Caccam. The Soberanos moved to have the decision reconsidered. The motion for reconsideration was
denied; hence the present recourse.

The nine errors imputed by the Soberanos to the lower court actually pose only two basic issues, namely, whether the
dismissal of the complaint against Caccam is proper, and whether the amount of damages awarded is adequate.

Upon the first issue it is the contention of the Soberanos that the lower court, instead of dismissing their complaint
against Caccam, should have priorly declared him in default for failure to file an answer to the complaint. It is true that
Caccam did not file any answer to the complaint; but it is also true that the plaintiffs did not move to declare him in

119
default. And no default order may be issued against a defendant who fails to file a timely answer to a complaint
except "upon motion of the plaintiff" (sec. 6, Rule 35, old Rules of Court, now sec. 1, Rule 18, Revised Rules of
Court), and a court cannot issue a default order motu proprio (Viacrucis, et al. vs. Estenzo, etc., et al., L-18457, June
30, 1962). In spite of the lack of a formal motion to secure a default order against Caccam, however, the Soberanos
contend that at the hearing held on July 11, 1959, their counsel, Atty. Marcos Vega, before closing his evidence,
manifested to the lower court that because Caccam failed to file an answer to the complaint, he should "be declared
in default and that we be allowed to present evidence against him in accordance with our complaint." This
manifestation would nevertheless not have precluded the dismissal of the complaint against Caccam. In resolving this
manifestation, the lower court asked Vega upon what basis the complaint is predicated, whether on culpa
contractual or culpa aquiliana. Vega at first said, "It can be taken as both." But when the lower court pointedly
declared that it "cannot allow you or give you both remedies," said counsel replied that the complaint is predicated
upon culpa contractual. Because of this reply, the lower court ruled that the Soberanos cannot go against Caccam,
because he cannot be held liable on culpa contractual. Vega was given another chance to make a choice, but he
finally decided to proceed on the basis of "culpa contractual because we cannot get anything from Caccam", adding
that we are ready to present evidence to sustain our allegations against Santiago Caccam, we will close because
moral damages against him cannot be recovered just the same."

That the complaint is in fact predicated on culpa contractual can be seen front a perusal thereof. While it names three
defendants, the MRR the BAL, and Santiago Caccam, the prayer thereof shows that the action is directed against the
first two only, "to declare the defendant companies Manila Railroad Company and Benguet Auto Line solidarily
liable." And although paragraph 11 of the complaint recites that the incident was "due to the negligence and reckless
imprudence of the defendant driver Santiago Caccam," it is significant that there is no prayer for declaration of liability
against Caccam.

The complaint against Caccam was therefore properly dismissed. He was not a party to the contract; he was a mere
employee of the BAL. The parties to that contract are Juana Soberano, the passenger, and the MRR and its
subsidiary, the BAL, the bus owner and operator, respectively; and consequent to the inability of the defendant
companies to carry Juana Soberano and her baggage and personal effects securely and safely to her destination as
imposed by law (art. 1733, in relation to arts. 1736 and 1755, N.C.C.), their liability to her becomes direct and
immediate.

We now come to the question of damages.

The Soberanos initially contend that the lower court erred in disallowing their claim of P200, representing the
expenses of Juana Soberano in attending as a witness in the criminal case and attorney's fees incurred in connection
therewith. This claim was correctly denied by the lower court, because these expenses were properly taxable in the
criminal case. It may be argued that the Soberanos could not have recovered this sum in the criminal case because
Juana Soberano expressly filed a formal reservation to institute a separate civil action for damages, but such
reservation did not preserve whatever rights they had against Caccam on the basis of the latter's imprudence. The
reservation is ineffective as to Caccam as it did not include him among those against whom their rights had been
reserved. And the Soberanos not having intervened in the criminal case, this claim must be considered as having
been impliedly adjudicated in the criminal case, and cannot therefore be ventilated in the present action.

The Soberanos next contend that the lower court erred in denying their claim for moral damages in the sum of
P15,000, for the physical suffering, mental anguish, serious anxiety and fright they suffered as a consequence of the
mishap. The lower court denied this claim on the strength of the oft-reiterated ruling of this Court that moral damages
cannot be recovered against the employer in actions based on a breach of contract of carriage in the absence of
malice, fraud, or bad faith.

The lower court rightly denied the claim for moral damages as far as Jose Soberano is concerned. In case of physical
injuries, moral damages are recoverable only by the party injured and not by his next of kin, unless there is express
statutory provision to the contrary (Strebel v. Figueras, L-4722, Dec. 29, 1954; Araneta et al. v. Arreglado, et al., L-
11394, Sept. 9, 1958). In this case it was Juana Soberano, not her husband Jose, who sustained the bodily injuries.

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With respect to the claim of Juana Soberano for moral damages, the rule is well-settled in this jurisdiction that in
cases of breach of contract of carriage, moral damages are recoverable only "where the defendant has acted
fraudulently or in bad faith" (art. 2220, N.C.C.), and the terms fraud and bad faith have reference to "wanton,
reckless, oppressive, malevolent conduct", or, in the very least, to "negligence so gross as to amount to malice."
(Fores Miranda, L-12163, March 4, 1959; Necesito, etc. v. Paras,et al., L-10605-10606, June 30, 1958).

To prove malice and bad faith on the part of the defendant companies, the Soberanos aver that the said defendants
intentionally omitted the name of Juana as one of the offended parties in the information in criminal case 1086, and
that her name was included therein only upon the intervention of the Soberanos themselves; that the defendant
companies prevailed upon Caccam to plead guilty to the lesser crime of double homicide and serious physical injuries
thru simple imprudence, purposely to prevent the introduction of evidence of gross negligence amounting to malice
against the said companies; that the BAL physician, Dr. Nievera, disowned having been an attending physician of
Juana Soberano, and, together with MRR physician Dr. Salvador, suppressed the introduction of the X-ray plates
takenof Juana as evidence to prove the extent of the injuries suffered by the latter; and that the defendant companies
exerted undue influence upon Dr. Fernandez, who treated Juana's dental injuries, not to testify to such matters or
identify a medical certificate issued by him, describing the dental injuries suffered by Juana. These incidents, even if
true, cannot be considered as acts committed fraudulently or in bad faith by the defendant companies in the
operation of their transportation business which directly resulted in the mishap that caused the injuries to Juana.
Moreover, the allegation in paragraph 11 of the complaint that the incident was "due to the negligence and reckless
imprudence of the defendant driver Santiago Caccam", does not per se justify an inference of malice or bad faith on
the part of the defendant companies (Rex Taxicab Co. v. Bautista, et al., L-15392, Sept. 30, 1962; Cachero v. Manila
Yellow Taxicab Co., Inc., L-8721, May 23, 1957), for fraud, malice, or bad faith must be proved to support a claim for
moral damages if only physical injuries are sustained (Lira vs. Mercado, L-13358, Sept. 29, 1961).

The absence of fraud, malice, or bad faith on the part of the defendant companies justifies the denial of Juana
Soberano's claim for moral damages as well as the denial of the claim for exemplary damages (art. 2232, N.C.C.).

The third claim for attorney's fees was also properly denied by the lower court. The Soberanos aver that they
were obliged to file a separate civil action for damages against the defendant companies. This claim is predicated
upon paragraphs (2) and (5) of article 2208 of the New Civil Code, which provide that attorney's fees and expenses of
litigation may be recovered when the defendant's act or omission has compelled the plaintiff to litigate with third
persons or incur expenses to protect his interest, or when the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff's plainly valid, just and demandable claim. It will be observed that the defendant
companies offered to settle the case by offering to the Soberanos the additional sum of P5,000. The Soberanos,
however, rejected the offer and proceeded to court to recover damages in the total sum of P76,757.76. It was not,
therefore, the defendant companies that compelled the Soberanos to litigate, or to incur expenses in connection with
the litigation instituted by them. The Soberanos went to court after rejecting the defendant companies' offer of
settlement. The latter can not likewise be considered to have acted in gross and evident bad faith in not satisfying the
claim of the Soberanos, because, as the lower court puts it, the Soberanos "have asked for too much", and the
"defendant was justified in resisting this action." We are not without precedent on this point. In Globe Assn. vs.
Arcache, L-12378, May 28, 1958, this Court observed that the refusal of the defendant therein to pay the amount
claimed was due not to malice but to the fact that the plaintiff therein demanded more than it should, and
consequently ruled that the defendant had the right to refuse it; and in the Cachero case, supra, this Court held that
the plaintiff in that case cannot recover attorney's fees, because the litigation was caused not by the defendant's
failure to pay but by the plaintiff's "exorbitant charge."

We now come to the claim for additional unpaid allowances of Juana Soberano while she was undergoing medical
and dental treatment in Manila and Quezon City, in the total sum of P600. In our view, this claim has merit.

The allowance of ten pesos for each day of stay in Quezon City of Juana Soberano was recommended for approval
by the superintendent of the BAL, Mr. C. Rivera (exh. C-4) and by the MRR physician, Dr. Salgado, and appears to
have been "OK" by the MRR administrative officer, Mr. F.C. Unson (exh. C-5). These exhibits C-4 and C-5 were
admitted in evidence without objection from the Government Corporate Counsel who represented the defendant

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companies. The defendant companies have already paid to Jose Soberano the total sum of P600, covering Juana
Soberano's stay for 60 days in a private house, from June 7 to July 5, 1955, and from July 7 to August 5, 1955 (exhs.
3-I and 3-J).

As to the balance of P600, it was error for the lower court to include this sum in the assessment of loss of earning
capacity, because this amount represents expenses for board and lodging, short order such as milk and fruit, laundry
and transportation of Juana Soberano incurred during her stay in a private house in Quezon City, after her discharge
from the National Orthopedic Hospital, which continued stay was upon the advice of her attending physician that she
go to that hospital every other day for physical therapy (exh. C-3). It will be seen under exhibits C-4 and C-5 that the
defendant companies agreed to pay the Soberanos the sum of P10.00 a day for her said stay beginning "June 7,
1955 not to exceed 60 days, depending upon the advice of the attending physician or other bone specialist." The
deposition of, and a medical certificate issued by, Dr. Juan 0. Floirendo, in EENT specialist who treated Juana
Soberano for "visual and other defects", show that he treated her for more than sixty days, from September 10, 1955
to February 2, 1956 (exh. L). The balance of P600 should, therefore, be paid to Juana Soberano.

We come finally to the claim for loss of earning capacity in the total sum of P50,000, based upon the expectancy that
Juana Soberano, who was 37 years old at the time of the accident, would live for 20 more years and be able to earn
an average annual income of P2,500. On this point, the lower court found that "Juana Soberano suffered greatly and
that her injuries left her permanently disfigured and partially disabled as she walks with a stiff neck and her arms have
partly lost their full freedom." After finding however, that she is not altogether a helpless woman and can still engage
in business, the lower court awarded to her P5,000 to compensate loss of earnings as a result of her partial disability.

The appellants contend that the award is inadequate. We agree.

This Court, in three cases, allowed in one, and increased in the two others, the amount of compensatory damages.
In Borromeo v. Manila Electric Railroad and Light Co., 44 Phil. 165 (1922), this Court awarded P2,000 in future
damages to the plaintiff therein, after finding that due to the accident, wherein Borromeo's left foot was passed over
by the rear wheels of the electric car of the defendant company and had to be amputated, he had to use an artificial
foot in order to be able to walk; that he could no longer be employed as a marine engineer which he had been for
sixteen years; that at the time of the accident he was a chief engineer with a monthly salary of P375; and that
because he knew of no other profession, his incapacity had put an end to his activities and had destroyed his
principal source of professional earnings in the future. In Cariaga, et al. v. Laguna Tayabas Bus Co., et al., L-11037,
Dec. 29, 1960, this Court increased the award of compensatory damages from P10,490 to P25,000, after finding that
Edgardo Cariaga's right forehead was fractured, necessitating the removal of practically all of the right frontal lobe of
his brain; that he had become a misfit for any kind of work; that he could hardly walk around without someone helping
him and he had to use a brace on his left leg and foot; that he was a virtual invalid, physically and mentally; that at the
time of the accident he was already a fourth-year student in medicine in a reputable university; that his scholastic
record is sufficient to justify the assumption that had he continued his studies, he would have finished the course and
would have passed the board examinations; and that he could possibly have earned as a medical practitioner the
minimum monthly income of P300. And in Araneta, et al. v. Arreglado, et al., L-11394, September 9, 1958, this Court
increased the award of compensatory damages from P1,000 to P18,000, after finding that Benjamin Araneta
sustained "permanent deformity and something like an inferiority complex" as well as a "pathological condition on
the left side of the jaw" caused by the defendant Dario Arreglado who inflicted the injury upon him voluntarily; that to
arrest the degenerative process taking place in the mandible and to restore the injured boy to a nearly normal
condition, surgical intervention was needed; that a repair, however skillfully conducted, is never equivalent to the
original state; and that because of the injury, the boy had suffered greatly.

In the case at bar, the nature and extent of the physical injuries suffered by Juana Soberano and thereafter effects
upon her life and activities, are by three reputable physicians: Dr. Hector Lopes, a radiologist of the Baguio General
Hospital; Dr. Angel Poblete, an orthopedist of the National Orthopedic Hospital; and Dr. Juan O. Floirendo, an EENT
specialist. Dr. Lopez declared that Juana Soberano suffered comminuted fracture in the left mandible near the
articulation, cracked fracture in the right temporal bone, crushed fractures both scapular, and fracture in the 2nd, 3rd
and 4th ribs. As a result of these injuries, Dr. Poblete said that she suffered and would continue to suffer limitation of

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mouth opening, bad approximation of the jaw alignment which is drawn inside, limitation of neck and shoulder
movements with numbness on the right side of the face and right and left side of the body, disturbance in vision, and
poor mastication resulting in indigestion. Dr. Poblete further testified that she will be "abnormal and naturally she
could not be expected to live a normal life." Dr. Floirendo declared that she suffers from pain along the cheeks on
both sides of her face, double vision, and paralysis of the ocular muscles due to partial disequilibrium of the eye
muscles.

