ISSUE on negligence and damages

G.R. No. 175540 April 7, 2014

DR. FILOTEO A. ALANO, Petitioner,
vs.
ZENAIDA MAGUD-LOGMAO, Respondent.
PERALTA, J.:
This deals with the Petition for Review on Certiorari under Rule ! of the Rules of Court pra"ing that
the #ecision
$
of the Court of %ppeals &C%', dated (arch )$, *++,, ad-udging petitioner lia.le for
damages, and the Resolution
*
dated /ovem.er **, *++,, den"ing petitioner0s motion for
reconsideration thereof, .e reversed and set aside.
The C%0s narration of facts is accurate, to wit1
Plaintiff2appellee 3enaida (agud24ogmao is the mother of deceased %rnelito 4ogmao. #efendant2
appellant #r. 5iloteo %lano is the E6ecutive #irector of the /ational 7idne" Institute &/7I'.
%t around 81!+ in the evening of (arch $, $899, %rnelito 4ogmao, then eighteen &$9' "ears old, was
.rought to the East %venue (edical Center &E%(C' in :ue;on Cit" ." two sidewal< vendors, who
allegedl" saw the former fall from the overpass near the 5armers= (ar<et in Cu.ao, :ue;on Cit".
The patient=s data sheet identified the patient as %ngelito 4ugmoso of >oni %venue, (andalu"ong.
?owever, the clinical a.stract prepared ." #r. Paterno 5. Ca.rera, the surgical resident on2dut" at
the Emergenc" Room of E%(C, stated that the patient is %ngelito @4ogmaoA.
#r. Ca.rera reported that @4ogmaoA was drows" with alcoholic .reath, was conscious and coherentB
that the s<ull 62ra" showed no fractureB that at around 1++ o=cloc< in the morning of (arch *, $899,
@4ogmaoA developed generali;ed sei;ures and was managed ." the neuro2surger" resident on2dut"B
that the condition of @4ogmaoA progressivel" deteriorated and he was intu.ated and am.u2.agging
support was providedB that admission to the Intensive Care Unit &ICU' and mechanical ventilator
support .ecame necessar", .ut there was no vacanc" at the ICU and all the ventilator units were
.eing used ." other patientsB that a resident ph"sician of /7I, who was rotating at E%(C, suggested
that @4ogmaoA .e transferred to /7IB and that after arrangements were made, @4ogmaoA was
transferred to /7I at $+1$+ in the morning.
%t the /7I, the name %ngelito @4ogmaoA was recorded as %ngelito 4ugmoso. 4ugmoso was
immediatel" attended to and given the necessar" medical treatment. %s 4ugmoso had no relatives
around, Cennifer >. (isa, Transplant Coordinator, was as<ed to locate his famil" ." enlisting police
and media assistance. #r. EnriDue T. Ena, Chairman of the #epartment of Surger", o.served that
the severit" of the .rain in-ur" of 4ugmoso manifested s"mptoms of .rain death. ?e reDuested the
4a.orator" Section to conduct a tissue t"ping and tissue cross2matching e6amination, so that should
4ugmoso e6pire despite the necessar" medical care and management and he would .e found to .e
a suita.le organ donor and his famil" would consent to organ donation, the organs thus donated
could .e detached and transplanted promptl" to an" compati.le .eneficiar".
Cennifer (isa verified on the same da", (arch *, $899, from E%(C the identit" of 4ugmoso and,
upon her reDuest, she was furnished ." E%(C a cop" of the patient=s date sheet which .ears the
name %ngelito 4ugmoso, with address at >oni %venue, (andalu"ong. She then contacted several
radio and television stations to reDuest for air time for the purpose of locating the famil" of %ngelito
4ugmoso of >oni %venue, (andalu"ong, who was confined at /7I for severe head in-ur" after
allegedl" falling from the Cu.ao overpass, as well as Police Station /o. !, Eastern Police #istrict,
whose area of -urisdiction includes >oni %venue, (andalu"ong, for assistance in locating the
relatives of %ngelito 4ugmoso. Certifications were issued ." Channel , %>S2C>/ and F(%
attesting that the reDuest made ." the /7I on (arch *, $899 to air its appeal to locate the famil" and
relatives of %ngelito 4ugmoso of >oni %venue, (andalu"ong was accommodated. % Certification was
li<ewise issued ." Police Station /o. !, Eastern Police #istrict, (andalu"ong attesting to the fact
that on (arch *, $899, at a.out ,1++ p.m., Cennifer (isa reDuested for assistance to immediatel"
locate the famil" and relatives of %ngelito 4ugmoso and that she followed up her reDuest until (arch
8, $899.
En (arch ), $899, at a.out G1++ o=cloc< in the morning, #r. Ena was informed that 4ugmoso had
.een pronounced .rain dead ." #r. %.dias H. %Duino, a neurologist, and ." #r. %ntonio Rafael, a
neurosurgeon and attending ph"sician of 4ugmoso, and that a repeat electroencephalogram &EEF'
was in progress to confirm the diagnosis of .rain death. Two hours later, #r. Ena was informed that
the EEF recording e6hi.ited a flat tracing, there." confirming that 4ugmoso was .rain dead. Upon
learning that 4ugmoso was a suita.le organ donor and that some /7I patients awaiting organ
donation had .lood and tissue t"pes compati.le with 4ugmoso, #r. Ena inDuired from Cennifer (isa
whether the relatives of 4ugmoso had .een located so that the necessar" consent for organ
donation could .e o.tained. %s the e6tensive search for the relatives of 4ugmoso "ielded no positive
result and time .eing of the essence in the success of organ transplantation, #r. Ena reDuested #r.
5iloteo %. %lano, E6ecutive #irector of /7I, to authori;e the removal of specific organs from the .od"
of 4ugmoso for transplantation purposes. #r. Ena li<ewise instructed #r. Rose (arie Rosete24iDuete
to secure permission for the planned organ retrieval and transplantation from the (edico24egal
Effice of the /ational >ureau of Investigation &/>I', on the assumption that the incident which lead
to the .rain in-ur" and death of 4ugmoso was a medico legal case.
En (arch ), $899, #r. %lano issued to #r. Ena a (emorandum, which reads as follows1
This is in connection with the use of the human organs or an" portion or portions of the human .od"
of the deceased patient, identified as a certain (r. %ngelito 4ugmoso who was .rought to the
/ational 7idne" Institute on (arch *, $899 from the East %venue (edical Center.
