Sunteți pe pagina 1din 196

G.R. No.

120921 January 29, 1998


THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
FELIPE BALLESTEROS, CESAR GALO and ALVIN BULUSAN, accused-appellants.

ROMERO, J.:
This is an appeal from the decision of the Regional Trial Court of Bangui, Ilocos Norte, Branch 19,
finding the accused guilty beyond reasonable doubt of murder, qualified by treachery, as charged
under Article 248 of the Revised Penal Code, as amended, to wit:
WHEREFORE, the Court finds the three accused guilty beyond reasonable doubt of
murder, qualified by treachery, as charged, defined and penalized under Article 248
of the Revised Penal Code, as amended, and applying Article 248 of the Revised
Penal Code hereby sentences them to reclusion perpetua, with all the accessory
penalties provided by law, and further sentencing them to pay jointly and solidarily
1. The heirs of Jerry Agliam compensatory damages in the amount of FIFTY
THOUSAND PESOS (P50,000.00), moral damages in the amount of TWENTY
THOUSAND PESOS (P20,000.00), and actual damages in the amount of THIRTY
FIVE THOUSAND SEVEN HUNDRED FIFTY-FIVE PESOS (P35,755.00), with
interest;
2. The heirs of the late Eduardo Tolentino, Sr., compensatory damages in the
amount of FIFTY THOUSAND PESOS (P50,000.00), moral damages in the amount
of TWENTY THOUSAND PESOS (P20,000.00), and actual damages in the total
amount of SIXTY-ONE THOUSAND SEVEN HUNDRED EIGHTY-FIVE PESOS
(P61,785.00), with interest;
3. Carmelo Agliam, actual damages in the amount of TWO THOUSAND AND
THREE PESOS AND FORTY CENTAVOS (P2,003.40), and moral damages in the
amount of TEN THOUSAND PESOS (P10,000.00), with interest;
4. Vidal Agliam Jr., Robert Cacal and Ronnel Tolentino, moral damages in the
amount of FIVE THOUSAND PESOS (P5,000.00) each, with interest.
5. The costs.
The accused shall be credited in the service of their sentence the full time during
which they had undergone preventive imprisonment, if they agreed voluntarily in
writing to abide by the same disciplinary rules imposed upon convicted prisoners,
otherwise, they shall be credited in the service thereof with only four-fifths of the time
during which they had undergone preventive imprisonment. 1
In the warm summer evening of May 28, 1991, Carmelo Agliam, his half-brother Eduardo
Tolentino, Ronnel Tolentino, Vidal Agliam, his brother Jerry Agliam, Robert Cacal, Raymundo
Bangi and Marcial Barid converged at acarinderia owned by Ronnel Tolentino at Ganayao,
Pasuquin, Ilocos Norte. They proceeded to the barangay hall at Carusipan to attend a dance. The
group did not tarry for long at the dance because they sensed some hostility from Cesar Galo and
his companions who were giving them dagger looks. In order to avoid trouble, especially during
the festivity, they decided to head for home instead of reacting to the perceived provocation of
Galo and his companions.

The group had barely left when, within fifty meters from the dance hall, their owner jeep was fired
upon from the rear. Vidal Agliam was able to jump out from the eastern side of the "topdown" jeep
and landed just beside it. He scurried to the side of the road and hid in the ricefield. His younger
brother Jerry also managed to jump out, but was shot in the stomach and died. 2 Carmelo Agliam,
Robert Cacal and Ronnel Tolentino sustained injuries in the right foot, back of the right thigh, and
legs and thighs, respectively. 3 The stunned Eduardo Tolentino was not even able to move from
his seat and was hit with a bullet which punctured his right kidney. 4 He did not survive. The
precipitate attack upon the jeep left two people dead and four others injured.
Based upon the affidavits of Carmelo and Vidal Agliam, warrants for the arrest of Ballesteros, Galo
and Bulusan were issued. Charged with the crime of double murder with multiple frustrated
murder, an information was filed as follows:
That on or about (sic) May 28, 1991, in the Municipality of Pasuquin, Ilocos Norte,
Philippines and within the jurisdiction of the Honorable Court, the abovenamed
accused, nighttime purposely sought, with evident premeditation and treachery,
confederating and mutually helping one anotlner, did then and there, with intent to
kill, willfully, unlawfully and feloniously attack and shot Eduardo Tolentino Sr., Jerry
Agliam, Vidal Agliam, Carmelo Agliam, Robert Cacal and Ronnel Tolentino, with the
use of firearms which caused the death of Eduardo Tolentino Sr. and Jerry Agliam
and thereby inflicting gunshot wounds to Vidal Agliam, Carmelo Agliam, Robert
Cacal and Ronnel Tolentino having performed all the acts which would have
produced the crime of Murder, but which did not by reason of causes independent of
the will of the defendant, namely the able and timely medical assistance given to
said Vidal Agliam, Carmelo Agliam, Robert Cacal and Ronnel Tolentino which
prevented their death.
All pleaded not guilty. Paraffin tests conducted on Galo and Ballesteros produced positive results.
Bulusan was not tested for nitrates.
In his testimony, Galo claimed that he did not even talk to Bulusan or any of his companions at the
basketball court, as alleged by the complainants. Having been found with gunpowder residue in
his hands, Galo attempted to exculpate himself from the results by confessing that he had been a
cigarette smoker for the past ten years and had, in fact, just consumed eight cigarette sticks prior
to the test. He further asserted that paraffin tests are not infallible, and that his hand may have
been contaminated by a nitrogenous compound, the source of which is urine. Lastly, he said that
he was not even present at the crime scene when the firing incident took place; hence, he could
not have been one of those who strafed the jeep. 5
For his part, Ballesteros interposed the defense of alibi, narrating to the court that, on May 28,
1991, at around 7:00 o'clock in the evening, he went to a nearby store to purchase some
cigarettes. He returned home within thirty minutes and cleaned his garlic bulbs before retiring at
9:00 o'clock. The next morning, he busied himself with some chores, which included fertilizing his
pepper plants with sulfate. He handled the fertilizers without gloves. To counter the finding of
traces of nitrates on his left hand, Ballesteros maintained that he uses his left hand in lighting
cigarettes, as it was very painful for him to use his right hand. He likewise informed the trial court
that he had no motive to kill the victims. 6
Bulusan echoed the defense of alibi of Galo and Ballesteros, stating that he saw only Galo on the
evening of the dance but did not talk to him. He denied joining the two later that night because
after the dance, he went straight to the house of Michael Viloria, where he spent the night he went
to work at 7:00 o'clock in the morning of the following day. 7
The trial court found the three accused guilty beyond reasonable doubt of murder, qualified by
treachery, as charged, defined and penalized under Article 248 of the Revised Penal Code.

The accused now come to the High Court on appeal, praying that the decision of the trial court be
reversed and that a new one be entered acquitting them of the charges.
The principal question to be resolved has to do with the merits of the decision of the lower court.
Was it correct in finding accused-appellants guilty beyond reasonable doubt? We answer in the
affirmative.
Accused-appellants insist that the trial court erred in finding that Carmelo and Vidal Agliam
recognized them as the assailants. This claim is unmeritorious. In their testimonies, Carmelo and
Vidal Agliam both described the area to be well illumined by the moon. The shooting took place on
a small road in the mountainous terrains of Ilocos Norte, where the air is free from darkening
elements and turbidity. It being a summer evening, there could not have been any fog to becloud
the atmosphere and hamper the vision of the victims, which would have prevented them from
clearly seeing their assailants. They pinpointed the location of the malefactors to be approximately
three meters from where they stood. 8 Considering the luminescence of the moon and the
proximity between them, the victims could distinctly identify their assailants. It must be noted that
Carmelo was acquainted with Galo and his brother, a butcher, since he used to deal with them in
his business of buying and selling cattle. 9 Bulusan was a classmate of Vidal at Cadaratan School.
Generally, people in rural communities know each other both by face and name. 10 Bulusan and
Agliam were, not only townmates, but former classmates as well. The constant interaction
between them through the years would necessarily lead to familiarity with each other such that, at
the very least, one would have been able to recognize the other easily.
That accused-appellants had no motive in perpetrating the offense is irrelevant. A distinction is
herein timely made between motive and intent. Motive is the moving power which impels one to
action for a definite result. Intent, on the other hand, is the purpose to use a particular means to
effect such result. 11 Motive alone is not proof of a crime. 12 In order to tip the scales in its favor,
intent and not motive must be established by the prosecution. Motive is hardly ever an essential
element of a crime. A man driven by extreme moral perversion may be led to commit a crime,
without a real motive but a just for the sake of committing it. 13 Along the same line, a man who
commits a crime with an apparent motive may produce different results, for which he is punished.
As held in a line of cases, the rule is well-settled that the prosecution need not prove motive on the
part of the accused when the latter has been positively identified as the author of the
crime. 14 Lack or absence of motive for committing the crime does not preclude conviction thereof
where there were reliable witnesses who fully and satisfactorily identified the accused as the
perpetrator of the felony. 15
Accused-appellant's attempt to offer wild excuses regarding the source of the gunpowder traces
found on their hands is futile. Experts confirm the possibility that cigarettes, fertilizers and urine
may leave traces of nitrates, but these are minimal and, unlike those found in gunpowder, may be
washed off with tap water.
The hackneyed defense of alibi interposed by accused-appellants must likewise fail. As
consistently enunciated by this Court, the established doctrine is that, for the defense of alibi to
prosper, the accused must prove, not only that he was at some other place at the time of the
commission of the crime, but also that it was physically impossible for him to be at the locus
delicti or within its immediate vicinity. 16 This accused-appellants failed to satisfactorily prove. On
the night of May 28, 1991, Galo and Bulusan attended the dance at the barangay hall. After the
dance, they went their separate ways but remained within the barangay. Galo lingered in the
premises. Bulusan slept over at the house of Michael Viloria, which was within walking distance
from the dance hall.
The defense of alibi must be established by positive, clear and satisfactorily evidence, the reason
being that it is easily manufactured and usually so unreliable that it can rarely be given
credence. 17 This is especially true in case of positive identification of the culprit by reliable

witnesses, 18 which renders their alibis worthless. 19 Positive identification prevails over denials
and alibis. 20
Accused-appellants are under the common misconception that proof beyond reasonable doubt
requires total freedom from any quantum of doubt. This is not so. Under Section 2, Rule 133 of the
Rules of Court,
(p)roof beyond reasonable doubt does not mean such a degree of proof as,
excluding possibility of error, produces absolute certainty. Moral certainty only is
required, or that degree of proof which produces conviction in an unprejudiced mind.
Absolute certainty of guilt is not demanded by law to convict a person of a criminal charge. The
doubt to the benefit of which an accused is entitled in a criminal trial is a reasonable doubt, not a
whimsical or fanciful doubt based on imagined but wholly improbable possibilities and unsupported
by evidence. 21 Reasonable doubt is that engendered by an investigation of the whole proof and
inability, after such investigation, to let the mind rest easy upon the certainty of guilt.22 A precise
example would be the uncorroborated alibi of accused in the case at bar where accusedappellants individually interposed the wavering defense of alibi. Galo failed to elucidate on his
whereabouts after the dance, whereas Bulusan claimed to have slept in the house of one Michael
Viloria. Ballesteros attested that he was not at the dance hall at all. None of them, however,
attempted to corroborate their alibi through the testimony of witnesses. In fact, they never
attempted to present as witnesses those who would have testified to having seen them elsewhere
on the night in question. Had they done so, the presentation of corroborative testimony would
have reenforced their defense of alibi. As held in People vs. Ligotan, 23an alibi must be supported
by credible corroboration from disinterested witnesses, and where such defense is not
corroborated, it is fatal to the accused.
The Court correctly ruled in finding that the offense was qualified by treachery. Under Paragraph
16, Article 14 of the Revised Penal Code, "(t)here is treachery when the offender commits any of
the crimes against the person employing means, methods or forms in the execution thereof which
tend directly and specially to insure its execution without risk to himself arising from the defense
which the offended party might make." The requisites of treachery are twofold: (1) (t)hat at the
time of the attack, the victim was not in a position to defend himself ; and (2) that the
offender consciously adopted the particular means, method or form of attack employed by
him. 24 As regards the second requisite, the accused must make some preparation to kill his victim
in such a manner at to insure the execution of the crime or to make it impossible or hard for the
person attacked to defend himself or retaliate. 25 There must be evidence that such form of attack
was purposely adopted by the accused. 26 Here, it is obvious that the accused-appellants had
sufficient opportunity to reflect on their heinous plan. The facts show that the attack was wellplanned and not merely a result of the impulsiveness of the offenders. Manifestations of their evil
designs were already apparent as early as the time of the dance. They were well-armed and
approached the homebound victims, totally unaware of their presence, from behind. There was no
opportunity for the latter to defend themselves, the attack being so sudden and Eduardo Tolentino
was shot right where he sat.
The trial court was also correct in the award of damages to the heirs of the victims. Damages may
be defined as the pecuniary compensation, recompense, or satisfaction for an injury sustained, or
as otherwise expressed, the pecuniary consequences which the law imposes for the breach of
some duty or the violation of some right. 27 Actual or compensatory damages are those awarded in
satisfaction of, or in recompense for, loss or injury sustained, 28 whereas moral damages may be
invoked when the complainant has experienced mental anguish, serious anxiety, physical
suffering, moral shock and so forth, and had furthermore shown that these were the proximate
result of the offender's wrongful act or omission. 29 In granting actual or compensatory damages,
the party making a claim for such must present the best evidence available, viz., receipts,
vouchers, and the like, 30 as corroborated by his testimony. 31 Here, the claim for actual damages

by the heirs of the victims is not controverted, the same having been fully substantiated by receipts
accumulated by them and presented to the court. 32 Therefore, the award of actual damages is
proper. However, the order granting compensatory damages to the heirs of Jerry Agliam and
Eduardo Tolentino Sr. must be amended. Consistent with the policy of this Court, the amount of
fifty thousand pesos (P50,000.00) is given to the heirs of the victims by way of indemnity, and not
as compensatory damages. 33 As regards moral damages, the amount of psychological pain,
damage and injury caused to the heirs of the victims, although inestimable, 34 may be determined
by the trial court in its discretion. Hence, we see no reason to disturb its findings as to this matter.
WHEREFORE, premises considered, the decision appealed from is hereby AFFIRMED WITH
MODIFICATION. No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur.

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA CRISTINA
SANTOS, petitioners, vs. COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA
and REGIONAL TRIAL COURT OF PASIG, METRO MANILA, BRANCH
181,respondents.
DECISION
REGALADO, J.:
This petition for review on certiorari assails the decision of respondent Court of Appeals in CAG.R. CV No. 29115, promulgated on November 10, 1993, which affirmed with modification the
decision of the trial court, as well as its resolution dated July 8, 1994 denying petitioners motion for
reconsideration.[1]
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was
filed by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito
Santos and Maria Cristina C. Santos before the Regional Trial Court of Pasig and assigned to
Branch 22 thereof.[2]
The generative facts of the case, as synthesized by the trial court and adopted by the Court of
Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during the
pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse [and children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at Interior P.
Burgos St., Palingon, Tipas, Taguig, Metro Manila. The plaintiff was able to acquire said property
through a contract of sale with spouses Mamerto Rayos and Teodora Quintero as vendors last
September 1981. Said property may be described to be surrounded by other immovables
pertaining to defendants herein. Taking P. Burgos Street as the point of reference, on the left side,
going to plaintiffs property, the row of houses will be as follows: That of defendants Cristino and
Brigido Custodio, then that of Lito and Maria Cristina Santos and then that of Ofelia Mabasa. On
the right side (is) that of defendant Rosalina Morato and then a Septic Tank (Exhibit D). As an
access to P. Burgos Street from plaintiffs property, there are two possible passageways. The first
passageway is approximately one meter wide and is about 20 meters distan(t) from Mabasas
residence to P. Burgos Street. Such path is passing in between the previously mentioned row of
houses. The second passageway is about 3 meters in width and length from plaintiff Mabasas
residence to P. Burgos Street; it is about 26 meters. In passing thru said passageway, a less than
a meter wide path through the septic tank and with 5-6 meters in length has to be traversed.
When said property was purchased by Mabasa, there were tenants occupying the premises and
who were acknowledged by plaintiff Mabasa as tenants. However, sometime in February, 1982.
one of said tenants vacated the apartment and when plaintiff Mabasa went to see the premises,
he saw that there had been built an adobe fence in the first passageway making it narrower in
width. Said adobe fence was first constructed by defendants Santoses along their property which
is also along the first passageway. Defendant Morato constructed her adobe fence and even
extended said fence in such a way that the entire passageway was enclosed (Exhibit 1-Santoses
and Custodios, Exh. D for plaintiff, Exhs. 1-C, 1-D and I -E) And it was then that the remaining
tenants of said apartment vacated the area. Defendant Ma. Cristina Santos testified that she
constructed said fence because there was an incident when her daughter was dragged by a
bicycle pedalled by a son of one of the tenants in said apartment along the first passageway. She
also mentioned some other inconveniences of having (at) the front of her house a pathway such
as when some of the tenants were drunk and would bang their doors and windows. Some of their
footwear were even lost. x x x[3] (Italics in original text; corrections in parentheses supplied)
On February 27, 1990, a decision was rendered by the trial court, with this dispositive part:

Accordingly, judgment is hereby rendered as follows:


1) Ordering defendants Custodios and Santoses to give plaintiff permanent access - ingress and
egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight Thousand
Pesos (P8,000) as indemnity for the permanent use of the passageway.
The parties to shoulder their respective litigation expenses.[4]
Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents,
went to the Court of Appeals raising the sole issue of whether or not the lower court erred in not
awarding damages in their favor. On November 10, 1993, as earlier stated, the Court of Appeals
rendered its decision affirming the judgment of the trial court with modification, the decretal portion
of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The Court
hereby orders defendants-appellees to pay plaintiffs-appellants the sum of Sixty Five
Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos as Moral
Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the appealed
decision is affirmed to all respects.[5]
On July 8, 1994, the Court of Appeals denied petitioners motion for
reconsideration.[6] Petitioners then took the present recourse to us, raising two issues, namely,
whether or not the grant of right of way to herein private respondents is proper, and whether or not
the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from raising the same.
Petitioners did not appeal from the decision of the court a quogranting private respondents the
right of way, hence they are presumed to be satisfied with the adjudication therein. With the finality
of the judgment of the trial court as to petitioners, the issue of propriety of the grant of right of way
has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot
obtain any affirmative relief other than those granted in the decision of the trial court. That decision
of the court below has become final as against them and can no longer be reviewed, much less
reversed, by this Court. The rule in this jurisdiction is that whenever an appeal is taken in a civil
case, an appellee who has not himself appealed may not obtain from the appellate court any
affirmative relief other than what was granted in the decision of the lower court. The appellee can
only advance any argument that he may deem necessary to defeat the appellants claim or to
uphold the decision that is being disputed, and he can assign errors in his brief if such is required
to strengthen the views expressed by the court a quo. These assigned errors, in turn, may be
considered by the appellate court solely to maintain the appealed decision on other grounds, but
not for the purpose of reversing or modifying the judgment in the appellees favor and giving him
other affirmative reliefs.[7]
However, with respect to the second issue, we agree with petitioners that the Court of Appeals
erred in awarding damages in favor of private respondents. The award of damages has no
substantial legal basis. A reading of the decision of the Court of Appeals will show that the award
of damages was based solely on the fact that the original plaintiff, Pacifico Mabasa, incurred
losses in the form of unrealized rentals when the tenants vacated the leased premises by reason
of the closure of the passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover
damages. To warrant the recovery of damages, there must be both a right of action for a legal
wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without

damage, or damage without wrong, does not constitute a cause of action, since damages are
merely part of the remedy allowed for the injury caused by a breach or wrong.[8]
There is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result of a violation of a
legal duty. These situations are often called damnum absque injuria.[9] in order that a plaintiff may
maintain an action for the injuries of which he complains, he must establish that such injuries
resulted from a breach of duty which the defendant owed to the plaintiff - a concurrence of injury to
the plaintiff and legal responsibility by the person causing it.[10] The underlying basis for the award
of tort damages is the premise that an individual was injured in contemplation of law. Thus, there
must first be the breach of some duty and the imposition of liability for that breach before damages
may be awarded; it is not sufficient to state that there should be tort liability merely because the
plaintiff suffered some pain and suffering)[11]
Many accidents occur and many injuries are inflicted by acts or omissions which cause
damage or loss to another but which violate no legal duty to such other person, and consequently
create no cause of action in his favor. In such cases, the consequences must be borne by the
injured person alone. The law affords no remedy for damages resulting from an act which does not
amount to a legal injury or wrong. [12]
In other words, in order that the law will give redress for an act causing damage, that act must
be not only hurtful, but wrongful. There must be damnum et injuria.[13] If, as may happen in many
cases, a person sustains actual damage, that is, harm or loss to his person or property, without
sustaining any legal injury, that is, an act or omission which the law does not deem an injury, the
damage is regarded as damnum absque injuria.[14]
In the case at bar, although there was damage, there was no legal injury. Contrary to the claim
of private respondents, petitioners could not be said to have violated the principle of abuse of
right. In order that the principle of abuse of right provided in Article 21 of the Civil Code can be
applied, it is essential that the following requisites concur: (1) The defendant should have acted in
a manner that is contrary to morals, good customs or public policy; (2) The acts should be willful;
and (3) There was damage or injury to the plaintiff.[15]
The act of petitioners in constructing a fence within their lot is a valid exercise of their right as
owners, hence not contrary to morals, good customs or public policy. The law recognizes in the
owner the right to enjoy and dispose of a thing, without other limitations than those established by
law.[16] It is within the right of petitioners, as owners, to enclose and fence their property. Article
430 of the Civil Code provides that (e)very owner may enclose or fence his land or tenements by
means of walls, ditches, live or dead hedges, or by any other means without detriment to
servitudes constituted thereon.
At the time of the construction of the fence, the lot was not subject to any servitudes. There
was no easement of way existing in favor of private respondents, either by law or by contract. The
fact that private respondents had no existing right over the said passageway is confirmed by the
very decision of the trial court granting a compulsory right of way in their favor after payment of
just compensation. It was only that decision which gave private respondents the right to use the
said passageway after payment of the compensation and imposed a corresponding duty on
petitioners not to interfere in the exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property and their act
of fencing and enclosing the same was an act which they may lawfully perform in the employment
and exercise of said right. To repeat, whatever injury or damage may have been sustained by
private respondents by reason of the rightful use of the said land by petitioners is damnum absque
injuria.[17]
A person has a right to the natural use and enjoyment of his own property, according to his
pleasure, for all the purposes to which such property is usually applied. As a general rule,

therefore, there is no cause of action for acts done by one person upon his own property in a
lawful and proper manner, although such acts incidentally cause damage or an unavoidable loss
to another, as such damage or loss is damnum absque injuria.[18] When the owner of property
makes use thereof in the general and ordinary manner in which the property is used, such as
fencing or enclosing the same as in this case, nobody can complain of having been injured,
because the inconvenience arising from said use can be considered as a mere consequence of
community life.[19]
The proper exercise of a lawful right cannot constitute a legal wrong for which an action will
lie, although the act may result in damage to another, for no legal right has been
invaded[21] One may use any lawful means to accomplish a lawful purpose and though the means
adopted may cause damage to another, no cause of action arises in the latters favor. Any injury or
damage occasioned thereby is damnum absque injuria. The courts can give no redress for
hardship to an individual resulting from action reasonably calculated to achieve a lawful end by
lawful means.[22]
[20]

WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of
respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment of the trial
court is correspondingly REINSTATED.
SO ORDERED.
Romero and Puno, JJ., concur.
Mendoza, J., took no part.