Juana Soberano herself categorically declared, and this was not contradicted, that prior to the accident, she had a
complete and healthy set of teeth; that as a result of the accident she lost three of her teeth, and the remaining ones
in the upper jaw had to be extracted because they were already loose and a denture had perforce to be made for her;
and that her face is permanently disfigured (exhs. K & K-1).

There is absolutely no doubt that the resultant physical handicaps would entail for Juana Soberano a loss of positive
economic values. In fact, they will greatly adversely affect her occupation as a pending merchant which she has been
since 1950 (exh. A), earning from 1950 to March 8, 1955, when the accident happened, an average annual net
income of about P1,500 (exhs. B, B-1 to B-5, inclusive). It is to be assumed that had the interruption to her
occupation through defendant's wrongful act not occurred, she would continue earning this average income.

Considering all the facts detailed above, this Court is of the opinion that the sum of P5,000 in compensatory damages
awarded to her for loss of earning capacity is inadequate; the amount should be increased to P15,000.

She should also be awarded the sum of P45.35, representing unrealized profits from the 3,024 chicken eggs which
she brought with her in the trip and which were destroyed. She brought those eggs to be sold in Baguio City. She
bought them at nine centavos each, was to sell them in Baguio City to definite customers at an agreed price of ten
and a half centavos each, or with a profit of one and a half centavos per egg.

Finally, all the awards to Juana Soberano should earn interest at the legal rate from the date the judgment a quo was
rendered, on November 25, 1960, and not from the date of the filing of the complaint.

ACCORDINGLY, the judgment appealed from is modified to read as follows: "Judgment is therefore rendered
ordering the Manila Railroad Company to pay to the plaintiffs (1) P600 representing the balance of the unpaid
allowances due to Juana Soberano in connection with her stay in a private house in Quezon City during the period of
her medical treatment; (2) P15,000 for loss of earning capacity; and (3) P45.36 for unrealized profits, all of these
sums to earn interest at the legal rate from November 25, 1960." Costs against the defendants-appellees.

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G.R. No. L-47180 May 19, 1980
THE PHILIPPINE AMERICAN ACCIDENT INSURANCE COMPANY, INC., petitioner-appellant,
vs.
THE HON. JOSE P. FLORES, and CONCORDIA G. NAVALTA, respondents-appellees.

ABAD SANTOS, J.:

Petition to review the Order of the respondent judge dated August 24, 1977. The facts are simple.

Private respondent was the plaintiff and the petitioner was the defendant in Civil Case No. 2414 of the Court of First
Instance of La Union. On January 22, 1973, the respondent judge rendered judgment in said case, the dispositive
portion of which reads: t.hqw

IN VIEW OF THE FOREGOING, the Court hereby renders judgment and sentences the defendant
to pay Concordia Garcia Navalta the amount of P75,000.00 with legal interest from October, 1968,
Pl,000.00, as attorney's fees am the cost of suit.

The decision was appealed by the petitioner to the Court of Appeals in CA-G.R. No. 52675-R but was affirmed on
February 7, 1977. On February 24, 1977, the petitioner paid the following amounts to the private respondent: t.
hqw

On the principal P75,000.00

Interest at 6% per annum

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from Oct. 1968* to April 30,

1977 P 38,250.00

Attorney's fee P 1,000.00

Total P114,250.00

(*Art. 2209 of the Civil Code provides: "If the obligation consists in the payment of a sum of money,
and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the
legal interest, which is six per cent per annum." This appears to be the basis for awarding interest
at the legal rate from October, 1968, although the debt was judicially demanded only on July 6,
1970.)

The petitioner was advised by the respondent and her counsel that the payment was not in fun satisfaction of the
judgment because the former had to pay compound interest or an additional sum of P10,375.77.

Upon refusal of the petitioner to pay the sum additionally claimed, the private respondent secure a writ of execution
for the same which the former sought to quash over the opposition of the latter. In resolving the question the
respondent judge issued an Order on August 24, 1977 as follows: t.hqw

After hearing and consideration of the motion of the plaintiff for the issuance of an alias writ of
execution, and the written manifestation and opposition filed by the defendant and finding as it
appears that the written schedule of interest computation, which was submitted, is correct and in
order, because compound interest has been computed from July 6, 1970 when the claim was
judicially demanded, let an alias writ of execution issue to satisfy accordingly the unpaid balance as
demanded.

It is this Order which is the object of this petition and which raises the question as to whether or not the petitioner is
obligated to pay compound interest under the judgment.

The questioned Order cannot be sustained. The judgment which was sought to be executed ordered the payment of
simple "legal interest" only. It said nothing about the payment of compound interest. Accordingly, when the
respondent judge ordered the payment of compound interest he went beyond the confines of his own judgment which
had been affirmed by the Court of Appeals and which had become final. Fundamental is the rule that execution must
conform to that ordained or decreed in the dispositive part of the decision. Likewise, a court can not, except for
clerical errors or omissions, amend a judgment that has become final. (Jabon, et al. vs. Alo, et al., 91 Phil. 750 [1952];
Robles vs. Timario, et al., 107 Phil. 809 [1960]; Collector of Internal Revenue vs. Gutierrez, et al., 108 Phil. 215
[1960]; Ablaza vs. Sycip, et al., 110 Phil., 4 [1960].)

Private respondent invokes Sec. 5 of the Usury Law which reads in part as follows: "In computing the interest on any
obligation, promissory note or other instrument or contract, compound interest shall not be reckoned, except by
agreement, or, in default thereof, whenever the debt is judicially claimed in which last case it shall draw six per
centum per annum interest ..." as well as Art. 2212 of the Civil Code which stipulates: "Interest due shall earn legal
interest from the time it is judicially demanded, although the obligation may be silent upon this point." Both legal
provisions are in applicable for they contemplate the presence of stipulated or conventional interest which had
accrued when demand was judicially made. (Sunico vs. Ramirez, 14 Phil. 500 [1909]; Salvador vs. Palencia, 25 Phil.
661 [1913]; Bachrach vs. Golingco, 39 Phil. 912 [1919]; Robinson vs. Sackermann 46 Phil. 539 [1924]; Philippine
Engineering Co. vs. Green, 48 Phil. 466 [1925]; and Cu Unjieng vs. Mabalacat Sugar Co., 54 Phil. 916 [1930].) In this
case no interest had been stipulated by the parties. In other words, there was no accrued conventional interest which
could further earn interest upon judicial demand.

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WHEREFORE, the Order dated August 24, 1977, of the respondent judge is hereby set aside. No special
pronouncement as to costs.

SO ORDERED.

G.R. No. L-33836 March 16, 1987


DRA. SOFIA L. PRUDENCIADO, petitioner,
vs.
ALLIANCE TRANSPORT SYSTEM, INC. and JOSE LEYSON, et al., respondents.
PARAS, J.:

This is a petition for review on certiorari of the decision 1 of the Court of Appeals dated May 4,1971 in CA-G.R. No.
34832R entitled Dra. Sofia L. Prudenciado v. Alliance Transport System, Inc. and Jose Leyson, which modified the
decision 2 of the Court of First Instance of Rizal, Quezon City, in Civil Case No. Q-5235 reducing the amount of moral
damages from P25,000 to P2,000 and eliminating the award of exemplary damages and attorney's fees but granting
actual damages of P2,451.27.

The decretal portion of said decision reads:

WHEREFORE, the decision appealed from is hereby modified, ordering appellants jointly and
severally to pay plaintiff the sum of P2,451.27 for actual damages representing the cost of the

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repair of the car of Plaintiff; (2) the sum of P2,000.00 as moral damages. No pronouncement as to
costs.

The antecedent facts of this case as found by the trial court and by the Court of Appeals are as follows:

At about 2:05 p.m. of May 11, 1960, Dra. Sofia L. Prudenciado was driving her own Chevrolet Bel Air car along
Arroceros Street with the intention of crossing Taft Avenue in order to turn left, to go to the Philippine Normal College
Compound where she would hold classes. She claimed that she was driving her car at the rate of 10 kmph; that
before crossing Taft Ave. she stopped her car and looked to the right and to the left and not noticing any on-coming
vehicle on either side she slowly proceeded on first gear to cross the same, but when she was almost at the center,
near the island thereof, Jose Leyson who was driving People's Taxicab owned and operated by Alliance Transport
System, Inc., suddenly bumped and struck Dra. Prudenciado's car, thereby causing physical injuries in different parts
of her body, suffering more particularly brain concussion which subjected her to several physical examinations and to
an encephalograph test while her car was damaged to the extent of P2,451.27. The damage to the taxicab amounted
to P190.00 (Decision in Civil Case No. Q-5235, CFI, Rizal; Record on Appeal, pp. 63-64; Decision, CA-G.R. No.
34832-R, Rollo, pp. 37-38).

Dra. Prudenciado filed a complaint for damages at the Court of First Instance of Rizal, Quezon City against the
Alliance Transport System and Jose Leyson docketed as aforestated, Civil Case No. Q-5232 (Record on Appeal, pp.
2-11).

After due hearing, the Court of First Instance of Rizal, Quezon City, found Jose Leyson guilty of negligence in the
performance of his duties as taxicab driver which is the proximate cause of the accident in question. On the other
hand, defendant Alliance Transport System, Inc. failed to prove to the satisfaction of the court that it had exercised
the required diligence of a good father of the family in the selection, supervision and control of its employees
including defendant Leyson. Consequently, both defendants were held jointly and severally liable for the physical
injuries suffered by the plaintiff Dra. Sofia L. Prudenciado as well as for the damage to her car, in addition to the other
consequential damages prayed for. The dispositive portion of said decision reads:

IN VIEW OF THE FOREGOING CONSIDERATIONS judgment is rendered, one in favor of plaintiff


and against the defendants, by ordering the said defendants, jointly and severally, to pay the
plaintiff the sum of P2,451.27 for actual damages representing the cost for the repair of the car of
plaintiff; P25,000.00 as moral damages; P5,000.00 as exemplary damages; and the further sum of
P3,000.00 as attorney's fees, with costs against the defendants. (Record on Appeal, pp. 71-73).

On appeal, the Court of Appeals rendered the assailed decision on May 14, 1971 and denied petitioner's motion for
reconsideration in its resolution dated July 20, 1971.

Hence, this petition.

The petition was given due course in the resolution of this Court dated September 6, 1971 and petitioner filed her
brief on November 10, 1971 (Rollo, p. 69) while respondents filed their brief on January 24, 1972 (Rollo, p. 86).
Petitioner filed her Reply Brief on March 1, 1972 (Rollo, p. 96); after which the case was considered submitted for
decision on the same date (Rollo, p. 99).

In her brief, petitioner raised the following assignment of errors:

THE RESPONDENT COURT OF APPEALS ERRED IN REDUCING THE AWARD OF MORAL DAMAGES TO THE
PETITIONER FROM P25,000.00 AWARDED BY THE COURT OF FIRST INSTANCE OF RIZAL, BRANCH V,
QUEZON CITY, TO P2,000.00 NOTWITHSTANDING THE FACT THAT THERE WAS NO FINDING THAT THE

127
AWARD WAS PALPABLY AND SCANDALOUSLY EXCESSIVE AS TO INDICATE THAT IT WAS THE RESULT OF
PASSION OR CORRUPTION ON THE PART OF THE TRIAL COURT;

II

THE RESPONDENT COURT OF APPEALS ERRED IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES
OF P5,000.00 NOTWITHSTANDING THE FACT THAT THE FINDING OF THE SAID COURT ON THE EVIDENCE
AND THE LAW APPLICABLE JUSTIFIED THE AWARD OF EXEMPLARY DAMAGES AS HELD BY THE SAID TRIAL
COURT;

III

THE COURT OF APPEALS ERRED IN FINDING THAT HER DEMOTION IN RANK AS A PROFESSOR IN THE
UNITED STATES WAS NOT SUBSTANTIATED AND IN MAKING THIS FINDING A BASIS FOR THE REDUCTION
OF THE AWARD OF MORAL DAMAGES, NOTWITHSTANDING THAT IT IS ALREADY TOO FAR FETCHED AND IT
MERELY CONFIRMS THE TRUTH OF THE FACT THAT THE ACCUSED SUFFERED LOSS OF HER USUAL
LIVELINESS; VIVACITY ACTIVITY SELF-CONFIDENCE AND THAT SHE FEELS UNCERTAIN AND INSECURE
AND THAT SHE WAS SUBJECTED TO EXTREME FRIGHT AND SERIOUS ANXIETY, SERIOUS APPREHENSION
OF LOSING HER LIFE OR HER SENSES OR REASON AND OF HER PHYSICAL MOBILITY ANYTIME AND THAT
SHE SUFFERED GREAT SHOCK AND SEVERE PAINS ON HER BACK NEAR THE LEFT SIDE OF HER SPINAL
COLUMN OF THE LUMBAR REGION;

IV

THE RESPONDENT COURT OF APPEALS ALSO ERRED IN ELIMINATING THE AWARD OF ATTORNEY'S FEES
TO THE PETITIONERS NOTWITHSTANDING THE FACT THAT SAID AWARD IS LEGAL AND PROPER;

THE RESPONDENT COURT OF APPEALS ERRED IN ELIMINATING THE COSTS TAXED AGAINST THE
RESPONDENTS NOTWITHSTANDING THE FACT THAT SAID COSTS ARE LEGAL AND PROPER;

VI

THE RESPONDENT COURT OF APPEALS ERRED IN FINDING THAT THE CLAIM OF DR. SOFIA L.
PRUDENCIADO OF HER LOSS OF HER USUAL LIVELINESS, VIVACITY ACTIVITY AND HER USUAL SELF
CONFIDENCE, SUCH THAT SHE NOW FEELS UNCERTAIN AND INSECURE... EXTREME FRIGHT AND
SERIOUS ANXIETY, SERIOUS APPREHENSION OF LOSING HER LIFE OR HER SENSES OR REASON; OF HER
PHYSICAL MOBILITY ANYTIME ... GREAT SHOCK AND SEVERE PAINS ON HER BACK NEAR THE LEFT SIDE
OF HER SPINAL COLUMN IN THE LUMBAR REGION IS UNCORROBORATED NOTWITHSTANDING THE FACT
OF THE CERTIFICATE, EXHIBIT "G" OF DR. DOMINADOR VERGARA, OF THE VETERANS MEMORIAL
HOSPITAL AND DR. CONRADO ARAMIL, BRAIN SPECIALIST AND THE CORROBORATING TESTIMONY OF THE
LATTER AFTER EXAMINATION AND TREATMENT OF PETITIONER;

VII

THE RESPONDENT COURT OF APPEALS ERRED IN SO MODIFYING THE DECISION OF THE TRIAL COURT
NOTWITHSTANDING THE FACT THAT IT HAD NO POWER TO DO SO UNDER THE FACTS AND
CIRCUMSTANCES OF THIS CASE AS FOUND BY THE COURT OF APPEALS;

VIII

128
THE RESPONDENT COURT OF APPEALS ERRED IN MODIFYING THE DECISION OF THE TRIAL COURT
NOTWITHSTANDING THE FACT THAT THE DECISION OF SAID TRIAL COURT IS IN ACCORDANCE WITH LAW.