%s shown ." the medical records, the said patient died on (arch ), $899 at 81$+ in the morning due
to craniocere.ral in-ur". Please ma<e certain that "our #epartment has e6erted all reasona.le efforts
to locate the relatives or ne6t of <in of the said deceased patient such as appeal through the radios
and television as well as through police and other government agencies and that the />I @(edico2
4egalA Section has .een notified and is aware of the case.
If all the a.ove has .een complied with, in accordance with the provisions of Repu.lic %ct /o. )8
as amended and P.#. 9!,, permission andIor authorit" is here." given to the #epartment of Surger"
to retrieve and remove the <idne"s, pancreas, liver and heart of the said deceased patient and to
transplant the said organs to an" compati.le patient who ma".e in need of said organs to live and
survive.
% Certification dated (arch $+, $899 was issued ." #r. (a6imo Re"es, (edico24egal Efficer of the
/>I, stating that he received a telephone call from #r. 4iDuete on (arch ), $899 at 81$! a.m.
regarding the case of 4ugmoso, who was declared .rain deadB that despite efforts to locate the
latter=s relatives, no one respondedB that #r. 4iDuete sought from him a second opinion for organ
retrieval for donation purposes even in the a.sence of consent from the famil" of the deceasedB and
that he ver.all" agreed to organ retrieval.
%t )1! in the afternoon of (arch ), $899, a medical team, composed of #r. EnriDue Ena, as
principal surgeon, #rs. (anuel Chua2Chiaco, Cr., Rose (arie Rosete24iDuete, %urea %m.rosio,
4udivino de Fu;man, (ar" 4iton-ua, Caime HelasDue;, Ricardo 5ernando, and ("rna (endo;a,
removed the heart, <idne"s, pancreas, liver and spleen of 4ugmoso. The medical team then
transplanted a <idne" and the pancreas of 4ugmoso to 4ee Tan ?oc and the other <idne" of
4ugmoso to %le6is %m.ustan. The transplant operation was completed at around $$1++ o=cloc< in the
evening of (arch ), $899.
En (arch , $899, #r. %ntonio R. Paraiso, ?ead of the Cadaver Ergan Retrieval Effort &CERE'
program of /7I, made arrangements with 4a 5uneraria Ero for the em.almment of the cadaver of
4ugmoso good for a period of fifteen &$!' da"s to afford /7I more time to continue searching for the
relatives of the latter. En the same da", Ro.erto Ertega, 5uneral Consultant of 4a 5uneraria Ero,
sent a reDuest for autops" to the />I. The %utops" Report and Certification of Post2(ortem
E6amination issued ." the />I stated that the cause of death of 4ugmoso was intracranial
hemorrhage secondar" to s<ull fracture.
En (arch $$, $899, the /7I issued a press release announcing its successful dou.le organ
transplantation. %ida #oromal, a cousin of plaintiff, heard the news aired on television that the donor
was an eighteen &$9' "ear old .o" whose remains were at 4a 5uneraria Ero in :ue;on Cit". %s the
name of the donor sounded li<e %rnelito 4ogmao, %ida informed plaintiff of the news report.
It appears that on (arch ), $899, %rlen 4ogmao, a .rother of %rnelito, who was then a resident of
$G2C San Pedro Street, (andalu"ong, reported to Police Station /o. !, Eastern Police #istrict,
(andalu"ong that the latter did not return home after seeing a movie in Cu.ao, :ue;on Cit", as
evidenced ." a Certification issued ." said StationB and that the relatives of %rnelito were li<ewise
informed that the latter was missing. Upon receiving the news from %ida, plaintiff and her other
children went to 4a 5uneraria Ero, where the" saw %rnelito inside a cheap cas<et.
En %pril *8, $899, plaintiff filed with the court a Duo a complaint for damages against #r. Emmanuel
4enon, Taurean Protectors %genc", represented ." its Proprietor, Celso Santiago, /ational 7idne"
Institute, represented ." its #irector, #r. 5iloteo %. %lano, Cennifer (isa, #r. (a6imo Re"es, #r.
EnriDue T. Ena, #r. (anuel Chua2Chiaco, Cr., #r. Rose (arie E. Rosete24iDuete, #r. %urea 3.
%m.rosio, #r. 4udivino de Fu;man, #r. (ar" 4iton-ua, #r. Caime HelasDue;, #r. Ricardo 5ernando,
#r. ("rna (endo;a, 4ee Tan 7oc, %le6is %m.ustan, #r. %ntonio R. Paraiso, 4a 5uneraria Ero, Inc.,
represented ." its President, Ferman E. Ertega, Ro.erto Ertega alias >o.." Ertega, #r. (ariano >.
Cueva, Cr., Cohn #oe, Peter #oe, and %le6 #oe in connection with the death of her son %rnelito.
Plaintiff alleged that defendants conspired to remove the organs of %rnelito while the latter was still
alive and that the" concealed his true identit".
En Canuar" $G, *+++, the court a Duo rendered -udgment finding onl" #r. 5iloteo %lano lia.le for
damages to plaintiff and dismissing the complaint against the other defendants for lac< of legal
.asis.
)
%fter finding petitioner lia.le for a Duasi2delict, the Regional Trial Court of :ue;on Cit" &RTC'
ordered petitioner to pa" respondent P$99,G+.8+ as actual damagesB P!++,+++.++ as moral
damagesB P!++,+++.++ as e6emplar" damagesB P)++,+++.++ as attorne"0s feesB and costs of suit.
Petitioner appealed to the C%.
En (arch )$, *++,, the C% issued its #ecision, the dispositive portion of which reads as follows1
J?ERE5ERE, the #ecision appealed from is %55IR(E#, with (E#I5IC%TIE/ ." #E4ETI/F the
award ofP$99,G+.8+ as actual damages and RE#UCI/F the award of moral damages
to P*!+,+++.++, the award of e6emplar" damages to P*++,+++.++ and the award of attorne"0s fees
to P$++,+++.++.
SE ER#ERE#.