HEIRS OF SIMEON BORLADO, namely, ADELAIDA BORLADO, LORETO BORLADO,


REYNALDO BORLADO, RICARDO BORLADO, FRANCISCO BORLADO and ALADINO
DORADO, petitioners, vs. COURT OF APPEALS, and SALVACION VDA. DE BULAN,
BIENVENIDO BULAN, JR., NORMA B. CLARITO and THE PROVINCIAL SHERIFF OF
CAPIZ, respondents.
DECISION
PARDO, J.:
The case is an appeal via certiorari from a decision[1] of the Court of Appeals affirming the
decision of the trial court, the dispositive portion of which reads:
WHEREFORE, judgment is rendered dismissing plaintiffs complaint for lack of cause of action and
ordering as vacated the restraining order and writ of preliminary injunction issued in this case; and
1. Plaintiffs to be jointly and solidarily liable to defendants the quantity of one hundred (100)
cavans of palay every year from 1972 until plaintiffs vacate the premises of the land in question;
2. Declaring defendants as owner of the land and entitled to possession;
3. Ordering plaintiffs to pay defendants the sum of P5,000.00 as attorneys fees and the sum of
P5,000.00 as litigation expenses; and
4. To pay the costs of the suit.
SO ORDERED.
Roxas City, Philippines, March 18, 1988.
(Sgd.) JONAS A. ABELLAR
J u d g e[2]
The Facts
The facts, as found by the Court of Appeals, are as follows:
The records show that plaintiffs-appellants[3] (petitioners) are the heirs of Simeon Borlado whose
parents were Serapio Borlado and Balbina Bulan. The original owner of the lot in question, Lot No.
2097 of the Pontevedra Cadastre, Maayon, Capiz, was Serapio Borlado, grandfather of
petitioners.
On 15 April 1942, Serapio sold the lot to Francisco Bacero (Exh. C, p. 247, MTC Record) for
Three Hundred Pesos (P300.00). After the death of Francsico on 26 February 1948, his widow
Amparo Dionisio Vda. de Bacero, in her capacity as legal guardian of her minor children, namely:
Nicolas, Valentin and Luzviminda, all surnamed Bacero and forced heirs of Francisco Bacero sold
it (the lot) to the Spouses Bienvenido Bulan and Salvacion Borbon, through a Deed of Absolute
Sale dated 27 August 1954 (Exh. 65, pp. 243-245, id.).
Upon the execution of the Deed of Sale and even prior thereto, actual possession of Lot No. 2057
was with the vendees-spouses Bulans in view of a loan obtained by Francisco Bacero from them
in December 1947 (Exh. 65, supra). Exercising their right of ownership under the Deed of Sale,
Salvacion Borbon Vda. de Bulan declared the lot in her name in 1900 for taxation purposes under
Tax Declaration No. 2232 (Exh. F, p. 254, Record [MTC]). She paid the corresponding taxes as

evidenced by the Tax Receipts marked as Exhibits K, J, I, G, F and H (pp. 248-253, Record,
id.). Salvacion and her co-defendants-appellees[4] possession of the lot was continuous, peaceful,
uninterrupted, adverse and exclusive until November 4, 1972, when petitioners forcibly entered
and wrested physical possession thereof from them.
On 23 November 1972, respondents filed with the Municipal Court of Maayon, Capiz a complaint
for ejectment docketed as Civil Case No. A-1, against petitioners (p. 1, id.). The ejectment case
was decided in favor of the respondents whereby the petitioners, their agents, tenants, privies and
members of their families were ordered to vacate Lot No. 2079 and deliver possession to the
respondents together with all improvements and standing crops; to pay said respondents One
Hundred (100) cavans of palay annually from 1972 to the present or in the total amount of One
Thousand One Hundred (1,100) cavans of palay; and to pay the sum of Five Thousand
(P5,000.00) Pesos as reimbursement for the amount respondents had paid their lawyer to protect
their rights; and, the costs of suit (Exh. 57, pp. 256-261, id.). Instead of appealing the adverse
decision to the Court of First Instance (now RTC), on 8 November 1983, petitioners filed the
present case with the Regional Trial Court, Branch 18, Roxas City, docketed as Civil Case No. V4887. This case was dismissed for lack of cause of action in a decision, the decretal portion of
which was quoted earlier.[5]
On 24 November 1993, the Court of Appeals promulgated its decision affirming in toto the
appealed decision.[6]
Hence, this appeal.[7]
The Issue
The issue raised is whether the Court of Appeals erred in ruling that respondents were the
owners of the lot in question.
The Courts Ruling
We deny the petition. The issue is factual. In an appeal via certiorari, we may not review the
findings of fact of the Court of Appeals.[8] When supported by substantial evidence, the findings of
fact of the Court of Appeals are conclusive and binding on the parties and are not reviewable by
this Court,[9] unless the case falls under any of the exceptions to the rule.[10]
Petitioner failed to prove that the case falls within the exceptions.[11] The Supreme Court is not
a trier of facts.[12] It is not our function to review, examine and evaluate or weigh the probative
value of the evidence presented.[13] A question of fact would arise in such event.[14] Questions of
fact cannot be raised in an appeal via certiorari before the Supreme Court and are not proper for
its consideration.[15]
Nevertheless, as a matter of law, the trial court and the Court of Appeals erred in holding
petitioners liable to pay respondents one hundred (100) cavans of palay every year from 1972
until they vacate the premises of the land in question.
The one hundred cavans of palay was awarded as a form of damages. We cannot sustain the
award. Palay is not legal tender currency in the Philippines.
El Fallo del Tribunal

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of
Appeals in CA-G. R. CV No. 18980 with modification that petitioners liability to pay respondents
one hundred (100) cavans of palay every year from 1972 until petitioners vacate the land in
question is deleted, for lack of basis.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.

G.R. No. 107518 October 8, 1998


PNOC SHIPPING AND TRANSPORT CORPORATION, petitioner,
vs.
HONORABLE COURT OF APPEALS and MARIA EFIGENIA FISHING
CORPORATION, respondents.

ROMERO, J.:
A party is entitled to adequate compensation only for such pecuniary loss actually suffered and
duly proved. 1Indeed, basic is the rule that to recover actual damages, the amount of loss must not
only be capable of proof but must actually be proven with a reasonable degree of certainty,
premised upon competent proof or best evidence obtainable of the actual amount thereof. 2 The
claimant is duty-bound to point out specific facts that afford a basis for measuring whatever
compensatory damages are borne. 3 A court cannot merely rely on speculations, conjectures, or
guesswork as to the fact and amount of damages 4 as well as hearsay 5 or uncorroborated
testimony whose truth is suspect. 6 Such are the jurisprudential precepts that the Court now
applies in resolving the instant petition.
The records disclose that in the early morning of September 21, 1977, the M/V Maria Efigenia
XV, owned by private respondent Maria Efigenia Fishing Corporation, was navigating the waters
near Fortune Island in Nasugbu, Batangas on its way to Navotas, Metro Manila when it collided
with the vessel Petroparcel which at the time was owned by the Luzon Stevedoring Corporation
(LSC).
After investigation was conducted by the Board of Marine Inquiry, Philippine Coast Guard
Commandant Simeon N. Alejandro rendered a decision finding the Petroparcel at fault. Based on
this finding by the Board and after unsuccessful demands on petitioner, 7 private respondent sued
the LSC and the Petroparcel captain, Edgardo Doruelo, before the then Court of First Instance of
Caloocan City, paying thereto the docket fee of one thousand two hundred fifty-two pesos
(P1,252.00) and the legal research fee of two pesos (P2.00). 8 In particular, private respondent
prayed for an award of P692,680.00, allegedly representing the value of the fishing nets, boat
equipment and cargoes of M/V Maria Efigenia XV,with interest at the legal rate plus 25% thereof
as attorney's fees. Meanwhile, during the pendency of the case, petitioner PNOC Shipping and
Transport Corporation sought to be substituted in place of LSC as it had already acquired
ownership of the Petroparcel. 9
For its part, private respondent later sought the amendment of its complaint on the ground that the
original complaint failed to plead for the recovery of the lost value of the hull of M/V Maria Efigenia
XV. 10 Accordingly, in the amended complaint, private respondent averred that M/V Maria Efigenia
XV had an actual value of P800,000.00 and that, after deducting the insurance payment of
P200,000.00, the amount of P600,000.00 should likewise be claimed. The amended complaint
also alleged that inflation resulting from the devaluation of the Philippine peso had affected the
replacement value of the hull of the vessel, its equipment and its lost cargoes, such that there
should be a reasonable determination thereof. Furthermore, on account of the sinking of the
vessel, private respondent supposedly incurred unrealized profits and lost business opportunities
that would thereafter be proven. 11
Subsequently, the complaint was further amended to include petitioner as a defendant 12 which
the lower court granted in its order of September 16,
1985. 13 After petitioner had filed its answer to the second amended complaint, on February 5,
1987, the lower court issued a pre-trial order 14 containing, among other things, a stipulations of
facts, to wit:

1. On 21 September 1977, while the fishing boat "M/V MARIA EFIGENIA" owned by
plaintiff was navigating in the vicinity of Fortune Island in Nasugbu, Batangas, on its
way to Navotas, Metro Manila, said fishing boat was hit by the LSCO tanker
"Petroparcel" causing the former to sink.
2. The Board of Marine Inquiry conducted an investigation of this marine accident
and on 21 November 1978, the Commandant of the Philippine Coast Guard, the
Honorable Simeon N. Alejandro, rendered a decision finding the cause of the
accident to be the reckless and imprudent manner in which Edgardo Doruelo
navigated the LSCO "Petroparcel" and declared the latter vessel at fault.
3. On 2 April 1978, defendant Luzon Stevedoring Corporation (LUSTEVECO),
executed in favor of PNOC Shipping and Transport Corporation a Deed of Transfer
involving several tankers, tugboats, barges and pumping stations, among which was
the LSCO Petroparcel.
4. On the same date on 2 April 1979 (sic), defendant PNOC STC again entered into
an Agreement of Transfer with co-defendant Lusteveco whereby all the business
properties and other assets appertaining to the tanker and bulk oil departments
including the motor tanker LSCO Petroparcel of defendant Lusteveco were sold to
PNOC STC.
5. The aforesaid agreement stipulates, among others, that PNOC-STC assumes,
without qualifications, all obligations arising from and by virtue of all rights it obtained
over the LSCO "Petroparcel".
6. On 6 July 1979, another agreement between defendant LUSTEVECO and PNOCSTC was executed wherein Board of Marine Inquiry Case No. 332 (involving the sea
accident of 21 September 1977) was specifically identified and assumed by the
latter.
7. On 23 June 1979, the decision of Board of Marine Inquiry was affirmed by the
Ministry of National Defense, in its decision dismissing the appeal of Capt. Edgardo
Doruelo and Chief mate Anthony Estenzo of LSCO "Petroparcel".
8. LSCO "Petroparcel" is presently owned and operated by PNOC-STC and likewise
Capt. Edgardo Doruelo is still in their employ.
9. As a result of the sinking of M/V Maria Efigenia caused by the reckless and
imprudent manner in which LSCO Petroparcel was navigated by defendant Doruelo,
plaintiff suffered actual damages by the loss of its fishing nets, boat equipments (sic)
and cargoes, which went down with the ship when it sank the replacement value of
which should be left to the sound discretion of this Honorable Court.
After trial, the lower court 15 rendered on November 18, 1989 its decision disposing of Civil Case
No. C-9457 as follows:
WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of
the plaintiff and against the defendant PNOC Shipping & Transport Corporation, to
pay the plaintiff:
a. The sum of P6,438,048.00 representing the value of the fishing boat
with interest from the date of the filing of the complaint at the rate of 6%
per annum;

b. The sum of P50,000.00 as and for attorney's fees; and


c. The costs of suit.
The counterclaim is hereby DISMISSED for lack of merit. Likewise, the case against
defendant Edgardo Doruelo is hereby DISMISSED, for lack of jurisdiction.
SO ORDERED.
In arriving at the above disposition, the lower court cited the evidence presented by private
respondent consisting of the testimony of its general manager and sole witness, Edilberto del
Rosario. Private respondent's witness testified that M/V Maria Efigenia XV was owned by private
respondent per Exhibit A, a certificate of ownership issued by the Philippine Coast Guard showing
that M/V Maria Efigenia XV was a wooden motor boat constructed in 1965 with 128.23 gross
tonnage. According to him, at the time the vessel sank, it was then carrying 1,060 tubs (baeras)
of assorted fish the value of which was never recovered. Also lost with the vessel were two
cummins engines (250 horsepower), radar, pathometer and compass. He further added that with
the loss of his flagship vessel in his fishing fleet of fourteen (14) vessels, he was constrained to
hire the services of counsel whom he paid P10,000 to handle the case at the Board of Marine
Inquiry and P50,000.00 for commencing suit for damages in the lower court.
As to the award of P6,438,048.00 in actual damages, the lower court took into account the
following pieces of documentary evidence that private respondent proffered during trial:
(a) Exhibit A certified xerox copy of the certificate of ownership
of M/V Maria Efigenia XV;
(b) Exhibit B a document titled "Marine Protest" executed by Delfin
Villarosa, Jr. on September 22, 1977 stating that as a result of the
collision, the M/V Maria Efigenia XVsustained a hole at its left side that
caused it to sink with its cargo of 1,050 baeras valued at
P170,000.00;
(c) Exhibit C a quotation for the construction of a 95-footer trawler
issued by Isidoro A. Magalong of I. A. Magalong Engineering and
Construction on January 26, 1987 to Del Rosario showing that
construction of such trawler would cost P2,250,000.00;
(d) Exhibit D pro forma invoice No. PSPI-05/87-NAV issued by E.D.
Daclan of Power Systems, Incorporated on January 20, 1987 to Del
Rosario showing that two (2) units of CUMMINS Marine Engine model
N855-M, 195 bhp. at 1800 rpm. would cost P1,160,000.00;
(e) Exhibit E quotation of prices issued by Scan Marine Inc. on
January 20, 1987 to Del Rosario showing that a unit of Furuno
Compact Daylight Radar, Model FR-604D, would cost P100,000.00
while a unit of Furuno Color Video Sounder, Model FCV-501 would
cost P45,000.00 so that the two units would cost P145,000.00;
(f) Exhibit F quotation of prices issued by Seafgear Sales, Inc. on
January 21, 1987 to Del Rosario showing that two (2) rolls of nylon
rope (5" cir. X 300fl.) would cost P140,000.00; two (2) rolls of nylon
rope (3" cir. X 240fl.), P42,750.00; one (1) binocular (7 x 50),
P1,400.00, one (1) compass (6"), P4,000.00 and 50 pcs. of floats,
P9,000.00 or a total of P197,150.00;

(g) Exhibit G retainer agreement between Del Rosario and F.


Sumulong Associates Law Offices stipulating an acceptance fee of
P5,000.00, per appearance fee of P400.00, monthly retainer of
P500.00, contingent fee of 20% of the total amount recovered and that
attorney's fee to be awarded by the court should be given to Del
Rosario; and
(h) Exhibit H price quotation issued by Seafgear Sales, Inc. dated
April 10, 1987 to Del Rosario showing the cost of poly nettings as: 50
rolls of 400/18 3kts. 100md x 100mtrs., P70,000.00; 50 rolls of 400/18
5kts. 100md x 100mtrs., P81,500.00; 50 rolls of 400/18 8kts. 100md x
100mtrs., P116,000.00, and 50 rolls of 400/18 10kts. 100md x
100mtrs., P146,500 and baera (tub) at P65.00 per piece or a total of
P414,065.00.
The lower court held that the prevailing replacement value of P6,438,048.00 of the fishing boat
and all its equipment would regularly increase at 30% every year from the date the quotations
were given.
On the other hand, the lower court noted that petitioner only presented Lorenzo Lazaro, senior
estimator at PNOC Dockyard & Engineering Corporation, as sole witness and it did not bother at
all to offer any documentary evidence to support its position. Lazaro testified that the price
quotations submitted by private respondent were "excessive" and that as an expert witness, he
used the quotations of his suppliers in making his estimates. However, he failed to present such
quotations of prices from his suppliers, saying that he could not produce a breakdown of the costs
of his estimates as it was "a sort of secret scheme." For this reason, the lower court concluded:
Evidently, the quotation of prices submitted by the plaintiff relative to the replacement
value of the fishing boat and its equipments in the tune of P6,438,048.00 which were
lost due to the recklessness and imprudence of the herein defendants were not
rebutted by the latter with sufficient evidence. The defendants through their sole
witness Lorenzo Lazaro relied heavily on said witness' bare claim that the amount
afore-said is excessive or bloated, but they did not bother at all to present any
documentary evidence to substantiate such claim. Evidence to be believed must not
only proceed from the mouth of the credible witness, but it must be credible in itself.
(Vda. de Bonifacio vs. B. L. T. Bus Co., Inc. L-26810, August 31, 1970).
Aggrieved, petitioner filed a motion for the reconsideration of the lower court's decision contending
that: (1) the lower court erred in holding it liable for damages; that the lower court did not acquire
jurisdiction over the case by paying only P1,252.00 as docket fee; (2) assuming that plaintiff was
entitled to damages, the lower court erred in awarding an amount greater than that prayed for in
the second amended complaint; and (3) the lower court erred when it failed to resolve the issues it
had raised in its memorandum. 16 Petitioner likewise filed a supplemental motion for
reconsideration expounding on whether the lower court acquired jurisdiction over the subject
matter of the case despite therein plaintiff's failure to pay the prescribed docket fee. 17
On January 25, 1990, the lower court declined reconsideration for lack of merit. 18 Apparently not
having received the order denying its motion for reconsideration, petitioner still filed a motion for
leave to file a reply to private respondent's opposition to said motion. 19 Hence, on February 12,
1990, the lower court denied said motion for leave to file a reply on the ground that by the
issuance of the order of January 25, 1990, said motion had become moot and academic. 20
Unsatisfied with the lower court's decision, petitioner elevated the matter to the Court of Appeals
which, however, affirmed the same in toto on October 14, 1992. 21 On petitioner's assertion that
the award of P6,438,048.00 was not convincingly proved by competent and admissible evidence,

the Court of Appeals ruled that it was not necessary to qualify Del Rosario as an expert witness
because as the owner of the lost vessel, "it was well within his knowledge and competency to
identify and determine the equipment installed and the cargoes loaded" on the vessel. Considering
the documentary evidence presented as in the nature of market reports or quotations, trade
journals, trade circulars and price lists, the Court of Appeals held, thus:
Consequently, until such time as the Supreme Court categorically rules on the
admissibility or inadmissibility of this class of evidence, the reception of these
documentary exhibits (price quotations) as evidence rests on the sound discretion of
the trial court. In fact, where the lower court is confronted with evidence which
appears to be of doubtful admissibility, the judge should declare in favor of
admissibility rather than of non-admissibility (The Collector of Palakadhari, 124
[1899], p. 13, cited in Francisco, Revised Rules of Court, Evidence, Volume VII, Part
I, 1990 Edition, p. 18). Trial courts are enjoined to observe the strict enforcement of
the rules of evidence which crystallized through constant use and practice and are
very useful and effective aids in the search for truth and for the effective
administration of justice. But in connection with evidence which may appear to be of
doubtful relevancy or incompetency or admissibility, it is the safest policy to be
liberal, not rejecting them on doubtful or technical grounds, but admitting them
unless plainly irrelevant, immaterial or incompetent, for the reason that their rejection
places them beyond the consideration of the court. If they are thereafter found
relevant or competent, can easily be remedied by completely discarding or ignoring
them. (Banaria vs. Banaria, et al., C.A. No. 4142, May 31, 1950; cited in
Francisco, Supra). [Emphasis supplied].
Stressing that the alleged inadmissible documentary exhibits were never satisfactorily rebutted by
appellant's own sole witness in the person of Lorenzo Lazaro, the appellate court found that
petitioner ironically situated itself in an "inconsistent posture by the fact that its own witness,
admittedly an expert one, heavily relies on the very same pieces of evidence (price quotations)
appellant has so vigorously objected to as inadmissible evidence." Hence, it concluded:
. . . The amount of P6,438,048.00 was duly established at the trial on the basis of
appellee's documentary exhibits (price quotations) which stood uncontroverted, and
which already included the amount by way of adjustment as prayed for in the
amended complaint. There was therefore no need for appellee to amend the second
amended complaint in so far as to the claim for damages is concerned to conform
with the evidence presented at the trial. The amount of P6,438,048.00 awarded is
clearly within the relief prayed for in appellee's second amended complaint.
On the issue of lack of jurisdiction, the respondent court held that following the ruling in Sun
Insurance Ltd. v. Asuncion, 22 the additional docket fee that may later on be declared as still owing
the court may be enforced as a lien on the judgment.
Hence, the instant recourse.
In assailing the Court of Appeals' decision, petitioner posits the view that the award of P6,438,048
as actual damages should have been in light of these considerations, namely: (1) the trial court did
not base such award on the actual value of the vessel and its equipment at the time of loss in
1977; (2) there was no evidence on extraordinary inflation that would warrant an adjustment of the
replacement cost of the lost vessel, equipment and cargo; (3) the value of the lost cargo and the
prices quoted in respondent's documentary evidence only amount to P4,336,215.00; (4) private
respondent's failure to adduce evidence to support its claim for unrealized profit and business
opportunities; and (5) private respondent's failure to prove the extent and actual value of damages
sustained as a result of the 1977 collision of the vessels. 23

Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in
satisfaction of, or in recompense for, loss or injury sustained. They proceed from a sense of
natural justice and are designed to repair the wrong that has been done, to compensate for the
injury inflicted and not to impose a penalty. 24 In actions based on torts or quasi-delicts, actual
damages include all the natural and probable consequences of the act or omission complained
of. 25 There are two kinds of actual or compensatory damages: one is the loss of what a person
already possesses (dao emergente), and the other is the failure to receive as a benefit that which
would have pertained to him (lucro cesante). 26 Thus:
Where goods are destroyed by the wrongful act of the defendant the plaintiff is
entitled to their value at the time of destruction, that is, normally, the sum of money
which he would have to pay in the market for identical or essentially similar goods,
plus in a proper case damages for the loss of use during the period before
replacement. In other words, in the case of profit-earning chattels, what has to be
assessed is the value of the chattel to its owner as a going concern at the time and
place of the loss, and this means, at least in the case of ships, that regard must be
had to existing and pending engagements, . . .
. . . . If the market value of the ship reflects the fact that it is in any case virtually
certain of profitable employment, then nothing can be added to that value in respect
of charters actually lost, for to do so would be pro tanto to compensate the plaintiff
twice over. On the other hand, if the ship is valued without reference to its actual
future engagements and only in the light of its profit-earning potentiality, then it may
be necessary to add to the value thus assessed the anticipated profit on a charter or
other engagement which it was unable to fulfill. What the court has to ascertain in
each case is the "capitalised value of the vessel as a profit-earning machine not in
the abstract but in view of the actual circumstances," without, of course, taking into
account considerations which were too remote at the time of the loss. 27 [Emphasis
supplied].
As stated at the outset, to enable an injured party to recover actual or compensatory damages, he
is required to prove the actual amount of loss with reasonable degree of certainty premised upon
competent proof and on the best evidence available. 28 The burden of proof is on the party who
would be defeated if no evidence would be presented on either side. He must establish his case
by a preponderance of evidence which means that the evidence, as a whole, adduced by one side
is superior to that of the other. 29 In other words, damages cannot be presumed and courts, in
making an award must point out specific facts that could afford a basis for measuring whatever
compensatory or actual damages are borne. 30
In this case, actual damages were proven through the sole testimony of private respondent's
general manager and certain pieces of documentary evidence. Except for Exhibit B where the
value of the 1,050 baeras of fish were pegged at their September 1977 value when the collision
happened, the pieces of documentary evidence proffered by private respondent with respect to
items and equipment lost show similar items and equipment with corresponding prices in early
1987 or approximately ten (10) years after the collision. Noticeably, petitioner did not object to the
exhibits in terms of the time index for valuation of the lost goods and equipment. In objecting to the
same pieces of evidence, petitioner commented that these were not duly authenticated and that
the witness (Del Rosario) did not have personal knowledge on the contents of the writings and
neither was he an expert on the subjects thereof. 31 Clearly ignoring petitioner's objections to the
exhibits, the lower court admitted these pieces of evidence and gave them due weight to arrive at
the award of P6,438,048.00 as actual damages.
The exhibits were presented ostensibly in the course of Del Rosario's testimony. Private
respondent did not present any other witnesses especially those whose signatures appear in the
price quotations that became the bases of the award. We hold, however, that the price quotations

are ordinary private writings which under the Revised Rules of Court should have been proffered
along with the testimony of the authors thereof. Del Rosario could not have testified on the veracity
of the contents of the writings even though he was the seasoned owner of a fishing fleet because
he was not the one who issued the price quotations. Section 36, Rule 130 of the Revised Rules of
Court provides that a witness can testify only to those facts that he knows of his personal
knowledge.
For this reason, Del Rosario's claim that private respondent incurred losses in the total amount of
P6,438,048.00 should be admitted with extreme caution considering that, because it was a bare
assertion, it should be supported by independent evidence. Moreover, because he was the owner
of private respondent corporation 32 whatever testimony he would give with regard to the value of
the lost vessel, its equipment and cargoes should be viewed in the light of his self-interest therein.
We agree with the Court of Appeals that his testimony as to the equipment installed and the
cargoes loaded on the vessel should be given credence 33 considering his familiarity thereto.
However, we do not subscribe to the conclusion that his valuation of such equipment, cargo and
the vessel itself should be accepted as gospel truth. 34 We must, therefore, examine the
documentary evidence presented to support Del Rosario's claim as regards the amount of losses.
The price quotations presented as exhibits partake of the nature of hearsay evidence considering
that the persons who issued them were not presented as witnesses. 35 Any evidence, whether oral
or documentary, is hearsay if its probative value is not based on the personal knowledge of the
witness but on the knowledge of another person who is not on the witness stand. Hearsay
evidence, whether objected to or not, has no probative value unless the proponent can show that
the evidence falls within the exceptions to the hearsay evidence rule. 36 On this point, we believe
that the exhibits do not fall under any of the exceptions provided under Sections 37 to 47 of Rule
130. 37
It is true that one of the exceptions to the hearsay rule pertains to "commercial lists and the like"
under Section 45, Rule 130 of the Revised Rules on Evidence. In this respect, the Court of
Appeals considered private respondent's exhibits as "commercial lists." It added, however, that
these exhibits should be admitted in evidence "until such time as the Supreme Court categorically
rules on the admissibility or inadmissibility of this class of evidence" because "the reception of
these documentary exhibits (price quotations) as evidence rests on the sound discretion of the trial
court." 38 Reference to Section 45, Rule 130, however, would show that the conclusion of the
Court of Appeals on the matter was arbitrarily arrived at. This rule states:
Commercial lists and the like. Evidence of statements of matters of interest to
persons engaged in an occupation contained in a list, register, periodical, or other
published compilation is admissible as tending to prove the truth of any relevant
matter so stated if that compilation is published for use by persons engaged in that
occupation and is generally used and relied upon by them there.
Under Section 45 of the aforesaid Rule, a document is a commercial list if: (1) it is a statement of
matters of interest to persons engaged in an occupation; (2) such statement is contained in a list,
register, periodical or other published compilation; (3) said compilation is published for the use of
persons engaged in that occupation, and (4) it is generally used and relied upon by persons in the
same occupation.
Based on the above requisites, it is our considered view that Exhibits B, C, D, E, F and H 39 are
not "commercial lists" for these do not belong to the category of "other published compilations"
under Section 45 aforequoted. Under the principle of ejusdem generis, "(w)here general words
follow an enumeration of persons or things, by words of a particular and specific meaning, such
general words are not to be construed in their widest extent, but are to be held as applying only to
persons or things of the same kind or class as those specifically mentioned." 40 The exhibits
mentioned are mere price quotations issued personally to Del Rosario who requested for them

from dealers of equipment similar to the ones lost at the collision of the two vessels. These are not
published in any list, register, periodical or other compilation on the relevant subject matter.
Neither are these "market reports or quotations" within the purview of "commercial lists" as these
are not "standard handbooks or periodicals, containing data of everyday professional need and
relied upon in the work of the occupation." 41These are simply letters responding to the queries of
Del Rosario. Thus, take for example Exhibit D which reads:
January 20, 1987
PROFORMA INVOICE NO. PSPI-05/87-NAV
MARIA EFIGINIA FISHING CORPORATION
Navotas, Metro Manila
Attention: MR. EDDIE DEL ROSARIO
Gentlemen:
In accordance to your request, we are pleated to quote our Cummins Marine Engine,
to wit.
Two (2) units CUMMINS Marine Engine model N855-M,
195 bhp. at 1800 rpm., 6-cylinder in-line, 4-stroke cycle,
natural aspirated, 5 1/2 in. x 6 in. bore and stroke, 855 cu.
In. displacement, keel-cooled, electric starting coupled
with Twin-Disc Marine gearbox model MG-509, 4.5:1
reduction ratio, includes oil cooler, companion flange,
manual and standard accessories as per attached sheet.
Price FOB Manila P580,000.00/unit
Total FOB Manila P1,160,000.00
TERMS : CASH
DELIVERY : 60-90 days from date of order.
VALIDITY : Subject to our final confirmation.
WARRANTY : One (1) full year against factory defect.
Very truly
yours,
POWER
SYSTEM
S, INC.
(Sgd.)
E. D.
Daclan