The Court of Appeals and the trial court are in accord in the finding that the accident was caused by the negligence of
the taxi driver. The bone of contention is however in the award of damages, which crystalizes the errors assigned into
one issue, which is whether or not the Court of Appeals is justified in modifying or changing the grant of damages by
the trial court.

It is well settled that factual findings of the Court of Appeals are binding on the Supreme Court, but said findings are
subject to scrutiny if such are diametrically opposed to those of the trial court (Samson v. CA, et al. G.R. No. L-40071,
January 29, 1986).

The Court of Appeals concedes that a concussion of the brain was suffered by Dra. Prudenciado but as to how
serious was the concussion or how it had later become, and the disastrous extent of the injuries which she alleges to
have sustained as a result of the accident, are seriously doubted by said Appellate Court.

Specifically, said Court finds that Dra. Prudenciado's claim (which was sustained b the trial court) that because of
aforesaid concussion, she eventually lost her usual liveliness, vivacity activity and her usual self- confidence, to the
extent that now she feels uncertain and insecure, not to mention a sense of extreme fright and serious anxiety,
serious apprehension of losing her life, or her senses or reason or her physical mobility momentarily, plus
experiences of great shock and severe pains on her back near the left side of her spinal column in the lumbar region,
was not supported by the deposition of Dr. Conrado Aramil the list who attended to the plaintiff from May 14 to May
26, 1960 (TSN, July 13, 1960, pp. 72-73). From said deposition, it was gathered that Dra. Prudenciado suffered a
mild abnormality, compatible with mold concussion of the brain (TSN, July 13, 1960, pp. 47-48); that the symptoms of
any brain concussion usually are headache, dizziness, voting and lack of pep or alertness; and that the possible after
effects that may be produced are persistent or irregular headaches, fluctuating dizziness. Accordingly, Dra.
Prudenciado was advised "Just to watch herself if she would develop any alarming symptoms such as headache,
dizziness or vomitings, to have her re-checked after several months for her to be sure." (Ibid, pp. 51-52). It might also
produce intellectual deterioration or lessening of intelligence, and even insanity.

Dra. Prudenciado sought to establish that she had precisely suffered are those after effects except insanity; but the
Court of Appeals ruled that her proof consisted merely in her own uncorroborated testimony. In support of her
allegation she could not show any medical certificate tending to prove that she was indeed medically treated abroad
for her brain ailment nor was there any showing in the documents presented that she was demoted to the rank of
technical assistant because the San Francisco State College does not believe in her mental capacity any more.

Finally, her statements that she is almost completely losing her voice, that she has a terrible headache when her
head is pressed, that she has lost her sense of taste, that she is nervous and temperamental and that she has lapses
of memory, are belied by the deposition of Dr. Aramil that the patient's EEG was already normal on May 26, 1960;
and on cross-examination he declared that she was clinically symtomless when she was discharged from the hospital
(TSN, July 13, 1960, pp. 75-76; 78-79).

There is no argument that 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 defendant's wrongful act
or omission (People v. Baylon, 129 SCRA 62 [1984]).

In the same manner, it is undisputed that the trial courts are given discretion to determine the amount of moral
damages Alcantara v. Surro, 93 Phil. 472) and that the Court of Appeals can only modify or change the amount
awarded when they are palpably and scandalously excessive "so as to indicate that it was the result of passion,
prejudice or corruption on the part of the trial court (Gellada v. Warner Barnes & Co., Inc., 57 O.G. (4) 7347, 7358;
Sadie v. Bachrach Motors Co., Inc., 57 O.G. (4) 636 and Adone v. Bachrach Motor Co., Inc., 57 O.G. 656). But in

129
more recent cases where the awards of moral and exemplary damages are far too excessive compared to the, actual
losses sustained by the aggrieved party, this Court ruled that they should be reduced to more reasonable amounts.

Thus, in the case of San Andres v. Court of Appeals (116 SCRA 85 [1982]) the Supreme Court ruled that while the
amount of moral damages is a matter left largely to the sound discretion of a court, the same when found excessive
should be reduced to more reasonable amounts, considering the attendant facts and circumstances. 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.

In a much later case (Siguenza v. Court of Appeals, 137 SCRA 578-579 [1985]), the Supreme court, reiterating the
above ruling, reduced the awards of moral and exemplary damages which were far too excessive compared to the
actual losses sustained by the aggrieved parties and where the records show that the injury suffered was not serious
or gross and, therefore, out of proportion to the amount of damages generously awarded by the trial court.

In any case the Court held that "moral damages are emphatically not intended to enrich a complainant at the expense
of a defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will
serve to alleviate the moral suffering he has undergone, by reason of the defendants' culpable action." The award of
moral damages must be proportionate to the suffering inflicted & B Surety & Insurance Co., Inc. v. Intermediate
Appellate Court, 129 SCRA 745 [1984] citing Grand Union Supermarket, Inc. v. Espino, Jr., 94 SCRA 966).

Coming back to the case at bar, a careful review of the records makes it readily apparent that the injuries sustained
by Dra. Prudenciado are not as serious or extensive as they were claimed to be, to warrant the damages awarded by
the trial court. In fact, a closer scrutiny of the exhibits showing a moderate damage to the car can by no stretch of the
imagination produce a logical conclusion that such disastrous effects of the accident sought to be established,
actually took place, not to mention the fact that such were not supported by the medical findings presented.
Unquestionably, therefore, the damages imposed' by the lower court should be reduced to more reasonable levels.

On the other hand, it will be observed that the reduction of the damages made by the Court of Appeals is both too
drastic and unrealistic, to pass the test of reasonableness, which appears to be the underlying basis to justify such
reduction.

While the damages sought to be recovered were not satisfactorily established to the extent desired by the petitioner,
it was nonetheless not disputed that an accident occurred due to the fault and negligence of the respondents; that
Dra. Prudenciado suffered a brain concussion which although mild can admittedly produce the effects complained of
by her and that these symptoms can develop after several years and can lead to some, serious handicaps or
predispose the patient to other sickness (TSN, July 13, 1960, pp. 52-54). Being a doctor by profession, her fears can
be more real and intense than an ordinary person. Otherwise stated, she is undeniably a proper recipient of moral
damages which are proportionate to her suffering.

As to exemplary damages, Article 2231 of the Civil Code provides:

In quasi-delicts, exemplary damages may be granted if the defendant acted with grave negligence.

The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction
for the public good (Lopez, et al. v. Pan American World Airways, 16 SCRA 431).

The findings of the trial court in the case at bar which became the basis of the award of exemplary damages are to
the effect that it is more apparent from the facts, conditions and circumstances obtaining in the record of the case that
respondent driver was running at high speed after turning to the right along Taft Ave. coming from Ayala Boulevard,
considering that the traffic was clear. Failing to notice petitioner's car, he failed to apply his brakes and did not even
swerve to the right to avoid the collision (Record on Appeal, pp. 69-70).

130
The Court of Appeals conforms with aforesaid findings of the trial court but is not prepared to accept that there was
gross negligence on the part of the driver to justify the imposition of exemplary damages.

However, a driver running at full speed on a rainy day, on a slippery road in complete disregard of the hazards to life
and limb of other people cannot be said to be acting in anything less than gross negligence. The frequent incidence
of accidents of this nature caused by taxi drivers indeed demands corrective measures.

PREMISES CONSIDERED, the assailed decision of the Court of Appeals is hereby MODIFIED insofar as the award
of damages is concerned; and respondents are ordered to jointly and severally pay the petitioner; (1) the sum of
P2,451.27 for actual damages representing the cost of the repair of her car; (2) the sum of P15,000.00 as moral
damages; (3) the sum of P5,000.00 as exemplary damages; and (4) the sum of P3,000.00 as attorney's fees. No
pronouncement as to costs.

SO ORDERED.

131
G.R. No. L-14333 January 28, 1961
OSCAR VENTANILLA, plaintiff-appellant,
vs.
GREGORIO CENTENO, defendant-appellee.
PADILLA, J.:

This is an action to recover damages claimed to have been suffered by the plaintiff due to the defendant's neglect in
perfecting within the reglementary period his appeal from an adverse judgment rendered by the Court of First
Instance of Manila in civil case No. 18833, attorney's fees and costs (civil No. 2063, Court of First Instance of Nueva
Ecija). After trial, the Court rendered judgment in favor of the plaintiff and against the defendant, ordering the latter to
pay the former the sum of P200 as nominal damages and the costs. The plaintiff appealed to the Court of Appeals,
which certified the case to this Court on the ground that only questions of law are raised. The defendant did not
appeal.

The facts, as found by the trial court, are:

In Civil Case No. 18833 of the Court of First Instance of Manila, entitled Oscar Ventanilla vs. Edilberto
Alejandrino and Aida G. Alejandrino, plaintiff retained the service of Atty. Gregorio Centeno to represent him
and prosecute the case. Civil Case No. 19833 was an action for the recovery of P4,000.00 together with
damages. Decision unfavorable to the plaintiff was received by Atty. Gregorio Centeno on July 21, 1955, and
a notice of appeal was filed by Atty. Centeno on July 25, 1955. On July 30, 1955, Atty. Centeno wrote to the
plaintiff the letter, Exhibit A, enclosing copies of the decision and that notice of appeal, and stating that he
was not conformable to the decision and had not hesitated to file the notice of appeal. Plaintiff Oscar
Ventanilla after receiving the letter and copy of the decision went to see Atty. Centeno in his office in Manila
about August 5, 1955. Atty. Centeno informed him that he intended to appeal and plaintiff agreed. Plaintiff,
however, did not leave with Atty. Centeno at that time the amount for the appeal bond. About the middle of
Aug. 1955, Atty. Centeno wrote a letter to the plaintiff enclosing therein forms for an appeal bond. The
plaintiff Ventanilla, however, instead of executing an appeal bond, and because use of his reluctance to pay
the premium on the appeal bond, decided to file a cash appeal bond of P60.00. He went to the office of Atty.
Centeno at about 4 o'clock on August 18,1955, but was informed by the clerk, Leonardo Sanchez, that Atty.
Centeno was in Laguna campaigning for his candidacy as member of the Provincial Board. Plaintiff then
issued the check Exhibit 1, for P60.00 as appeal bond and delivered the same to Leonardo Sanchez with
instruction to give the same to Atty. Centeno upon his arrival. The Court does not believe plaintiff's testimony
that Sanchez had contacted Atty. Centeno by telephone and that he issued the cheek upon instruction of
Atty. Centeno. Leonardo Sanchez had informed the plaintiff that Atty. Centeno was in Laguna, and if he were
in Manila, Sanchez could not have known the whereabouts of Atty, Centeno. It was therefore improbable
that he could contact Atty. Centeno that afternoon. On August 17, Atty. Centeno prepared the motion for
extension of time to file the record on appeal, Exhibit D, which was filed only on August 20, 1955. Atty.
Centeno returned to Manila and went to his office at about 10 o'clock in the morning of August 22. He cash
the check, Exhibit 1, with the Marvel Building Corporation and then went to the office of the Clerk of Court to
file the appeal bond. According to Atty. Centeno it was not accepted because the period of appeal had
already expired, and that it was only at that time he came to know that the period of appeal had expired. The
court does not likewise believe the testimony of Atty. Centeno. Neither the Clerk of Court, or any of the

132
employees had the right to refuse an appeal bond that is being filed, for it is not in his power to determine
whether or not the appeal bond has been filed within the time prescribed by law. In fact the record on appeal
was accepted and filed on September 5, 1955, but no appeal bond has been filed by Atty. Centeno. The fact
that the record on appeal was admitted for filing is the best evidence that Atty. Centeno had not in fact filed
any appeal bond. The record on appeal was disapproved because it was filed out of time and no appeal
bond had been filed by the plaintiff. (pp. 33-36, rec. on app.)

The appellant claims that the trial court erred in not ordering the appellee to pay him actual or compensatory, moral,
temperate or moderate, and exemplary or corrective damages; in ordering the appellee to pay the appellant only the
sum of P200, and not P2,000 as nominal damages; and in not ordering the appellee to pay the appellant the sum of
P500 as attorney's fee.

Article 2199 of the new Civil Code provides:

Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or
compensatory damages.

He who claims actual or compensatory damages must establish and prove by competent evidence actual pecuniary
loss.1 The appellant's bare allegation that by reason of the appellee's indifference, negligence and failure to perfect
within the reglementary period his appeal from an adverse judgment rendered in civil case No. 18833, by not paying
the appeal bond of P60, he lost his chance to recover from the defendants therein the sum of P4,000 and moral and
actual damages, which he could have recovered if the appeal had duly been perfected, indicates that his claim for
actual or compensatory damages is highly speculative. Hence he is not entitled to such damages.

The appellant claims that he suffered mental anguish upon learning that his appeal had not been perfected within the
reglementary period due to the appellee's negligence; serious anxiety upon learning that his adversary had won by a
mere technicality; besmirched reputation for losing the opportunity to substantiate his claim made while testifying in
open court that he was entitled to collect the sum of P4,000 and damages from the defendants in civil No. 18833; and
wounded feelings for the appellee's failure to remain faithful to his client and worthy of his trust and confidence. The
provisions of the new Civil Code on moral damages state:

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shocks, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's
wrongful act or omission.

Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries; .

(2) Quasi-delicts causing physical injuries; .

(3) Seduction, abduction, rape, or other lascivious acts; .

(4) Adultery or concubinage; .

(5) Illegal or arbitrary detention or arrest; .

(6) Illegal search; .

(7) Libel, slander or any other form of defamation; .

133
(8) Malicious prosecution .

(9) Acts mentioned in article 309; .

(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also
recover moral damages.

The spouse, descendants, ascendants, and brothers and sister may bring action mentioned in No. 9 of this
article, in the order named.

Art. 2220. Willful injury to property may be 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.

Moral damages are recoverable only when physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shocks, social humiliation, and similar injury are the proximate result of a criminal
offense resulting in physical injuries, quasi-delicts causing physical injuries, seduction, abduction, rape or other
lascivious acts, adultery or concubinage, illegal or arbitrary detention or arrest, illegal search, libel, slander or any
other form of defamation, malicious prosecution, disrespect for the dead or wrongful interference with funerals,
violation of specific provisions of the Civil Code on human relations, and willful injury to property. To this we may add
that where a mishap occurs resulting in the death of a passenger being transported by a common carrier, the spouse,
descendants and ascendants of the deceased passenger are entitled to demand moral damages for mental anguish
by reason of the passenger's death.2 In Malonzo vs. Galang, supra, this Court categorically stated that

. . .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, G.R. L-4722, Dec. 29, 1954), 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).3

Since the appellant's cause of action for recovery of moral damages is not predicated upon any of those specifically
enumerated, the trial court did not err in declining to award moral damages to him.

Concerning temperate or moderate damages claimed by the appellant, considering that he is not entitled to actual or
compensatory damages but has been awarded nominal damages by the trial court, such award precludes the
recovery of temperate or moderate damages,4 and so the trial court did not err in refusing to award temperate or
moderate damages to the appellant .

As regards exemplary or corrective damages also claimed by the appellant, since it cannot be recovered as a matter
of right and the court will decide whether or not they should be adjudicated, 5 if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner,6 the trial court has judiciously, wisely and correctly exercised
its discretion in not awarding them to the appellant.

Relative to the sufficiency of the sum of P200 as nominal damages awarded by the trial court to the appellant, article
2221 of the new Civil Code provides:

Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by
the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him.

134
The assessment of nominal damages is left to the discretion of the court, according to the circumstances of the
case.7 Considering the circumstances, as found by the trial court, and the degree of negligence committed by the
appellee, a lawyer, in not depositing on time the appeal bond and filing the record on appeal within the extension
period granted by the court, which brought about the refusal by the trial court to allow the record on appeal, the
amount of P200 awarded by the trial court to the appellant as nominal damages may seem exiguous. Nevertheless,
considering that nominal damages are not for indemnification of loss suffered but for the vindication or recognition of
a right violated or invaded; and that even if the appeal in civil case No. 18833 had been duly perfected, it was not an
assurance that the appellant would succeed in recovering the amount he had claimed in his complaint, the amount of
P2,000 the appellant seeks to recover as nominal damages is excessive. After weighing carefully all the
considerations, the amount awarded to the appellant for nominal damages should not be disturbed.

As regards attorney's fees, since the appellant's claim does not fall under any of those enumerated in article 2208,
new Civil Code, the appellee may not be compelled to satisfy it.

The judgment appealed from is affirmed, without special pronouncement as to costs.

G.R. No. 135862 May 2, 2002


THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
RAFAEL PRINCIPE y MOLINA, accused-appellant.

PER CURIAM:

This case is here for review pursuant to Rule 122, Sec. 3, par. (d), and Sec. 10 of the Revised Rules of Criminal
Procedure in view of the decision, 1 dated September 18, 1998, of the Regional Trial Court, Branch. 27, Cabanatuan
City, imposing on accused-appellant Rafael Principe y Molina the penalty of death for the rape-slaying of a 6-year old
child, Arlene Ipurong, in Cabanatuan City on August 9, 1998.

The information against accused-appellant alleged:

"That on or about the 9th day of August, 1998, in the City of Cabanatuan, Republic of the Philippines and
within the jurisdiction of this Honorable Court, the above-named accused, with lewd design and by means of
force and intimidation, did then and there, willfully, unlawfully and feloniously have carnal knowledge of one
ARLENE IPURONG y GONZALES, who was then 6 years of age and by reason of (or) on the occasion
thereof, said ARLENE IPURONG y GONZALES was killed."2

Upon arraignment, during which the information was read, interpreted, and explained to accused-appellant and the
consequences of a plea of guilt explained to him, accused-appellant, assisted by counsel, pleaded guilty 3 to the
charge, whereupon the trial court ordered the prosecution to present evidence to prove the guilt of accused-appellant
and the precise degree of his culpability. Accordingly, the prosecution presented five witnesses, namely: Lerma
Morales,4 Frederick Agrigado,5 Miguel Bernabe,6 Alfredo Apan,7 and Danilo Ipurong.8 Their testimonies established the
following facts:

Accused-appellant, an elementary graduate and then 19 years old, had a drinking spree with eight friends at the
birthday party of Freddie Saragpon, held in the latter's house on Perigola Street, Valdefuente, Cabanatuan City on
August 9, 1998, starting 9:00 a.m. At about 4:00 p.m., accused-appellant went to buy some "pulutan" at the Best-Line
Eatery located along the national highway. Accused-appellant had only maroon shorts on and was wearing slippers.
As it was raining, he brought an umbrella with him.

135
On the way, he passed by the victim, 6-year old Arlene Ipurong, who asked if she could share his umbrella. Arlene
was his niece, her paternal grandmother being the sister of accused-appellant's mother. Accused-appellant carried
Arlene on his back and went to Best-Line Eatery to buy the "puIutan."9 They were seen by witness Alfredo Apan as
they passed by the church between 3:00 to 4:00 p.m. Apan was in the church attending an activity of the Singles for
Christ.10

At the restaurant, accused-appellant was served by witness Lerma Morales. Lerma noticed the child with him, whom
accused-appellant introduced as his niece. After getting the "pulutan," accused-appellant took the hand of Arlene, and
the two went in the direction of an abandoned house, approximately 10 meters from the restaurant.11

Accused-appellant took Arlene to the abandoned house, which was owned by a certain Jet Magno. There, accused-
appellant ordered Arlene to undress. Although Arlene complied, she told him that she was going to tell somebody
about it. This angered accused-appellant, who picked up a big rock and hit the child with it three times on the
forehead. When Arlene fell unconscious, accused-appellant pulled down his shorts to his knees and raped her.
Accused-appellant then brought her to the toilet and dumped her into the bowl.12

At about 5:30 p.m., accused-appellant went back to Saragpon's house. He was still without any shirt on. He was wet
from the rain and was no longer wearing his slippers. As accused-appellant was gone for about one and a half hours,
some of his drinking buddies got tired of waiting for him and already fell asleep. After giving the "pulutan" to his
friends, accused-appellant left.13

In the meantime, at about 5:00 p.m. of the same day, Arlene's father, Danilo Ipurong, a tricycle driver, arrived home
from work and, realizing that her daughter was not in their house, started searching for her. He came upon a group
playing "tong-its" but Arlene was not there.14 Danilo continued his search, now joined by several people, including
Alfredo Apan. Then Apan saw accused-appellant and asked him, "Hindi ba ikaw ang may dala-dala noong bata sa
balikat mo nang pagitan ng 3-4 ng hapon na iyon?" ("Wasn't it you who was carrying the child sometime between 3
and 4 o'clock in the afternoon?") Accused-appellant denied he was with the child, saying "Si kuya naman, hindi ko
dinala ang bata." ("No, I didn't bring the child with me.") Apan began to suspect that accused-appellant had
something to do with the disappearance of Arlene. He informed the Chief of the Bantay Bayan, Miguel Bernabe, of his
suspicions.15 For this reason, Bernabe invited accused-appellant for questioning, but the latter denied having anything
to do with the disappearance of the child.16

At around 8:00 p.m., Alfredo Apan and Danilo Ipurong found the body of Arlene in the toilet bowl in the abandoned
house. Danilo was shocked and he screamed.17

On August 10, 1998, the body of Arlene was taken to the City Health Office of Cabanatuan City. Upon the request of
PO2 Romeo Lopez, the investigating officer, Dr. Jun B. Concepcion, the medico-legal officer, conducted an autopsy.
His findings are as follows:

"HT: 100 cm. in length.

(+) Abrasions, multiple, with hematoma and lacerated wounds, (2) linear on the midfrontal area. Abrasions
measuring to 6-5 cms. in diameter extending down to (L) pen-orbital area. This involving the subconjunctival
area, laterally.

(+) Skull fractures, multiple, depressed, frontal area.

(+) Hematomas, both upper arm, medially.

GENITALIA:

(+) Abrasions, opening of the vagina, 3 O'CLOCK, with bleeding.

(+) Abrasions, 12-o'clock, fresh, vaginal canal

136
(+) Vaginal discharges, creamy-white in character flowing out of the vagina. Extracted 0.5 ml for sperm
analysis then submitted to PNP-CRIME LAB, CAPITOL COMPOUND, NE. on same day and place in a
disposable syringe with marking of: X - I.

CAUSE OF DEATH:

INTRA-CRANIAL INJURIES, SEVERE, SECONDARY TO EXTRA-CRANIAL INJURIES, SEVERE." 18

Dr. Concepcion issued a death certificate indicating the cause of death as:

"Immediate cause: a. intracranial injuries severe

Antecedent cause: b. Extra cranial injuries severe"19

Dr. Concepcion testified that Arlene sustained severe fractures on the forehead, which could have been caused by a
hammer, a hollow block, or a hard piece of wood. Likewise, there were hematomas on her upper arms which were
possibly caused by a strong grip from the assailant. In addition, Arlene also sustained abrasions on the external
opening of her genital organ and an abrasion along the vaginal canal, which could have been caused by the
penetration of a penis or some other object. There was fresh blood coming out of the abrasions. Dr. Concepcion
found secretions in the vagina, which could be vaginal secretions or semen from the assailant. From the vaginal
bleeding, Dr. Concepcion concluded that the rape of Arlene occurred before she died. The victim's death was caused
by the severe injuries sustained on the head.20

An investigation was conducted by the police in the evening of August 9, 1998. Several witnesses pointed to
accused-appellant as the person who was last seen with the victim Arlene.

Accused-appellant was subsequently taken into custody by the police, and an information was filed against him on
August 10, 1998.21 On August 17, 1998, accused-appellant was interrogated by the police, to whom, after reading his
rights in Tagalog and in the presence of accused-appellant's father and of his counsel Atty. Cesar Villar, he admitted
hitting Arlene with a large rock until she was unconscious and subsequently raping her. Accused-appellant claimed
that he was drunk at that time.22

On September 18, 1998, the trial court rendered its decision, the dispositive part of which reads:

"WHEREFORE, premises considered, the Court hereby finds, and so holds, the accused GUILTY, beyond
reasonable doubt, of the crime of Rape with Homicide, and hereby sentences him to suffer the penalty of
DEATH.

The accused is further ordered to indemnify the heirs of the deceased offended party in the sum
of P50,000.00, and the additional sum of P21,307.00 representing funeral expenses.

SO ORDERED."23

Hence, this appeal. Accused-appellant's sole assignment of error is that-

"THE COURT A QUO MANIFESTLY ERRED IN CONVICTING THE ACCUSED OF THE CRIME CHARGED
DESPITE HIS IMPROVIDENT PLEA OF GUILT."

Accused-appellant contends that the trial court failed to ascertain whether accused-appellant was fully apprised of the
legal consequences of his plea, considering that he finished only up to the sixth grade of the elementary school.

137
Accused-appellant is correct. When an accused enters a plea of guilt to a capital offense, Section 3 of Rule 116 of the
Rules of Criminal Procedure provides that it is the duty of the trial court to observe the following rules: (1) it must
conduct a searching inquiry into the voluntariness and full comprehension of the consequences of his plea; (2) it must
require the prosecution to present evidence to prove the guilt of the accused and the precise degree of his culpability;
and (3) it must asks the accused if he desires to present evidence in his behalf and allow him to do so if he
desires.24 This is because a plea of guilt must be based on a free and informed judgment. Thus, the inquiry must
focus on the voluntariness of the plea and the full comprehension of the consequences of the plea.25

In this case, the trial court failed to comply fully with the requirement to conduct a searching inquiry to determine
whether accused-appellant's plea was voluntary and done with full comprehension of the consequences thereof.
Before the hearing, the trial court asked accused-appellant:

"COURT:

Are you still willing to present evidence for your defense or you want the prosecution (to) present
evidence and you still insist on admitting what you did to Arlene Ipurong y Gonzales?

R. PRINCIPE:

I will now admit the same, I will not present any other evidence, sir.

COURT:

Do you know that because you admit the guilt, you may be sentenced to death like Echegaray?

R. PRINCIPE:

Yes, sir."26

Thus, in determining whether accused-appellant was aware of the full consequences of his plea of guilt, the trial court
simply asked him whether he knew that he "may" be sentenced to death, implying that it was possible that the death
penalty might not be imposed on him. But Art. 266-B of the Revised Penal Code provides for the mandatory
imposition of the death penalty if the crime of rape is committed against a child below seven years old. In fact, even if
the victim is not a child below seven years of age but homicide is committed by reason of or on the occasion of the
rape, the imposable penalty is death. Indeed, as noted in People vs. Nadera,27 a mere warning that the accused
faces the supreme penalty of death is insufficient. More often than not, an accused pleads guilty because he hopes
for a lenient treatment or a lighter penalty. Thus, in the case at bar, when the trial court again asked accused-
appellant his final plea, accused-appellant answered:

"COURT:

Mr. Principe, for the last time, the court would like to ask you your final plea before the case is
submitted for resolution.

ACCUSED PRINCIPE:

A As narrated. I have admitted my guilt, sir, in connection with this case. My only plea is, if possible,
kindly give me the minimum penalty that the Court can impose.

COURT:

Q In other words, you admit your guilt because you did it. Only, what you want is leniency from the
Court?

A Yes, sir.