Petitioner then elevated the matter to this Court via a petition for review on certiorari, where the
following issues are presented for resolution1
%. J?ET?ER T?E CEURT E5 %PPE%4S #ISREF%R#E# EKISTI/F CURISPRU#E/CE
PRE/EU/CE# >L T?IS ?E/ER%>4E SUPRE(E CEURT I/ ?E4#I/F PETITIE/ER
#R. 5I4ETEE %4%/E 4I%>4E 5ER (ER%4 %/# EKE(P4%RL #%(%FES %/#
%TTER/EL0S 5EES #ESPITE T?E 5%CT T?%T T?E %CT E5 T?E PETITIE/ER IS /ET
T?E PREKI(%TE C%USE /ER IS T?ERE %/L 5I/#I/F T?%T T?E %CT E5 T?E
PETITIE/ER J%S T?E PREKI(%TE C%USE E5 T?E I/CURL ER #%(%FE %44EFE#4L
SUST%I/E# >L RESPE/#E/T 3E/%I#% (%FU#24EF(%E.
>. J?ET?ER T?E CEURT E5 %PPE%4S FR%HE4L ERRE# I/ RE5USI/F %/#IER
5%I4I/F TE #EC4%RE T?%T PETITIE/ER #R. %4%/E %CTE# I/ FEE# 5%IT? %/#
PURSU%/T TE 4%J J?E/ ?E ISSUE# T?E %UT?ERI3%TIE/ TE RE(EHE %/#
RETRIEHE T?E ERF%/S E5 %/FE4ITE 4UF(ESE &4%TER I#E/TI5IE# TE >E I/ 5%CT
%R/E4ITE 4EF(%E' CE/SI#ERI/F T?%T /E /EF4IFE/CE C%/ >E %TTRI>UTE# ER
I(PUTE# E/ ?I( I/ ?IS PER5ER(%/CE E5 %/ %CT (%/#%TE# >L 4%J.
C. J?ET?ER T?E CEURT E5 %PPE%4S FR%HE4L ERRE# I/ %J%R#I/F
RESPE/#E/T 3E/%I#% (%FU#24EF(%E (ER%4 %/# EKE(P4%RL #%(%FES %/#
%TTER/EL0S 5EES T?%T %RE /ET I/ %CCER#%/CE JIT? %/# %RE CE/TR%RL TE
EST%>4IS?E# CURISPRU#E/CE.
!
The first two issues .oil down to the Duestion of whether respondent0s sufferings were .rought a.out
." petitioner0s alleged negligence in granting authori;ation for the removal or retrieval of the internal
organs of respondent0s son who had .een declared .rain dead.
Petitioner maintains that when he gave authori;ation for the removal of some of the internal organs
to .e transplanted to other patients, he did so in accordance with the letter of the law, Repu.lic %ct
&R.%.' /o. )8, as amended ." Presidential #ecree &P.#.' 9!,, i.e., giving his su.ordinates
instructions to e6ert all reasona.le efforts to locate the relatives or ne6t of <in of respondent0s son. In
fact, announcements were made through radio and television, the assistance of police authorities
was sought, and the />I (edico24egal Section was notified. Thus, petitioner insists that he should
not .e held responsi.le for an" damage allegedl" suffered ." respondent due to the death of her son
and the removal of her son=s internal organs for transplant purposes.
The appellate court affirmed the trial court0s finding that there was negligence on petitioner0s part
when he failed to ensure that reasona.le time had elapsed to locate the relatives of the deceased
.efore giving the authori;ation to remove said deceased0s internal organs for transplant purposes.
?owever, a close e6amination of the records of this case would reveal that this case falls under one
of the e6ceptions to the general rule that factual findings of the trial court, when affirmed ." the
appellate court, are .inding on this Court. There are some important circumstances that the lower
courts failed to consider in ascertaining whether it was the actions of petitioner that .rought a.out
the sufferings of respondent.
,
The (emorandum dated (arch ), $899 issued ." petitioner, stated thus1
%s shown ." the medical records, the said patient died on (arch ), $899 at 81$+ in the morning due
to craniocere.ral in-ur". Please ma<e certain that "our #epartment has e6erted all reasona.le efforts
to locate the relatives or ne6t2of2<in of the said deceased patient, such as appeal through the radios
and television, as well as through police and other government agencies and that the />I @(edico2
4egalA Section has .een notified and is aware of the case.
If all the a.ove has .een complied with, in accordance with the provisions of Repu.lic %ct /o. )8
as amended and P.#. 9!,, permission andIor authorit" is here." given to the #epartment of Surger"
to retrieve and remove the <idne"s, pancreas, liver and heart of the said deceased patient and to
transplant the said organs to an" compati.le patient who ma".e in need of said organs to live and
survive.
G
% careful reading of the a.ove shows that petitioner instructed his su.ordinates to Mma<e certainM
that Mall reasona.le effortsM are e6erted to locate the patient0s ne6t of <in, even enumerating wa"s in
which to ensure that notices of the death of the patient would reach said relatives. It also clearl"
stated that permission or authori;ation to retrieve and remove the internal organs of the deceased
was .eing given E/4L I5 the provisions of the applica.le law had .een complied with. Such
instructions reveal that petitioner acted prudentl" ." directing his su.ordinates to e6haust all
reasona.le means of locating the relatives of the deceased. ?e could not have made his directives
an" clearer. ?e even specificall" mentioned that permission is onl" .eing granted I5 the #epartment
of Surger" has complied with all the reDuirements of the law. Heril", petitioner could not have .een
faulted for having full confidence in the a.ilit" of the doctors in the #epartment of Surger" to
comprehend the instructions, o.e"ing all his directives, and acting onl" in accordance with the
reDuirements of the law.
5urthermore, as found ." the lower courts from the records of the case, the doctors and personnel of
/7I disseminated notices of the death of respondent0s son to the media and sought the assistance
of the appropriate police authorities as earl" as (arch *, $899, even .efore petitioner issued the
(emorandum. Prior to performing the procedure for retrieval of the deceased0s internal organs, the
doctors concerned also the sought the opinion and approval of the (edico24egal Efficer of the />I.
Thus, there can .e no cavil that petitioner emplo"ed reasona.le means to disseminate notifications
intended to reach the relatives of the deceased. The onl" Duestion that remains pertains to the
sufficienc" of time allowed for notices to reach the relatives of the deceased.
If respondent failed to immediatel" receive notice of her son0s death .ecause the notices did not
properl" state the name or identit" of the deceased, fault cannot .e laid at petitioner0s door. The trial
and appellate courts found that it was the E%(C, who had the opportunit" to ascertain the name of
the deceased, who recorded the wrong information regarding the deceased0s identit" to /7I. The
/7I could not have o.tained the information a.out his name from the patient, .ecause as found ."
the lower courts, the deceased was alread" unconscious ." the time he was .rought to the /7I.