To be sure, letters and telegrams are admissible in evidence but these are, however, subject to
the general principles of evidence and to various rules relating to documentary
evidence. 42 Hence, in one case, it was held that a letter from an automobile dealer offering an
allowance for an automobile upon purchase of a new automobile after repairs had been
completed, was not a "price current" or "commercial list" within the statute which made such items
presumptive evidence of the value of the article specified therein. The letter was not admissible in
evidence as a "commercial list" even though the clerk of the dealer testified that he had written the
letter in due course of business upon instructions of the dealer.43
But even on the theory that the Court of Appeals correctly ruled on the admissibility of those letters
or communications when it held that unless "plainly irrelevant, immaterial or incompetent,"
evidence should better be admitted rather than rejected on "doubtful or technical grounds," 44 the
same pieces of evidence, however, should not have been given probative weight. This is a
distinction we wish to point out. Admissibility of evidence refers to the question of whether or not
the circumstance (or evidence) is to considered at all. 45 On the other hand, the probative value of
evidence refers to the question of whether or not it proves an issue. 46 Thus, a letter may be
offered in evidence and admitted as such but its evidentiary weight depends upon the observance
of the rules on evidence. Accordingly, the author of the letter should be presented as witness to
provide the other party to the litigation the opportunity to question him on the contents of the letter.
Being mere hearsay evidence, failure to present the author of the letter renders its contents
suspect. As earlier stated, hearsay evidence, whether objected to or not, has no probative value.
Thus:
The courts differ as to the weight to be given to hearsay evidence admitted without
objection. Some hold that when hearsay has been admitted without objection, the
same may be considered as any other properly admitted testimony. Others maintain
that it is entitled to no more consideration than if it had been excluded.
The rule prevailing in this jurisdiction is the latter one. Our Supreme Court held that
although the question of admissibility of evidence can not be raised for the first time
on appeal, yet if the evidence is hearsay it has no probative value and should be
disregarded whether objected to or not. "If no objection is made" quoting Jones on
Evidence "it (hearsay) becomes evidence by reason of the want of such objection
even though its admission does not confer upon it any new attribute in point of
weight. Its nature and quality remain the same, so far as its intrinsic weakness and
incompetency to satisfy the mind are concerned, and as opposed to direct primary
evidence, the latter always prevails.
The failure of the defense counsel to object to the presentation of incompetent
evidence, like hearsay evidence or evidence that violates the rules of res inter alios
acta, or his failure to ask for the striking out of the same does not give such evidence
any probative value. But admissibility of evidence should not be equated with weight
of evidence. Hearsay evidence whether objected to or not has no probative value. 47
Accordingly, as stated at the outset, damages may not be awarded on the basis of hearsay
evidence. 48
Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives private
respondent of any redress for the loss of its vessel. This is because in Lufthansa German Airlines
v. Court of Appeals, 49 the Court said:
In the absence of competent proof on the actual damage suffered, private
respondent is "entitled to nominal damages which, as the law says, is adjudicated in
order that a right of the plaintiff, which has been violated or invaded by defendant,

may be vindicated and recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered." [Emphasis supplied].
Nominal damages are awarded in every obligation arising from law, contracts, quasi-contracts,
acts or omissions punished by law, and quasi-delicts, or in every case where property right has
been invaded. 50 Under Article 2223 of the Civil Code, "(t)he adjudication of nominal damages
shall preclude further contest upon the right involved and all accessory questions, as between the
parties to the suit, or their respective heirs and assigns."
Actually, nominal damages are damages in name only and not in fact. Where these are allowed,
they are not treated as an equivalent of a wrong inflicted but simply in recognition of the existence
of a technical injury. 51 However, the amount to be awarded as nominal damages shall be equal or
at least commensurate to the injury sustained by private respondent considering the concept and
purpose of such damages. 52 The amount of nominal damages to be awarded may also depend
on certain special reasons extant in the case. 53
Applying now such principles to the instant case, we have on record the fact that petitioner's
vessel Petroparcel was at fault as well as private respondent's complaint claiming the amount of
P692,680.00 representing the fishing nets, boat equipment and cargoes that sunk with the M/V
Maria Efigenia XV. In its amended complaint, private respondent alleged that the vessel had an
actual value of P800,000.00 but it had been paid insurance in the amount of P200,000.00 and,
therefore, it claimed only the amount of P600,000.00. Ordinarily, the receipt of insurance
payments should diminish the total value of the vessel quoted by private respondent in his
complaint considering that such payment is causally related to the loss for which it claimed
compensation. This Court believes that such allegations in the original and amended complaints
can be the basis for determination of a fair amount of nominal damages inasmuch as a complaint
alleges the ultimate facts constituting the plaintiffs cause of
action. 54 Private respondent should be bound by its allegations on the amount of its claims.
With respect to petitioner's contention that the lower court did not acquire jurisdiction over the
amended complaint increasing the amount of damages claimed to P600,000.00, we agree with the
Court of Appeals that the lower court acquired jurisdiction over the case when private respondent
paid the docket fee corresponding to its claim in its original complaint. Its failure to pay the docket
fee corresponding to its increased claim for damages under the amended complaint should not be
considered as having curtailed the lower court's jurisdiction. Pursuant to the ruling in Sun
Insurance Office, Ltd. (SIOL) v. Asuncion, 55 the unpaid docket fee should be considered as a lien
on the judgment even though private respondent specified the amount of P600,000.00 as its claim
for damages in its amended complaint.
Moreover, we note that petitioner did not question at all the jurisdiction of the lower court on the
ground of insufficient docket fees in its answers to both the amended complaint and the second
amended complaint. It did so only in its motion for reconsideration of the decision of the lower
court after it had received an adverse decision. As this Court held in Pantranco North Express, Inc.
v. Court of Appeals, 56 participation in all stages of the case before the trial court, that included
invoking its authority in asking for affirmative relief, effectively barred petitioner by estoppel from
challenging the court's jurisdiction. Notably, from the time it filed its answer to the second
amended complaint on April 16, 1985, 57 petitioner did not question the lower court's jurisdiction. It
was only on December 29, 1989 58 when it filed its motion for reconsideration of the lower court's
decision that petitioner raised the question of the lower court's lack of jurisdiction. Petitioner thus
foreclosed its right to raise the issue of jurisdiction by its own inaction.
WHEREFORE, the challenged decision of the Court of Appeals dated October 14, 1992 in CAG.R. CV No. 26680 affirming that of the Regional Trial Court of Caloocan City, Branch 121, is
hereby MODIFIED insofar as it awarded actual damages to private respondent Maria Efigenia
Fishing Corporation in the amount of P6,438,048.00 for lack of evidentiary bases therefor.

Considering the fact, however, that: (1) technically petitioner sustained injury but which,
unfortunately, was not adequately and properly proved, and (2) this case has dragged on for
almost two decades, we believe that an award of Two Million (P2,000,000.00) 59 in favor of private
respondent as and for nominal damages is in order.
No pronouncement as to costs.
SO ORDERED.
Kapunan and Purisima, JJ., concur.
Narvasa, C.J., is on leave.

PERFECTO S. FLORESCA, in his own behalf and on behalf of the minors ROMULO and
NESTOR S. FLORESCA; and ERLINDA FLORESCA-GABUYO, PEDRO S. FLORESCA, JR.,
CELSO S. FLORESCA, MELBA S. FLORESCA, JUDITH S. FLORESCA and CARMEN S.
FLORESCA;
LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and on behalf of her minor
children LINDA, ROMEO, ANTONIO JEAN and ELY, all surnamed Martinez; and DANIEL
MARTINEZ and TOMAS MARTINEZ;
SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and on behalf of her minor
children JOSE, ESTELA, JULITA SALUD and DANILO, all surnamed OBRA;
LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on behalf of her minor
children EDNA, GEORGE and LARRY III, all surnamed VILLAR;
DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf and on behalf of her minor
children EDITHA, ELIZABETH, DIVINA, RAYMUNDO, NESTOR and AURELIO, JR. all
surnamed LANUZA;
EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on behalf of her minor children
JOSE, LORENZO, JR., MARIA, VENUS and FELIX, all surnamed ISLA, petitioners,
vs.
PHILEX MINING CORPORATION and HON. JESUS P. MORFE, Presiding Judge of Branch
XIII, Court of First Instance of Manila, respondents.
Rodolfo C. Pacampara for petitioners.
Tito M. Villaluna for respondents.

MAKASIAR, J.:
This is a petition to review the order of the former Court of First Instance of Manila, Branch XIII,
dated December 16, 1968 dismissing petitioners' complaint for damages on the ground of lack of
jurisdiction.
Petitioners are the heirs of the deceased employees of Philex Mining Corporation (hereinafter
referred to as Philex), who, while working at its copper mines underground operations at Tuba,
Benguet on June 28, 1967, died as a result of the cave-in that buried them in the tunnels of the
mine. Specifically, the complaint alleges that Philex, in violation of government rules and
regulations, negligently and deliberately failed to take the required precautions for the protection of
the lives of its men working underground. Portion of the complaint reads:
xxx xxx xxx
9. That for sometime prior and up to June 28,1967, the defendant PHILEX, with
gross and reckless negligence and imprudence and deliberate failure to take the
required precautions for the due protection of the lives of its men working
underground at the time, and in utter violation of the laws and the rules and
regulations duly promulgated by the Government pursuant thereto, allowed great
amount of water and mud to accumulate in an open pit area at the mine above Block
43-S-1 which seeped through and saturated the 600 ft. column of broken ore and
rock below it, thereby exerting tremendous pressure on the working spaces at its
4300 level, with the result that, on the said date, at about 4 o'clock in the afternoon,

with the collapse of all underground supports due to such enormous pressure,
approximately 500,000 cubic feet of broken ores rocks, mud and water,
accompanied by surface boulders, blasted through the tunnels and flowed out and
filled in, in a matter of approximately five (5) minutes, the underground workings,
ripped timber supports and carried off materials, machines and equipment which
blocked all avenues of exit, thereby trapping within its tunnels of all its men above
referred to, including those named in the next preceding paragraph, represented by
the plaintiffs herein;
10. That out of the 48 mine workers who were then working at defendant PHILEX's
mine on the said date, five (5) were able to escape from the terrifying holocaust; 22
were rescued within the next 7 days; and the rest, 21 in number, including those
referred to in paragraph 7 hereinabove, were left mercilessly to their fate,
notwithstanding the fact that up to then, a great many of them were still alive,
entombed in the tunnels of the mine, but were not rescued due to defendant
PHILEX's decision to abandon rescue operations, in utter disregard of its bounden
legal and moral duties in the premises;
xxx xxx xxx
13. That defendant PHILEX not only violated the law and the rules and regulations
duly promulgated by the duly constituted authorities as set out by the Special
Committee above referred to, in their Report of investigation, pages 7-13, Annex 'B'
hereof, but also failed completely to provide its men working underground the
necessary security for the protection of their lives notwithstanding the fact that it had
vast financial resources, it having made, during the year 1966 alone, a total
operating income of P 38,220,254.00, or net earnings, after taxes of P19,117,394.00,
as per its llth Annual Report for the year ended December 31, 1966, and with
aggregate assets totalling P 45,794,103.00 as of December 31, 1966;
xxx xxx xxx
(pp. 42-44, rec.)
A motion to dismiss dated May 14, 1968 was filed by Philex alleging that the causes of action of
petitioners based on an industrial accident are covered by the provisions of the Workmen's
Compensation Act (Act 3428, as amended by RA 772) and that the former Court of First Instance
has no jurisdiction over the case. Petitioners filed an opposition dated May 27, 1968 to the said
motion to dismiss claiming that the causes of action are not based on the provisions of the
Workmen's Compensation Act but on the provisions of the Civil Code allowing the award of actual,
moral and exemplary damages, particularly:
Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre- existing contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter.
Art. 2178. The provisions of articles 1172 to 1174 are also applicable to a quasidelict.
(b) Art. 1173The fault or negligence of the obligor consists in the omission of that
diligence which is required by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place. When negligence shows
bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply.

Art. 2201. x x x x x x x x x
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non-performance of the
obligation.
Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant
acted with gross negligence.
After a reply and a rejoinder thereto were filed, respondent Judge issued an order dated June 27,
1968 dismissing the case on the ground that it falls within the exclusive jurisdiction of the
Workmen's Compensation Commission. On petitioners' motion for reconsideration of the said
order, respondent Judge, on September 23, 1968, reconsidered and set aside his order of June
27, 1968 and allowed Philex to file an answer to the complaint. Philex moved to reconsider the
aforesaid order which was opposed by petitioners.
On December 16, 1968, respondent Judge dismissed the case for lack of jurisdiction and ruled
that in accordance with the established jurisprudence, the Workmen's Compensation Commission
has exclusive original jurisdiction over damage or compensation claims for work-connected deaths
or injuries of workmen or employees, irrespective of whether or not the employer was negligent,
adding that if the employer's negligence results in work-connected deaths or injuries, the employer
shall, pursuant to Section 4-A of the Workmen's Compensation Act, pay additional compensation
equal to 50% of the compensation fixed in the Act.
Petitioners thus filed the present petition.
In their brief, petitioners raised the following assignment of errors:
I
THE LOWER COURT ERRED IN DISMISSING THE PLAINTIFFS- PETITIONERS'
COMPLAINT FOR LACK OF JURISDICTION.
II
THE LOWER COURT ERRED IN FAILING TO CONSIDER THE CLEAR
DISTINCTION BETWEEN CLAIMS FOR DAMAGES UNDER THE CIVIL CODE
AND CLAIMS FOR COMPENSATION UNDER THE WORKMEN'S
COMPENSATION ACT.
A
In the first assignment of error, petitioners argue that the lower court has jurisdiction over the
cause of action since the complaint is based on the provisions of the Civil Code on damages,
particularly Articles 2176, 2178, 1173, 2201 and 2231, and not on the provisions of the Workmen's
Compensation Act. They point out that the complaint alleges gross and brazen negligence on the
part of Philex in failing to take the necessary security for the protection of the lives of its
employees working underground. They also assert that since Philex opted to file a motion to
dismiss in the court a quo, the allegations in their complaint including those contained in the
annexes are deemed admitted.
In the second assignment of error, petitioners asseverate that respondent Judge failed to see the
distinction between the claims for compensation under the Workmen's Compensation Act and the
claims for damages based on gross negligence of Philex under the Civil Code. They point out that
workmen's compensation refers to liability for compensation for loss resulting from injury, disability

or death of the working man through industrial accident or disease, without regard to the fault or
negligence of the employer, while the claim for damages under the Civil Code which petitioners
pursued in the regular court, refers to the employer's liability for reckless and wanton negligence
resulting in the death of the employees and for which the regular court has jurisdiction to
adjudicate the same.
On the other hand, Philex asserts that work-connected injuries are compensable exclusively under
the provisions of Sections 5 and 46 of the Workmen's Compensation Act, which read:
SEC. 5. Exclusive right to compensation.The rights and remedies granted by this
Act to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws because of said injury ...
SEC. 46. Jurisdiction. The Workmen's Compensation Commissioner shall have
exclusive jurisdiction to hear and decide claims for compensation under the
Workmen's Compensation Act, subject to appeal to the Supreme Court, ...
Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855 [1956]) where it was held that "all
claims of workmen against their employer for damages due to accident suffered in the course of
employment shall be investigated and adjudicated by the Workmen's Compensation Commission,"
subject to appeal to the Supreme Court.
Philex maintains that the fact that an employer was negligent, does not remove the case from the
exclusive character of recoveries under the Workmen's Compensation Act; because Section 4-A
of the Act provides an additional compensation in case the employer fails to comply with the
requirements of safety as imposed by law to prevent accidents. In fact, it points out that Philex
voluntarily paid the compensation due the petitioners and all the payments have been accepted in
behalf of the deceased miners, except the heirs of Nazarito Floresca who insisted that they are
entitled to a greater amount of damages under the Civil Code.
In the hearing of this case, then Undersecretary of Labor Israel Bocobo, then Atty. Edgardo
Angara, now President of the University of the Philippines, Justice Manuel Lazaro, as corporate
counsel and Assistant General Manager of the GSIS Legal Affairs Department, and Commissioner
on Elections, formerly UP Law Center Director Froilan Bacungan, appeared as amici curiae and
thereafter, submitted their respective memoranda.
The issue to be resolved as WE stated in the resolution of November 26, 1976, is:
Whether the action of an injured employee or worker or that of his heirs in case of his
death under the Workmen's Compensation Act is exclusive, selective or cumulative,
that is to say, whether his or his heirs' action is exclusively restricted to seeking the
limited compensation provided under the Workmen's Compensation Act or whether
they have a right of selection or choice of action between availing of the worker's
right under the Workmen's Compensation Act and suing in the regular courts under
the Civil Code for higher damages (actual, moral and/or exemplary) from the
employer by virtue of negligence (or fault) of the employer or of his other employees
or whether they may avail cumulatively of both actions, i.e., collect the limited
compensation under the Workmen's Compensation Act and sue in addition for
damages in the regular courts.
There are divergent opinions in this case. Justice Lazaro is of the opinion that an injured employee
or worker, or the heirs in case of his death, may initiate a complaint to recover damages (not
compensation under the Workmen's Compensation Act) with the regular court on the basis of

negligence of an employer pursuant to the Civil Code provisions. Atty. Angara believes otherwise.
He submits that the remedy of an injured employee for work-connected injury or accident is
exclusive in accordance with Section 5 of the Workmen's Compensation Act, while Atty.
Bacungan's position is that the action is selective. He opines that the heirs of the employee in
case of his death have a right of choice to avail themselves of the benefits provided under the
Workmen's Compensation Act or to sue in the regular court under the Civil Code for higher
damages from the employer by virtue of negligence of the latter. Atty. Bocobo's stand is the same
as that of Atty. Bacungan and adds that once the heirs elect the remedy provided for under the
Act, they are no longer entitled to avail themselves of the remedy provided for under the Civil
Code by filing an action for higher damages in the regular court, and vice versa.
On August 3, 1978, petitioners-heirs of deceased employee Nazarito Floresca filed a motion to
dismiss on the ground that they have amicably settled their claim with respondent Philex. In the
resolution of September 7, 1978, WE dismissed the petition only insofar as the aforesaid
petitioners are connected, it appearing that there are other petitioners in this case.
WE hold that the former Court of First Instance has jurisdiction to try the case,
It should be underscored that petitioners' complaint is not for compensation based on the
Workmen's Compensation Act but a complaint for damages (actual, exemplary and moral) in the
total amount of eight hundred twenty-five thousand (P825,000.00) pesos. Petitioners did not
invoke the provisions of the Workmen's Compensation Act to entitle them to compensation
thereunder. In fact, no allegation appeared in the complaint that the employees died from accident
arising out of and in the course of their employments. The complaint instead alleges gross and
reckless negligence and deliberate failure on the part of Philex to protect the lives of its workers as
a consequence of which a cave-in occurred resulting in the death of the employees working
underground. Settled is the rule that in ascertaining whether or not the cause of action is in the
nature of workmen's compensation claim or a claim for damages pursuant to the provisions of the
Civil Code, the test is the averments or allegations in the complaint (Belandres vs. Lopez Sugar
Mill, Co., Inc., 97 Phil. 100).
In the present case, there exists between Philex and the deceased employees a contractual
relationship. The alleged gross and reckless negligence and deliberate failure that amount to bad
faith on the part of Philex, constitute a breach of contract for which it may be held liable for
damages. The provisions of the Civil Code on cases of breach of contract when there is fraud or
bad faith, read:
Art. 2232. In contracts and quasi-contracts, the court may award exemplary
damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is able shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen
or could have reasonably foreseen at the time the obligation was constituted.
In cases of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the nonperformance of the obligation.
Furthermore, Articles 2216 et seq., Civil Code, allow the payment of all kinds of damages, as
assessed by the court.
The rationale in awarding compensation under the Workmen's Compensation Act differs from that
in giving damages under the Civil Code. The compensation acts are based on a theory of

compensation distinct from the existing theories of damages, payments under the acts being made
as compensation and not as damages (99 C.J.S. 53). Compensation is given to mitigate the
harshness and insecurity of industrial life for the workman and his family. Hence, an employer is
liable whether negligence exists or not since liability is created by law. Recovery under the Act is
not based on any theory of actionable wrong on the part of the employer (99 C.J.S. 36).
In other words, under the compensation acts, the employer is liable to pay compensation benefits
for loss of income, as long as the death, sickness or injury is work-connected or work-aggravated,
even if the death or injury is not due to the fault of the employer (Murillo vs. Mendoza, 66 Phil.
689). On the other hand, damages are awarded to one as a vindication of the wrongful invasion of
his rights. It is the indemnity recoverable by a person who has sustained injury either in his person,
property or relative rights, through the act or default of another (25 C.J.S. 452).
The claimant for damages under the Civil Code has the burden of proving the causal relation
between the defendant's negligence and the resulting injury as well as the damages suffered.
While under the Workmen's Compensation Act, there is a presumption in favor of the deceased or
injured employee that the death or injury is work-connected or work-aggravated; and the employer
has the burden to prove otherwise (De los Angeles vs. GSIS, 94 SCRA 308; Carino vs. WCC, 93
SCRA 551; Maria Cristina Fertilizer Corp. vs. WCC, 60 SCRA 228).
The claim of petitioners that the case is not cognizable by the Workmen's Compensation
Commission then, now Employees Compensation Commission, is strengthened by the fact that
unlike in the Civil Code, the Workmen's Compensation Act did not contain any provision for an
award of actual, moral and exemplary damages. What the Act provided was merely the right of the
heirs to claim limited compensation for the death in the amount of six thousand (P6,000.00) pesos
plus burial expenses of two hundred (P200.00) pesos, and medical expenses when incurred
(Sections 8, 12 and 13, Workmen's Compensation Act), and an additional compensation of only
50% if the complaint alleges failure on the part of the employer to "install and maintain safety
appliances or to take other precautions for the prevention of accident or occupational disease"
(Section 4-A, Ibid.). In the case at bar, the amount sought to be recovered is over and above that
which was provided under the Workmen's Compensation Act and which cannot be granted by the
Commission.
Moreover, under the Workmen's Compensation Act, compensation benefits should be paid to an
employee who suffered an accident not due to the facilities or lack of facilities in the industry of his
employer but caused by factors outside the industrial plant of his employer. Under the Civil Code,
the liability of the employer, depends on breach of contract or tort. The Workmen's Compensation
Act was specifically enacted to afford protection to the employees or workmen. It is a social
legislation designed to give relief to the workman who has been the victim of an accident causing
his death or ailment or injury in the pursuit of his employment (Abong vs. WCC, 54 SCRA 379).
WE now come to the query as to whether or not the injured employee or his heirs in case of death
have a right of selection or choice of action between availing themselves of the worker's right
under the Workmen's Compensation Act and suing in the regular courts under the Civil Code for
higher damages (actual, moral and exemplary) from the employers by virtue of that negligence or
fault of the employers or whether they may avail themselves cumulatively of both actions, i.e.,
collect the limited compensation under the Workmen's Compensation Act and sue in addition for
damages in the regular courts.
In disposing of a similar issue, this Court in Pacana vs. Cebu Autobus Company, 32 SCRA 442,
ruled that an injured worker has a choice of either to recover from the employer the fixed amounts
set by the Workmen's Compensation Act or to prosecute an ordinary civil action against the
tortfeasor for higher damages but he cannot pursue both courses of action simultaneously.
In Pacaa WE said:

In the analogous case of Esguerra vs. Munoz Palma, involving the application of
Section 6 of the Workmen's Compensation Act on the injured workers' right to sue
third- party tortfeasors in the regular courts, Mr. Justice J.B.L. Reyes, again speaking
for the Court, pointed out that the injured worker has the choice of remedies but
cannot pursue both courses of action simultaneously and thus balanced the relative
advantage of recourse under the Workmen's Compensation Act as against an
ordinary action.
As applied to this case, petitioner Esguerra cannot maintain his action for damages
against the respondents (defendants below), because he has elected to seek
compensation under the Workmen's Compensation Law, and his claim (case No.
44549 of the Compensation Commission) was being processed at the time he filed
this action in the Court of First Instance. It is argued for petitioner that as the
damages recoverable under the Civil Code are much more extensive than the
amounts that may be awarded under the Workmen's Compensation Act, they should
not be deemed incompatible. As already indicated, the injured laborer was initially
free to choose either to recover from the employer the fixed amounts set by the
Compensation Law or else, to prosecute an ordinary civil action against the
tortfeasor for higher damages. While perhaps not as profitable, the smaller indemnity
obtainable by the first course is balanced by the claimant's being relieved of the
burden of proving the causal connection between the defendant's negligence and
the resulting injury, and of having to establish the extent of the damage suffered;
issues that are apt to be troublesome to establish satisfactorily. Having staked his
fortunes on a particular remedy, petitioner is precluded from pursuing the alternate
course, at least until the prior claim is rejected by the Compensation Commission.
Anyway, under the proviso of Section 6 aforequoted, if the employer Franklin Baker
Company recovers, by derivative action against the alleged tortfeasors, a sum
greater than the compensation he may have paid the herein petitioner, the excess
accrues to the latter.
Although the doctrine in the case of Esguerra vs. Munoz Palma (104 Phil. 582), applies to thirdparty tortfeasor, said rule should likewise apply to the employer-tortfeasor.
Insofar as the heirs of Nazarito Floresca are concerned, as already stated, the petition has been
dismissed in the resolution of September 7, 1978 in view of the amicable settlement reached by
Philex and the said heirs.
With regard to the other petitioners, it was alleged by Philex in its motion to dismiss dated May 14,
1968 before the court a quo, that the heirs of the deceased employees, namely Emerito Obra,
Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino Martinez submitted notices and claims
for compensation to the Regional Office No. 1 of the then Department of Labor and all of them
have been paid in full as of August 25, 1967, except Saturnino Martinez whose heirs decided that
they be paid in installments (pp. 106-107, rec.). Such allegation was admitted by herein petitioners
in their opposition to the motion to dismiss dated May 27, 1968 (pp. 121-122, rec.) in the lower
court, but they set up the defense that the claims were filed under the Workmen's Compensation
Act before they learned of the official report of the committee created to investigate the accident
which established the criminal negligence and violation of law by Philex, and which report was
forwarded by the Director of Mines to the then Executive Secretary Rafael Salas in a letter dated
October 19, 1967 only (p. 76, rec.).
WE hold that although the other petitioners had received the benefits under the Workmen's
Compensation Act, such may not preclude them from bringing an action before the regular court
because they became cognizant of the fact that Philex has been remiss in its contractual
obligations with the deceased miners only after receiving compensation under the Act. Had
petitioners been aware of said violation of government rules and regulations by Philex, and of its

negligence, they would not have sought redress under the Workmen's Compensation Commission
which awarded a lesser amount for compensation. The choice of the first remedy was based on
ignorance or a mistake of fact, which nullifies the choice as it was not an intelligent choice. The
case should therefore be remanded to the lower court for further proceedings. However, should
the petitioners be successful in their bid before the lower court, the payments made under the
Workmen's Compensation Act should be deducted from the damages that may be decreed in their
favor.
B
Contrary to the perception of the dissenting opinion, the Court does not legislate in the instant
case. The Court merely applies and gives effect to the constitutional guarantees of social justice
then secured by Section 5 of Article 11 and Section 6 of Article XIV of the 1935 Constitution, and
now by Sections 6, 7, and 9 of Article 11 of the DECLARATION OF PRINCIPLES AND STATE
POLICIES of the 1973 Constitution, as amended, and as implemented by Articles 2176, 2177,
2178, 1173, 2201, 2216, 2231 and 2232 of the New Civil Code of 1950.
To emphasize, the 1935 Constitution declares that:
Sec. 5. The promotion of social justice to insure the well-being and economic
security of all the people should be the concern of the State (Art. II).
Sec. 6. The State shall afford protection to labor, especially to working women, and
minors, and shall regulate the relations between landowner and tenant, and between
labor and capital in industry and in agriculture. The State may provide for compulsory
arbitration (Art. XIV).
The 1973 Constitution likewise commands the State to "promote social justice to insure the
dignity, welfare, and security of all the people "... regulate the use ... and disposition of private
property and equitably diffuse property ownership and profits "establish, maintain and ensure
adequate social services in, the field of education, health, housing, employment, welfare and
social security to guarantee the enjoyment by the people of a decent standard of living" (Sections
6 and 7, Art. II, 1973 Constitution); "... afford protection to labor, ... and regulate the relations
between workers and employers ..., and assure the rights of workers to ... just and humane
conditions of work"(Sec. 9, Art. II, 1973 Constitution, emphasis supplied).
The foregoing constitutional guarantees in favor of labor institutionalized in Section 9 of Article 11
of the 1973 Constitution and re-stated as a declaration of basic policy in Article 3 of the New Labor
Code, thus:
Art. 3. Declaration of basic policy.The State shall afford protection to labor,
promote full employment,ensure equal work opportunities regardless of sex, race or
creed, and regulate the relations between workers and employers. The State
shall assure the rights of workers to self-organization, collective bargaining, security
of tenure, and just and humane conditions of work. (emphasis supplied).
The aforestated constitutional principles as implemented by the aforementioned articles of the
New Civil Code cannot be impliedly repealed by the restrictive provisions of Article 173 of the New
Labor Code. Section 5 of the Workmen's Compensation Act (before it was amended by R.A. No.
772 on June 20, 1952), predecessor of Article 173 of the New Labor Code, has been superseded
by the aforestated provisions of the New Civil Code, a subsequent law, which took effect on
August 30, 1950, which obey the constitutional mandates of social justice enhancing as they do
the rights of the workers as against their employers. Article 173 of the New Labor Code seems to
diminish the rights of the workers and therefore collides with the social justice guarantee of the
Constitution and the liberal provisions of the New Civil Code.

The guarantees of social justice embodied in Sections 6, 7 and 9 of Article II of the 1973
Constitution are statements of legal principles to be applied and enforced by the courts. Mr.
Justice Robert Jackson in the case of West Virginia State Board of Education vs. Barnette, with
characteristic eloquence, enunciated:
The very purpose of a Bill of Rights was to withdraw certain subjects from the
vicissitudes of political controversy, to place them beyond the reach of majorities and
officials and to establish them as legal principles to be applied by the courts. One's
right to life, liberty, and property, to free speech, a free press, freedom of worship
and assembly, and other fundamental rights may not be submitted to vote; they
depend on the outcome of no elections (319 U.S. 625, 638, 87 L.ed. 1638, emphasis
supplied).
In case of any doubt which may be engendered by Article 173 of the New Labor Code, both the
New Labor Code and the Civil Code direct that the doubts should be resolved in favor of the
workers and employees.
Thus, Article 4 of the New Labor Code, otherwise known as Presidential Decree No. 442, as
amended, promulgated on May 1, 1974, but which took effect six months thereafter, provides that
"all doubts in the implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor" (Art. 2, Labor Code).
Article 10 of the New Civil Code states: "In case of doubt in the interpretation or application of
laws, it is presumed that the law-making body intended right and justice to prevail. "
More specifically, Article 1702 of the New Civil Code likewise directs that. "In case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the safety and decent living of
the laborer."
Before it was amended by Commonwealth Act No. 772 on June 20, 1952, Section 5 of the
Workmen's Compensation Act provided:
Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this
Act to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws, because of said injury (emphasis supplied).
Employers contracting laborecsrs in the Philippine Islands for work outside the same
may stipulate with such laborers that the remedies prescribed by this Act shall apply
exclusively to injuries received outside the Islands through accidents happening in
and during the performance of the duties of the employment; and all service
contracts made in the manner prescribed in this section shall be presumed to include
such agreement.
Only the second paragraph of Section 5 of the Workmen's Compensation Act No. 3428, was
amended by Commonwealth Act No. 772 on June 20, 1952, thus:
Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this
Act to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws, because of said injury.

Employers contracting laborers in the Philippine Islands for work outside the same
shall stipulate with such laborers that the remedies prescribed by this Act shall apply
to injuries received outside the Island through accidents happening in and during the
performance of the duties of the employment. Such stipulation shall not prejudice the
right of the laborers to the benefits of the Workmen's Compensation Law of the place
where the accident occurs, should such law be more favorable to them (As amended
by section 5 of Republic Act No. 772).
Article 173 of the New Labor Code does not repeal expressly nor impliedly the applicable
provisions of the New Civil Code, because said Article 173 provides:
Art. 173. Exclusiveness of liability.- Unless otherwise provided, the liability of the
State Insurance Fund under this Title shall be exclusive and in place of all other
liabilities of the employer to the employee, his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents. The
payment of compensation under this Title shall bar the recovery of benefits as
provided for in Section 699 of the Revised Administrative Code, Republic Act
Numbered Eleven hundred sixty-one, as amended, Commonwealth Act Numbered
One hundred eighty- six, as amended, Commonwealth Act Numbered Six hundred
ten, as amended, Republic Act Numbered Forty-eight hundred Sixty-four, as
amended, and other laws whose benefits are administered by the System during the
period of such payment for the same disability or death, and conversely (emphasis
supplied).
As above-quoted, Article 173 of the New Labor Code expressly repealed only Section 699 of the
Revised Administrative Code, R.A. No. 1161, as amended, C.A. No. 186, as amended, R.A. No.
610, as amended, R.A. No. 4864, as amended, and all other laws whose benefits are
administered by the System (referring to the GSIS or SSS).
Unlike Section 5 of the Workmen's Compensation Act as aforequoted, Article 173 of the New
Labor Code does not even remotely, much less expressly, repeal the New Civil Code provisions
heretofore quoted.
It is patent, therefore, that recovery under the New Civil Code for damages arising from
negligence, is not barred by Article 173 of the New Labor Code. And the damages recoverable
under the New Civil Code are not administered by the System provided for by the New Labor
Code, which defines the "System" as referring to the Government Service Insurance System or
the Social Security System (Art. 167 [c], [d] and [e] of the New Labor Code).
Furthermore, under Article 8 of the New Civil Code, decisions of the Supreme Court form part of
the law of the land.
Article 8 of the New Civil Code provides:
Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall
form a part of the legal system of the Philippines.
The Court, through the late Chief Justice Fred Ruiz Castro, in People vs. Licera ruled:
Article 8 of the Civil Code of the Philippines decrees that judicial decisions applying
or interpreting the laws or the Constitution form part of this jurisdiction's legal system.
These decisions, although in themselves not laws, constitute evidence of what the
laws mean. The application or interpretation placed by the Court upon a law is part of
the law as of the date of the enactment of the said law since the Court's application

or interpretation merely establishes the contemporaneous legislative intent that the


construed law purports to carry into effect" (65 SCRA 270, 272-273 [1975]).
WE ruled that judicial decisions of the Supreme Court assume the same authority as the statute
itself (Caltex vs. Palomer, 18 SCRA 247; 124 Phil. 763).
The aforequoted provisions of Section 5 of the Workmen's Compensation Act, before and after it
was amended by Commonwealth Act No. 772 on June 20, 1952, limited the right of recovery in
favor of the deceased, ailing or injured employee to the compensation provided for therein. Said
Section 5 was not accorded controlling application by the Supreme Court in the 1970 case of
Pacana vs. Cebu Autobus Company (32 SCRA 442) when WE ruled that an injured worker has a
choice of either to recover from the employer the fixed amount set by the Workmen's
Compensation Act or to prosecute an ordinary civil action against the tortfeasor for greater
damages; but he cannot pursue both courses of action simultaneously. Said Pacana case penned
by Mr. Justice Teehankee, applied Article 1711 of the Civil Code as against the Workmen's
Compensation Act, reiterating the 1969 ruling in the case of Valencia vs. Manila Yacht Club (28
SCRA 724, June 30,1969) and the 1958 case of Esguerra vs. Munoz Palma (104 Phil. 582), both
penned by Justice J.B.L. Reyes. Said Pacana case was concurred in by Justices J.B.L. Reyes,
Dizon, Makalintal, Zaldivar, Castro, Fernando and Villamor.
Since the first sentence of Article 173 of the New Labor Code is merely a re-statement of the first
paragraph of Section 5 of the Workmen's Compensation Act, as amended, and does not even
refer, neither expressly nor impliedly, to the Civil Code as Section 5 of the Workmen's
Compensation Act did, with greater reason said Article 173 must be subject to the same
interpretation adopted in the cases of Pacana, Valencia and Esguerra aforementioned as the
doctrine in the aforesaid three (3) cases is faithful to and advances the social justice guarantees
enshrined in both the 1935 and 1973 Constitutions.
It should be stressed likewise that there is no similar provision on social justice in the American
Federal Constitution, nor in the various state constitutions of the American Union. Consequently,
the restrictive nature of the American decisions on the Workmen's Compensation Act cannot limit
the range and compass of OUR interpretation of our own laws, especially Article 1711 of the New
Civil Code, vis-a-vis Article 173 of the New Labor Code, in relation to Section 5 of Article II and
Section 6 of Article XIV of the 1935 Constitution then, and now Sections 6, 7 and 9 of the
Declaration of Principles and State Policies of Article II of the 1973 Constitution.
The dissent seems to subordinate the life of the laborer to the property rights of the employer. The
right to life is guaranteed specifically by the due process clause of the Constitution. To relieve the
employer from liability for the death of his workers arising from his gross or wanton fault or failure
to provide safety devices for the protection of his employees or workers against the dangers which
are inherent in underground mining, is to deprive the deceased worker and his heirs of the right to
recover indemnity for the loss of the life of the worker and the consequent loss to his family without
due process of law. The dissent in effect condones and therefore encourages such gross or
wanton neglect on the part of the employer to comply with his legal obligation to provide safety
measures for the protection of the life, limb and health of his worker. Even from the moral
viewpoint alone, such attitude is un-Christian.
It is therefore patent that giving effect to the social justice guarantees of the Constitution, as
implemented by the provisions of the New Civil Code, is not an exercise of the power of lawmaking, but is rendering obedience to the mandates of the fundamental law and the implementing
legislation aforementioned.
The Court, to repeat, is not legislating in the instant case.
It is axiomatic that no ordinary statute can override a constitutional provision.

The words of Section 5 of the Workmen's Compensation Act and of Article 173 of the New Labor
Code subvert the rights of the petitioners as surviving heirs of the deceased mining employees.
Section 5 of the Workmen's Compensation Act and Article 173 of the New Labor Code are
retrogressive; because they are a throwback to the obsolete laissez-faire doctrine of Adam Smith
enunciated in 1776 in his treatise Wealth of Nations (Collier's Encyclopedia, Vol. 21, p. 93, 1964),
which has been discarded soon after the close of the 18th century due to the Industrial Revolution
that generated the machines and other mechanical devices (beginning with Eli Whitney's cotton
gin of 1793 and Robert Fulton's steamboat of 1807) for production and transportation which are
dangerous to life, limb and health. The old socio-political-economic philosophy of live-and-let-live
is now superdesed by the benign Christian shibboleth of live-and-help others to live. Those who
profess to be Christians should not adhere to Cain's selfish affirmation that he is not his brother's
keeper. In this our civilization, each one of us is our brother's keeper. No man is an island. To
assert otherwise is to be as atavistic and ante-deluvian as the 1837 case of Prisley vs. Fowler (3
MN 1,150 reprint 1030) invoked by the dissent, The Prisley case was decided in 1837 during the
era of economic royalists and robber barons of America. Only ruthless, unfeeling capitalistics and
egoistic reactionaries continue to pay obeisance to such un-Christian doctrine. The Prisley rule
humiliates man and debases him; because the decision derisively refers to the lowly worker as
"servant" and utilizes with aristocratic arrogance "master" for "employer." It robs man of his
inherent dignity and dehumanizes him. To stress this affront to human dignity, WE only have to
restate the quotation from Prisley, thus: "The mere relation of the master and the servant never
can imply an obligation on the part of the master to take more care of the servant than he may
reasonably be expected to do himself." This is the very selfish doctrine that provoked the
American Civil War which generated so much hatred and drew so much precious blood on
American plains and valleys from 1861 to 1864.
"Idolatrous reverence" for the letter of the law sacrifices the human being. The spirit of the law
insures man's survival and ennobles him. In the words of Shakespeare, "the letter of the law
killeth; its spirit giveth life."
C
It is curious that the dissenting opinion clings to the myth that the courts cannot legislate.
That myth had been exploded by Article 9 of the New Civil Code, which provides that "No judge or
court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the
laws. "
Hence, even the legislator himself, through Article 9 of the New Civil Code, recognizes that in
certain instances, the court, in the language of Justice Holmes, "do and must legislate" to fill in the
gaps in the law; because the mind of the legislator, like all human beings, is finite and therefore
cannot envisage all possible cases to which the law may apply Nor has the human mind the
infinite capacity to anticipate all situations.
But about two centuries before Article 9 of the New Civil Code, the founding fathers of the
American Constitution foresaw and recognized the eventuality that the courts may have to
legislate to supply the omissions or to clarify the ambiguities in the American Constitution and the
statutes.
'Thus, Alexander Hamilton pragmatically admits that judicial legislation may be justified but denies
that the power of the Judiciary to nullify statutes may give rise to Judicial tyranny (The Federalist,
Modern Library, pp. 503-511, 1937 ed.). Thomas Jefferson went farther to concede that the court
is even independent of the Nation itself (A.F.L. vs. American Sash Company, 1949 335 US 538).
Many of the great expounders of the American Constitution likewise share the same view. Chief
Justice Marshall pronounced: "It is emphatically the province and duty of the Judicial department

to say what the law is (Marbury vs. Madison I Cranch 127 1803), which was re-stated by Chief
Justice Hughes when he said that "the Constitution is what the judge says it is (Address on May 3,
1907, quoted by President Franklin Delano Roosevelt on March 9, 1937). This was reiterated by
Justice Cardozo who pronounced that "No doubt the limits for the judge are narrower. He
legislates only between gaps. He fills the open spaces in the law. " (The Nature of the Judicial
Process, p. 113). In the language of Chief Justice Harlan F. Stone, "The only limit to the judicial
legislation is the restraint of the judge" (U.S. vs. Butler 297 U.S. 1 Dissenting Opinion, p. 79),
which view is also entertained by Justice Frankfurter and Justice Robert Jackson. In the rhetoric of
Justice Frankfurter, "the courts breathe life, feeble or strong, into the inert pages of the
Constitution and all statute books."
It should be stressed that the liability of the employer under Section 5 of the Workmen's
Compensation Act or Article 173 of the New Labor Code is limited to death, ailment or injury
caused by the nature of the work, without any fault on the part of the employers. It is correctly
termed no fault liability. Section 5 of the Workmen's Compensation Act, as amended, or Article
173 of the New Labor Code, does not cover the tortious liability of the employer occasioned by his
fault or culpable negligence in failing to provide the safety devices required by the law for the
protection of the life, limb and health of the workers. Under either Section 5 or Article 173, the
employer remains liable to pay compensation benefits to the employee whose death, ailment or
injury is work-connected, even if the employer has faithfully and diligently furnished all the safety
measures and contrivances decreed by the law to protect the employee.
The written word is no longer the "sovereign talisman." In the epigrammatic language of Mr.
Justice Cardozo, "the law has outgrown its primitive stage of formalism when the precise word
was the sovereign talisman, and every slip was fatal" (Wood vs. Duff Gordon 222 NW 88;
Cardozo, The Nature of the Judicial Process 100). Justice Cardozo warned that: "Sometimes the
conservatism of judges has threatened for an interval to rob the legislation of its efficacy. ...
Precedents established in those items exert an unhappy influence even now" (citing Pound,
Common Law and Legislation 21 Harvard Law Review 383, 387).
Finally, Justice Holmes delivered the coup de grace when he pragmatically admitted, although
with a cautionary undertone: "that judges do and must legislate, but they can do so only
interstitially they are confined from molar to molecular motions" (Southern Pacific Company vs.
Jensen, 244 US 204 1917). And in the subsequent case of Springer vs. Government (277 US 188,
210-212, 72 L.ed. 845, 852- 853), Justice Holmes pronounced:
The great ordinances of the Constitution do not establish and divide fields of black
and white. Even the more specific of them are found to terminate in a penumbra
shading gradually from one extreme to the other. x x x. When we come to the
fundamental distinctions it is still more obvious that they must be received with a
certain latitude or our government could not go on.
To make a rule of conduct applicable to an individual who but for such action would
be free from it is to legislate yet it is what the judges do whenever they determine
which of two competing principles of policy shall prevail.
xxx xxx xxx
It does not seem to need argument to show that however we may disguise it by
veiling words we do not and cannot carry out the distinction between legislative and
executive action with mathematical precision and divide the branches into waterlight
compartments, were it ever so desirable to do so, which I am far from believing that it
is, or that the Constitution requires.

True, there are jurists and legal writers who affirm that judges should not legislate, but grudgingly
concede that in certain cases judges do legislate. They criticize the assumption by the courts of
such law-making power as dangerous for it may degenerate into Judicial tyranny. They include
Blackstone, Jeremy Bentham, Justice Black, Justice Harlan, Justice Roberts, Justice David
Brewer, Ronald Dworkin, Rolf Sartorious, Macklin Fleming and Beryl Harold Levy. But said
Justices, jurists or legal commentators, who either deny the power of the courts to legislate inbetween gaps of the law, or decry the exercise of such power, have not pointed to examples of the
exercise by the courts of such law-making authority in the interpretation and application of the laws
in specific cases that gave rise to judicial tyranny or oppression or that such judicial legislation has
not protected public interest or individual welfare, particularly the lowly workers or the
underprivileged.
On the other hand, there are numerous decisions interpreting the Bill of Rights and statutory
enactments expanding the scope of such provisions to protect human rights. Foremost among
them is the doctrine in the cases of Miranda vs. Arizona (384 US 436 1964), Gideon vs. Wainright
(372 US 335), Escubedo vs. Illinois (378 US 478), which guaranteed the accused under custodial
investigation his rights to remain silent and to counsel and to be informed of such rights as even
as it protects him against the use of force or intimidation to extort confession from him. These
rights are not found in the American Bill of Rights. These rights are now institutionalized in Section
20, Article IV of the 1973 Constitution. Only the peace-and-order adherents were critical of the
activism of the American Supreme Court led by Chief Justice Earl Warren.
Even the definition of Identical offenses for purposes of the double jeopardy provision was
developed by American judicial decisions, not by amendment to the Bill of Rights on double
jeopardy (see Justice Laurel in People vs. Tarok, 73 Phil. 260, 261-268). And these judicial
decisions have been re-stated in Section 7 of Rule 117 of the 1985 Rules on Criminal Procedure,
as well as in Section 9 of Rule 117 of the 1964 Revised Rules of Court. In both provisions, the
second offense is the same as the first offense if the second offense is an attempt to commit the
first or frustration thereof or necessarily includes or is necessarily included in the first offense.
The requisites of double jeopardy are not spelled out in the Bill of Rights. They were also
developed by judicial decisions in the United States and in the Philippines even before people vs.
Ylagan (58 Phil. 851-853).
Again, the equal protection clause was interpreted in the case of Plessy vs. Ferguson (163 US
537) as securing to the Negroes equal but separate facilities, which doctrine was revoked in the
case of Brown vs. Maryland Board of Education (349 US 294), holding that the equal protection
clause means that the Negroes are entitled to attend the same schools attended by the whitesequal facilities in the same school-which was extended to public parks and public buses.
De-segregation, not segregation, is now the governing principle.
Among other examples, the due process clause was interpreted in the case of People vs. Pomar
(46 Phil. 440) by a conservative, capitalistic court to invalidate a law granting maternity leave to
working women-according primacy to property rights over human rights. The case of People vs.
Pomar is no longer the rule.
As early as 1904, in the case of Lochner vs. New York (198 US 45, 76, 49 L. ed. 937, 949),
Justice Holmes had been railing against the conservatism of Judges perverting the guarantee of
due process to protect property rights as against human rights or social justice for the working
man. The law fixing maximum hours of labor was invalidated. Justice Holmes was vindicated
finally in 1936 in the case of West Coast Hotel vs. Parish (300 US 377-79; 81 L. ed. 703) where
the American Supreme Court upheld the rights of workers to social justice in the form of
guaranteed minimum wage for women and minors, working hours not exceeding eight (8) daily,
and maternity leave for women employees.

The power of judicial review and the principle of separation of powers as well as the rule on
political questions have been evolved and grafted into the American Constitution by judicial
decisions (Marbury vs. Madison, supra Coleman vs. Miller, 307 US 433, 83 L. ed. 1385; Springer
vs. Government, 277 US 210-212, 72 L. ed. 852, 853).
It is noteworthy that Justice Black, who seems to be against judicial legislation, penned a separate
concurring opinion in the case of Coleman vs. Miller, supra, affirming the doctrine of political
question as beyond the ambit of judicial review. There is nothing in both the American and
Philippine Constitutions expressly providing that the power of the courts is limited by the principle
of separation of powers and the doctrine on political questions. There are numerous cases in
Philippine jurisprudence applying the doctrines of separation of powers and political questions and
invoking American precedents.
Unlike the American Constitution, both the 1935 and 1973 Philippine Constitutions expressly vest
in the Supreme Court the power to review the validity or constitutionality of any legislative
enactment or executive act.
WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS HEREBY REVERSED AND
SET ASIDE AND THE CASE IS REMANDED TO IT FOR FURTHER PROCEEDINGS. SHOULD
A GREATER AMOUNT OF DAMAGES BE DECREED IN FAVOR OF HEREIN PETITIONERS,
THE PAYMENTS ALREADY MADE TO THEM PURSUANT TO THE WORKMEN'S
COMPENSATION ACT SHALL BE DEDUCTED. NO COSTS.
SO ORDERED.
Fernando, C.J., Teehankee, Plana, Escolin, De la Fuente, Cuevas and Alampay JJ., concur.
Concepcion, Jr., J., is on leave.
Abad Santos and Relova, JJ., took no part.

SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners,


vs.
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES, INC., respondents.
Sycip, Salazar, Hernandez, Gatmaitan for petitioners.
Quisumbing, Torres & Evangelista for private-respondent.