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Q I want to tell you that what you stated in open court are recorded and it is finally for the Supreme
Court to give you leniency.

A Yes, sir."28

Although accused-appellant said he was admitting guilt "because [he] did it," there is doubt whether that was his only
reason for pleading guilty because he also said he "wanted leniency from the court." This makes it doubtful whether
his plea was voluntary.

While accused-appellant's improvident plea should be disregarded, nevertheless his conviction cannot be set aside
as there is, in addition to his plea, other sufficient and credible evidence on which the judgment of the trial court
rests.29 This evidence consists of accused-appellant's extrajudicial confession, his testimony in open court, and the
testimony of the other witnesses.

With respect to accused-appellant's extrajudicial confession, the Constitution,30 R.A. No. 7438,31 and caselaw32lay
down four fundamental requirements for the admissibility of extrajudicial confessions in general, to wit: (a) the
confession must be voluntary; (b) it must be made with the assistance of competent and independent counsel; (c) the
confession must be express; and (d) it must be in writing. In this case, after accused-appellant was read his rights in
Tagalog, he signified his intention to confess his participation in the rape and killing of Arlene. He did this in the
presence of his father and with the assistance of Atty. Cesar Villar, who had been chosen by his father for him. In his
confession, he stated categorically that he took Arlene to an abandoned house near Best-Line Eatery, where he
struck her on the head with a rock, raped her, and afterwards dumped her body into the toilet bowl in order to hide it.
Accused-appellant's confession was placed in writing and it was signed by him, his counsel, and the administering
officer.

Accused-appellant acknowledged his extrajudicial confession in court. The court asked him if he executed the
extrajudicial confession voluntarily and in the presence of counsel, and he answered in the affirmative. Accused-
appellant testified with some relatives present in the courtroom, including his grandmother. In addition, he was
assisted by his counsel de oficio, Atty. Victor Galang.

Finally, the testimonies of witnesses for the prosecution confirm accused-appellant's testimony that he committed the
crime. One of his drinking companions, Frederick Agrigado, testified that accused-appellant left them at about 4 p.m.
to buy "pulutan" from the Best-Line Eatery. Another witness, Alfredo Apan, said he saw accused-appellant with the
victim Arlene on his back walking towards the highway at about the same time. After the disappearance of the victim,
Alfredo Apan confronted accused-appellant, telling him that he was the last person seen with the child. Accused-
appellant's vehement denial aroused Apan's suspicions as he was the one who saw accused-appellant with Arlene.
At the restaurant, accused-appellant was served by Lerma Morales, who noticed that he was with a 6-year old child,
whom accused-appellant introduced as his niece. After accused-appellant was given his order, he took the child's
hand and led her to the abandoned house. When he returned to his drinking companions, they noted it was already
about 5:30 p.m. and that he had been gone for one and a half hours. Arlene's body was found missing at past 5 p.m.
of that same day. All the above witnesses placed accused-appellant at the scene of the crime at the time it took place.

The conviction of an accused may be based on circumstantial evidence provided the following requisites must
concur: (1) there is more than one circumstance; (2) the facts from which the inferences are derived are proven; and
(3) the combination of all the circumstances is such as to produce a conviction beyond reasonable doubt. 33Thus,
while there is no eyewitness account as to who raped and killed Arlene, the above circumstances strongly point to no
other person than accused-appellant as the perpetrator of the crime. This conclusion becomes all the more certain
and inevitable when the circumstantial evidence is considered together with accused-appellant's extrajudicial
confession and his own testimony in open court.

The trial court correctly imposed the penalty of death. Art. 266-B of the Revised Penal Code provides for the
imposition of the death penalty when, by reason or on the occasion of the rape, homicide is committed. In this case,
accused-appellant knocked Arlene unconscious to facilitate his dastardly design. The severity of the blows caused
her death. Thus, the imposable penalty is death.34 The fact that Arlene was below seven years old at the time of the
rape cannot be taken into account against accused-appellant as, although her age was alleged in the information, it
was not proven during the trial.

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The trial court erred, however, in fixing the civil indemnity at P50,000.00. In People vs. Robles, Jr.35 and in
subsequent cases,36 this Court ruled that where homicide is committed by reason or on the occasion of the rape, the
civil indemnity shall be not less than P100,000.00.

The trial court likewise erred in granting the heirs of the deceased victim an additional amount of P21,307.00
representing funeral expenses. Under Art. 2199 of the Civil Code, a party is entitled to compensation only for such
pecuniary loss suffered by him as proven. 37 The recovery thereof must be premised upon competent proof and the
best evidence obtainable, such as receipts, by the injured party showing the actual expenses incurred in connection
with the death, wake, or burial of the victim. The list of expenses incurred for the wake, funeral, and burial of the
victim amounting to P21,307.0038 submitted by Arlene's father is self-serving and not proved. 39 Thus, the trial court's
award of P21,307.00 for funeral expenses cannot be affirmed.

However, the reason Arlene's father was unable to present the receipt for the funeral parlor was because the latter's
representative refused to issue a receipt until he had fully paid the entire amount, which he had not done at the time
of the trial. Under Art. 2224 of the Civil Code, temperate damages may be recovered if it is shown that such party
suffered some pecuniary loss but the amount cannot, from the nature of the case, be proved with certainty. 40 As there
is no doubt the heirs of the victim incurred funeral expenses, although the amount thereof has not been proven, it is
appropriate to award P15,000.00 by way of temperate damages to the heirs of the victim.

In addition, the heirs are entitled to moral damages in the amount of P50,000.00 in accordance with Art. 2219 of the
Civil Code for the physical suffering, mental anguish, serious anxiety, and moral shock caused by the manner by
which Arlene was raped and killed.41

WHEREFORE, the judgment of the Regional Trial Court, Branch 27, Cabanatuan City is AFFIRMED with the
MODIFICATION that accused-appellant is ordered to pay the heirs of the victim, Arlene Ipurong, P100,000.00 as civil
indemnity, P15,000.00 as temperate damages, and P50,000.00 as moral damages.

Upon finality of this decision, let the Records of this case be forthwith forwarded to the Office of the President for the
possible exercise of her pardoning power.

SO ORDERED.

G.R. No. L-19118 January 30, 1965


MARIANO A. ALBERT, plaintiff-appellant,
vs.
UNIVERSITY PUBLISHING CO., INC., defendant-appellee.
BENGZON, J.P., J.:

No less than three times have the parties here appealed to this Court.

In Albert vs. University Publishing Co., Inc., L-9300, April 18, 1958, we found plaintiff entitled to damages (for breach
of contract) but reduced the amount from P23,000.00 to P15,000.00.

Then in Albert vs. University Publishing Co., Inc., L-15275, October 24, 1960, we held that the judgment for
P15,000.00 which had become final and executory, should be executed to its full amount, since in fixing it, payment
already made had been considered.

Now we are asked whether the judgment may be executed against Jose M. Aruego, supposed President of University
Publishing Co., Inc., as the real defendant.

Fifteen years ago, on September 24, 1949, Mariano A. Albert sued University Publishing Co., Inc. Plaintiff
alleged inter alia that defendant was a corporation duly organized and existing under the laws of the Philippines; that
on July 19, 1948, defendant, through Jose M. Aruego, its President, entered into a contract with plaintifif; that

140
defendant had thereby agreed to pay plaintiff P30,000.00 for the exclusive right to publish his revised Commentaries
on the Revised Penal Code and for his share in previous sales of the book's first edition; that defendant had
undertaken to pay in eight quarterly installments of P3,750.00 starting July 15, 1948; that per contract failure to pay
one installment would render the rest due; and that defendant had failed to pay the second installment.

Defendant admitted plaintiff's allegation of defendant's corporate existence; admitted the execution and terms of the
contract dated July 19, 1948; but alleged that it was plaintiff who breached their contract by failing to deliver his
manuscript. Furthermore, defendant counterclaimed for damages.1wph1.t

Plaintiff died before trial and Justo R. Albert, his estate's administrator, was substituted for him.

The Court of First Instance of Manila, after trial, rendered decision on April 26, 1954, stating in the dispositive portion

IN VIEW OF ALL THE FOREGOING, the Court renders judgment in favor of the plaintiff and against the
defendant the University Publishing Co., Inc., ordering the defendant to pay the administrator Justo R.
Albert, the sum of P23,000.00 with legal [rate] of interest from the date of the filing of this complaint until the
whole amount shall have been fully paid. The defendant shall also pay the costs. The counterclaim of the
defendant is hereby dismissed for lack of evidence.

As aforesaid, we reduced the amount of damages to P15,000.00, to be executed in full. Thereafter, on July 22, 1961,
the court a quo ordered issuance of an execution writ against University Publishing Co., Inc. Plaintiff, however, on
August 10, 1961, petitioned for a writ of execution against Jose M. Aruego, as the real defendant, stating, "plaintiff's
counsel and the Sheriff of Manila discovered that there is no such entity as University Publishing Co., Inc." Plaintiff
annexed to his petition a certification from the securities and Exchange Commission dated July 31, 1961, attesting:
"The records of this Commission do not show the registration of UNIVERSITY PUBLISHING CO., INC., either as a
corporation or partnership." "University Publishing Co., Inc." countered by filing, through counsel (Jose M. Aruego's
own law firm), a "manifestation" stating that "Jose M. Aruego is not a party to this case," and that, therefore, plaintiff's
petition should be denied.

Parenthetically, it is not hard to decipher why "University Publishing Co., Inc.," through counsel, would not want Jose
M. Aruego to be considered a party to the present case: should a separate action be now instituted against Jose M.
Aruego, the plaintiff will have to reckon with the statute of limitations.

The court a quo denied the petition by order of September 9, 1961, and from this, plaintiff has appealed.

The fact of non-registration of University Publishing Co., Inc. in the Securities and Exchange Commission has not
been disputed. Defendant would only raise the point that "University Publishing Co., Inc.," and not Jose M. Aruego, is
the party defendant; thereby assuming that "University Publishing Co., Inc." is an existing corporation with an
independent juridical personality. Precisely, however, on account of the non-registration it cannot be considered a
corporation, not even a corporation de facto (Hall vs. Piccio, 86 Phil. 603). It has therefore no personality separate
from Jose M. Aruego; it cannot be sued independently.

The corporation-by-estoppel doctrine has not been invoked. At any rate, the same is inapplicable here. Aruego
represented a non-existent entity and induced not only the plaintiff but even the court to believe in such
representation. He signed the contract as "President" of "University Publishing Co., Inc.," stating that this was "a
corporation duly organized and existing under the laws of the Philippines," and obviously misled plaintiff (Mariano A.
Albert) into believing the same. One who has induced another to act upon his wilful misrepresentation that a
corporation was duly organized and existing under the law, cannot thereafter set up against his victim the principle of
corporation by estoppel (Salvatiera vs. Garlitos, 56 O.G. 3069).

141
"University Publishing Co., Inc." purported to come to court, answering the complaint and litigating upon the merits.
But as stated, "University Publishing Co., Inc." has no independent personality; it is just a name. Jose M. Aruego was,
in reality, the one who answered and litigated, through his own law firm as counsel. He was in fact, if not, in name, the
defendant.

Even with regard to corporations duly organized and existing under the law, we have in many a case pierced the veil
of corporate fiction to administer the ends of justice. * And in Salvatiera vs. Garlitos, supra, p. 3073, we ruled: "A
person acting or purporting to act on behalf of a corporation which has no valid existence assumes such privileges
and obligations and becomes personally liable for contracts entered into or for other acts performed as such agent."
Had Jose M. Aruego been named as party defendant instead of, or together with, "University Publishing Co., Inc.,"
there would be no room for debate as to his personal liability. Since he was not so named, the matters of "day in
court" and "due process" have arisen.

In this connection, it must be realized that parties to a suit are "persons who have a right to control the proceedings,
to make defense, to adduce and cross-examine witnesses, and to appeal from a decision" (67 C.J.S. 887) and
Aruego was, in reality, the person who had and exercised these rights. Clearly, then, Aruego had his day in court as
the real defendant; and due process of law has been substantially observed.

By "due process of law" we mean " "a law which hears before it condemns; which proceeds upon inquiry, and renders
judgment only after trial. ... ." (4 Wheaton, U.S. 518, 581.)"; or, as this Court has said, " "Due process of law"
contemplates notice and opportunity to be heard before judgment is rendered, affecting one's person or property"
(Lopez vs. Director of Lands, 47 Phil. 23, 32)." (Sicat vs. Reyes, L-11023, Dec. 14, 1956.) And it may not be amiss to
mention here also that the "due process" clause of the Constitution is designed to secure justice as a living reality; not
to sacrifice it by paying undue homage to formality. For substance must prevail over form. It may now be trite, but
none the less apt, to quote what long ago we said in Alonso vs. Villamor, 16 Phil. 315, 321-322:

A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of
movement and position, entraps and destroys the other. It is, rather, a contest in which each contending
party fully and fairly lays before the court the facts in issue and then, brushing side as wholly trivial and
indecisive all imperfections of form and technicalities of procedure, asks that Justice be done upon the
merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper
office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration
from courts. There should be no vested rights in technicalities.

The evidence is patently clear that Jose M. Aruego, acting as representative of a non-existent principal, was the real
party to the contract sued upon; that he was the one who reaped the benefits resulting from it, so much so that partial
payments of the consideration were made by him; that he violated its terms, thereby precipitating the suit in question;
and that in the litigation he was the real defendant. Perforce, in line with the ends of justice, responsibility under the
judgment falls on him.

We need hardly state that should there be persons who under the law are liable to Aruego for reimbursement or
contribution with respect to the payment he makes under the judgment in question, he may, of course, proceed
against them through proper remedial measures.

[G.R. Nos. L-33819 and L-33897. October 23, 1982.]

NATIONAL POWER CORPORATION, Plaintiff-Appellant, v. NATIONAL MERCHANDISING


CORPORATION and DOMESTIC INSURANCE COMPANY OF THE PHILIPPINES, Defendants-
Appellants.