Ultimatel", it is respondent0s failure to adduce adeDuate evidence that doomed this case.1wphi1 %s stated
in Etero v. Tan,
9
M@iAn civil cases, it is a .asic rule that the part" ma<ing allegations has the .urden of
proving them ." a preponderance of evidence. The parties must rel" on the strength of their own
evidence and not upon the wea<ness of the defense offered ." their opponent.M
8
?ere, there is to
proof that, indeed, the period of around * hours from the time notices were disseminated, cannot
.e considered as reasona.le under the circumstances. The" failed to present an" e6pert witness to
prove that given the medical technolog" and <nowledge at that time in the $89+0s, the doctors could
or should have waited longer .efore harvesting the internal organs for transplantation.
Heril", the Court cannot, in conscience, agree with the lower court. 5inding petitioner lia.le for
damages is improper. It should .e emphasi;ed that the internal organs of the deceased were
removed onl" after he had .een declared .rain deadB thus, the emotional pain suffered ."
respondent due to the death of her son cannot in an" wa" .e attri.uted to petitioner. /either can the
Court find evidence on record to show that respondent0s emotional suffering at the sight of the pitiful
state in which she found her son0s lifeless .od" .e categoricall" attri.uted to petitioner0s conduct.
J?ERE5ERE, the petition is FR%/TE#. The #ecision of the Court of %ppeals, dated (arch )$,
*++,, is REHERSE# and SET %SI#E. The complaint against petitioner is here." #IS(ISSE#.
SE ER#ERE#.
En Suret" N defenses, lia.ilities2 and dela"
G.R. No. 185!" April 7, 2014
GILAT #ATELLITE NET$OR%#, LTD., Petitioner,
vs.
UNITED &O&ONUT PLANTER# 'AN% GENERAL IN#URAN&E &O., IN&., Respondent.
#ERENO, CJ:
This is an appeal via a Petition for Review on Certiorari
$
filed , /ovem.er *++8 assailing the
#ecision
*
and Resolution
)
of the Court of %ppeals &C%' in C%2F.R. CH /o. 98*,), which reversed
the #ecision

of the Regional Trial Court &RTC', >ranch $$, (a<ati Cit" in Civil Case /o. +*2,$,
ordering respondent to pa" petitioner a sum of mone".
The antecedent facts, as culled from the C%, are as follows1
En Septem.er $!, $888, Ene Hirtual placed with FI4%T a purchase order for various
telecommunications eDuipment &sic', accessories, spares, services and software, at a total purchase
price of Two (illion Ene ?undred Twent" Eight Thousand Two ?undred 5ift" #ollars
&USO*,$*9,*!+.++'. Ef the said purchase price for the goods delivered, Ene Hirtual promised to pa"
a portion thereof totalling USO$.* (illion in accordance with the pa"ment schedule dated **
/ovem.er $888. To ensure the prompt pa"ment of this amount, it o.tained defendant UCP>
Feneral Insurance Co., Inc.=s suret" .ond dated ) #ecem.er $888, in favor of FI4%T.
#uring the period .etween @sicA Septem.er $888 and Cune *+++, FI4%T shipped and delivered to
Ene Hirtual the purchased products and eDuipment, as evidenced ." airwa" .illsI>ill of 4ading
&E6hi.its M5M, M52$M to M529M'. %ll of the eDuipment &including the software components for which
pa"ment was secured ." the suret" .ond, was shipped ." FI4%T and dul" received ." Ene Hirtual.
Under an endorsement dated #ecem.er *), $888 &E6hi.it MEM', the suret" issued, with Ene Hirtual=s
conformit", an amendment to the suret" .ond, %nne6 M%M thereof, correcting its e6pir" date from (a"
)+, *++$ to Cul" )+, *++$.
Ene Hirtual failed to pa" FI4%T the amount of 5our ?undred Thousand #ollars &USO++,+++.++' on
the due date of (a" )+, *+++ in accordance with the pa"ment schedule attached as %nne6 M%M to
the suret" .ond, prompting FI4%T to write the suret" defendant UCP> on Cune !, *+++, a demand
letter &E6hi.it MFM' for pa"ment of the said amount of USO++,+++.++. /o part of the amount set forth
in this demand has .een paid to date ." either Ene Hirtual or defendant UCP>. Ene Hirtual li<ewise
failed to pa" on the succeeding pa"ment instalment date of )+ /ovem.er *+++ as set out in %nne6
M%M of the suret" .ond, prompting FI4%T to send a second demand letter dated Canuar" *, *++$, for
the pa"ment of the full amount of USO$,*++,+++.++ guaranteed under the suret" .ond, plus interests
and e6penses &E6hi.its M?M' and which letter was received ." the defendant suret" on Canuar" *!,
*++$. ?owever, defendant UCP> failed to settle the amount of USO$,*++,+++.++ or a part thereof,
hence, the instant complaint.M
!
&Emphases in the original'
En * %pril *++*, petitioner Filat Satellite /etwor<s, 4td., filed a Complaint
,
against respondent
UCP> Feneral Insurance Co., Inc., to recover the amounts supposedl" covered ." the suret" .ond,
plus interests and e6penses. %fter due hearing, the RTC rendered its #ecision,
G
the dispositive
portion of which is herein Duoted1
J?ERE5ERE, premises considered, the Court here." renders -udgment for the plaintiff, and
against the defendant, ordering, to wit1
$. The defendant suret" to pa" the plaintiff the amount of Ene (illion Two ?undred
Thousand #ollars &USO$,*++,+++.++' representing the principal de.t under the Suret" >ond,
with legal interest thereon at the rate of $*P per annum computed from the time the
-udgment .ecomes final and e6ecutor" until the o.ligation is full" settledB and
*. The defendant suret" to pa" the plaintiff the amount of 5ort" 5our Thousand 5our #ollars
and 5our Cents &USO,++.+' representing attorne"=s fees and litigation e6penses.
%ccordingl", defendant=s counterclaim is here." dismissed for want of merit.