NOCON, J.:
Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA Flight 007
departing from New York to Los Angeles on June 6, 1984 despite possession of confirmed tickets,
petitioners filed an action for damages before the Regional Trial Court of Makati, Metro Manila,
Branch 145. Advocating petitioner's position, the trial court categorically ruled that respondent
TransWorld Airlines (TWA) breached its contract of carriage with petitioners and that said breach
was "characterized by bad faith." On appeal, however, the appellate court found that while there
was a breach of contract on respondent TWA's part, there was neither fraud nor bad faith because
under the Code of Federal Regulations by the Civil Aeronautics Board of the United States of
America it is allowed to overbook flights.
The factual backdrop of the case is as follows:
Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana Zalamea,
purchased three (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc.
for a flight to New York to Los Angeles on June 6, 1984. The tickets of petitioners-spouses were
purchased at a discount of 75% while that of their daughter was a full fare ticket. All three tickets
represented confirmed reservations.
While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their
reservations for said flight. On the appointed date, however, petitioners checked in at 10:00 a.m.,
an hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list because the
number of passengers who had checked in before them had already taken all the seats available
on the flight. Liana Zalamea appeared as the No. 13 on the wait-list while the two other Zalameas
were listed as "No. 34, showing a party of two." Out of the 42 names on the wait list, the first 22
names were eventually allowed to board the flight to Los Angeles, including petitioner Cesar
Zalamea. The two others, on the other hand, at No. 34, being ranked lower than 22, were not able
to fly. As it were, those holding full-fare tickets were given first priority among the wait-listed
passengers. Mr. Zalamea, who was holding the full-fare ticket of his daughter, was allowed to
board the plane; while his wife and daughter, who presented the discounted tickets were denied
boarding. According to Mr. Zalamea, it was only later when he discovered the he was holding his
daughter's full-fare ticket.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be
accommodated because it was also fully booked. Thus, they were constrained to book in another
flight and purchased two tickets from American Airlines at a cost of Nine Hundred Eighteen
($918.00) Dollars.
Upon their arrival in the Philippines, petitioners filed an action for damages based on breach of
contract of air carriage before the Regional Trial Court of Makati, Metro Manila, Branch 145. As
aforesaid, the lower court ruled in favor of petitioners in its decision 1 dated January 9, 1989 the
dispositive portion of which states as follows:

WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiffs


the following amounts:
(1) US $918.00, or its peso equivalent at the time of payment representing the price
of the tickets bought by Suthira and Liana Zalamea from American Airlines, to enable
them to fly to Los Angeles from New York City;
(2) US $159.49, or its peso equivalent at the time of payment, representing the price
of Suthira Zalamea's ticket for TWA Flight 007;
(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty Centavos (P8,934.50,
Philippine Currency, representing the price of Liana Zalamea's ticket for TWA Flight
007,
(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine Currency, as
moral damages for all the plaintiffs'
(5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as and for
attorney's fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals held that moral damages are recoverable in a
damage suit predicated upon a breach of contract of carriage only where there is fraud or bad
faith. Since it is a matter of record that overbooking of flights is a common and accepted practice
of airlines in the United States and is specifically allowed under the Code of Federal Regulations
by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on respondent TransWorld
Airlines.
Moreover, while respondent TWA was remiss in not informing petitioners that the flight was
overbooked and that even a person with a confirmed reservation may be denied accommodation
on an overbooked flight, nevertheless it ruled that such omission or negligence cannot under the
circumstances be considered to be so gross as to amount to bad faith.
Finally, it also held that there was no bad faith in placing petitioners in the wait-list along with fortyeight (48) other passengers where full-fare first class tickets were given priority over discounted
tickets.
The dispositive portion of the decision of respondent Court of Appeals 3 dated October 25, 1991
states as follows:
WHEREFORE, in view of all the foregoing, the decision under review is hereby
MODIFIED in that the award of moral and exemplary damages to the plaintiffs is
eliminated, and the defendant-appellant is hereby ordered to pay the plaintiff the
following amounts:
(1) US$159.49, or its peso equivalent at the time of the payment, representing the
price of Suthira Zalamea's ticket for TWA Flight 007;
(2) US$159.49, or its peso equivalent at the time of the payment, representing the
price of Cesar Zalamea's ticket for TWA Flight 007;
(3) P50,000.00 as and for attorney's fees.

(4) The costs of suit.


SO ORDERED. 4
Not satisfied with the decision, petitioners raised the case on petition for review on certiorari and
alleged the following errors committed by the respondent Court of Appeals, to wit:
I.
. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON THE PART
OF RESPONDENT TWA BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS.
II.
. . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.
III.
. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S TWA TICKET AND
PAYMENT FOR THE AMERICAN AIRLINES
TICKETS. 5
That there was fraud or bad faith on the part of respondent airline when it did not allow petitioners
to board their flight for Los Angeles in spite of confirmed tickets cannot be disputed. The U.S. law
or regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove
themselves nor can the courts take judicial notice of them. Like any other fact, they must be
alleged and proved. 6 Written law may be evidenced by an official publication thereof or by a copy
attested by the officer having the legal custody of the record, or by his deputy, and accompanied
with a certificate that such officer has custody. The certificate may be made by a secretary of an
embassy or legation, consul general, consul, vice-consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. 7
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service
agent, in her deposition dated January 27, 1986 that the Code of Federal Regulations of the Civil
Aeronautics Board allows overbooking. Aside from said statement, no official publication of said
code was presented as evidence. Thus, respondent court's finding that overbooking is specifically
allowed by the US Code of Federal Regulations has no basis in fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the
case at bar in accordance with the principle of lex loci contractus which require that the law of the
place where the airline ticket was issued should be applied by the court where the passengers are
residents and nationals of the forum and the ticket is issued in such State by the defendant
airline. 8 Since the tickets were sold and issued in the Philippines, the applicable law in this case
would be Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the
passengers concerned to an award of moral damages. In Alitalia Airways v. Court of
Appeals, 9 where passengers with confirmed bookings were refused carriage on the last minute,
this Court held that when an airline issues a ticket to a passenger confirmed on a particular flight,
on a certain date, a contract of carriage arises, and the passenger has every right to expect that
he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for
breach of contract of carriage. Where an airline had deliberately overbooked, it took the risk of
having to deprive some passengers of their seats in case all of them would show up for the check

in. For the indignity and inconvenience of being refused a confirmed seat on the last minute, said
passenger is entitled to an award of moral damages.
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where private respondent was not
allowed to board the plane because her seat had already been given to another passenger even
before the allowable period for passengers to check in had lapsed despite the fact that she had a
confirmed ticket and she had arrived on time, this Court held that petitioner airline acted in bad
faith in violating private respondent's rights under their contract of carriage and is therefore liable
for the injuries she has sustained as a result.
In fact, existing jurisprudence abounds with rulings where the breach of contract of carriage
amounts to bad faith. InPan American World Airways, Inc. v. Intermediate Appellate
Court, 11 where a would-be passenger had the necessary ticket, baggage claim and clearance
from immigration all clearly and unmistakably showing that she was, in fact, included in the
passenger manifest of said flight, and yet was denied accommodation in said flight, this Court did
not hesitate to affirm the lower court's finding awarding her damages.
A contract to transport passengers is quite different in kind and degree from any other contractual
relation. So ruled this Court in Zulueta v. Pan American World Airways, Inc. 12 This is so, for a
contract of carriage generates a relation attended with public duty a duty to provide public
service and convenience to its passengers which must be paramount to self-interest or
enrichment. Thus, it was also held that the switch of planes from Lockheed 1011 to a smaller
Boeing 707 because there were only 138 confirmed economy class passengers who could very
well be accommodated in the smaller planes, thereby sacrificing the comfort of its first class
passengers for the sake of economy, amounts to bad faith. Such inattention and lack of care for
the interest of its passengers who are entitled to its utmost consideration entitles the passenger to
an award of moral damages. 13
Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in
not informing its passengers beforehand that it could breach the contract of carriage even if they
have confirmed tickets if there was overbooking. Respondent TWA should have incorporated
stipulations on overbooking on the tickets issued or to properly inform its passengers about these
policies so that the latter would be prepared for such eventuality or would have the choice to ride
with another airline.
Respondent TWA contends that Exhibit I, the detached flight coupon upon which were written the
name of the passenger and the points of origin and destination, contained such a notice. An
examination of Exhibit I does not bear this out. At any rate, said exhibit was not offered for the
purpose of showing the existence of a notice of overbooking but to show that Exhibit I was used
for flight 007 in first class of June 11, 1984 from New York to Los Angeles.
Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of
giving less priority to discounted tickets. While the petitioners had checked in at the same time,
and held confirmed tickets, yet, only one of them was allowed to board the plane ten minutes
before departure time because the full-fare ticket he was holding was given priority over
discounted tickets. The other two petitioners were left behind.
It is respondent TWA's position that the practice of overbooking and the airline system of boarding
priorities are reasonable policies, which when implemented do not amount to bad faith. But the
issue raised in this case is not the reasonableness of said policies but whether or not said policies
were incorporated or deemed written on petitioners' contracts of carriage. Respondent TWA failed
to show that there are provisions to that effect. Neither did it present any argument of substance to
show that petitioners were duly apprised of the overbooked condition of the flight or that there is a
hierarchy of boarding priorities in booking passengers. It is evident that petitioners had the right to
rely upon the assurance of respondent TWA, thru its agent in Manila, then in New York, that their

tickets represented confirmed seats without any qualification. The failure of respondent TWA to so
inform them when it could easily have done so thereby enabling respondent to hold on to them as
passengers up to the last minute amounts to bad faith. Evidently, respondent TWA placed its selfinterest over the rights of petitioners under their contracts of carriage. Such conscious disregard of
petitioners' rights makes respondent TWA liable for moral damages. To deter breach of contracts
by respondent TWA in similar fashion in the future, we adjudge respondent TWA liable for
exemplary damages, as well.
Petitioners also assail the respondent court's decision not to require the refund of Liana Zalamea's
ticket because the ticket was used by her father. On this score, we uphold the respondent court.
Petitioners had not shown with certainty that the act of respondent TWA in allowing Mr. Zalamea
to use the ticket of her daughter was due to inadvertence or deliberate act. Petitioners had also
failed to establish that they did not accede to said agreement. The logical conclusion, therefore, is
that both petitioners and respondent TWA agreed, albeit impliedly, to the course of action taken.
The respondent court erred, however, in not ordering the refund of the American Airlines tickets
purchased and used by petitioners Suthira and Liana. The evidence shows that petitioners Suthira
and Liana were constrained to take the American Airlines flight to Los Angeles not because they
"opted not to use their TWA tickets on another TWA flight" but because respondent TWA could not
accommodate them either on the next TWA flight which was also fully booked. 14 The purchase of
the American Airlines tickets by petitioners Suthira and Liana was the consequence of respondent
TWA's unjustifiable breach of its contracts of carriage with petitioners. In accordance with Article
2201, New Civil Code, respondent TWA should, therefore, be responsible for all damages which
may be reasonably attributed to the non-performance of its obligation. In the previously cited case
of Alitalia Airways v. Court of Appeals, 15 this Court explicitly held that a passenger is entitled to be
reimbursed for the cost of the tickets he had to buy for a flight to another airline. Thus, instead of
simply being refunded for the cost of the unused TWA tickets, petitioners should be awarded the
actual cost of their flight from New York to Los Angeles. On this score, we differ from the trial
court's ruling which ordered not only the reimbursement of the American Airlines tickets but also
the refund of the unused TWA tickets. To require both prestations would have enabled petitioners
to fly from New York to Los Angeles without any fare being paid.
The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil Code
which allows recovery when the defendant's act or omission has compelled plaintiff to litigate or to
incur expenses to protect his interest. However, the award for moral damages and exemplary
damages by the trial court is excessive in the light of the fact that only Suthira and Liana Zalamea
were actually "bumped off." An award of P50,000.00 moral damages and another P50,000.00
exemplary damages would suffice under the circumstances obtaining in the instant case.
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of
Appeals is hereby MODIFIED to the extent of adjudging respondent TransWorld Airlines to pay
damages to petitioners in the following amounts, to wit:
(1) US$918.00 or its peso equivalent at the time of payment representing the price of the tickets
bought by Suthira and Liana Zalamea from American Airlines, to enable them to fly to Los Angeles
from New York City;
(2) P50,000.00 as moral damages;
(3) P50,000.00 as exemplary damages;
(4) P50,000.00 as attorney's fees; and
(5) Costs of suit.

SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.

MERCURY DRUG CORPORATION and


ROLANDO J. DEL ROSARIO,
Petitioners,

- versus -

G.R. No. 172122


Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

SPOUSES RICHARD HUANG and


CARMEN HUANG, and STEPHEN HUANG, Promulgated:
Respondents.
June 22, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
PUNO, C.J.:
On appeal are the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. CV No.
83981, dated February 16, 2006 and March 30, 2006, respectively which affirmed with
modification the Decision[3] of the Regional Trial Court (RTC) of Makati City, dated September 29,
2004. The trial court found petitioners jointly and severally liable to pay respondents damages for
the injuries sustained by respondent Stephen Huang, son of respondent spouses Richard and
Carmen Huang.

First, the facts:


Petitioner Mercury Drug Corporation (Mercury Drug) is the registered owner of a sixwheeler 1990 Mitsubishi Truck with plate number PRE 641 (truck). It has in its employ petitioner
Rolando J. del Rosario as driver. Respondent spouses Richard and Carmen Huang are the
parents of respondent Stephen Huang and own the red 1991 Toyota Corolla GLI Sedan with plate
number PTT 775 (car).
These two vehicles figured in a road accident on December 20, 1996 at around 10:30 p.m.
within the municipality of Taguig, Metro Manila.Respondent Stephen Huang was driving the car,
weighing 1,450 kg., while petitioner Del Rosario was driving the truck, weighing 14,058 kg. Both
were traversing the C-5 Highway, north bound, coming from the general direction of Alabang going
to Pasig City. The car was on the left innermost lane while the truck was on the next lane to its
right, when the truck suddenly swerved to its left and slammed into the front right side of the
car. The collision hurled the car over the island where it hit a lamppost, spun around and landed

on the opposite lane. The truck also hit a lamppost, ran over the car and zigzagged towards, and
finally stopped in front of Buellah Land Church.
At the time of the accident, petitioner Del Rosario only had a Traffic Violation Receipt
(TVR). His drivers license had been confiscated because he had been previously apprehended for
reckless driving.
The car, valued at P300,000.00, was a total wreck. Respondent Stephen Huang sustained
massive injuries to his spinal cord, head, face, and lung.Despite a series of operations, respondent
Stephen Huang is paralyzed for life from his chest down and requires continuous medical and
rehabilitation treatment.
Respondents fault petitioner Del Rosario for committing gross negligence and reckless
imprudence while driving, and petitioner Mercury Drug for failing to exercise the diligence of a
good father of a family in the selection and supervision of its driver.
In contrast, petitioners allege that the immediate and proximate cause of the accident was
respondent Stephen Huangs recklessness. According to petitioner Del Rosario, he was driving on
the left innermost lane when the car bumped the trucks front right tire. The truck then swerved to
the left, smashed into an electric post, crossed the center island, and stopped on the other side of
the highway. The car likewise crossed over the center island and landed on the same portion of C5. Further, petitioner Mercury Drug claims that it exercised due diligence of a good father of a
family in the selection and supervision of all its employees.
The trial court, in its Decision dated September 29, 2004, found petitioners Mercury Drug
and Del Rosario jointly and severally liable to pay respondents actual, compensatory, moral and
exemplary damages, attorneys fees, and litigation expenses. The dispositive portion reads:
WHEREFORE, judgment is rendered finding defendants Mercury Drug
Corporation, Inc. and Rolando del Rosario, jointly and severally liable to pay plaintiffs
Spouses Richard Y. Huang and Carmen G. Huang, and Stephen Huang the
following amounts:
1.

Two Million Nine Hundred


(P2,973,000.00) actual damages;

2.

Seventy

Three

Thousand

Pesos

As compensatory damages:
a.

Twenty Three Million Four Hundred Sixty One Thousand, and SixtyTwo Pesos (P23,461,062.00) for life care cost of Stephen;

b.

Ten Million Pesos (P10,000,000.00) as and for lost or impaired


earning capacity of Stephen;

3.

Four Million Pesos (P4,000,000.00) as moral damages;

4.

Two Million Pesos (P2,000,000.00) as exemplary damages; and

5.

One Million Pesos (P1,000,000.00) as attorneys fees and litigation


expense.[4]

On February 16, 2006, the Court of Appeals affirmed the decision of the trial court but
reduced the award of moral damages to P1,000,000.00. The appellate court also denied the
motion for reconsideration filed by petitioners.
Hence, this appeal.
Petitioners cite the following grounds for their appeal:
1. That the subject Decision which dismissed the appeal of petitioners herein but
AFFIRMED WITH MODIFICATION the decision of the Regional Trial Court, Branch
64, Makati City, in that the award of moral damages was reduced to P1,000,000.00
and its Resolution dated March 30, 2006, which dismissed outright the Motion for
Reconsideration must be set aside because the Honorable Court of Appeals
committed reversible error:
A.

IN DENYING OUTRIGHTLY THE MOTION FOR RECONSIDERATION ON


ALLEGEDLY BEING FILED OUT OF TIME FOR ONE DAY;

B.

IN ACCORDING GREATER WEIGHT TO THE EVIDENCE ADDUCED BY


THE RESPONDENTS HEREIN AND COMPLETELY DISREGARDING THE
DEFENSE INTERPOSED BY THE PETITIONERS HEREIN;

C.

IN DISREGARDING COMPLETELY ALL EVIDENCES PRESENTED BY


THE PETITIONERS HEREIN AND PROCEEDED TO RENDER ITS DECISION
BASED ON PRESUMPTIONS AND PERSONAL OPINIONS OF PEOPLE
WHO ARE NOT WITNESSES TO THE ACCIDENT;

D.

IN AWARDING DAMAGES IN FAVOR OF RESPONDENTS HEREIN;

E.

IN FINDING THAT MERCURY DRUG CORPORATION FAILED TO


EXERCISE THE DILIGENCE REQUIRED IN SUPERVISING ITS EMPLOYEES
DESPITE OVERWHELMING EVIDENCE PRESENTED BY PETITIONER
COMPANY;

F.

IN FINDING THAT PETITIONER ROLANDO DEL ROSARIO WAS


NEGLIGENT IN DRIVING THE TRUCK AT THE TIME OF ACCIDENT AND
TOTALLY DISREGARDING THE EVIDENCES PRESENTED DURING THE
TRIAL OF THE CASE.

G.

IN PRESENTING ONLY IN THE DECISION TESTIMONIES FAVORABLE


TO THE RESPONDENTS HEREIN AND COMPLETELY DISREGARDING THE
EVIDENCES PRESENTED BY THE PETITIONERS HEREIN WHICH
CONTRADICTED SUCH TESTIMONIES NOT ONLY THROUGH ORAL
TESTIMONIES BUT AS WELL AS DOCUMENTARY EVIDENCES.[5]

We affirm the findings of the trial court and the appellate court that petitioner Del Rosario
was negligent. The evidence does not support petitioners claim that at the time of the accident, the
truck was at the left inner lane and that it was respondent Stephen Huangs car, at its right, which
bumped the right front side of the truck. Firstly, petitioner Del Rosario could not precisely tell which
part of the truck was hit by the car,[6] despite the fact that the truck was snub-nosed and a lot
higher than the car. Petitioner Del Rosario could not also explain why the car landed on the
opposite lane of C-5 which was on its left side. He said that the car did not pass in front of him

after it hit him or under him or over him or behind him.[7] If the truck were really at the left lane and
the car were at its right, and the car hit the truck at its front right side, the car would not have
landed on the opposite side, but would have been thrown to the right side of the C-5
Highway. Noteworthy on this issue is the testimony of Dr. Marlon Rosendo H. Daza, an expert in
the field of physics. He conducted a study based on the following assumptions provided by
respondents:
1.

Two vehicles collided;

2.

One vehicle is ten times heavier, more massive than the other;

3.

Both vehicles were moving in the same direction and at the same speed of
about 85 to 90 kilometers per hour;

4.

The heavier vehicle was driving at the innermost left lane, while the lighter
vehicle was at its right.

Dr. Daza testified that given the foregoing assumptions, if the lighter vehicle hits the right front
portion of the heavier vehicle, the general direction of the light vehicle after the impact would be to
the right side of the heavy vehicle, not the other way around. The truck, he opined, is more difficult
to move as it is heavier. It is the car, the lighter vehicle, which would move to the right of, and
away from the truck. Thus, there is very little chance that the car will move towards the opposite
side, i.e., to the left of the truck.
Dr. Daza also gave a further study on the basis of the same assumptions except that the
car is on the left side of the truck, in accordance with the testimony of respondent Stephen
Huang. Dr. Daza concluded that the general direction of the car after impact would be to the left of
the truck. In this situation, the middle island against which the car was pinned would slow down
the car, and enable the truck to catch up and hit the car again, before running over it.[8]
To support their thesis, petitioners tried to show the damages that the truck sustained at its
front right side. The attempt does not impress. The photographs presented were taken a month
after the accident, and Rogelio Pantua, the automechanic who repaired the truck and
authenticated the photographs, admitted that there were damages also on the left side of the
truck.[9]
Worse still, petitioner Del Rosario further admitted that after the impact, he lost control of
the truck and failed to apply his brakes. Considering that the car was smaller and lighter than the
six-wheeler truck, the impact allegedly caused by the car when it hit the truck could not possibly be
so great to cause petitioner to lose all control that he failed to even step on the brakes. He
testified, as follows:
ATTY. DIAZ:
May I proceed, Your Honor. You were able to apply the brakes, were you sir?
WITNESS:

No more, sir, because I went over the island.


ATTY. DIAZ:
Because as you said you lost control, correct sir?
WITNESS:
Yes, sir.
ATTY. DIAZ:
In other words, sir from the time your truck was hit according to you up to the time
you rested on the shoulder, you traveled fifty meters?
WITNESS:
Yes, sir, about that distance.
ATTY. DIAZ:
And this was despite the fact that you were only traveling at the speed of seventy
five kilometers per hour, jumped over the island, hit the lamppost, and traveled
the three lanes of the opposite lane of C-5 highway, is that what you want to
impress upon this court?
WITNESS:
Yes, sir.[10]
We therefore find no cogent reason to disturb the findings of the RTC and the Court of
Appeals. The evidence proves petitioner Del Rosarios negligence as the direct and proximate
cause of the injuries suffered by respondent Stephen Huang. Petitioner Del Rosario failed to do
what a reasonable and prudent man would have done under the circumstances.
We now come to the liability of petitioner Mercury Drug as employer of Del Rosario. Articles
2176 and 2180 of the Civil Code provide:
Art. 2176. Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this Chapter.
Art. 2180. The obligation imposed by article 2176 is demandable not only for
ones own acts or omissions, but also for those of persons for whom one is
responsible.
xxx
The owners and managers of an establishment or enterprise are likewise
responsible for damages caused by their employees in the service of the branches in
which the latter are employed or on the occasion of their functions.
xxx
The liability of the employer under Art. 2180 of the Civil Code is direct or immediate. It is not
conditioned on a prior recourse against the negligent employee, or a prior showing of insolvency
of such employee. It is also joint and solidary with the employee.[11]

To be relieved of liability, petitioner Mercury Drug should show that it exercised the
diligence of a good father of a family, both in the selection of the employee and in the supervision
of the performance of his duties. Thus, in the selection of its prospective employees, the employer
is required to examine them as to their qualifications, experience, and service records.[12] With
respect to the supervision of its employees, the employer should formulate standard operating
procedures, monitor their implementation, and impose disciplinary measures for their breach. To
establish compliance with these requirements, employers must submit concrete proof, including
documentary evidence.[13]
In the instant case, petitioner Mercury Drug presented testimonial evidence on its hiring
procedure. According to Mrs. Merlie Caamic, the Recruitment and Training Manager of petitioner
Mercury Drug, applicants are required to take theoretical and actual driving tests, and
psychological examination. In the case of petitioner Del Rosario, however, Mrs. Caamic admitted
that he took the driving tests and psychological examination when he applied for the position of
Delivery Man, but not when he applied for the position of Truck Man. Mrs. Caamic also admitted
that petitioner Del Rosario used a Galant which is a light vehicle, instead of a truck during the
driving tests. Further, no tests were conducted on the motor skills development, perceptual speed,
visual attention, depth visualization, eye and hand coordination and steadiness of petitioner Del
Rosario. No NBI and police clearances were also presented. Lastly, petitioner Del Rosario
attended only three driving seminars on June 30, 2001, February 5, 2000 and July 7, 1984. In
effect, the only seminar he attended before the accident which occurred in 1996 was held twelve
years ago in 1984.
It also appears that petitioner Mercury Drug does not provide for a back-up driver for long
trips. At the time of the accident, petitioner Del Rosario has been out on the road for more than
thirteen hours, without any alternate. Mrs. Caamic testified that she does not know of any
company policy requiring back-up drivers for long trips.[14]
Petitioner Mercury Drug likewise failed to show that it exercised due diligence on the
supervision and discipline over its employees. In fact, on the day of the accident, petitioner Del
Rosario was driving without a license. He was holding a TVR for reckless driving. He testified that
he reported the incident to his superior, but nothing was done about it. He was not suspended or
reprimanded.[15] No disciplinary action whatsoever was taken against petitioner Del Rosario. We
therefore affirm the finding that petitioner Mercury Drug has failed to discharge its burden of
proving that it exercised due diligence in the selection and supervision of its employee, petitioner
Del Rosario.

We now consider the damages which respondents should recover from the petitioners.
The trial court awarded the following amounts:
1.

Two
Million
Nine
Hundred
(P2,973,000.00) actual damages;

Seventy-Three

Thousand

Pesos

2.

As compensatory damages:
a.

Twenty-Three Million Four Hundred Sixty One Thousand, and Sixty-Two


Pesos (P23,461,062.00) for life care cost of Stephen;

b.

Ten Million Pesos (P10,000,000.00) as and for lost or impaired earning


capacity of Stephen;

3.

Four Million Pesos (P4,000,000.00) as moral damages;

4.

Two Million Pesos (P2,000,000.00) as exemplary damages; and

5.

One Million Pesos (P1,000,000.00) as attorneys fees and litigation expense.