SYNOPSIS

142
Plaintiff-appellant National Power Corporation (NPC) and defendant- appellant National Merchandising Corporation
(NAMERCO), the Philippine representative of New York-based International Commodities Corporation, executed a
contract of sale of sulfur with a stipulation for liquidated damages in case of breach. Defendant-appellant Domestic
Insurance Company executed a performance bond in favor of NPC to guarantee the sellers obligation. In entering
into the contract, Namerco, however, did not disclose to NPC that Namercos principal, in a cabled instruction, stated
that the sale was subject to availability of a steamer, and contrary to its principals instruction, Namerco agreed that
non-availability of a steamer was not a justification for non-payment of liquidated damages. The New York supplier
was not able to deliver the sulfur due to its inability to secure shipping space. Consequently, the Government
Corporate Counsel rescinded the contract of sale due to the suppliers non-performance of its obligations, and
demanded payment of liquidated damages from both Namerco and the surety. Thereafter, NPC sued for recovery of
the stipulated liquidated damages. After trial, the Court of First Instance rendered judgment ordering defendants-
appellants to pay solidarity to the NPC reduced liquidated damages with interest.

The Supreme Court held that Namerco is liable fur damages because under Article 1897 of the Civil Code the agent
who exceeds the limits of his authority without giving the party with whom he contracts sufficient notice of his powers
is personally liable to such party. The Court, however, further reduced the solidary liability of defendants-appellants
for liquidated damages.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; AGENCY; AN AGENT WHO EXCEEDS THE LIMITS OF HIS
AUTHORITY IS PERSONALLY LIABLE. Under Article 1897 of the Civil Code the agent who exceeds the limits of
his authority without giving the party with whom he contracts sufficient notice of his powers is personally liable to such
party.

2. ID.; ID.; ID.; ID.; CASE AT BAR. In the present case, Namerco, the agent of a New York-based principal,
entered into a contract of sale with the National Power Corporation without disclosing to the NPC the limits of its
powers and, contrary to its principals prior cabled instructions that the sale should be subject to availability of a
steamer, it agreed that non-availability of a steamer was not a justification for nonpayment of the liquidated damages.
Namerco. therefore, is liable for damages.

3. ID.; ID.; ID.; THE RULE THAT EVERY PERSON DEALING WITH AN AGENT IS PUT UPON AN INQUIRY AND
MUST DISCOVER UPON HIS PERIL THE AUTHORITY OF THE AGENT IS NOT APPLICABLE WHERE THE
AGENT, NOT THE PRINCIPAL, IS SOUGHT TO BE HELD LIABLE ON THE CONTRACT. The rule that every
person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent would
apply only in cases where the principal is sought to be held liable on the contract entered into by the agent. The said
rule is not applicable in the instant case since it is the agent, not the principal, that is sought to be held liable on the
contract of sale which was expressly repudiated by the principal because the agent took chances, it exceeded its
authority and, in effect. it acted in its own name.

4. ID.; ID.; ID.; THE CONTRACT ENTERED INTO BY AN AGENT WHO ACTED BEYOND HIS POWERS IS
UNENFORCEABLE ONLY AS AGAINST THE PRINCIPAL BUT NOT AGAINST THE AGENT AND ITS SURETY.
Article 1403 of the Civil Code which provides that a contract entered into in the name of another person by one who
has acted beyond his powers is unenforceable, refers to the unenforceability of the contract against the principal. In
the instant case, the contract containing the stipulation for liquidated damages is not being enforced against its
principal but against the agent and its surety. It being enforced against the agent because Article 1897 implies that
the agent who acts in excess of his authority is personally liable to the party with whom he contracted. And that rule is
complimented by Article 1898 of the Civil Code which provides that "if the agent contracts, in the name of the
principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party
with whom the agent contracted is aware of the limits of the powers granted by the principal." Namerco never
disclosed to the NPC the cabled or written instructions of its principal. For that reason and because Namerco
exceeded the limits of its authority, it virtually acted in its own name and not as agent and it is, therefore, bound by
the contract of sale which, however, it not enforceable against its principal. If, as contemplated in Articles 1897 and
1898, Namerco is bound under the contract of sale, then it follows that it is bound by the stipulation for liquidated
damages in that contract.

5. ID.; ID.; ID.; THE LIABILITY OF AN AGENT WHO EXCEEDS THE LIMITS OF HIS AUTHORITY IS BASED ON
CONTRACT AND NOT ON TORT OR QUASI-DELICT; CASE AT BAR. Defendants contention that Namercos
liability should be based on tort or quasi-delict, as held in some American cases, like Mendelson v. Holton, 149 N.E.
38,42 ACR 1307, is not well-taken. As correctly argued by the NPC, it would be unjust and inequitable for Namerco to

143
escape liability of the contract after it had deceived the NPC by not disclosing the limits of its powers and entering into
the contract with stipulations contrary to its principals instructions.

6. ID.; ID.; ID.; LIABILITY OF THE SURETY ON THE OBLIGATION CONTRACTED BY AN AGENT WHO
EXCEEDED HIS AUTHORITY IS NOT AFFECTED THEREBY. The contention of the defendants that the Domestic
Insurance Company is not liable to the NPC because its bond was posted, not to Namerco, the agent, but for the
New York firm which is not liable on the contract of sale, cannot be sustained because it was Namerco that actually
solicited the bond from the Domestic Insurance Company and, Namerco is being held liable under the contract of
sale because it virtually acted in its own name. In the last analysis, the Domestic Insurance Company acted as surety
for Namerco. The rule is that "want of authority of the person who executes an obligation as the agent or
representative of the principal will not, as a general rule, affect the surety thereon, especially in the absence of fraud,
even though the obligation is not binding on the principal." (72 C.J.S. 525).

7. CIVIL LAW; DAMAGES; IMPOSITION OF INTEREST THEREON NOT WARRANTED WHERE THE
DISPOSITION OF THE CASE HAS BEEN DELAYED DUE TO NO FAULT OF DEFENDANTS. With respect to the
imposition of the legal rate of interest on the damages from the filing of the complaint in 1957, or a quarter of a
century ago, defendants contention that interest should not be collected on the amount of damages is meritorious. It
should be manifestly iniquitous to collect interest on the damages especially considering that the disposition of this
case has been considerably delayed due to no fault of the defendants

8. ID.; ID.; LIQUIDATED DAMAGES; NO PROOF OF PECUNIARY LOSS IS REQUIRED FOR RECOVERY
THEREOF. No proof of pecuniary lost is required for the recovery of liquited damages. The stipulatian for
liquidated damages is intended to obviate controversy on the amount of damages. There can be no question that the
NPC suffered damages because its production of fertilizer was disrupted or diminished by reason of the non-delivery
of the sulfur. The parties foresaw that it might be difficult to ascertain the exact amount of damages for non-delivey of
the sulfur. So, they fixed the liquidated damages to be paid as indemnity to the NPC.

9. ID.; ID.; NOMINAL DAMAGES; NOT A CASE OF. Nominal damages are damages in name only or are in fact
the same as no damages (25 C.J.S. 466). It would not be correct to hold in this case that the NPC suffered damages
in name only or that the breach of contract "as merely technical in character since the NPC suffered damages
because its production of fertilizer "as disrupted or diminished by reason of the non-delivery of the sulfur.

DECISION

AQUINO, J.:

This case is about the recovery of liquidated damages from a sellers agent that allegedly exceeded its authority in
negotiating the sale.

Plaintiff National Power Corporation appealed on questions of law from the decision of the Court of First Instance of
Manila dated October 10, 1966, ordering defendants National Merchandising Corporation and Domestic Insurance
Company of the Philippines to pay solidarily to the National Power Corporation reduced liquidated damages in the
sum of P72,114.66 plus legal, rate of interest from the filing of the complaint and the costs (Civil Case No. 33114).

The two defendants appealed from the same decision allegedly because it is contrary to law and the evidence. As the
amount originally involved is P360,572.80 and defendants appeal is tied up with plaintiffs appeal on questions of law,
defendants appeal can be entertained under Republic Act No. 2613 which amended section 17 of the Judiciary Law.

On October 17, 1956, the National Power Corporation and National Merchandising Corporation (Namerco) of 3111
Nagtahan Street, Manila, as the representative of the International Commodities Corporation of 11 Mercer Street,
New York City (Exh. C), executed in Manila a contract for the purchase by the NPC from the New York firm of four
thousand long tons of crude sulfur for its Maria Cristina Fertilizer Plant in Iligan City at a total price of (450,716 (Exh.
E).

On that same date, a performance bond in the sum of P90,143.20 was executed by the Domestic Insurance
Company in favor of the NPC to guarantee the sellers obligations (Exh. F).

It was stipulated in the contract of sale that the seller would deliver the sulfur at Iligan City within sixty days from

144
notice of the establishment in its favor of a letter of credit for $212,120 and that failure to effect delivery would subject
the seller and its surety to the payment of liquidated damages at the rate of two-fifth of one percent of the full contract
price for the first thirty days of default and four-fifth of one percent for every day thereafter until complete delivery is
made (Art. 8, p. 111, Defendants Record on Appeal).

In a letter dated November 12, 1956, the NPC advised John Z. Sycip, the president of Namerco, of the opening on
November 8 of a letter of credit for $212,120 in favor of International Commodities Corporation which would expire on
January 31, 1957 (Exh. I). Notice of that letter of credit was, received by cable by the New York firm on November 15,
1956 (Exh. 80-Wallick). Thus, the deadline for the delivery of the sulfur was January 15, 1957.

The New York supplier was not able to deliver the sulfur due to its inability to secure shipping space. During the
period from January 20 to 26, 1957 there was a shutdown of the NPCs fertilizer plant because there was no sulfur.
No fertilizer was produced (Exh. K).

In a letter dated February 27, 1957, the general manager of the NPC advised Namerco and the Domestic Insurance
Company that under Article 9 of the contract of sale "non-availability of bottom or vessel" was not a fortuitous event
that would excuse non-performance and that the NPC would resort to legal remedies to enforce its rights (Exh. L and
M).

The Government Corporate Counsel in his letter to Sycip dated May 8, 1957 rescinded the contract of sale due to the
New York suppliers non-performance of its obligations (Exh. G). The same counsel in his letter of June 8, 1957
demanded from Namerco the payment of P360,572.80 as liquidated damages. He explained that time was of the
essence of the contract. A similar demand was made upon the surety (Exh. H and H-1).

The liquidated damages were computed on the basis of the 115-day period between January 15, 1957, the deadline
for the delivery of the sulfur at Iligan City, and May 9, 1957 when Namerco was notified of the rescission of the
contract, or P54,085.92 for the first thirty days and P306,486.88 for the remaining eighty-five days. Total:
P360,572.80.

On November 5, 1957, the NPC sued the New York firm, Namerco and the Domestic Insurance Company for the
recovery of the stipulated liquidated damages (Civil Case No. 33114).

The trial court in its order of January 17, 1958 dismissed the case as to the New York firm for lack of jurisdiction
because it was not doing business in the Philippines (p. 60, Defendants Record on Appeal).

On the other hand, Melvin Wallick, as the assignee of the New York corporation and after the latter was dropped as a
defendant in Civil Case No. 33114, sued Namerco for damages in connection with the same sulfur transaction (Civil
Case No. 37019). The two cases, both filed in the Court of First Instance of Manila, were consolidated. A joint trial
was held. The lower court rendered separate decisions in the two cases on the same date.

In Civil Case No. 37019, the trial court dismissed Wallicks action for damages against Namerco because the
assignment in favor of Wallick was champertous in character. Wallick appealed to this Court. The appeal was
dismissed because the record on appeal did not disclose that the appeal was perfected on time (Res. of July 11,
1972 in L-33893).In this Civil Case No. 33114, although the records on appeal were approved in 1967, inexplicably,
they were elevated to this Court in 1971. That anomaly initially contributed to the delay in the adjudication of this
case.

Defendants appeal L-33819. They contend that the delivery of the sulfur was conditioned on the availability of a
vessel to carry the shipment and that Namerco acted within the scope of its authority as agent in signing the contract
of sale.

The documentary evidence belies these contentions. The invitation to bid issued by the NPC provides that non-
availability of a steamer to transport the sulfur is not a ground for non-payment of the liquidated damages in case of
non-performance by the seller.

"4. Responsibility for availability of vessel. The availability of vessel to transport the quantity of sulfur within the
time specified in item 14 of this specification shall be the responsibility of the bidder. In case of award of contract,
failure to ship on time allegedly due to non-availability of vessels shall not exempt the Contractor from payment of
liquidated damages provided in item 15 of this specification."cralaw virtua1aw library

"15. Liquidated damages. . . .

145
"Availability of vessel being a responsibility of the Contractor as specified in item 4 of this specification, the terms
unforeseeable causes beyond the control and without the fault or negligence of the Contractor and force majeure
as used herein shall not be deemed to embrace or include lack or nonavailability of bottom or vessel. It is agreed that
prior to making his bid, a bidder shall have made previous arrangements regarding shipments within the required
time. It is clearly understood that in no event shall the Contractor be exempt from the payment of liquidated damages
herein specified for reason of lack of bottom or vessel. Lack of bottom or nonavailability of vessel shall, in no case, be
considered as a ground for extension of time. . . . ."cralaw virtua1aw library

Namercos bid or offer is even more explicit. It provides that it was "responsible for the availability of bottom or vessel"
and that it "guarantees the availability of bottom or vessel to ship the quantity of sulfur within the time specified in this
bid" (Exh. B, p. 22, Defendants Record on Appeal).

In the contract of sale itself item 15 of the invitation to bid is reproduced in Article 9 which provides that "it is clearly
understood that in no event shall the seller be entitled to an extension of time or be exempt from the payment of
liquidated damages herein specified for reason of lack of bottom or vessel" (Exh. E, p. 36, Record on Appeal).

It is true that the New York corporation in its cable to Namerco dated August 9, 1956 stated that the sale was subject
to availability of a steamer (Exh. N). However, Namerco did not disclose that cable to the NPC and, contrary to its
principals instruction, it agreed that nonavailability of a steamer was not a justification for nonpayment of the
liquidated damages.