SE ER#ERE#. &Emphasis in the original'
In so ruling, the RTC reasoned that there is Mno dispute that plaintiff @petitionerA delivered all the
su.-ect eDuipments @sicA and the same was installed. Even with the deliver" and installation made,
Ene Hirtual failed to pa" an" of the pa"ments agreed upon. #emand notwithstanding, defendant
failed and refused and continued to fail and refused to settle the o.ligation.M
9
Considering that its lia.ilit" was indeed that of a suret", as Mspelled out in the Suret" >ond e6ecuted
." and .etween Ene Hirtual as Principal, UCP> as Suret" and FI4%T as CreditorI>ond
E.ligee,M
8
respondent agreed and .ound itself to pa" in accordance with the Pa"ment (ilestones.
This o.ligation was not made dependent on an" condition outside the terms and conditions of the
Suret" >ond and Pa"ment (ilestones.
$+
Insofar as the interests were concerned, the RTC denied petitioner=s claim on the premise that while
a suret" can .e held lia.le for interest even if it .ecomes more onerous than the principal o.ligation,
the suret" shall onl" accrue when the dela" or refusal to pa" the principal o.ligation is without an"
-ustifia.le cause.
$$
?ere, respondent failed to pa" its suret" o.ligation .ecause of the advice of its
principal &Ene Hirtual' not to pa".
$*
The RTC then o.ligated respondent to pa" petitioner the amount
of US#$,*++,+++.++ representing the principal de.t under the Suret" >ond, with legal interest at the
rate of $*P per annum computed from the time the -udgment .ecomes final and e6ecutor", and
US#,++.+ representing attorne"=s fees and litigation e6penses.
En $9 Ecto.er *++G, respondent appealed to the C%.
$)
The appellate court rendered a #ecision
$
in
the following manner1
J?ERE5ERE, this appealed case is #IS(ISSE# for lac< of -urisdiction. The trial court=s #ecision
dated #ecem.er *9, *++, is H%C%TE#. Plaintiff2appellant Filat Satellite /etwor<s 4td., and Ene
Hirtual are ordered to proceed to ar.itration, the outcome of which shall necessar" .ind the parties,
including the suret", defendant2appellant United Coconut Planters >an< Feneral Insurance Co., Inc.
SE ER#ERE#. &Emphasis in the original'
The C% ruled that in Menforcing a suret" contract, the Qcomplementar"2contracts2construed2together=
doctrine finds application.M %ccording to this doctrine, the accessor" contract must .e construed with
the principal agreement.
$!
In this case, the appellate court considered the Purchase %greement
entered into .etween petitioner and Ene Hirtual as the principal contract,
$,
whose stipulations are
also .inding on the parties to the suret"ship.
$G
>earing in mind the ar.itration clause contained in the
Purchase %greement
$9
and pursuant to the polic" of the courts to encourage alternative dispute
resolution methods,
$8
the trial court=s #ecision was vacatedB petitioner and Ene Hirtual were ordered
to proceed to ar.itration.
En 8 Septem.er *++9, petitioner filed a (otion for Reconsideration with (otion for Eral %rgument.
The motion was denied for lac< of merit in a Resolution
*+
issued ." the C% on $, Septem.er *++8.
?ence, the instant Petition.
En )$ %ugust *+$+, respondent filed a Comment
*$
on the Petition for Review. En * /ovem.er
*+$+, petitioner filed a Repl".
**
ISSUES
5rom the foregoing, we reduce the issues to the following1
$. Jhether or not the C% erred in dismissing the case and ordering petitioner and Ene
Hirtual to ar.itrateB and
*. Jhether or not petitioner is entitled to legal interest due to the dela" in the fulfilment ."
respondent of its o.ligation under the Suret"ship %greement.
T?E CEURT=S RU4I/F
The e6istence of a suret"ship agreement does not give the suret" the right to intervene in the
principal contract, nor can an ar.itration clause .etween the .u"er and the seller .e invo<ed ." a
non2part" such as the suret".
Petitioner alleges that ar.itration laws mandate that no court can compel ar.itration, unless a part"
entitled to it applies for this relief.
*)
This referral, however, can onl" .e demanded ." one who is a
part" to the ar.itration agreement.
*
Considering that neither petitioner nor Ene Hirtual has as<ed for
a referral, there is no .asis for the C%=s order to ar.itrate.
(oreover, %rticles $*$, and *+G of the Civil Code
*!
clearl" provide that the creditor ma" proceed
against the suret" without having first sued the principal de.tor.
*,
Even the Suret" %greement itself
states that respondent .ecomes lia.le upon Mmere failure of the Principal to ma<e such prompt
pa"ment.M
*G
Thus, petitioner should not .e ordered to ma<e a separate claim against Ene Hirtual &via
ar.itration' .efore proceeding against respondent.
*9
En the other hand, respondent maintains that a suret" contract is merel" an accessor" contract,
which cannot e6ist without a valid o.ligation.
*8
Thus, the suret" ma" avail itself of all the defenses
availa.le to the principal de.tor and inherent in the de.t
)+
N that is, the right to invo<e the ar.itration
clause in the Purchase %greement.
Je agree with petitioner.
In suret"ship, the oft2repeated rule is that a suret"=s lia.ilit" is -oint and solidar" with that of the
principal de.tor. This underta<ing ma<es a suret" agreement an ancillar" contract, as it presupposes
the e6istence of a principal contract.
)$
/evertheless, although the contract of a suret" is in essence
secondar" onl" to a valid principal o.ligation, its lia.ilit" to the creditor or MpromiseM of the principal is
said to .e direct, primar" and a.soluteB in other words, a suret" is directl" and eDuall" .ound with the
principal.
)*
?e .ecomes lia.le for the de.t and dut" of the principal o.ligor, even without possessing
a direct or personal interest in the o.ligations constituted ." the latter.
))
Thus, a suret" is not entitled
to a separate notice of default or to the .enefit of e6cussion.
)
It ma" in fact .e sued separatel" or
together with the principal de.tor.
)!
%fter a thorough e6amination of the pieces of evidence presented ." .oth parties,
),
the RTC found
that petitioner had delivered all the goods to Ene Hirtual and installed them. #espite these
compliances, Ene Hirtual still failed to pa" its o.ligation,
)G
triggering respondent=s lia.ilit" to petitioner
as the former=s suret".1wphi1 In other words, the failure of Ene Hirtual, as the principal de.tor, to fulfill its
monetar" o.ligation to petitioner gave the latter an immediate right to pursue respondent as the
suret".