The Court of Appeals affirmed the decision of the trial court but reduced the award of moral
damages to P1,000,000.00.
With regard to actual damages, Art. 2199 of the Civil Code provides that [E]xcept 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 x x x. In the instant case, we uphold the
finding that the actual damages claimed by respondents were supported by receipts. The amount
of P2,973,000.00 represented cost of hospital expenses, medicines, medical services and
supplies, and nursing care services provided respondent Stephen from December 20, 1996, the
day of the accident, until December 1998.
Petitioners are also liable for all damages which are the natural and probable
consequences of the act or omission complained of.[16] The doctors who attended to respondent
Stephen are one in their prognosis that his chances of walking again and performing basic body
functions are nil. For the rest of his life, he will need continuous rehabilitation and therapy to
prevent

further

complications

such

as

pneumonia,

bladder

and

rectum

infection, renal failure, sepsis and severe bed sores, osteoporosis and fractures, and other spinal
cord injury-related conditions. He will be completely dependent on the care and support of his
family. We thus affirm the award of P23,461,062.00 for the life care cost of respondent Stephen
Huang, based on his average monthly expense and the actuarial computation of the remaining
years that he is expected to live; and the conservative amount ofP10,000,000.00, as reduced by
the trial court, for the loss or impairment of his earning capacity,[17] considering his age, probable
life expectancy, the state of his health, and his mental and physical condition before the
accident. He was only seventeen years old, nearly six feet tall and weighed 175 pounds. He was
in fourth year high school, and a member of the school varsity basketball team. He was also class
president and editor-in-chief of the school annual. He had shown very good leadership
qualities. He was looking forward to his college life, having just passed the entrance examinations
of the University of the Philippines, De La Salle University, and the University of Asia and the
Pacific. The University of Sto. Tomas even offered him a chance to obtain an athletic scholarship,
but the accident prevented him from attending the basketball try-outs. Without doubt, he was an
exceptional student. He excelled both in his academics and extracurricular undertakings. He is
intelligent and motivated, a go-getter, as testified by Francisco Lopez, respondent Stephen
Huangs godfather and a bank executive.[18] Had the accident not happened, he had a rosy future
ahead of him. He wanted to embark on a banking career, get married and raise children. Taking
into account his outstanding abilities, he would have enjoyed a successful professional career in
banking. But, as Mr. Lopez stated, it is highly unlikely for someone like respondent to ever secure
a job in a bank. To his knowledge, no bank has ever hired a person suffering with

the kind of disability as Stephen Huangs.[19]


We likewise uphold the award of moral and exemplary damages and attorneys fees.
The award of moral damages is aimed at a restoration, within the limits of the possible, of
the spiritual status quo ante.[20] Moral damages are designed to compensate and alleviate in some
way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury unjustly caused a
person. Although incapable of pecuniary computation, they must be proportionate to the suffering
inflicted.[21] The amount of the award bears no relation whatsoever with the wealth or means of the
offender.
In the instant case, respondent Stephen Huang and respondent spouses Richard and
Carmen Huang testified to the intense suffering they continue to experience as a result of the
accident. Stephen recounted the nightmares and traumas he suffers almost every night when he
relives the accident. He also gets depression when he thinks of his bleak future. He feels
frustration and embarrassment in needing to be helped with almost everything and in his inability
to do simple things he used to do. Similarly, respondent spouses and the rest of the family
undergo their own private suffering. They live with the day-to-day uncertainty of respondent
Stephen Huangs condition. They know that the chance of full recovery is nil. Moreover,
respondent Stephen Huangs paralysis has made him prone to many other illnesses. His family,
especially respondent spouses, have to make themselves available for Stephen twenty-four hours
a day. They have patterned their daily life around taking care of him, ministering to his daily needs,
altering the lifestyle to which they had been accustomed.
Respondent Carmen Huangs brother testified on the insensitivity of petitioner Mercury Drug
towards the plight of respondent. Stephen, viz.:
Maybe words cannot describe the anger that we feel towards the
defendants. All the time that we were going through the crisis, there was none(sic) a
single sign of nor offer of help, any consolation or anything whatsoever. It is funny
because, you know, I have many colleagues, business associates, people even as
far as United States, Japan, that I probably met only once, when they found out, they
make a call, they sent card, they write small notes, but from the defendant, absolute
silence. They didnt care, and worst, you know, this is a company that have (sic) all
the resources to help us.They were (sic) on our part, it was doubly painful because
we have no choice but to go back to them and buy the medicines that we need for
Stephen. So, I dont know how someone will really have no sense of decency at all to
at least find out what happened to my son, what is his condition, or if there is
anything that they can do to help us.[22]
On the matter of exemplary damages, Art. 2231 of the Civil Code provides that in cases of
quasi-delicts, exemplary damages may be granted if the defendant acted with gross

negligence. The records show that at the time of the accident, petitioner Del Rosario was driving
without a license because he was previously ticketed for reckless driving. The evidence also
shows that he failed to step on his brakes immediately after the impact. Had petitioner Del Rosario
done so, the injuries which respondent Stephen sustained could have been greatly reduced.
Wanton acts such as that committed by petitioner Del Rosario need be suppressed; and
employers like petitioner Mercury Drug should be more circumspect in the observance of due
diligence in the selection and supervision of their employees. The award of exemplary damages in
favor of the respondents is therefore justified.
With the award of exemplary damages, we also affirm the grant of attorneys fees to
respondents.[23] In addition, attorneys fees may be granted when a party is compelled to litigate or
incur expenses to protect his interest by reason of an unjustified act of the other party.[24]
Cost against petitioners.
IN VIEW THEREOF, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated February 16, 2006 and March 30, 2006, respectively, in CA-G.R. CV No. 83981,
are AFFIRMED.
SO ORDERED.

TANAY RECREATION CENTER AND DEVELOPMENT CORP., petitioner, vs. CATALINA


MATIENZO FAUSTO+ and ANUNCIACION FAUSTO PACUNAYEN, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Petitioner Tanay Recreation Center and Development Corp. (TRCDC) is the lessee of a
3,090-square meter property located in Sitio Gayas, Tanay, Rizal, owned by Catalina Matienzo
Fausto,[1] under a Contract of Lease executed on August 1, 1971. On this property stands the
Tanay Coliseum Cockpit operated by petitioner. The lease contract provided for a 20-year term,
subject to renewal within sixty days prior to its expiration. The contract also provided that should
Fausto decide to sell the property, petitioner shall have the priority right to purchase the same.[2]
On June 17, 1991, petitioner wrote Fausto informing her of its intention to renew the
lease.[3] However, it was Faustos daughter, respondent Anunciacion F. Pacunayen, who replied,
asking that petitioner remove the improvements built thereon, as she is now the absolute owner of
the property.[4] It appears that Fausto had earlier sold the property to Pacunayen on August 8,
1990, for the sum of P10,000.00 under a Kasulatan ng Bilihan Patuluyan ng Lupa,[5] and title has
already been transferred in her name under Transfer Certificate of Title (TCT) No. M-35468.[6]
Despite efforts, the matter was not resolved. Hence, on September 4, 1991, petitioner filed an
Amended Complaint for Annulment of Deed of Sale, Specific Performance with Damages, and
Injunction, docketed as Civil Case No. 372-M.[7]
In her Answer, respondent claimed that petitioner is estopped from assailing the validity of the
deed of sale as the latter acknowledged her ownership when it merely asked for a renewal of the
lease. According to respondent, when they met to discuss the matter, petitioner did not demand
for the exercise of its option to purchase the property, and it even asked for grace period to vacate
the premises.[8]
After trial on the merits, the Regional Trial Court of Morong, Rizal (Branch 78), rendered
judgment extending the period of the lease for another seven years from August 1, 1991 at a
monthly rental of P10,000.00, and dismissed petitioners claim for damages.[9]
On appeal, docketed as CA-G.R. CV No. 43770, the Court of Appeals (CA) affirmed with
modifications the trial courts judgment per its Decision dated June 14, 1999.[10] The dispositive
portion of the decision reads:
WHEREFORE, the appealed decision is AFFIRMED AND ACCORDINGLY MODIFIED AS
DISCUSSED.
Furthermore, we resolved:
1.0. That TRCDC VACATE the leased premises immediately;
2.0. To GRANT the motion of Pacunayen to allow her to withdraw the amount of P320,000.00,
deposited according to records, with this court.
3.0. To order TRCDC to MAKE THE NECESSARY ACCOUNTING regarding the amounts it had
already deposited (for unpaid rentals for the extended period of seven [7] years of the contract of
lease). In case it had not yet completed its deposit, to immediately pay the remaining balance to
Pacunayen.
4.0. To order TRCDC to PAY the amount of P10,000.00 as monthly rental, with regard to its
continued stay in the leased premises even after the expiration of the extended period of seven (7)
years, computed from August 1, 1998, until it finally vacates therefrom.

SO ORDERED.[11]
In arriving at the assailed decision, the CA acknowledged the priority right of TRCDC to
purchase the property in question. However, the CA interpreted such right to mean that it shall be
applicable only in case the property is sold to strangers and not to Faustos relative. The CA stated
that (T)o interpret it otherwise as to comprehend all sales including those made to relatives and to
the compulsory heirs of the seller at that would be an absurdity, and her (Faustos) only motive for
such transfer was precisely one of preserving the property within her bloodline and that someone
administer the property.[12] The CA also ruled that petitioner already acknowledged the transfer of
ownership and is deemed to have waived its right to purchase the property.[13] The CA even
further went on to rule that even if the sale is annulled, petitioner could not achieve anything
because the property will be eventually transferred to Pacunayen after Faustos death.[14]
Petitioner filed a motion for reconsideration but it was denied per Resolution dated September
14, 1999.[15]
Dissatisfied, petitioner elevated the case to this Court on petition for review on certiorari,
raising the following grounds:
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN
HOLDING THAT THE CONTRACTUAL STIPULATION GIVING PETITIONER THE PRIORITY
RIGHT TO PURCHASE THE LEASED PREMISES SHALL ONLY APPLY IF THE LESSOR
DECIDES TO SELL THE SAME TO STRANGERS;
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN
HOLDING THAT PETITIONERS PRIORITY RIGHT TO PURCHASE THE LEASED PREMISES IS
INCONSEQUENTIAL.[16]
The principal bone of contention in this case refers to petitioners priority right to purchase, also
referred to as the right of first refusal.
Petitioners right of first refusal in this case is expressly provided for in the notarized Contract
of Lease dated August 1, 1971, between Fausto and petitioner, to wit:
7. That should the LESSOR decide to sell the leased premises, the LESSEE shall have the priority
right to purchase the same;[17]
When a lease contract contains a right of first refusal, the lessor is under a legal duty to the
lessee not to sell to anybody at any price until after he has made an offer to sell to the latter at a
certain price and the lessee has failed to accept it. The lessee has a right that the lessor's first
offer shall be in his favor.[18] Petitioners right of first refusal is an integral and indivisible part of the
contract of lease and is inseparable from the whole contract. The consideration for the lease
includes the consideration for the right of first refusal[19] and is built into the reciprocal obligations
of the parties.
It was erroneous for the CA to rule that the right of first refusal does not apply when the
property is sold to Faustos relative.[20] When the terms of an agreement have been reduced to
writing, it is considered as containing all the terms agreed upon. As such, there can be, between
the parties and their successors in interest, no evidence of such terms other than the contents of
the written agreement, except when it fails to express the true intent and agreement of the
parties.[21] In this case, the wording of the stipulation giving petitioner the right of first refusal is
plain and unambiguous, and leaves no room for interpretation. It simply means that should Fausto
decide to sell the leased property during the term of the lease, such sale should first be offered to
petitioner. The stipulation does not provide for the qualification that such right may be exercised
only when the sale is made to strangers or persons other than Faustos kin. Thus, under the terms
of petitioners right of first refusal, Fausto has the legal duty to petitioner not to sell the property to
anybody, even her relatives, at any price until after she has made an offer to sell to petitioner at a

certain price and said offer was rejected by petitioner. Pursuant to their contract, it was essential
that Fausto should have first offered the property to petitioner before she sold it to respondent. It
was only after petitioner failed to exercise its right of first priority could Fausto then lawfully sell the
property to respondent.
The rule is that a sale made in violation of a right of first refusal is valid. However, it may be
rescinded, or, as in this case, may be the subject of an action for specific
performance.[22] In Riviera Filipina, Inc. vs. Court of Appeals,[23] the Court discussed the concept
and interpretation of the right of first refusal and the consequences of a breach thereof, to wit:
. . . It all started in 1992 with Guzman, Bocaling & Co. v. Bonnevie where the Court held that a
lease with a proviso granting the lessee the right of first priority all things and conditions being
equal meant that there should be identity of the terms and conditions to be offered to the lessee
and all other prospective buyers, with the lessee to enjoy the right of first priority. A deed of sale
executed in favor of a third party who cannot be deemed a purchaser in good faith, and which is in
violation of a right of first refusal granted to the lessee is not voidable under the Statute of Frauds
but rescissible under Articles 1380 to 1381 (3) of the New Civil Code.
Subsequently in 1994, in the case of Ang Yu Asuncion v. Court of Appeals, the
Court en banc departed from the doctrine laid down in Guzman, Bocaling & Co. v. Bonnevie and
refused to rescind a contract of sale which violated the right of first refusal. The Court held that the
so-called right of first refusal cannot be deemed a perfected contract of sale under Article 1458 of
the New Civil Code and, as such, a breach thereof decreed under a final judgment does not entitle
the aggrieved party to a writ of execution of the judgment but to an action for damages in a proper
forum for the purpose.
In the 1996 case of Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., the
Court en banc reverted back to the doctrine in Guzman Bocaling & Co. v. Bonnevie stating that
rescission is a relief allowed for the protection of one of the contracting parties and even third
persons from all injury and damage the contract may cause or to protect some incompatible and
preferred right by the contract.
Thereafter in 1997, in Paraaque Kings Enterprises, Inc. v. Court of Appeals, the Court affirmed
the nature of and the concomitant rights and obligations of parties under a right of first refusal. The
Court, summarizing the rulings in Guzman, Bocaling & Co. v. Bonnevie and Equatorial Realty
Development, Inc. v. Mayfair Theater, Inc., held that in order to have full compliance with the
contractual right granting petitioner the first option to purchase, the sale of the properties for the
price for which they were finally sold to a third person should have likewise been first offered to the
former. Further, there should be identity of terms and conditions to be offered to the buyer holding
a right of first refusal if such right is not to be rendered illusory. Lastly, the basis of the right of first
refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer.
The prevailing doctrine therefore, is that a right of first refusal means identity of terms and
conditions to be offered to the lessee and all other prospective buyers and a contract of sale
entered into in violation of a right of first refusal of another person, while valid, is rescissible.[24]
It was also incorrect for the CA to rule that it would be useless to annul the sale between
Fausto and respondent because the property would still remain with respondent after the death of
her mother by virtue of succession, as in fact, Fausto died in March 1996, and the property now
belongs to respondent, being Faustos heir.[25]
For one, Fausto was bound by the terms and conditions of the lease contract. Under the right
of first refusal clause, she was obligated to offer the property first to petitioner before selling it to
anybody else. When she sold the property to respondent without offering it to petitioner, the sale
while valid is rescissible so that petitioner may exercise its option under the contract.

With the death of Fausto, whatever rights and obligations she had over the property, including
her obligation under the lease contract, were transmitted to her heirs by way of succession, a
mode of acquiring the property, rights and obligation of the decedent to the extent of the value of
the inheritance of the heirs. Article 1311 of the Civil Code provides:
ART. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by their nature, or
by stipulation or by provision of law. The heir is not liable beyond the value of the property he
received from the decedent.
A lease contract is not essentially personal in character.[26] Thus, the rights and obligations
therein are transmissible to the heirs. The general rule is that heirs are bound by contracts entered
into by their predecessors-in-interest except when the rights and obligations arising therefrom are
not transmissible by (1) their nature, (2) stipulation or (3) provision of law.[27]
In this case, the nature of the rights and obligations are, by their nature, transmissible. There
is also neither contractual stipulation nor provision of law that makes the rights and obligations
under the lease contract intransmissible. The lease contract between petitioner and Fausto is a
property right, which is a right that passed on to respondent and the other heirs, if any, upon the
death of Fausto.
In DKC Holdings Corporation vs. Court of Appeals,[28] the Court held that the Contract of
Lease with Option to Buy entered into by the late Encarnacion Bartolome with DKC Holdings
Corporation was binding upon her sole heir, Victor, even after her demise and it subsists even
after her death. The Court ruled that:
. . . Indeed, being an heir of Encarnacion, there is privity of interest between him and his deceased
mother. He only succeeds to what rights his mother had and what is valid and binding
against her is also valid and binding as against him. This is clear from Paraaque Kings
Enterprises vs. Court of Appeals, where this Court rejected a similar defenseWith respect to the contention of respondent Raymundo that he is not privy to the lease
contract, not being the lessor nor the lessee referred to therein, he could thus not have
violated its provisions, but he is nevertheless a proper party. Clearly, he stepped into the
shoes of the owner-lessor of the land as, by virtue of his purchase, he assumed all the
obligations of the lessor under the lease contract. Moreover, he received benefits in the
form of rental payments. Furthermore, the complaint, as well as the petition, prayed for
the annulment of the sale of the properties to him. Both pleadings also alleged collusion
between him and respondent Santos which defeated the exercise by petitioner of its right
of first refusal.
In order then to accord complete relief to petitioner, respondent Raymundo was a
necessary, if not indispensable, party to the case. A favorable judgment for the petitioner
will necessarily affect the rights of respondent Raymundo as the buyer of the property
over which petitioner would like to assert its right of first option to buy.[29] (Emphasis
supplied)
Likewise in this case, the contract of lease, with all its concomitant provisions, continues even
after Faustos death and her heirs merely stepped into her shoes.[30] Respondent, as an heir of
Fausto, is therefore bound to fulfill all its terms and conditions.
There is no personal act required from Fausto such that respondent cannot perform it.
Faustos obligation to deliver possession of the property to petitioner upon the exercise by the
latter of its right of first refusal may be performed by respondent and the other heirs, if any.
Similarly, nonperformance is not excused by the death of the party when the other party has a
property interest in the subject matter of the contract.[31]

The CA likewise found that petitioner acknowledged the legitimacy of the sale to respondent
and it is now barred from exercising its right of first refusal. According to the appellate court:
Second, when TRCDC, in a letter to Fausto, signified its intention to renew the lease contract, it
was Pacunayen who answered the letter on June 19, 1991. In that letter Pacunayen demanded
that TRCDC vacate the leased premises within sixty (60) days and informed it of her ownership of
the leased premises. The pertinent portion of the letter reads:
Furtherly, please be advised that the land is no longer under the absolute ownership of my mother
and the undersigned is now the real and absolute owner of the land.
Instead of raising a howl over the contents of the letter, as would be its expected and natural
reaction under the circumstances, TRCDC surprisingly kept silent about the whole thing. As we
mentioned in the factual antecedents of this case, it even invited Pacunayen to its special board
meeting particularly to discuss with her the renewal of the lease contract. Again, during that
meeting, TRCDC did not mention anything that could be construed as challenging Pacunayens
ownership of the leased premises. Neither did TRCDC assert its priority right to purchase the
same against Pacunayen.[32]
The essential elements of estoppel are: (1) conduct of a party amounting to false
representation or concealment of material facts or at least calculated to convey the impression that
the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to
assert; (2) intent, or at least expectation, that this conduct shall be acted upon by, or at least
influence, the other party; and (3) knowledge, actual or constructive, of the real facts.[33]
The records are bereft of any proposition that petitioner waived its right of first refusal under
the contract such that it is now estopped from exercising the same. In a letter dated June 17,
1991, petitioner wrote to Fausto asking for a renewal of the term of lease.[34] Petitioner cannot be
faulted for merely seeking a renewal of the lease contract because obviously, it was working on
the assumption that title to the property is still in Faustos name and the latter has the sole authority
to decide on the fate of the property. Instead, it was respondent who replied, advising petitioner to
remove all the improvements on the property, as the lease is to expire on the 1st of August 1991.
Respondent also informed petitioner that her mother has already sold the property to her.[35] In
order to resolve the matter, a meeting was called among petitioners stockholders, including
respondent, on July 27, 1991, where petitioner, again, proposed that the lease be renewed.
Respondent, however, declined. While petitioner may have sought the renewal of the lease, it
cannot be construed as a relinquishment of its right of first refusal. Estoppel must be intentional
and unequivocal.[36]
Also, in the excerpts from the minutes of the special meeting, it was further stated that the
possibility of a sale was likewise considered.[37] But respondent also refused to sell the land, while
the improvements, if for sale shall be subject for appraisal.[38] After respondent refused to sell the
land, it was then that petitioner filed the complaint for annulment of sale, specific performance and
damages.[39] Petitioners acts of seeking all possible avenues for the amenable resolution of the
conflict do not amount to an intentional and unequivocal abandonment of its right of first refusal.
Respondent was well aware of petitioners right to priority of sale, and that the sale made to
her by her mother was merely for her to be able to take charge of the latters affairs. As admitted
by respondent in her Appellees Brief filed before the CA, viz.:
After June 19, 1991, TRCDC invited Pacunayen to meeting with the officers of the corporation. . .
. In the same meeting, Pacunayens attention was called to the provision of the Contract of
Lease had by her mother with TRCDC, particularly paragraph 7 thereof, which states:
7. That should the lessor decide to sell the leased premises, the LESSEE shall have the priority
right to purchase the same.

Of course, in the meeting she had with the officers of TRCDC, Pacunayen explained that the sale
made in her favor by her mother was just a formality so that she may have the proper
representation with TRCDC in the absence of her parents, more so that her father had already
passed away, and there was no malice in her mine (sic) and that of her mother, or any intention on
their part to deceive TRCDC. All these notwithstanding, and for her to show their good faith in
dealing with TRCDC, Pacunayen started the ground work to reconvey ownership over the whole
land, now covered by Transfer Certificare (sic) of Title No. M-259, to and in the name of her
mother (Fausto), but the latter was becoming sickly, old and weak, and they found no time to do it
as early as they wanted to.[40] (Emphasis supplied)
Given the foregoing, the Kasulatan ng Bilihan Patuluyan ng Lupa dated August 8, 1990
between Fausto and respondent must be rescinded. Considering, however, that Fausto already
died on March 16, 1996, during the pendency of this case with the CA, her heirs should have
been substituted as respondents in this case. Considering further that the Court cannot declare
respondent Pacunayen as the sole heir, as it is not the proper forum for that purpose, the right of
petitioner may only be enforced against the heirs of the deceased Catalina Matienzo Fausto,
represented by respondent Pacunayen.
In Paraaque Kings Enterprises, Inc. vs. Court of Appeals,[41] it was ruled that the basis of the
right of the first refusal must be the current offer to sell of the seller or offer to purchase of any
prospective buyer. It is only after the grantee fails to exercise its right of first priority under the
same terms and within the period contemplated, could the owner validly offer to sell the property to
a third person, again, under the same terms as offered to the grantee. The circumstances of this
case, however, dictate the application of a different ruling. An offer of the property to petitioner
under identical terms and conditions of the offer previously given to respondent Pacunayen would
be inequitable. The subject property was sold in 1990 to respondent Pacunayen for a measly sum
of P10,000.00. Obviously, the value is in a small amount because the sale was between a mother
and daughter. As admitted by said respondent, the sale made in her favor by her mother was just
a formality so that she may have the proper representation with TRCDC in the absence of her
parents[42] Consequently, the offer to be made to petitioner in this case should be under
reasonable terms and conditions, taking into account the fair market value of the property at the
time it was sold to respondent.
In its complaint, petitioner prayed for the cancellation of TCT No. M-35468 in the name of
respondent Pacunayen,[43] which was issued by the Register of Deeds of Morong on February 7,
1991.[44] Under ordinary circumstances, this would be the logical effect of the rescission of
the Kasulatan ng Bilihan Patuluyan ng Lupa between the deceased Fausto and respondent
Pacunayen. However, the circumstances in this case are not ordinary. The buyer of the subject
property is the sellers own daughter. If and when the title (TCT No. M-35468) in respondent
Pacunayens name is cancelled and reinstated in Faustos name, and thereafter negotiations
between petitioner and respondent Pacunayen for the purchase of the subject property break
down, then the subject property will again revert to respondent Pacunayen as she appears to be
one of Faustos heirs. This would certainly be a winding route to traverse. Sound reason therefore
dictates that title should remain in the name of respondent Pacunayen, for and in behalf of the
other heirs, if any, to be cancelled only when petitioner successfully exercises its right of first
refusal and purchases the subject property.
Petitioner further seeks the award of the following damages in its favor: (1) P100,000.00 as
actual damages; (2) P1,100,000.00 as compensation for lost goodwill or reputation;
(3) P100,000.00 as moral damages; (4) P100,000.00 as exemplary damages; (5) P50,000.00 as
attorneys fees; (6) P1,000.00 appearance fee per hearing; and (7) the costs of suit.[45]
According to petitioner, respondents act in fencing the property led to the closure of the Tanay
Coliseum Cockpit and petitioner was unable to conduct cockfights and generate income of not less
than P100,000.00 until the end of September 1991, aside from the expected rentals from the
cockpit space lessees in the amount ofP11,000.00.[46]
Under Article 2199 of the Civil Code, it is provided that:

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. (Emphasis supplied)
The rule is that actual or compensatory damages cannot be presumed, but must be proved
with reasonable degree of certainty. A court cannot rely on speculations, conjectures, or
guesswork as to the fact and amount of damages, but must depend upon competent proof that
they have been suffered by the injured party and on the best obtainable evidence of the actual
amount thereof. It must point out specific facts, which could afford a basis for measuring whatever
compensatory or actual damages are borne.[47]
In the present case, there is no question that the Tanay Coliseum Cockpit was closed for two
months and TRCDC did not gain any income during said period. But there is nothing on record to
substantiate petitioners claim that it was bound to lose some P111,000.00 from such closure.
TRCDCs president, Ambrosio Sacramento, testified that they suffered income losses with the
closure of the cockpit from August 2, 1991 until it re-opened on October 20, 1991.[48] Mr.
Sacramento, however, cannot state with certainty the amount of such unrealized
income.[49] Meanwhile, TRCDCs accountant, Merle Cruz, stated that based on the corporations
financial statement for the years 1990 and 1991,[50] they derived the amount of P120,000.00 as
annual income from rent.[51] From said financial statement, it is safe to presume that TRCDC
generated a monthly income of P10,000.00 a month (P120,000.00 annual income divided by 12
months). At best therefore, whatever actual damages that petitioner suffered from the cockpits
closure for a period of two months can be reasonably summed up only to P20,000.00.
Such award of damages shall earn interest at the legal rate of six percent (6%) per annum,
which shall be computed from the time of the filing of the Complaint on August 22, 1991, until the
finality of this decision. After the present decision becomes final and executory, the rate of interest
shall increase to twelve percent (12%) per annum from such finality until its satisfaction, this
interim period being deemed to be equivalent to a forbearance of credit.[52] This is in accord with
the guidelines laid down by the Court in Eastern Shipping Lines, Inc. vs. Court of
Appeals,[53] regarding the manner of computing legal interest, viz.:
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan
or forbearance of money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on
the amount of damages awarded may be imposed at thediscretion of the court at the rate of 6%
per annum. No interest, however, shall be adjudged on unliquidated claims or damages except
when or until the demand can be established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin to run only
from the date the judgment of the court is made (at which time quantification of damages may be
deemed to have been reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be