The trial court rightly concluded that Namerco acted beyond the bounds of its authority because it violated its
principals cabled instructions (1) that the delivery of the sulfur should be "C & F Manila", not "C & F Iligan City" ; (2)
that the sale be subject to the availability of a steamer and (3) that the seller should be allowed to withdraw right away
the full amount of the letter of credit and not merely eighty percent thereof (pp- 123-124, Record on Appeal).

The defendants argue that it was incumbent upon the NPC to inquire into the extent of the agents authority and, for
its failure to do so, it could not claim any liquidated damages which, according to the defendants, were provided for
merely to make the seller more diligent in looking for a steamer to transport the sulfur.

The NPC counter-argues that Namerco should have advised the NPC of the limitations on its authority to negotiate
the sale.

We agree with the trial court that Namerco is liable for damages because under article 1897 of the Civil Code the
agent who exceeds the limits of his authority without giving the party with whom he contracts sufficient notice of his
powers is personally liable to such party.

The truth is that even before the contract of sale was signed Namerco was already aware that its principal was having
difficulties in booking shipping space. In a cable dated October 16, 1956, or one day before the contract of sale was
signed, the New York supplier advised Namerco that the latter should not sign the contract unless it (Namerco)
wished to assume sole responsibility for the shipment (Exh. T).

Sycip, Namercos president, replied in his letter to the seller dated also October 16, 1956, that he had no choice but
to finalize the contract of sale because the NPC would forfeit Namercos bidders bond in the sum of P45,100 posted
by the Domestic Insurance Company if the contract was not formalized (Exh. 14, 14-A and Exh. V).

Three days later, or on October 19, the New York firm cabled Namerco that the firm did not consider itself bound by
the contract of sale and that Namerco signed the contract on its own responsibility (Exh. W).

In its letters dated November 8 and 19, 1956, the New York corporation informed Namerco that since the latter acted
contrary to the formers cabled instructions, the former disclaimed responsibility for the contract and that the
responsibility for the sale rested on Namerco (Exh. Y and Y-1).

The letters of the New York firm dated November 26 and December 11, 1956 were even more revealing. It bluntly told
Namerco that the latter was never authorized to enter into the contract and that it acted contrary to the repeated
instructions of the former (Exh. U and Z). Said the vice-president of the New York firm to Namerco:chanrobles virtual
lawlibrary

"As we have pointed out to you before, you have acted strictly contrary to our repeated instructions and, however
regretfully, you have no one but yourselves to blame."cralaw virtua1aw library

The rule relied upon by the defendants-appellants that every person dealing with an agent is put upon inquiry and

146
must discover upon his peril the authority of the agent would apply in this case if the principal is sought to be held
liable on the contract entered into by the agent.

That is not so in this case. Here, it is the agent that it sought to be held liable on a contract of sale which was
expressly repudiated by the principal because the agent took chances, it exceeded its authority, and, in effect, it acted
in its own name.

As observed by Castan Tobeas, an agent "que haya traspasado los limites dew mandato, lo que equivale a obrar
sin mandato" (4 Derecho Civil Espaol, 8th Ed., 1956, p. 520).

As opined by Olivieri, "si el mandante contesta o impugna el negocio juridico concluido por el mandatario con el
tercero, aduciendo el exceso de los limites impuestos, es justo que el mandatario, que ha tratado con engao al
tercero, sea responsable personalmente respecto de el des las consecuencias de tal falta de aceptacion por parte
del mandate. Tal responsabilidad del mandatario se informa en el principio de la falta de garantia de la existencia del
mandato y de la cualidad de mandatario, garantia impuesta coactivamente por la ley, que quire que aquel que
contrata como mandatario este obligado a garantizar al tercero la efectiva existencia de los poderes que afirma se
halla investido, siempre que el tercero mismo sea de buena fe. Efecto de tal garantia es el resarcimiento de los
daos causados al tercero como consecuencia de la negativa del mandante a reconocer lo actuado por el
mandatario." (26, part II, Scaveola, Codigo Civil, 1951, pp. 358-9).

Manresa says that the agent who exceeds the limits of his authority is personally liable "porque realmente obra sin
poderes" and the third person who contracts with the agent in such a case would be defrauded if he would not be
allowed to sue the agent (11 Codigo Civil, 6th Ed., 1972, p. 725).

The defendants also contend that the trial court erred in holding as enforceable the stipulation for liquidated damages
despite its finding that the contract was executed by the agent in excess of its authority and is, therefore, allegedly
unenforceable.

In support of that contention, the defendants cite article 1403 of the Civil Code which provides that a contract entered
into in the name of another person by one who has acted beyond his powers is unenforceable.

We hold that defendants contention is untenable because article 1403 refers to the unenforceability of the contract
against the principal. In the instant case, the contract containing the stipulation for liquidated damages is not being
enforced against it principal but against the agent and its surety.

It is being enforced against the agent because article 1807 implies that the agent who acts in excess of his authority
is personally liable to the party with whom he contracted.

And that rule is complemented by article 1898 of the Civil Code which provides that "if the agent contracts in the
name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be
void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal."

It is being enforced against the agent because article 1897 implies that the agent who acts in excess of his authority
is personally liable to the party with whom he contracted.

And the rule is complemented by article 1898 of the Civil Code which provides that "if the agent contracts in the name
of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if
the party with whom the agent contracted is aware of the limits of the powers granted by the principal."

As priorly discussed, namerco, as agent, exceeded the limits of its authority in contracting with the NPC in the name
of its principal. The NPC was unaware of the limitations on the powers granted by the New York firm to
Namerco.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

The New York corporation in its letter of April 26, 1956 said:jgc:chanrobles.com.ph

"We hereby certify that National Merchandising Corporation . . . are our exclusive representatives in the Philippines
for the sale of our products.

"Furthermore, we certify that they are empowered to present our offers in our behalf in accordance with our cabled or
written instructions." (Exh. C).

Namerco never disclosed to the NPC the cabled or written instructions of its principal. For that reason and because

147
Namerco exceeded the limits of its authority, it virtually acted in its own name and not as agent and it is, therefore,
bound by the contract of sale which, however, is not enforceable against its principal.

If, as contemplated in articles 1897 and 1898, Namerco is bound under the contract of sale, then it follows that it is
bound by the stipulation for liquidated damages in that contract.

Defendants contention that Namercos liability should be based on tort or quasi-delict, as held in some American
cases, like Mendelsohn v. Holton, 149 N.E. 38, 42 ALR 1307, is not well-taken. As correctly argued by the NPC, it
would be unjust and inequitable for Namerco to escape liability after it had deceived the NPC.

Another contention of the defendants is that the Domestic Insurance Company is not liable to the NPC because its
bond was posted, not for Namerco, the agent, but for the New York firm which is not liable on the contract of sale.

That contention cannot be sustained because it was Namerco that actually solicited the bond from the Domestic
Insurance Company and, as explained already, Namerco is being held liable under the contract of sale because it
virtually acted in its own name. It became the principal in the performance bond. In the last analysis, the Domestic
Insurance Company acted as surety for Namerco.

The rule is that "want of authority of the person who executes an obligation as the agent or representative of the
principal will not, as a general rule, affect the suretys liability thereon, especially in the absence of fraud, even though
the obligation is not binding on the principal" (72 C.J.S. 525).

Defendants other contentions are that they should be held liable only for nominal damages, that interest should not
be collected on the amount of damages and that the damages should be computed on the basis of a forty-five day
period and not for a period of one hundred fifteen days.

With respect to the imposition of the legal rate of interest on the damages from the filing of the complaint in 1957, or a
quarter of a century ago, defendants contention is meritorious. It would be manifestly inequitable to collect interest on
the damages especially considering that the disposition of this case has been considerably delayed due to no fault of
the defendants.

The contention that only nominal damages should be adjudged is contrary to the intention of the parties (NPC,
Namerco and its surety) because it is clearly provided that liquidated damages are recoverable for delay in the
delivery of the sulfur and, with more reason, for nondelivery.

No proof of pecuniary loss is required for the recovery of liquidated damages. the stipulation for liquidated damages is
intended to obviate controversy on the amount of damages. There can be no question that the NPC suffered
damages because its production of fertilizer was disrupted or diminished by reason of the nondelivery of the
sulfur.chanrobles.com.ph : virtual law library

The parties foresaw that it might be difficult to ascertain the exact amount of damages for nondelivery of the sulfur.
So, they fixed the liquidated damages to be paid as indemnity to the NPC.

On the other hand, nominal damages are damages in name only or are in fact the same as no damages (25 C.J.S.
466). It would not be correct to hold in this case that the NPC suffered damages in name only or that the breach of
contract was merely technical in character.

As to the contention that the damages should be computed on the basis of forty-five days, the period required by a
vessel leaving Galveston, Texas to reach Iligan City, that point need not be resolved in view of our conclusion that the
liquidated damages should be equivalent to the amount of the bidders bond posted by Namerco.

NPCs appeal, L-33897. The trial court reduced the liquidated damages to twenty percent of the stipulated amount.
the NPC contends the it is entitled to the full amount of liquidated damages in the sum of P360,572.80.

In reducing the liquidated damages, the trial court relied on article 2227 of the Civil Code which provides that
"liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous
or unconscionable."

Apparently, the trial court regarded as an equitable consideration the persistent efforts of Namerco and its principal to
charter a steamer and that the failure of the New York firm to secure shipping space was not attributable to its fault or
negligence.

148
The trial court also took into account the fact that the selling price of the sulfur was P450,716 and that to award as
liquidated damages more than eighty percent of the price would not be altogether reasonable.

The NPC contends that Namerco was an obligor in bad faith and, therefore, it should be responsible for all damages
which could be reasonably attributed to its nonperformance of the obligation as provided in article 2201 of the Civil
Code.

On the other hand, the defendants argue that Namerco having acted as a mere agent, was not liable for the
liquidated damages stipulated in the alleged unenforceable contract of sale; that, as already noted, Namercos liability
should be based on tort or quasi-delict and not on the contract of sale; that if Namerco is not liable, then the
insurance company, its surety, is likewise not liable; that the NPC is entitled only to nominal damages because it was
able to secure the sulfur from another source (58-59 tsn November 10, 1960) and that the reduced award of
stipulated damages is highly iniquitous, considering that Namerco acted in good faith and that the NPC did not suffer
any actual damages.chanrobles law library : red

These contentions have already been resolved in the preceding discussion. We find no sanction or justification for
NPCs claim that it is entitled to the full payment of the liquidated damages computed by its official.

Ruling on the amount of damages. A painstaking evaluation of the equities of the case in the light of the arguments
of the parties as expounded in their five briefs leads to the conclusion that the damages due from the defendants
should be further reduced to P45,100 which is equivalent to their bidders bond or to about ten percent of the selling
price of the sulfur.

WHEREFORE, the lower courts judgment is modified and defendants National Merchandising Corporation and
Domestic Insurance Company of the Philippines are ordered to pay solidarily to the National Power Corporation the
sum of P45,100.00 as liquidated damages. No costs.

SO ORDERED.

G.R. No. L-54598 April 15, 1988

JOSE B. LEDESMA, petitioner,


vs.

149
HON. COURT OF APPEALS, Spouses PACIFICO DELMO and SANCHA DELMO (as private
respondents), respondents.

GUTIERREZ, JR., J.:

This petition seeks to reverse the decision of the respondent Court of Appeals which afirmed the decision of the Court
of First Instance of Iloilo, adjudging the petitioner, who was then the President of the West Visayas College liable for
damages under Article 27 of the Civil Code of the Philippines for failure to graduate a student with honors.

The facts are not disputed.

An organization named Student Leadership Club was formed by some students of the West Visayas College. They
elected the late Violets Delmo as the treasurer. In that capacity, Delmo extended loans from the funds of the club to
some of the students of the school. "the petitioner claims that the said act of extending loans was against school rules
and regulations. Thus, the petitioner, as President of the School, sent a letter to Delmo informing her that she was
being dropped from the membership of the club and that she would not be a candidate for any award or citation from
the school.

Delmo asked for a reconsideration of the decision but the petitioner denied it. Delmo, thus, appealed to the Office of
the Director of the Bureau of Public Schools.

The Director after due investigation, rendered a decison on April 13, 1966 which provided:

Records of the preliminary investigation conducted by one of the legal officers of this Office
disclosed the following: That Violeta Delmo was the treasurer of the Student Leadership Club, an
exclusive student organization; that pursuant to Article IX of the of the Constitution and By-Laws of
the club, it passed Resolution No. 2, authorizing the treasurer to disburse funds of the Club to
student for financial aid and other humanitarian purposes; that in compliance with said resolution
and as treasurer of the Club, Violeta Delmo extended loans to some officers and members of the
Club upon proper application duly approved by the majority of the members of the Executive Board;
and that upon receiving the report from Mr. Jesse Dagoon, adviser of the funds of the Club, that
Office conducted an investigation on the matter and having been convinced of the guilt of Violets
Delmo and the other officers and members of the Club, that Office rendered the order or decision in
question. In justifying that Office's order or decision, it is contended that approval by that Office of
the Constitution and By-Laws of the Club is necessary for its effectivity and validity and since it was
never submitted to that Office, the Club had no valid constitution and By-Laws and that as a
consequence, Resolution No. 2 which was passed based on the Constitution and By-Laws- is
without any force and effect and the treasurer, Violeta Delmo, who extended loans to some officers
and members of the Club pursuant thereto are illegal (sic), hence, she and the other students
involved are deemed guilty of misappropriating the funds of the Club. On the other hand, Raclito
Castaneda, Nestor Golez and Violeta Delmo, President, Secretary and Treasurer of the Club,
respectively, testified that the Club had adopted its Constitution and By-Laws in a meeting held last
October 3, 1965, and that pursuant to Article I of said Constitution and By-Laws, the majority of the
members of the Executive Board passed Resolution No. 2, which resolution became the basis for
the extension on of loans to some officers and members of the Club, that the Club honestly
believed that its Constitution and By-Laws has been approved by the superintendent because the
adviser of the Club, Mr. Jesse Dagoon, assured the President of the Club that he will cause the
approval of the Constitution and By-Laws by the Superintendent; the officers of the Club have been
inducted to office on October 9,1965 by the Superintendent and that the Club had been likewise
allowed to cosponsor the Education Week Celebration.