ConseDuentl", we cannot sustain respondent=s claim that the Purchase %greement, .eing the
principal contract to which the Suret"ship %greement is accessor", must ta<e precedence over
ar.itration as the preferred mode of settling disputes.
5irst, we have held in Stronghold Insurance Co. Inc. v. To<"u Construction Co. 4td.,
)9
that M@theA
acceptance @of a suret" agreementA, however, does not change in an" material wa" the creditor=s
relationship with the principal de.tor nor does it ma<e the suret" an active part" to the principal
creditor2de.tor relationship. In other words, the acceptance does not give the suret" the right to
intervene in the principal contract. The suret"=s role arises onl" upon the de.tor=s default, at which
time, it can .e directl" held lia.le ." the creditor for pa"ment as a solidar" o.ligor.M ?ence, the suret"
remains a stranger to the Purchase %greement. Je agree with petitioner that respondent cannot
invo<e in its favor the ar.itration clause in the Purchase %greement, .ecause it is not a part" to that
contract.
)8
%n ar.itration agreement .eing contractual in nature,
+
it is .inding onl" on the parties
thereto, as well as their assigns and heirs.
$
Second, Section * of Repu.lic %ct /o. 8*9!
*
is clear in stating that a referral to ar.itration ma" onl"
ta<e place Mif at least one part" so reDuests not later than the pre2trial conference, or upon the
reDuest of .oth parties thereafter.M Respondent has not presented even an iota of evidence to show
that either petitioner or Ene Hirtual su.mitted its contesting claim for ar.itration.
Third, sureties do not insure the solvenc" of the de.tor, .ut rather the de.t itself.
)
The" are
contracted precisel" to mitigate ris<s of non2performance on the part of the o.ligor. This
responsi.ilit" necessaril" places a suret" on the same level as that of the principal de.tor.

The
effect is that the creditor is given the right to directl" proceed against either principal de.tor or suret".
This is the reason wh" e6cussion cannot .e invo<ed.
!
To reDuire the creditor to proceed to
ar.itration would render the ver" essence of suret"ship nugator" and diminish its value in
commerce. %t an" rate, as we have held in Palmares v. Court of %ppeals,
,
Mif the suret" is
dissatisfied with the degree of activit" displa"ed ." the creditor in the pursuit of his principal, he ma"
pa" the de.t himself and .ecome su.rogated to all the rights and remedies of the creditor.M
Interest, as a form of indemnit", ma" .e awarded to a creditor for the dela" incurred ." a de.tor in
the pa"ment of the latter=s o.ligation, provided that the dela" is ine6cusa.le.
%nent the issue of interests, petitioner alleges that it deserves to .e paid legal interest of $*P per
annum from the time of its first demand on respondent on ! Cune *+++ or at most, from the second
demand on * Canuar" *++$ .ecause of the latter=s dela" in discharging its monetar"
o.ligation.
G
Citing %rticle $$,8 of the Civil Code, petitioner insists that the dela" started to run from
the time it demanded the fulfilment of respondent=s o.ligation under the suret"ship contract.
Significantl", respondent does not contest this point, .ut instead argues that it is onl" lia.le for legal
interest of ,P per annum from the date of petitioner=s last demand on * Canuar" *++$.
In re-ecting petitioner=s position, the RTC stated that interests ma" onl" accrue when the dela" or the
refusal of a part" to pa" is without an" -ustifia.le cause.
9
In this case, respondent=s failure to heed
the demand was due to the advice of Ene Hirtual that petitioner allegedl" .reached its underta<ings
as stated in the Purchase %greement.
8
The C%, however, made no pronouncement on this matter.
Je sustain petitioner.
%rticle **+8 of the Civil Code is clear1 M@iAf an o.ligation consists in the pa"ment of a sum of mone",
and the de.tor incurs a dela", the indemnit" for damages, there .eing no stipulation to the contrar",
shall .e the pa"ment of the interest agreed upon, and in the a.sence of stipulation, the legal
interest.M
#ela" arises from the time the o.ligee -udiciall" or e6tra-udiciall" demands from the o.ligor the
performance of the o.ligation, and the latter fails to compl".
!+
#ela", as used in %rticle $$,8, is
s"non"mous with default or mora, which means dela" in the fulfilment of o.ligations.
!$
It is the
nonfulfillment of an o.ligation with respect to time.
!*
In order for the de.tor &in this case, the suret"' to
.e in default, it is necessar" that the following reDuisites .e present1 &$' that the o.ligation .e
demanda.le and alread" liDuidatedB &*' that the de.tor dela"s performanceB and &)' that the creditor
reDuires the performance -udiciall" or e6tra-udiciall".
!)
?aving held that a suret" upon demand fails to pa", it can .e held lia.le for interest, even if in thus
pa"ing, its lia.ilit" .ecomes more than the principal o.ligation.
!
The increased lia.ilit" is not .ecause
of the contract, .ut .ecause of the default and the necessit" of -udicial collection.
!!
?owever, for dela" to merit interest, it must .e ine6cusa.le in nature. In Fuanio v. (a<ati2Shangri2la
?otel,
!,
citing RCPI v. Herche;,
!G
we held thus1
In culpa contractual 6 6 6 the mere proof of the e6istence of the contract and the failure of its
compliance -ustif", prima facie, a corresponding right of relief. The law, recogni;ing the o.ligator"
force of contracts, will not permit a part" to .e set free from lia.ilit" for an" <ind of misperformance of
the contractual underta<ing or a contravention of the tenor thereof. % .reach upon the contract
confers upon the in-ured part" a valid cause for recovering that which ma" have .een lost or
suffered. The remed" serves to preserve the interests of the promissee that ma" include his
Me6pectation interest,M which is his interest in having the .enefit of his .argain ." .eing put in as
good a position as he would have .een in had the contract .een performed, or his Mreliance interest,M
which is his interest in .eing reim.ursed for loss caused ." reliance on the contract ." .eing put in
as good a position as he would have .een in had the contract not .een madeB or his Mrestitution
interest,M which is his interest in having restored to him an" .enefit that he has conferred on the
other part". Indeed, agreements can accomplish little, either for their ma<ers or for societ", unless
the" are made the .asis for action. The effect of ever" infraction is to create a new dut", that is, to
ma<e RECE(PE/SE to the one who has .een in-ured ." the failure of another to o.serve his
contractual o.ligation unless he can show e6tenuating circumstances, li<e proof of his e6ercise of
due diligence 6 6 6 or of the attendance of fortuitous event, to e6cuse him from his ensuing lia.ilit".