12% per annum from such finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.[54]
Petitioner also claims the amount of P1,100,000.00 as compensation for lost goodwill or
reputation. It alleged that with the unjust and wrongful conduct of the defendants as abovedescribed, plaintiff stands to lose its goodwill and reputation established for the past 20 years.[55]
An award of damages for loss of goodwill or reputation falls under actual or compensatory
damages as provided in Article 2205 of the Civil Code, to wit:
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 plaintiffs business standing or commercial credit.
Even if it is not recoverable as compensatory damages, it may still be awarded in the concept
of temperate or moderate damages.[56] In arriving at a reasonable level of temperate damages to
be awarded, trial courts are guided by the ruling that:
. . . 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 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. (Araneta v. Bank of America, 40 SCRA 144, 145)[57]
In this case, aside from the nebulous allegation of petitioner in its amended complaint, there is
no evidence on record, whether testimonial or documentary, to adequately support such claim.
Hence, it must be denied.
Petitioners claim for moral damages must likewise be denied. 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.[58] Petitioner being a corporation,[59] the claim for moral damages
must be denied.
With regard to the claim for exemplary damages, it is a requisite in the grant thereof that the
act of the offender must be accompanied by bad faith or done in wanton, fraudulent or malevolent
manner.[60] Moreover, where a party is not entitled to actual or moral damages, an award of
exemplary damages is likewise baseless.[61] In this case, petitioner failed to show that respondent
acted in bad faith, or in wanton, fraudulent or malevolent manner.
Petitioner likewise claims the amount of P50,000.00 as attorneys fees, the sum of P1,000.00
for every appearance of its counsel, plus costs of suit. It is well settled that no premium should be
placed on the right to litigate and not every winning party is entitled to an automatic grant of
attorney's fees. The party must show that he falls under one of the instances enumerated in Article
2208 of the Civil Code. In this case, since petitioner was compelled to engage the services of a
lawyer and incurred expenses to protect its interest and right over the subject property, the award
of attorneys fees is proper. However there are certain standards in fixing attorney's fees, to wit: (1)
the amount and the character of the services rendered; (2) labor, time and trouble involved; (3) the
nature and importance of the litigation and business in which the services were rendered; (4) the
responsibility imposed; (5) the amount of money and the value of the property affected by the
controversy or involved in the employment; (6) the skill and the experience called for in the
performance of the services; (7) the professional character and the social standing of the attorney;
and (8) the results secured, it being a recognized rule that an attorney may properly charge a

much larger fee when it is contingent than when it is not.[62] Considering the foregoing, the award
of P10,000.00 as attorneys fees, including the costs of suit, is reasonable under the
circumstances.
WHEREFORE, the instant Petition for Review is PARTIALLY GRANTED. The Court of
Appeals Decision dated June 14, 1999 in CA-G.R. CV No. 43770 is MODIFIED as follows:
(1) the Kasulatan ng Bilihan Patuluyan ng Lupa dated August 8, 1990 between Catalina Matienzo
Fausto and respondent Anunciacion Fausto Pacunayen is hereby deemed rescinded;
(2) The Heirs of the deceased Catalina Matienzo Fausto who are hereby deemed substituted as
respondents, represented by respondent Anunciacion Fausto Pacunayen, are ORDERED to
recognize the obligation of Catalina Matienzo Fausto under the Contract of Lease with respect to
the priority right of petitioner Tanay Recreation Center and Development Corp. to purchase the
subject property under reasonable terms and conditions;
(3) Transfer Certificate of Title No. M-35468 shall remain in the name of respondent Anunciacion
Fausto Pacunayen, which shall be cancelled in the event petitioner successfully purchases the
subject property;
(4) Respondent is ORDERED to pay petitioner Tanay Recreation Center and Development
Corporation the amount of Twenty Thousand Pesos (P20,000.00) as actual damages, plus interest
thereon at the legal rate of six percent (6%) per annum from the filing of the Complaint until the
finality of this Decision. After this Decision becomes final and executory, the applicable rate shall
be twelve percent (12%) per annum until its satisfaction; and,
(5) Respondent is ORDERED to pay petitioner the amount of Ten Thousand Pesos (P10,000.00)
as attorneys fees, and to pay the costs of suit.
(6) Let the case be remanded to the Regional Trial Court, Morong, Rizal (Branch 78) for further
proceedings on the determination of the reasonable terms and conditions of the offer to sell by
respondents to petitioner, without prejudice to possible mediation between the parties.
The rest of the unaffected dispositive portion of the Court of Appeals Decision is AFFIRMED.
SO ORDERED.
Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

RODEL CRISOSTOMO,
Petitioner,

G.R. No. 171526


Present:

- versus -

CORONA, C. J., Chairperson,


VELASCO, JR.,
LEONARDO- DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

PEOPLE OF THE PHILIPPINES,


Promulgated:
Respondent.
September 1, 2010
x--------------------------------------------------------x
DECISION
DEL CASTILLO, J.:
For review under Rule 45 of the Rules of Court is the Decision[1] dated September 22, 2005 of the Court of
Appeals in CA-G.R. CR.-H.C. No. 01192, affirming with modification the Decision[2] rendered by the
Regional Trial Court of Malolos, Bulacan, Branch 12, in Criminal Case No. 1632-M-2001, finding petitioner
Rodel Crisostomo guilty beyond reasonable doubt of the complex crime of Robbery with Homicide.
Factual Antecedents
The Information filed against petitioner and his two companions designated only as John Doe and Peter
Doe contained the following accusatory allegations:
That on or about the 12th day of February, 2001, in the municipality of San Miguel, province
of Bulacan, Philippines and within the jurisdiction of this Honorable Court, the above-named
accused, conspiring and helping one another, armed with a gun, did then and there willfully,
unlawfully and feloniously, with intent [to] gain and by means of force, violence and
intimidation upon person, enter the gasoline station owned by Jose Buencamino and once
inside, take, rob and carry away with them P40,000.00, belonging to the said Jose
Buencamino, to the damage and prejudice of the latter in the amount of P40,000.00, and on
the occasion of the commission of the said robbery or by reason thereof, the herein
accused, in furtherance of their conspiracy, did then and there willfully, unlawfully and
feloniously, attack, assault and shoot Janet Ramos, cashier of said gasoline station, thereby
inflicting on her serious physical injuries which directly caused her death.
Contrary to law.[3]
During his arraignment, petitioner entered a plea of not guilty.[4] Thereafter, trial ensued.
Version of the Prosecution
On February 12, 2001, at around 12:20 in the afternoon, Rodelio Pangilinan (Rodelio) was working at a
gasoline station owned by Jose Buencamino (Jose) at Buliran, San Miguel, Bulacan. He was by the
gasoline tank which was two or three arms length from the cashiers office when three armed men on
board a motorcycle arrived.Two of the men immediately went to the cashier while the driver stayed on the
motorcycle. Inside the office, one of the men pulled out a fan knife while the other, armed with a gun, fired

a shot at Janet Ramos (Janet), the cashier. They forcibly took the money in the cash register and the man
with the gun fired a second shot that fatally hit Janet in the right side of her head. The two armed men
returned to their companion waiting by the motorcycle and together sped away from the scene of the
crime.
Rodelio gave a description of the driver of the motorcycle but not of the two armed men who
entered the cashiers office since they had their backs turned to him.The National Bureau of Investigation
(NBI) prepared a cartographic sketch based on the information provided by Rodelio. Jose, the owner of
the gas station, stated that the stolen money was worth P40,000.00. Receipts in the amount
of P14,500.00 were presented as funeral expenses.
On February 23, 2001, the petitioner was detained after being implicated in a robbery that occurred in San
Miguel, Bulacan. During his detention, Rodelio and another gasoline boy arrived and identified him in a
police lineup as one of the three robbers who killed Janet.
Version of the Defense
Petitioner denied committing the crime for which he was charged. He maintained that the face of the man
depicted in the cartographic sketch by the NBI was completely different from his appearance in the police
lineup in which Rodelio pointed at him as one of the perpetrators. He argued that the only reason why
Rodelio pointed to him in the police lineup was because he was the only one in handcuffs.
Ruling of the Regional Trial Court
The trial court rendered its Decision convicting petitioner of robbery with homicide. The dispositive portion
reads:
WHEREFORE, finding herein accused RODEL CRISOSTOMO y DE LEON guilty as
principal beyond reasonable doubt of the crime of robbery with homicide as charged, there
being no circumstances, aggravating or mitigating, found attendant in the
commission thereof, he is hereby sentenced to suffer the penalty of reclusion perpetua, to
indemnify the heirs of victim Janet Ramos in the amount of P75,000.00, the owner or
operator, Jose Buencamino, Jr., of the gasoline station that was robbed, in the amount
of P40,000.00 plusP14,500.00 as funeral expenses (Exh. H) defrayed by said owner for its
cashier Janet Ramos, as actual damages, and to pay the costs of the proceedings.
In the service of his sentence said accused, a detention prisoner, shall be credited with the
full time during which he had undergone preventive imprisonment, pursuant to Art. 29 of the
Revised Penal Code.
SO ORDERED.[5]
Not satisfied, petitioner filed a Motion for Reconsideration and Inhibition,[6] which was denied by the trial
court in an Order[7] dated January 13, 2003.
Ruling of the Court of Appeals
Upon review of the case pursuant to this Courts ruling in People v. Mateo,[8] the CA affirmed with
modification the conviction of petitioner. The dispositive portion of the CAs Decision reads:

In VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with a


modification that the awarded civil indemnity is reduced from P75,000.00
toP50,000,00. Costs de oficio.
SO ORDERED.[9]

Issue
Before us, the petitioner assails the Decision of the CA and raises the following issue:
WHETHER X X X THE X X X COURT OF APPEALS COMMITTED ERROR IN NOT
HOLDING THAT THE TRIAL COURT GRIEVOUSLY ERRED IN THE APRPECIATION
OF FACTS AND APPLYING THE LAW IN CONVICTING ACCUSED OF ROBBERY
WITH HOMICIDE.[10]

Our Ruling
The petition is unmeritorious.
The trial court properly denied the motion for inhibition.

Petitioner claims that his motion for inhibition should have been granted since his counsel filed a
case against the wife of the trial judge involving a land dispute.Petitioner alleges that the case rendered
the trial judge partial, biased and, thus, incapable of rendering a just and wise decision.
We are not convinced. It must be stressed that as a rule, a motion to inhibit must be denied if filed
after x x x the Court had already given its opinion on the merits of the case, the rationale being that a
litigant cannot be permitted to speculate upon the action of the court x x x (only to) raise an objection of
this sort after a decision had been rendered.[11] Here, petitioners Motion for Reconsideration and Inhibition
was filed on November 29, 2002[12] after the trial court rendered its Decision on November 14,
2002.[13] Accordingly, the trial judge did not commit any impropriety in denying the motion to inhibit as it
came after the case had been decided on the merits.
Further, in a motion for inhibition, [t]he movant must x x x prove the ground of bias and prejudice by
clear and convincing evidence to disqualify a judge from participating in a particular trial.[14] Bare
allegations of partiality x x x [is not sufficient] in the absence of clear and convincing evidence to overcome
the presumption that the judge will undertake his noble role to dispense justice according to law and
evidence and without fear or favor.[15] Petitioners bare allegations in his motion to inhibit are not adequate
grounds for the disqualification or inhibition of the trial judge. Thus, credence should not be given to the
issue of alleged prejudice and partiality of the trial judge.
Petitioner is guilty of the complex crime of robbery with
homicide.

Robbery with homicide exists when a homicide is committed either by reason, or on occasion, of
the robbery. To sustain a conviction for robbery with homicide, the prosecution must prove the following
elements: (1) the taking of personal property belonging to another; (2) with intent to gain; (3) with the use
of violence or intimidation against a person; and[,] (4) on the occasion or by reason of the robbery, the
crime of homicide, as used in its generic sense, was committed. A conviction requires certitude that the
robbery is the main purpose and objective of the malefactor and the killing is merely incidental to the
robbery. The intent to rob must precede the taking of human life but the killing may occur before, during or
after the robbery.[16]
In this case, the prosecution successfully adduced proof beyond reasonable doubt that the genuine
intention of the petitioner and his companions was to rob the gasoline station. Rodelio testified that at
around 12:20 in the afternoon of February 12, 2001, the petitioner and his companions arrived on board a
motorcycle at the gas station located at Buliran, San Miguel, Bulacan. While the petitioner stayed on the
motorcycle, his companions entered the cashiers office. One of them pulled out a fan knife while the other
fired his gun at Janet. After divesting the amount of P40,000.00, the man with the gun fired a fatal shot to
the head of Janet. The petitioners companions returned to and boarded their motorcycle, and sped away
together.[17]
From the foregoing, it is clear that the overriding intention of the petitioner and his cohorts was to
rob the gasoline station. The killing was merely incidental, resulting by reason or on occasion of the
robbery.
The petitioner attempts to discredit Rodelio, the eyewitness presented by the prosecution, by asserting
that his testimony is in conflict with the statements in his affidavit. In his testimony, Rodelio said that it was
one of the men who entered the cashiers office who was holding a gun while in his sworn statement, he
alleged that petitioner had a .45 caliber pistol which was poked at him.
Such an argument fails to impress as discrepancies between sworn statements and testimonies made at
the witness stand do not necessarily discredit the witness. Sworn statements/affidavits are generally
subordinated in importance to open court declarations because the former are often executed when the
affiants mental faculties are not in such a state as to afford him a fair opportunity of narrating in full the
incident which transpired. Testimonies given during trials are much more exact and elaborate. Thus,
testimonial evidence carries more weight than sworn statements/affidavits.[18]
Further, to the extent that inconsistencies were in fact shown, they appear to [this] Court to relate to details
of peripheral significance which do not negate or dissolve the positive identification [by the eyewitness of
the petitioner and his co-accused] as the perpetrators of the crime.[19]
That Rodelio had to be subpoenaed five times and be arrested in order to testify for the prosecution do not
weaken the case against the petitioner and his cohorts.During cross-examination, Rodelio explained that
his failure to respond immediately to the subpoena was because he does not know how to go to
court. Thus:
Q: Why did you fail to appear before this Honorable Court when you were first summoned
to appear before this court?
A: Because my employer was sick, sir.
COURT:
Q: Who was that employer?

A: Ping Buencamino, your Honor.


ATTY. KLIATCHKO:
Q: Assuming that he is sick why did you not go to this Honorable Court?
A: I have no companion. I have no idea.
Q: You have no idea about what?
A: I do not know how to come to this court, sir.[20]

Even assuming that Rodelio was initially reluctant to testify and get involved in the ensuing criminal
prosecution against the petitioner and his co-accused, this is but normal and does not by itself affect [his]
credibility.[21]
The petitioner also avers that he was not the person depicted in the cartographic sketch. However, a
cartographic sketch, unlike a photograph, is only intended to give the law enforcers a general idea of the
likeness of a suspect and is never expected to exactly resemble his actual facial appearance. Even the
description of the suspect given in the cartographic sketch may not be unerringly exact.[22] What is
important is the fact that the petitioner was positively identified by Rodelio as the perpetrator of the crime
even without a moustache and curly hair.
We are not likewise impressed with petitioners assertion that the case against him was weakened with the
failure to present Reinerio, the other eyewitness to the commission of the crime and one of the
prosecutions proposed witnesses. As a rule, the prosecution has the exclusive prerogative to determine
whom to present as witnesses. [It] need not present each and every witness but only such as may be
needed to meet the quantum of proof necessary to establish the guilt of the accused beyond reasonable
doubt.[23] Here, the testimony of Reinerio would merely corroborate the statements of Rodelio on the
witness stand, which when considered together with the other evidence presented by the prosecution,
established beyond reasonable doubt the culpability of the petitioner and his cohorts. Further, there is
nothing on record which would show that Rodelio was actuated by ill motive or hate in imputing a serious
offense of robbery with homicide against the petitioner.
We are also not impressed with the petitioners insistence that his identification in the police lineup
was highly irregular. There is simply no factual basis to prove that he was the only suspect in the lineup
with handcuffs that prompted Rodelio to point to him as the suspect. It is worth stressing that the police
investigators are presumed to have performed their duties regularly and in good faith.[24] In the absence of
sufficient proof to overturn this presumption, petitioners positive identification by Rodelio remains free from
any stain of wrongdoing.
Besides, not only did Rodelio identify the petitioner in the police lineup, he also positively identified
petitioner when he testified in court.
The petitioners contention that he did not conspire with the other accused in the commission of the
crime cannot be given credence. There is no doubt that the petitioner participated actively in the
commission of the crime. He was positively identified as the driver of the motorcycle with his two male
companions on board.They arrived together at the gasoline station. His cohorts then went inside the office
to conduct the robbery while he remained on the motorcycle and waited for his cohorts. After his two

companions stole the money and killed the cashier, they sped away from the scene of the crime in each
others company using the same motorcycle.
Against the testimony of the prosecutions eyewitness, the petitioner could only rely on the defense
of denial. This defense, however, deserves scant consideration since denial cannot prevail over the
positive testimony of a witness. A mere denial, just like alibi, is a self-serving negative evidence which
cannot be accorded greater evidentiary weight than the declaration of credible witnesses who [testified] on
affirmative matters.[25]
The concerted manner [in which the petitioner and his] companions perpetrated the crime showed
beyond reasonable doubt the presence of conspiracy. Where conspiracy is established, it matters not who
among the accused actually shot and killed the victim. The consistent doctrinal rule is that when a
homicide takes place by reason or on the occasion of the robbery, all those who took part shall be guilty of
the special complex crime of robbery with homicide whether or not they actually participated in the killing,
unless there is proof that they had endeavored to prevent the killing.[26] There was no evidence adduced in
this case that petitioner attempted to prevent his companions from shooting the victim. Thus, regardless of
the acts individually performed by [the petitioner] and his co-accused, and applying the basic principle in
conspiracy that the act of one is the act of all, [the petitioner] is guilty as a co-conspirator. Being coconspirators, the criminal liabilities of the [petitioner and his co-accused] are one and the same.[27]
The Proper Penalty
The crime of robbery with homicide is punishable under Article 294 (as amended by Republic Act No.
7659) of the Revised Penal Code by reclusion perpetua to death. Article 63[28] of the Revised Penal Code
states that when the law prescribes a penalty consisting of two indivisible penalties, and the crime is
neither attended by mitigating nor aggravating circumstances, the lesser penalty shall be
imposed. Considering that no modifying circumstance was proven to have attended the commission of the
crime, the trial court correctly sentenced the petitioner to suffer the penalty of reclusion perpetua.[29]
The Civil Liabilities
In robbery with homicide, civil indemnity and moral damages in the amount of P50,000.00 each is granted
automatically in the absence of any qualifying aggravating circumstances.[30] These awards are mandatory
without need of allegation and evidence other than the death of the victim owing to the fact of the
commission of the crime. In this case, the CA properly awarded the amount of P50,000.00 as civil
indemnity. In addition, we also award the amount of P50,000.00 as moral damages.[31]
To be entitled to compensatory damages, it is necessary to prove the actual amount of loss with a
reasonable degree of certainty, premised upon competent proof and the best evidence obtainable to the
injured party. [R]eceipts should support claims of actual damages.[32] Thus, as correctly held by the trial
court and affirmed by the CA, the amount of P14,500.00 incurred as funeral expenses can be sustained
since these are expenditures supported by receipts. Also, the courts below correctly held petitioner liable
to return the amount of P40,000.00 which was stolen from the gas station before the victim was shot and
killed.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CR.-H.C. No. 01192 that affirmed with
modification the Decision of the Regional Trial Court of Malolos, Bulacan, Branch 12, in Criminal Case No.

1632-M-2001 is AFFIRMED with further MODIFICATION that petitioner is hereby ordered to pay the
heirs of the victim moral damages in the amount of P50,000.00.
SO ORDERED.

PHILIPPINE HAWK
CORPORATION,
Petitioner,

-versus-

G.R. No. 166869


Present:
CORONA, J., Chairperson,
VELASCO, JR.,
NACHURA,
PERALTA, and
MENDOZA, JJ.
Promulgated:
February 16, 2010

VIVIAN TAN LEE,


Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
PERALTA, J.:

This is a Petition for Review on Certiorari[1] of the Decision of the Court of Appeals in CAG.R. CV No. 70860, promulgated on August 17, 2004, affirming with modification the Decision of
the Regional Trial Court (RTC) of Quezon City, Branch 102, dated March 16, 2001, in Civil Case
No. Q-91-9191, ordering petitioner Philippine Hawk Corporation and Margarito Avila to jointly and
severally pay respondent Vivian Tan Lee damages as a result of a vehicular accident.
The facts are as follows:
On March 15, 2005, respondent Vivian Tan Lee filed before the RTC of Quezon City a
Complaint[2] against petitioner Philippine Hawk Corporation and defendant Margarito Avila for
damages based on quasi-delict, arising from a vehicular accident that occurred on March 17, 1991
in Barangay Buensoceso, Gumaca, Quezon. The accident resulted in the death of respondents
husband, Silvino Tan, and caused respondent physical injuries.
On June 18, 1992, respondent filed an Amended Complaint,[3] in her own behalf and in
behalf of her children, in the civil case for damages against petitioner. Respondent sought the
payment of indemnity for the death of Silvino Tan, moral and exemplary damages, funeral and
interment expenses, medical and hospitalization expenses, the cost of the motorcycles repair,
attorneys fees, and other just and equitable reliefs.
The accident involved a motorcycle, a passenger jeep, and a bus with Body No. 119. The
bus was owned by petitioner Philippine Hawk Corporation, and was then being driven by Margarito
Avila.
In its Answer,[4] petitioner denied liability for the vehicular accident, alleging that the
immediate and proximate cause of the accident was the recklessness or lack of caution of Silvino

Tan. Petitioner asserted that it exercised the diligence of a good father of the family in the
selection and supervision of its employees, including Margarito Avila.
On March 25, 1993, the trial court issued a Pre-trial Order[5] stating that the parties
manifested that there was no possibility of amicable settlement between them. However, they
agreed to stipulate on the following facts:
1.

On March 17, 1991, in Bgy. Buensoceso, Gumaca, Quezon, plaintiff Vivian Lee
Tan and her husband Silvino Tan, while on board a motorcycle with [P]late No.
DA-5480 driven by the latter, and a Metro Bus with [P]late No. NXR-262 driven by
Margarito Avila, were involved in an accident;
2.
As a result of the accident, Silvino Tan died on the spot while plaintiff Vivian
Lee Tan suffered physical injuries which necessitated medical attention and
hospitalization;
3.
The deceased Silvino Tan is survived by his wife, plaintiff Vivian Lee Tan and
four children, three of whom are now residents of the United States; and
4.
Defendant Margarito Avila is an employee of defendant Philippine Hawk.[6]
The parties also agreed on the following issues:
1.

Whether or not the proximate cause of the accident causing physical injuries
upon the plaintiff Vivian Lee Tan and resulting in the death of the latters husband
was the recklessness and negligence of Margarito Avila or the deceased Silvino
Tan; and
2. Whether or not defendant Philippine Hawk Transport Corporation exercised the
diligence of a good father of the family in the selection and supervision of its
driver Margarito Avila.[7]

Respondent testified that on March 17, 1991, she was riding on their motorcycle in tandem
with her husband, who was on the wheel, at a place after a Caltex gasoline station in Barangay
Buensoceso, Gumaca, Quezon on the way to Lopez, Quezon. They came from the Pasumbal
Machine Shop, where they inquired about the repair of their tanker. They were on a stop position
at the side of the highway; and when they were about to make a turn, she saw a bus running at
fast speed coming toward them, and then the bus hit a jeep parked on the roadside, and their
motorcycle as well. She lost consciousness and was brought to the hospital in Gumaca, Quezon,
where she was confined for a week. She was later transferred to St. Lukes Hospital in Quezon
City, Manila. She suffered a fracture on her left chest, her left arm became swollen, she felt pain in
her bones, and had high blood pressure.[8]
Respondents husband died due to the vehicular accident. The immediate cause of his
death was massive cerebral hemorrhage.[9]
Respondent further testified that her husband was leasing[10] and operating a
Caltex gasoline station in Gumaca, Quezon that yielded one million pesos a year in revenue. They
also had a copra business, which gave them an income of P3,000.00 a month or P36,000.00 a
year.[11]

Ernest Ovial, the driver of the passenger jeep involved in the accident, testified that in the
afternoon of March 17, 1991, his jeep was parked on the left side of the highway near the
Pasumbal Machine Shop. He did not notice the motorcycle before the accident. But he saw the
bus dragging the motorcycle along the highway, and then the bus bumped his jeep and sped
away.[12]
For the defense, Margarito Avila, the driver of petitioners bus, testified that on March 17,
1999, at about 4:30 p.m., he was driving his bus at 60 kilometers per hour on the Maharlika
Highway. When they were at Barangay Buensoceso, Gumaca, Quezon, a motorcycle ran from his
left side of the highway, and as the bus came near, the motorcycle crossed the path of the bus,
and so he turned the bus to the right. He heard a loud banging sound. From his side mirror, he
saw that the motorcycle turned turtle (bumaliktad). He did not stop to help out of fear for his life,
but drove on and surrendered to the police. He denied that he bumped the motorcycle.[13]
Avila further testified that he had previously been involved in sideswiping incidents, but he
forgot how many times.[14]
Rodolfo Ilagan, the bus conductor, testified that the motorcycle bumped the left side of the
bus that was running at 40 kilometers per hour.[15]
Domingo S. Sisperes, operations officer of petitioner, testified that, like their other drivers,
Avila was subjected to and passed the following requirements:
(1) Submission of NBI clearance;
(2) Certification from his previous employer that he had no bad record;
(3) Physical examination to determine his fitness to drive;
(4) Test of his driving ability, particularly his defensive skill; and
(5) Review of his driving skill every six months.[16]

Efren Delantar, a Barangay Kagawad in Buensoceso, Gumaca, Quezon, testified that the
bus was running on the highway on a straight path when a motorcycle, with a woman behind its
driver, suddenly emerged from the left side of the road from a machine shop. The motorcycle
crossed the highway in a zigzag manner and bumped the side of the bus.[17]
In its Decision dated March 16, 2001, the trial court rendered judgment against petitioner
and defendant Margarito Avila, the dispositive portion of which reads:
ACCORDINGLY, MARGARITO AVILA is adjudged guilty of simple
negligence, and judgment is hereby rendered in favor of the plaintiff Vivian Lee Tan
and h[er] husbands heirs ordering the defendants Philippine Hawk Corporation and
Margarito Avila to pay them jointly and solidarily the sum of P745,575.00
representing loss of earnings and actual damages plus P50,000.00 as moral
damages.[18]

The trial court found that before the collision, the motorcycle was on the left side of the
road, just as the passenger jeep was. Prior to the accident, the motorcycle was in a running
position moving toward the right side of the highway. The trial court agreed with the bus driver that
the motorcycle was moving ahead of the bus from the left side of the road toward the right side of
the road, but disagreed that the motorcycle crossed the path of the bus while the bus was running
on the right side of the road.[19]
The trial court held that if the bus were on the right side of the highway, and Margarito Avila
turned his bus to the right in an attempt to avoid hitting the motorcyle, then the bus would not have
hit the passenger jeep, which was then parked on the left side of the road. The fact that the bus
also hit the passenger jeep showed that the bus must have been running from the right lane to the
left lane of the highway, which caused the collision with the motorcycle and the passenger jeep
parked on the left side of the road. The trial court stated that since Avila saw the motorcycle before
the collision, he should have stepped on the brakes and slowed down, but he just maintained his
speed and veered to the left.[20] The trial court found Margarito Avila guilty of simple negligence.
The trial court held petitioner bus company liable for failing to exercise the diligence of a
good father of the family in the selection and supervision of Avila, having failed to sufficiently
inculcate in him discipline and correct behavior on the road.[21]
On appeal, the Court of Appeals affirmed the decision of the trial court with modification in
the award of damages. The dispositive portion of the decision reads:
WHEREFORE, foregoing premises considered, the appeal is DENIED. The
assailed decision dated March 16, 2001 is hereby AFFIRMED with
MODIFICATION. Appellants Philippine Hawk and Avila are hereby ordered to pay
jointly and severally appellee the following amount: (a) P168,019.55 as actual
damages; (b) P10,000.00 as temperate damages; (c) P100,000.00 as moral
damages; (d) P590,000.00 as unearned income; and (e) P50,000.00 as civil
indemnity.[22]
Petitioner filed this petition, raising the following issues:
1)

The Court of Appeals committed grave abuse of discretion amounting to lack of


jurisdiction in passing upon an issue, which had not been raised on appeal, and which
had, therefore, attained finality, in total disregard of the doctrine laid down by this Court
in Abubakar v. Abubakar, G.R. No. 134622, October 22, 1999.