150
After a careful study of the records, this Office sustains the action taken by the Superintendent in
penalizing the adviser of the Club as well as the officers and members thereof by dropping them
from membership therein. However, this Office is convinced that Violets M. Delmo had acted in
good faith, in her capacity as Club Treasurer, in extending loans to the officers and members of the
Student partnership Club. Resolution No. 2 authorizing the Club treasurer to discharge finds to
students in need of financial assistance and other humanitarian purposes had been approved by
the Club adviser, Mr. Jesse Dagoon, with the notation that approval was given in his capacity as
adviser of the Club and extension of the Superintendent's personality. Aside from misleading the
officers and members of the Club, Mr. Dagoon, had unsatisfactorily explained why he failed to give
the Constitution and By-Laws of the Club to the Superintendent for approval despite his assurance
to the Club president that he would do so. With this finding of negligence on the part of the Club
adviser, not to mention laxity in the performance of his duties as such, this Office considers as too
severe and unwarranted that portion of the questioned order stating that Violeta Delmo "shall not
be a candidate for any award or citation from this school or any organization in this school." Violeta
Delmo, it is noted, has been a consistent full scholar of the school and she alone has maintained
her scholarship. The decision in question would, therefore, set at naught all her sacrifice and
frustrate her dreams of graduating with honors in this year's commencement exercises.

In view of all the foregoing, this Office believes and so holds and hereby directs that appellant
Violeta. M. Delmo, and for that matter all other Club members or officers involved in this case, be
not deprived of any award, citation or honor from the school, if they are otherwise entitled thereto.
(Rollo, pp. 28-30)

On April 27, 1966, the petitioner received by mail the decision of the Director and all the records of the case. On the
same day, petitioner received a telegram stating the following:

"AIRMAIL RECORDS DELMO CASE MISSENT THAT OFFICE"

The Director asked for the return only of the records but the petitioner allegedly mistook the telegram as ordering him
to also send the decision back. On the same day, he returned by mail all the records plus the decision of the Director
to the Bureau of Public Schools.

The next day, the petitioner received another telegram from the Director order him to furnish Delmo with a copy of the
decision. The petitioner, in turn, sent a night letter to the Director informing the latter that he had sent the decision
back and that he had not retained a copy thereof..

On May 3, 1966, the day of the graduation, the petitioner received another telegram from the Director ordering him
not to deprive Delmo of any honors due her. As it was impossible by this time to include Delmo's name in the program
as one of the honor students, the petitioner let her graduate as a plain student instead of being awarded the Latin
honor of Magna Cum Laude.

To delay the matter further, the petitioner on May 5, 1966, wrote the Director for a reconsideration of the latters"
decision because he believed that Delmo should not be allowed to graduate with honors. The Director denied the
petitioner's request.

On July 12, 1966, the petitioner finally instructed the Registrar of the school to enter into the scholastic records of
Delmo the honor, "Magna Cum Laude."

On July 30, 1966, Delmo, then a minor, was joined by her parents in flag action for damages against the petitioner.
During the pendency of the action, however, Delmo passed away, and thus, an Amended and Supplemental
Complaint was filed by her parents as her sole and only heirs.

151
The trial court after hearing rendered judgment against the petitioner and in favor of the spouses Delmo. The court
said:

Let us go to specific badges of the defendants (now petitioners) bad faith. Per investigation of
Violeta Delmo's appeal to Director Vitaliano Bernardino of the Bureau of Public Schools (Exhibit L it
was the defendant who inducted the officers of the Student Leadership Club on October 9, 1965. In
fact the Club was allowed to cosponsor the Education Week Celebration. (Exh. "L"). If the
defendant he not approve of the constitution and by-laws of the Club, why did he induct the officers
into office and allow the Club to sponsor the Education Week Celebration"? It was through his own
act that the students were misled to do as they did. Coupled with the defendants tacit recognition of
the Club was the assurance of Mr. Jemm Dagoon, Club Adviser, who made the students believe
that he was acting as an extension of Mr. Ledesma's personality. (Exhibit "L").

Another badge of the defendan'ts want of good faith is the fact that, although, he kaew as early as
April 27,1966 that per on of r Bernardino, Exhibit "L," he was directed to give honors to Miss Delmo,
he kept Id information to . He told the Court that he knew that the letter of Director Bernardino
directed him not to deprive Miss Delmo the honors due her, but she (sic) says that he has not
finished reading the letter-decision, Exhibit "L," of Director Bernardino 0, him to give honors to Miss
Delmo. (Tsn, Feb. 5, 1974, testimony of Mr. Ledesma, pp. .33-35). It could not be true that he has
not finished reading the letter-decision, Exh. "L," because said letter consisted of only three pages,
and the portion which directed that Miss Delmo "be not deprived of any award, citation or honor
from the school, if otherwise entitled thereto is found at the last paragraph of the same. How did he
know the last paragraph if he did not read the letter.

Defendants actuations regarding Miss Delmo's cam had been one of bias and prejudice. When his
action would favor him, he was deliberate and aspect to the utter prejudice and detriment of Miss
Delmo. Thus, although, as early as April 27, 1966, he knew of the exoneration of Miss Delino by
Director Bernardino, he withheld the information from Miss Delmo. This is eloquently dramatized by
Exh. "11" and Exh. "13" On April 29,1966, Director Bernardino cabled him to furnish Violeta Delmo
copy of the Decision, Exh. "L," but instead of informing Miss Delmo about the decision, since he
said he mailed back the decision on April 28,1966, he sent a night letter on April 29,1966, to
Director Bernardino, informing the latter that he had returned the decision (Exh. "l3"), together with
the record. Why a night letter when the matter was of utmost urgency to the parties in the case,
because graduation day was only four days ahead? An examination of the telegrams sent by the
defendant shows that he had been sending ordinary telegram and not night letters. (Exh. "5",
Exhibit "7"). At least, if the defendant could not furnish a copy of the decision, (Exh. "L"), to Miss
Delmo, he should have told her about it or that Miss Delmo's honors and citation in the
commencement be announced or indicated. But Mr. Ledesma is one who cannot admit a mistake.
Very ungentlemanly this is home out by his own testimony despite his knowledge that his decision
to deprive Miss Delmo of honors due to her was overturned by Director Bernardino, he on his
wrong belief. To quote the defendant,1 believed that she did not deserve those honors(Tsn Feb. 5,
1974, p. 43,Empasized supplied). Despite the telegram of Director Bernardino which the defendant
received hours before the commencement executory on May 3-4,1966, he did not obey Director
Bernardino because he said in his testimony that he would be embarrassment . Tan Feb 5,1974, P.
46). Evidently, he knew only his embarrassment and not that of r Bernardino whose order was
being flagrantly and wantonly disregarded by bim And certainly, not the least of Miss Delmo's
embarrassment. His acts speak eloquently of ho bad faith and unjust of mindwarped by his delicate
sensitivity for having been challenged by Miss Delmo, a mere student.

xxx xxx xxx

152
Finally the defendant's behaviour relative to Miss s case smacks of contemptuous arrogance,
oppression and abuse of power. Come to think of it. He refused to obey the directive of Be o and
instead, chose to feign ignorance of it." (Reward on Appeal, p. 72-76).

The trial court awarded P20,000.00 to the estate of Violeta Delmo and P10,000.00 to her parents for moral damages;
P5,000.00 for nominal damages to Violeta's estate; exemplary damages of P10,000.00 and P2,000.00 attorney's
fees.

On appeal, the Court of Appeals affirmed the decision. Hence, this petition.

The issues raised in this petition can be reduced to the sole question of whether or not the respondent Court of
Appeals erred in affirming the trial court's finding that petitioner is liable for damages under Article 27 of the New Civil
Code.

We find no reason why the findings of the trial and appellate courts should be reversed. It cannot be disputed that
Violeta Delmo went through a painful ordeal which was brought about by the petitioner's neglect of duty and
callousness. Thus, moral damages are but proper. As we have affirmed in the case of (Prudenciado v. Alliance
Transport System, Inc., 148 SCRA 440, 448):

There is no argument that 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 defendant's wrongly act or omission." (People v. Baylon, 129 SCRA 62
(1984).

The Solicitor-General tries to cover-up the petitioner's deliberate omission to inform Miss Delmo by stating that it was
not the duty of the petitioner to furnish her a copy of the Director's decision. Granting this to be true, it was
nevertheless the petitioner's duty to enforce the said decision. He could have done so considering that he received
the decision on April 27, 1966 and even though he sent it back with the records of the case, he undoubtedly read the
whole of it which consisted of only three pages. Moreover, the petitioner should have had the decency to meet with
Mr. Delmo, the girl's father, and inform the latter, at the very least of the decision. This, the petitioner likewise failed to
do, and not without the attendant bad faith which the appellate court correctly pointed out in its decision, to wit:

Third, assuming that defendant could not furnish Miss Delmo of a copy of the decision, he could
have used his discretion and plain common sense by informing her about it or he could have
directed the inclusion of Miss Delmo's honor in the printed commencement program or announced
it during the commencement exercises.

Fourth, defendant despite receipt of the telegram of Director Benardino hours before the
commencement exercises on May 3-4, 1966, disobeyed his superior by refusing to give the honors
due Miss Delmo with a lame excuse that he would be embarrassed if he did so, to the prejudice of
and in complete disregard of Miss Delmo's rights.

Fifth, defendant did not even extend the courtesy of meeting Mr. Pacifico Delmo, father of Miss
Delmo, who tried several times to see defendant in his office thus Mr. Delmo suffered extreme
disappointment and humiliation.

xxx xxx xxx

Defendant, being a public officer should have acted with circumspection and due regard to the
rights of Miss Delmo. Inasmuch as he exceeded the scope of his authority by defiantly disobeying

153
the lawful directive of his superior, Director Bernardino, defendant is liable for damages in his
personal capacity. . . . (Rollo, pp- 57-58)

Based on the undisputed facts, exemplary damages are also in order. In the same case of Prudenciado v. Alliance
Transport System, Inc., supra., at p. 450, we ruled:

The rationale behind exemplary or corrective damages is, as the name implies, to provide an
example or correction for the public good (Lopez, et al. v. Pan American World Airways, 16 SCRA
431).

However, we do not deem it appropriate to award the spouses Delmo damages in the amount of
P10,000.00 in their individual capacity, separately from and in addition to what they are already
entitled to as sole heirs of the deceased Violeta Delmo. Thus, the decision is modified insofar as
moral damages are awarded to the spouses in their own behalf.

WHEREFORE, the petition is DISMISSED for lack of merit. The decision of the Court of Appeals is AFFIRMED with
the slight modification as stated in the preceding paragraph. This decision is immediately executory.

SO ORDERED.

G.R. No. L-19882 June 30, 1964


LAGUNA-TAYABAS BUS CO., petitioner,
vs.
RUFINA DIASANTA, assisted by her husband EVERO TAJADA, respondent.
CONCEPCION, J.:

Appeal by certiorari from a decision of the Court of Appeals.

The record shows that on July 28, 1958, respondent Rufina Diasanta boarded at Atimonan, Quezon, Bus No. 29 of
petitioner Laguna-Tayabas Transportation Co., which was bound for Manila; that the bus driver, Henry Betito, drove
and operated it so recklessly that, upon nearing the town of Pagbilao, the bus went off the asphalted part of the road
on to the shoulder thereof; that because of the holes and ruts on that portion of the road and of the excessive speed
of the bus, the same jumped up and down so violently that respondent was jerked from her seat to the floor with such
force that she suffered a fracture in her vertebrae; that she was accordingly taken to a clinic in San Pablo City, and
then transferred to the National Orthopedic Hospital at Mandaluyong, Rizal, where she was placed in a cast, thereby
immobilizing her for several months; that her demands for the corresponding indemnity not having been heeded, she
instituted in the Court of First Instance of Manila the present action for damages against the petitioner; that, in due
course, said Court rendered a decision, sentencing the petitioner to pay to respondent: (1) P1,281.05 as
reimbursement for actual expenses; (2) P3,000 as consequential damages; (3) P3,000 for moral and exemplary
damages; (4) P2,000 for attorney's fee; and (5) the costs; and that, on appeal, this decision was affirmed by the Court
of Appeals, except as to "the award of P3,000 for moral and exemplary damages", which was "reduced to P1,000
only for exemplary damages".

Petitioner maintains that these awards for actual and consequential damages, exemplary damages and attorney's
fees contravene Articles 2199, 2201, 2208 and 2232 of the Civil Code of the Philippines and our decision in Bautista

154
vs. Lovina, G. R. No. L-6569 and Pascual vs. Court of Appeals, G. R. No. L-6576 (April 18, 1956), as well as that of
the Court of Appeals in Alegre vs. Batangas Transportation Co., CA-G. R. No. 24823-R (December 29, 1961).

We find merit in this pretense. Upon consideration of the evidence on record, the Court of Appeals affirmed the
finding of the trial court to the effect that respondent had suffered actual damages and consequential damages in the
sums of P1,281.05 and P3,000, respectively. These are findings of fact which we can not review on appeal
by certiorari, there being substantial evidence in support of the conclusion reached by said courts. 1wph1.t

As regards the exemplary damages, Article 2232 of the Civil Code of the Philippines provides that, in contracts and
quasi-contracts the court may award exemplary damages if the defendant acted in a "wanton, fraudulent, reckless,
oppressive or malevolent manner." In the case at bar, petitioner's driver and, hence, its agent has been found guilty of
recklessness. No such finding had been made in the Bautista case. Moreover, under Article 2208 of the same Code,
attorney's fees other than judicial costs may be awarded "when exemplary damages are awarded."

Upon the other hand, the Alegre case relied upon by petitioner is not in point, not only because the bus driver in that
case unlike the one involved in the one at bar had not acted recklessly, but, also, because the injured party in
the Alegre case may have contributed, although in a small measure, to the occurrence of the accident that resulted in
the injury upon which the action was based, and no such factor is present in the present case. It may not be amiss to
note, also, that courts have discretion to grant or not to grant exemplary damages and that the circumstances
obtaining in this case do not warrant interference with the exercise of such discretion by the lower courts.

WHEREFORE, the decision appealed from is hereby affirmed, with costs against the petitioner. It is so ordered.

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