&Emphasis ours'
Je agree with petitioner that records are .ereft of proof to show that respondent=s dela" was indeed
-ustified ." the circumstances N that is, Ene Hirtual=s advice regarding petitioner=s alleged .reach of
o.ligations. The lower court=s #ecision itself .elied this contention when it said that Mplaintiff is not
disputing that it did not complete commissioning wor< on one of the two s"stems .ecause Ene
Hirtual at that time is alread" in default and has not paid FI4%T.M
!9
%ssuming arguendo that the
commissioning wor< was not completed, respondent has no one to .lame .ut its principal, Ene
HirtualB if onl" it had paid its o.ligation on time, petitioner would not have .een forced to stop
operations. (oreover, the deposition of (r. Ere; %nte.i, vice president of Filat, repeatedl" stated
that petitioner had delivered all eDuipment, including the licensed softwareB and that the eDuipment
had .een installed and in fact, gone into operation.
!8
/otwithstanding these compliances, respondent
still failed to pa".
%s to the issue of when interest must accrue, our Civil Code is e6plicit in stating that it accrues from
the time -udicial or e6tra-udicial demand is made on the suret". This ruling is in accordance with the
provisions of %rticle $$,8 of the Civil Code and of the settled rule that where there has .een an
e6tra2-udicial demand .efore an action for performance was filed, interest on the amount due .egins
to run, not from the date of the filing of the complaint, .ut from the date of that e6tra2-udicial
demand.
,+
Considering that respondent failed to pa" its o.ligation on )+ (a" *+++ in accordance
with the Purchase %greement, and that the e6tra-udicial demand of petitioner was sent on ! Cune
*+++,
,$
we agree with the latter that interest must start to run from the time petitioner sent its first
demand letter &! Cune *+++', .ecause the o.ligation was alread" due and demanda.le at that time.
Jith regard to the interest rate to .e imposed, we ta<e cue from /acar v. Faller" 5rames,
,*
which
modified the guidelines esta.lished in Eastern Shipping 4ines v. C%
,)
in relation to >ang<o Sentral2
(onetar" >oard Circular /o. G88 &Series of *+$)', to wit1
$. Jhen the o.ligation is .reached, and it consists in the pa"ment of a sum of mone", i.e., a loan or
for.earance of mone", the interest due should .e that which ma" have .een stipulated in writing.
5urthermore, the interest due shall itself earn legal interest from the time it is -udiciall" demanded.1wphi 1 In
the a.sence of stipulation, the rate of interest shall .e ,P per annum to .e computed from default,
i.e., from -udicial or e6tra-udicial demand under and su.-ect to the provisions of %rticle $$,8 of the
Civil Code.
6 6 6 6
). Jhen the -udgment of the court awarding a sum of mone" .ecomes final and e6ecutor", the rate
of legal interest, whether the case falls under paragraph $ or paragraph *, a.ove, shall .e ,P per
annum from such finalit" until its satisfaction, this interim period .eing deemed to .e ." then an
eDuivalent to a for.earance of credit.
%ppl"ing the a.ove2discussed concepts and in the a.sence of an agreement as to interests, we are
here." compelled to award petitioner legal interest at the rate of ,P per annum from ! Cune *+++,
its first date of e6tra -udicial demand, until the satisfaction of the de.t in accordance with the revised
guidelines enunciated in /acar.
J?ERE5ERE, the Petition for Review on Certiorari is here." FR%/TE#. The assailed #ecision
and Resolution of the Court of %ppeals in C%2F.R. CH /o. 98*,) are REHERSE#. The #ecision of
the Regional Trial Court, >ranch $$, (a<ati Cit" is REI/ST%TE#, with (E#I5IC%TIE/ insofar as
the award of legal interest is concerned. Respondent is here." ordered to pa" legal interest at the
rate of ,P per annum from ! Cune *+++ until the satisfaction of its o.ligation under the Suret"ship
Contract and Purchase %greement.
SE ER#ERE#.
MARIA LOURDE# P. A. #ERENO
Chief Custice, Chairperson
En damages
G.R. No. 1022 April 7, 2014
MAG#A(#A( MARITIME &ORPORATION, Petitioner,
vs.
O#&AR D. &)IN, *R., Respondent.
# E C I S I E /
A'AD, J.:
The 5acts and the Case
Thome Ship (anagement Pte. 4td., acting through its agent petitioner (agsa"sa" (aritime
Corporation &(agsa"sa"' hired respondent Escar #. Chin, Cr. to wor< for nine months as a.le
seaman on .oard (H Star Siranger
$
Chin was to receive a .asic pa" of USO!$! per
month.
*
(agsa"sa" deplo"ed him on Cul" *+, $88,.
En Ecto.er **, $88, Chin sustained in-uries while wor<ing on his -o. a.oard the vessel. #r. Solan of
Jilmington, /orth Carolina, US%, e6amined him on /ovem.er *8, $88, and found him to have
suffered from lum.osacral strain due to heav" lifting of pressuri;ed machine. The doctor gave him
medications and advised him to see an orthopedist and a cardiologist. Chin was repatriated on
/ovem.er )+, $88,. En return to the Philippines, Chin underwent a surgical procedure called
laminectom" and discectom" 42242!. % "ear after the operation, #r. Ro.ert #. 4im of the
(etropolitan ?ospital diagnosed Chin to have a moderate rigidit" of his tract.
En %ugust ,, $889 Chin filed a claim for disa.ilit" with Pandiman Phils., Inc. which is the local agent
of P R I Clu. of which (agsa"sa" (aritime is a mem.er. Pandiman offered USO)+,+++.++ as
disa.ilit" compensation which Chin accepted on %ugust ,, $889. ?e then e6ecuted a Release and
:uitclaim in favor of (agsa"sa" (aritime.
En Septem.er *8, $889 Chin filed a complaint with the /ational 4a.or Relations Commission
&/4RC', claiming underpa"ment of disa.ilit" .enefits and attorne"=s fees. ?e later amended his
complaint to include claims for damages.
The 4a.or %r.iter dismissed Chin=s complaint for lac< of merit. The /4RC affirmed the dismissal on
(a" $G, *++$. En appeal, however, the Court of %ppeals &C%' reversed the dismissal and ruled that
Chin was entitled to permanent total disa.ilit" .enefit of USO,+,+++.++. The C% remanded the case
to the 4a.or %r.iter for determination of the other monetar" claims of Chin. This prompted petitioner
(agsa"sa" to come .efore this court on a petition for review on certiorari. The Court denied the
petition, however, in a Resolution dated Septem.er 9, *++). This Resolution .ecame final and
e6ecutor" on 5e.ruar" *), *++.
En Septem.er *9, *++ petitioner (agsa"sa" paid the deficienc" award of USO)+,+++.++ in full and
final settlement of Chin=s disa.ilit" compensation claim. En 5e.ruar" *,, *++G, however, the 4a.or
%r.iter rendered a #ecision ordering it to pa" Chin1 a' P$8,*G8.G! as reim.ursement for medical
e6pensesB .' USO$G,+*,.) as loss of future wagesB c' P*++,+++.++ as moral damagesB
d' PG!,+++.++ as e6emplar" damagesB and e' $+P of the total award as attorne"=s fees.
En /ovem.er *!, *++9 the /4RC modified the 4a.or %r.iter=s #ecision ." deleting the awards of
loss of future wages and moral and e6emplar" damages for lac< of factual and legal .ases. En
appeal, the C% reversed the /4RC=s #ecision and ordered the reinstatement of the 4a.or %r.iter=s
#ecision, hence, this petition.
The Issue Presented
The <e" issue in this case is whether or not the C% erred in affirming the 4a.or %r.iter=s award of
loss of future earnings on top of his disa.ilit" .enefits as well as awards of moral and e6emplar"
damages and attorne"=s fees.
Ruling of the Court
Respondent Chin contends that the petition should .e dismissed on the ground of res -udicata in that
the C%=s #ecision in C%2F.R. SP ,G9+) authori;ed the determination of Chin=s other monetar"
claims. The additional award to him of actual, compensator", moral and e6emplar" damages as well
as attorne"=s fees was a determination of those other claims. These awards, he claims, can no
longer .e distur.ed.
>ut res -udicata applies to second actions involving su.stantiall" the same parties, the same su.-ect
matter, and cause or causes of action.
)
?ere, there is no second action to spea< of since the
su.seDuent awards were merel" the result of a remand from the C% for the 4a.or %r.iter to
determine the amounts to which Chin is entitled to receive aside from the full USO,+,+++.++
permanent total disa.ilit" compensation.
#efinitel", the 4a.or %r.iter=s award of loss of earning is unwarranted since Chin had alread" .een
given disa.ilit" compensation for loss of earning capacit". %n additional award for loss of earnings
will result in dou.le recover". In a catena of cases,

the Court has consistentl" ruled that disa.ilit"

should not .e understood more on its medical significance .ut on the loss of earning capacit".
Permanent total disa.ilit" means disa.lement of an emplo"ee to earn wages in the same <ind of
wor<, or wor< of similar nature that he was trained for or accustomed to perform, or an" <ind of wor<
which a person of his mentalit" and attainment could do. #isa.ilit", therefore, is not s"non"mous
with Msic<nessM or Millness.M Jhat is compensated is one=s incapacit" to wor< resulting in the
impairment of his earning capacit".
!
(oreover, the award for loss of earning lac<s .asis since the Philippine Everseas Emplo"ment
%genc" &PEE%' Standard Contract of Emplo"ment &PEE% SCE', the governing law .etween the
parties, does not provide for such a grant. Jhat Section *+, paragraph &F' of the PEE% SCE
provides is that pa"ment for in-ur", illness, incapacit", disa.ilit", or death of the seafarer covers Mall
claims arising from or in relation with or in the course of the seafarer=s emplo"ment, including .ut not
limited to damages arising from the contract, tort, fault or negligence under the laws of the
Philippines or an" other countr".M The permanent disa.ilit" compensation of USO,+,+++ clearl"
amounts to reasona.le compensation for the in-uries and loss of earning capacit" of the seafarer.1wphi 1
In awarding damages for loss of earning capacit", the 4a.or %r.iter relies on the rulings in Hilla Re"
Transit v. Court of %ppeals
,
and >aliwag Transit, Inc. v. Court of %ppeals.
G
>ut these cases involve
essentiall" claims for damages arising from Duasi2delict. The present case, on the other hand,
involves a claim for disa.ilit" .enefits under Chin=s contract of emplo"ment and the governing PEE%
set standards of recover". The long2standing rule is that loss of earning is recovera.le if the action is
.ased on the Duasi2delict provision of %rticle **+, of the Civil Code.
9
Jhile the 4a.or %r.iter can grant moral and e6emplar" damages, the amounts he fi6ed in this case
are Duite e6cessive in the a.sence of evidence to prove the degree of moral suffering or in-ur" that
Chin suffered. It has .een held that in order to arrive at a -udicious appro6imation of emotional or
moral in-ur", competent and su.stantial proof of the suffering e6perienced must .e laid .efore the
court.
8
It is worth" to stress that moral damages are awarded as compensation for actual in-ur"
suffered and not as a penalt". The Court .elieves that an award of P)+,+++.++ as moral damages is
commensurate to the an6iet" and inconvenience that Chin suffered.
%s for e6emplar" damages, the award of P*!,+++.++ is alread" sufficient to discourage petitioner
(agsa"sa" from entering into iniDuitous agreements with its emplo"ees that violate their right to
collect the amounts to which the" are entitled under the law. E6emplar" damages are imposed not to
enrich one part" or impoverish another .ut to serve as a deterrent against or as a negative incentive
to cur. sociall" deleterious actions.
$+
J?ERE5ERE, the Court P%RTI%44L FR%/TS the petition and %55IR(S the 5e.ruar" *9, *+$$
#ecision of the Court of %ppeals and its Ecto.er $$, *+$$ Resolution with (E#I5IC%TIE/. The
award of loss of earning is #E4ETE# and petitioner (agsa"sa" (aritime Corporation is ER#ERE#
to pa" respondent Escar #. Chin, Cr.P$8,*G8.8! as reim.ursement for medical
e6penses, P)+,+++.++ as moral damages, P*!,+++.++ as e6emplar" damages, and attorne"=s fees
eDuivalent to $+P of the total of these amounts.
SE ER#ERE#.