2)

The Court of Appeals committed reversible error in its finding that the petitioners bus
driver saw the motorcycle of private respondent executing a U-turn on the highway
about fifteen (15) meters away and thereafter held that the Doctrine of Last Clear was
applicable to the instant case. This was a palpable error for the simple reason that the
aforesaid distance was the distance of the witness to the bus and not the distance of the
bus to the respondents motorcycle, as clearly borne out by the records.

3)

The Court of Appeals committed reversible error in awarding damages in total


disregard of the established doctrine laid down in Danao v. Court of Appeals, 154 SCRA

447 and Viron Transportation Co., Inc. v. Delos Santos, G.R. No. 138296, November
22, 2000.[23]

In short, the issues raised by petitioner are: (1) whether or not negligence may be attributed
to petitioners driver, and whether negligence on his part was the proximate cause of the accident,
resulting in the death of Silvino Tan and causing physical injuries to respondent; (2) whether or not
petitioner is liable to respondent for damages; and (3) whether or not the damages awarded by
respondent Court of Appeals are proper.
Petitioner seeks a review of the factual findings of the trial court, which were sustained by
the Court of Appeals, that petitioners driver was negligent in driving the bus, which caused
physical injuries to respondent and the death of respondents husband.
The rule is settled that the findings of the trial court, especially when affirmed by the Court
of Appeals, are conclusive on this Court when supported by the evidence on record.[24] The Court
has carefully reviewed the records of this case, and found no cogent reason to disturb the findings
of the trial court, thus:
The Court agree[s] with the bus driver Margarito that the motorcycle was
moving ahead of the bus towards the right side from the left side of the road, but
disagrees with him that it crossed the path of the bus while the bus was running on
the right side of the highway.
If the bus were on the right side of the highway and Margarito turned his bus
to the right in an attempt to avoid hitting it, then the bus would not have hit the
passenger jeep vehicle which was then parked on the left side of the road. The fact
that the bus hit the jeep too, shows that the bus must have been running to the left
lane of the highway from right to the left, that the collision between it and the parked
jeep and the moving rightways cycle became inevitable. Besides, Margarito said he
saw the motorcycle before the collision ahead of the bus; that being so, an extracautious public utility driver should have stepped on his brakes and slowed
down.Here, the bus never slowed down, it simply maintained its highway speed and
veered to the left. This is negligence indeed.[25]

Petitioner contends that the Court of Appeals was mistaken in stating that the bus driver
saw respondents motorcycle about 15 meters away before the collision, because the said
distance, as testified to by its witness Efren Delantar Ong, was Ongs distance from the bus, and
not the distance of the bus from the motorcycle. Petitioner asserts that this mistaken assumption
of the Court of Appeals made it conclude that the bus driver, Margarito Avila, had the last clear
chance to avoid the accident, which was the basis for the conclusion that Avila was guilty of simple
negligence.
A review of the records showed that it was petitioners witness, Efren Delantar Ong, who
was about 15 meters away from the bus when he saw the vehicular accident.[26] Nevertheless, this
fact does not affect the finding of the trial court that petitioners bus driver, Margarito Avila, was
guilty of simple negligence as affirmed by the appellate court. Foreseeability is the fundamental
test of negligence.[27] To be negligent, a defendant must have acted or failed to act in such a way

that an ordinary reasonable man would have realized that certain interests of certain persons were
unreasonably subjected to a general but definite class of risks.[28]
In this case, the bus driver, who was driving on the right side of the road, already saw the
motorcycle on the left side of the road before the collision.However, he did not take the necessary
precaution to slow down, but drove on and bumped the motorcycle, and also the passenger jeep
parked on the left side of the road, showing that the bus was negligent in veering to the left lane,
causing it to hit the motorcycle and the passenger jeep.
Whenever an employees negligence causes damage or injury to another, there instantly
arises a presumption that the employer failed to exercise the due diligence of a good father of the
family in the selection or supervision of its employees.[29] To avoid liability for a quasidelict committed by his employee, an employer must overcome the presumption by presenting
convincing proof that he exercised the care and diligence of a good father of a family in the
selection and supervision of his employee.[30]
The Court upholds the finding of the trial court and the Court of Appeals that petitioner is
liable to respondent, since it failed to exercise the diligence of a good father of the family in the
selection and supervision of its bus driver, Margarito Avila, for having failed to sufficiently inculcate
in him discipline and correct behavior on the road. Indeed, petitioners tests were concentrated on
the ability to drive and physical fitness to do so. It also did not know that Avila had been previously
involved in sideswiping incidents.
As regards the issue on the damages awarded, petitioner contends that it was the only one
that appealed the decision of the trial court with respect to the award of actual and moral
damages; hence, the Court of Appeals erred in awarding other kinds of damages in favor of
respondent, who did not appeal from the trial courts decision.
Petitioners contention is unmeritorious.
Section 8, Rule 51 of the 1997 Rules of Civil Procedure provides:
SEC. 8. Questions that may be decided. -- No error which does not affect the
jurisdiction over the subject matter or the validity of the judgment appealed from or
the proceedings therein will be considered unless stated in the assignment of errors,
or closely related to or dependent on an assigned error and properly argued in the
brief, save as the court pass upon plain errors and clerical errors.

Philippine National Bank v. Rabat[31] cited the book[32] of Justice Florenz D. Regalado to
explain the section above, thus:
In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now
includes some substantial changes in the rules on assignment of errors. The basic
procedural rule is that only errors claimed and assigned by a party will be considered

by the court, except errors affecting its jurisdiction over the subject matter. To this
exception has now been added errors affecting the validity of the judgment appealed
from or the proceedings therein.
Also, even if the error complained of by a party is not expressly stated in his
assignment of errors but the same is closely related to or dependent on an assigned
error and properly argued in his brief, such error may now be considered by the
court. These changes are of jurisprudential origin.
2. The procedure in the Supreme Court being generally the same as that
in the Court of Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule
56), it has been held that the latter is clothed with ample authority to review
matters, even if they are not assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a just decision of the case. Also, an
unassigned error closely related to an error properly assigned (PCIB vs. CA, et al., L34931, Mar. 18, 1988), or upon which the determination of the question raised by
error properly assigned is dependent, will be considered by the appellate court
notwithstanding the failure to assign it as error (Ortigas, Jr. vs. Lufthansa German
Airlines, L-28773, June 30, 1975; Soco vs. Militante, et al., G.R. No. 58961, June 28,
1983).
It may also be observed that under Sec. 8 of this Rule, the appellate court is
authorized to consider a plain error, although it was not specifically assigned by the
appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it would be
sacrificing substance for technicalities.[33]

In this case for damages based on quasi-delict, the trial court awarded respondent the sum
of P745,575.00, representing loss of earning capacity (P590,000.00) and actual damages
(P155,575.00 for funeral expenses), plus P50,000.00 as moral damages. On appeal to the Court
of Appeals, petitioner assigned as error the award of damages by the trial court on the ground that
it was based merely on suppositions and surmises, not the admissions made by respondent
during the trial.
In its Decision, the Court of Appeals sustained the award by the trial court for loss of
earning capacity of the deceased Silvino Tan, moral damages for his death, and actual damages,
although the amount of the latter award was modified.
The indemnity for loss of earning capacity of the deceased is provided for by Article 2206 of
the Civil Code.[34] Compensation of this nature is awarded not for loss of earnings, but for loss of
capacity to earn money.[35]
As a rule, documentary evidence should be presented to substantiate the claim for
damages for loss of earning capacity.[36] By way of exception, damages for loss of earning
capacity may be awarded despite the absence of documentary evidence when: (1) the deceased
is self-employed and earning less than the minimum wage under current labor laws, in which case,
judicial notice may be taken of the fact that in the deceased's line of work no documentary
evidence is available; or (2) the deceased is employed as a daily wage worker earning less than
the minimum wage under current labor laws.[37]

In this case, the records show that respondents husband was leasing and
operating a Caltex gasoline station in Gumaca, Quezon. Respondent testified that her husband
earned an annual income of one million pesos. Respondent presented in evidence a Certificate of
Creditable Income Tax Withheld at Source for the Year 1990,[38] which showed that respondents
husband earned a gross income of P950,988.43 in 1990. It is reasonable to use the Certificate
and respondents testimony as bases for fixing the gross annual income of the deceased at one
million pesos before respondents husband died on March 17, 1999. However, no documentary
evidence was presented regarding the income derived from their copra business; hence, the
testimony of respondent as regards such income cannot be considered.
In the computation of loss of earning capacity, only net earnings, not gross earnings, are to
be considered; that is, the total of the earnings less expenses necessary for the creation of such
earnings or income, less living and other incidental expenses.[39] In the absence of documentary
evidence, it is reasonable to peg necessary expenses for the lease and operation of the gasoline
station at 80 percent of the gross income, and peg living expenses at 50 percent of the net income
(gross income less necessary expenses).
In this case, the computation for loss of earning capacity is as follows:
Net Earning = Life Expectancy x Gross Annual Income Reasonable and
Capacity [2/3 (80-age at the (GAI) Necessary
time of death)] Expenses
(80% of GAI)
X = [2/3 (80-65)] x P1,000,000.00 - P800,000.00
X = 2/3 (15) x P200,000.00 - P100,000.00
(Living Expenses)
X = 30/3 x P100,000.00
X = 10 x P100,000.00
X = P1,000,000.00
The Court of Appeals also awarded actual damages for the expenses incurred in
connection with the death, wake, and interment of respondents husband in the amount
of P154,575.30, and the medical expenses of respondent in the amount of P168,019.55.
Actual damages must be substantiated by documentary evidence, such as receipts, in
order to prove expenses incurred as a result of the death of the victim[40] or the physical injuries
sustained by the victim. A review of the valid receipts submitted in evidence showed that the
funeral and related expenses amounted only to P114,948.60, while the medical expenses of
respondent amounted only to P12,244.25, yielding a total of P127,192.85 in actual damages.
Moreover, the Court of Appeals correctly sustained the award of moral damages in the
amount of P50,000.00 for the death of respondents husband.Moral damages are not intended to
enrich a plaintiff at the expense of the defendant.[41] They are awarded to allow the plaintiff to
obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has
undergone due to the defendants culpable action and must, perforce, be proportional to the
suffering inflicted.[42]

In addition, the Court of Appeals correctly awarded temperate damages in the amount
of P10,000.00 for the damage caused on respondents motorcycle. Under Art. 2224 of the Civil
Code, temperate damages may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be proved with certainty. The
cost of the repair of the motorcycle was prayed for by respondent in her Complaint. However, the
evidence presented was merely a job estimate[43] of the cost of the motorcycles repair amounting
to P17, 829.00. The Court of Appeals aptly held that there was no doubt that the damage caused
on the motorcycle was due to the negligence of petitioners driver. In the absence of competent
proof of the actual damage caused on the motorcycle or the actual cost of its repair, the award of
temperate damages by the appellate court in the amount of P10,000.00 was reasonable under the
circumstances.[44]
The Court of Appeals also correctly awarded respondent moral damages for the physical
injuries she sustained due to the vehicular accident. Under Art. 2219 of the Civil Code,[45] moral
damages may be recovered in quasi-delicts causing physical injuries. However, the award
of P50,000.00 should be reduced to P30,000.00 in accordance with prevailing jurisprudence.[46]
Further, the Court of Appeals correctly awarded respondent civil indemnity for the death of
her husband, which has been fixed by current jurisprudence at P50,000.00.[47] The award is proper
under Art. 2206 of the Civil Code.[48]
In fine, the Court of Appeals correctly awarded civil indemnity for the death of respondents
husband, temperate damages, and moral damages for the physical injuries sustained by
respondent in addition to the damages granted by the trial court to respondent. The trial court
overlooked awarding the additional damages, which were prayed for by respondent in her
Amended Complaint. The appellate court is clothed with ample authority to review matters, even if
they are not assigned as errors in the appeal, if it finds that their consideration is necessary in
arriving at a just decision of the case.[49]
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated August
17, 2004 in CA-G.R. CV No. 70860 is herebyAFFIRMED with MODIFICATION. Petitioner
Philippine Hawk Corporation and Margarito Avila are hereby ordered to pay jointly and severally
respondent Vivian Lee Tan: (a) civil indemnity in the amount of Fifty Thousand Pesos
(P50,000.00); (b) actual damages in the amount of One Hundred Twenty-Seven Thousand One
Hundred Ninety-Two Pesos and Eighty-Five Centavos ( P127,192.85); (c) moral damages in the
amount of Eighty Thousand Pesos (P80,000.00); (d) indemnity for loss of earning capacity in the
amount of One Million Pesos (P1,000,000.00); and (e) temperate damages in the amount of Ten
Thousand Pesos (P10,000.00).
Costs against petitioner.
SO ORDERED.

BOBIE ROSE V. FRIAS, represented by her Attorney-in-fact, MARIE F. FUJITA, Petitioner,


vs.
FLORA SAN DIEGO-SISON, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari filed by Bobie Rose V. Frias represented by her
Attorney-in-fact, Marie Regine F. Fujita (petitioner) seeking to annul the Decision1 dated June 18,
2002 and the Resolution2 dated September 11, 2002 of the Court of Appeals (CA) in CA-G.R. CV
No. 52839.
Petitioner is the owner of a house and lot located at No. 589 Batangas East, Ayala Alabang,
Muntinlupa, Metro Manila, which she acquired from Island Masters Realty and Development
Corporation (IMRDC) by virtue of a Deed of Sale dated Nov. 16, 1990.3 The property is covered by
TCT No. 168173 of the Register of Deeds of Makati in the name of IMRDC.4
On December 7, 1990, petitioner, as the FIRST PARTY, and Dra. Flora San Diego-Sison
(respondent), as the SECOND PARTY, entered into a Memorandum of Agreement5 over the
property with the following terms:
NOW, THEREFORE, for and in consideration of the sum of THREE MILLION PESOS
(P3,000,000.00) receipt of which is hereby acknowledged by the FIRST PARTY from the
SECOND PARTY, the parties have agreed as follows:
1. That the SECOND PARTY has a period of Six (6) months from the date of the execution
of this contract within which to notify the FIRST PARTY of her intention to purchase the
aforementioned parcel of land together within (sic) the improvements thereon at the price of
SIX MILLION FOUR HUNDRED THOUSAND PESOS (P6,400,000.00). Upon notice to the
FIRST PARTY of the SECOND PARTYs intention to purchase the same, the latter has a
period of another six months within which to pay the remaining balance of P3.4 million.
2. That prior to the six months period given to the SECOND PARTY within which to decide
whether or not to purchase the above-mentioned property, the FIRST PARTY may still offer
the said property to other persons who may be interested to buy the same provided that the
amount of P3,000,000.00 given to the FIRST PARTY BY THE SECOND PARTY shall be
paid to the latter including interest based on prevailing compounded bank interest plus the
amount of the sale in excess of P7,000,000.00 should the property be sold at a price more
than P7 million.
3. That in case the FIRST PARTY has no other buyer within the first six months from the
execution of this contract, no interest shall be charged by the SECOND PARTY on the P3
million however, in the event that on the sixth month the SECOND PARTY would decide
not to purchase the aforementioned property, the FIRST PARTY has a period of another six
months within which to pay the sum of P3 million pesos provided that the said amount shall
earn compounded bank interest for the last six months only. Under this circumstance, the
amount of P3 million given by the SECOND PARTY shall be treated as [a] loan and the
property shall be considered as the security for the mortgage which can be enforced in
accordance with law.
x x x x.6
Petitioner received from respondent two million pesos in cash and one million pesos in a postdated check dated February 28, 1990, instead of 1991, which rendered said check

stale.7 Petitioner then gave respondent TCT No. 168173 in the name of IMRDC and the Deed of
Absolute Sale over the property between petitioner and IMRDC.
Respondent decided not to purchase the property and notified petitioner through a letter8 dated
March 20, 1991, which petitioner received only on June 11, 1991,9 reminding petitioner of their
agreement that the amount of two million pesos which petitioner received from respondent should
be considered as a loan payable within six months. Petitioner subsequently failed to pay
respondent the amount of two million pesos.
On April 1, 1993, respondent filed with the Regional Trial Court (RTC) of Manila, a complaint10 for
sum of money with preliminary attachment against petitioner. The case was docketed as Civil
Case No. 93-65367 and raffled to Branch 30. Respondent alleged the foregoing facts and in
addition thereto averred that petitioner tried to deprive her of the security for the loan by making a
false report11 of the loss of her owners copy of TCT No. 168173 to the Tagig Police Station on
June 3, 1991, executing an affidavit of loss and by filing a petition12 for the issuance of a new
owners duplicate copy of said title with the RTC of Makati, Branch 142; that the petition was
granted in an Order13 dated August 31, 1991; that said Order was subsequently set aside in an
Order dated April 10, 199214where the RTC Makati granted respondents petition for relief from
judgment due to the fact that respondent is in possession of the owners duplicate copy of TCT
No. 168173, and ordered the provincial public prosecutor to conduct an investigation of petitioner
for perjury and false testimony. Respondent prayed for the ex-parte issuance of a writ of
preliminary attachment and payment of two million pesos with interest at 36% per annum from
December 7, 1991, P100,000.00 moral, corrective and exemplary damages and P200,000.00 for
attorneys fees.
In an Order dated April 6, 1993, the Executive Judge of the RTC of Manila issued a writ of
preliminary attachment upon the filing of a bond in the amount of two million pesos.15
Petitioner filed an Amended Answer16 alleging that the Memorandum of Agreement was conceived
and arranged by her lawyer, Atty. Carmelita Lozada, who is also respondents lawyer; that she
was asked to sign the agreement without being given the chance to read the same; that the title to
the property and the Deed of Sale between her and the IMRDC were entrusted to Atty. Lozada for
safekeeping and were never turned over to respondent as there was no consummated sale yet;
that out of the two million pesos cash paid, Atty. Lozada took the one million pesos which has not
been returned, thus petitioner had filed a civil case against her; that she was never informed of
respondents decision not to purchase the property within the six month period fixed in the
agreement; that when she demanded the return of TCT No. 168173 and the Deed of Sale
between her and the IMRDC from Atty. Lozada, the latter gave her these documents in a brown
envelope on May 5, 1991 which her secretary placed in her attache case; that the envelope
together with her other personal things were lost when her car was forcibly opened the following
day; that she sought the help of Atty. Lozada who advised her to secure a police report, to execute
an affidavit of loss and to get the services of another lawyer to file a petition for the issuance of an
owners duplicate copy; that the petition for the issuance of a new owners duplicate copy was filed
on her behalf without her knowledge and neither did she sign the petition nor testify in court as
falsely claimed for she was abroad; that she was a victim of the manipulations of Atty. Lozada and
respondent as shown by the filing of criminal charges for perjury and false testimony against her;
that no interest could be due as there was no valid mortgage over the property as the principal
obligation is vitiated with fraud and deception. She prayed for the dismissal of the complaint,
counter-claim for damages and attorneys fees.
Trial on the merits ensued. On January 31, 1996, the RTC issued a decision,17 the dispositive
portion of which reads:
WHEREFORE, judgment is hereby RENDERED:

1) Ordering defendant to pay plaintiff the sum of P2 Million plus interest thereon at the rate
of thirty two (32%) per cent per annum beginning December 7, 1991 until fully paid.
2) Ordering defendant to pay plaintiff the sum of P70,000.00 representing premiums paid by
plaintiff on the attachment bond with legal interest thereon counted from the date of this
decision until fully paid.
3) Ordering defendant to pay plaintiff the sum of P100,000.00 by way of moral, corrective
and exemplary damages.
4) Ordering defendant to pay plaintiff attorneys fees of P100,000.00 plus cost of litigation.18
The RTC found that petitioner was under obligation to pay respondent the amount of two million
pesos with compounded interest pursuant to their Memorandum of Agreement; that the fraudulent
scheme employed by petitioner to deprive respondent of her only security to her loaned money
when petitioner executed an affidavit of loss and instituted a petition for the issuance of an owners
duplicate title knowing the same was in respondents possession, entitled respondent to moral
damages; and that petitioners bare denial cannot be accorded credence because her testimony
and that of her witness did not appear to be credible.
The RTC further found that petitioner admitted that she received from respondent the two million
pesos in cash but the fact that petitioner gave the one million pesos to Atty. Lozada was without
respondents knowledge thus it is not binding on respondent; that respondent had also proven that
in 1993, she initially paid the sum of P30,000.00 as premium for the issuance of the attachment
bond, P20,000.00 for its renewal in 1994, and P20,000.00 for the renewal in 1995, thus plaintiff
should be reimbursed considering that she was compelled to go to court and ask for a writ of
preliminary attachment to protect her rights under the agreement.
Petitioner filed her appeal with the CA. In a Decision dated June 18, 2002, the CA affirmed the
RTC decision with modification, the dispositive portion of which reads:
WHEREFORE, premises considered, the decision appealed from is MODIFIED in the sense that
the rate of interest is reduced from 32% to 25% per annum, effective June 7, 1991 until fully
paid.19
The CA found that: petitioner gave the one million pesos to Atty. Lozada partly as her commission
and partly as a loan; respondent did not replace the mistakenly dated check of one million pesos
because she had decided not to buy the property and petitioner knew of her decision as early as
April 1991; the award of moral damages was warranted since even granting petitioner had no
hand in the filing of the petition for the issuance of an owners copy, she executed an affidavit of
loss of TCT No. 168173 when she knew all along that said title was in respondents possession;
petitioners claim that she thought the title was lost when the brown envelope given to her by Atty.
Lozada was stolen from her car was hollow; that such deceitful conduct caused respondent
serious anxiety and emotional distress.
The CA concluded that there was no basis for petitioner to say that the interest should be charged
for six months only and no more; that a loan always bears interest otherwise it is not a loan; that
interest should commence on June 7, 199120 with compounded bank interest prevailing at the time
the two million was considered as a loan which was in June 1991; that the bank interest rate for
loans secured by a real estate mortgage in 1991 ranged from 25% to 32% per annum as certified
to by Prudential Bank,21 that in fairness to petitioner, the rate to be charged should be 25% only.
Petitioners motion for reconsideration was denied by the CA in a Resolution dated September 11,
2002.

Hence the instant Petition for Review on Certiorari filed by petitioner raising the following issues:
(A) WHETHER OR NOT THE COMPOUNDED BANK INTEREST SHOULD BE LIMITED
TO SIX (6) MONTHS AS CONTAINED IN THE MEMORANDUM OF AGREEMENT.
(B) WHETHER OR NOT THE RESPONDENT IS ENTITLED TO MORAL DAMAGES.
(C) WHETHER OR NOT THE GRANT OF CORRECTIVE AND EXEMPLARY DAMAGES
AND ATTORNEYS FEES IS PROPER EVEN IF NOT MENTIONED IN THE TEXT OF THE
DECISION.22
Petitioner contends that the interest, whether at 32% per annum awarded by the trial court or at
25% per annum as modified by the CA which should run from June 7, 1991 until fully paid, is
contrary to the parties Memorandum of Agreement; that the agreement provides that if
respondent would decide not to purchase the property, petitioner has the period of another six
months to pay the loan with compounded bank interest for the last six months only; that the CAs
ruling that a loan always bears interest otherwise it is not a loan is contrary to Art. 1956 of the New
Civil Code which provides that no interest shall be due unless it has been expressly stipulated in
writing.
We are not persuaded.
While the CAs conclusion, that a loan always bears interest otherwise it is not a loan, is flawed
since a simple loan may be gratuitous or with a stipulation to pay interest,23 we find no error
committed by the CA in awarding a 25% interest per annum on the two-million peso loan even
beyond the second six months stipulated period.
The Memorandum of Agreement executed between the petitioner and respondent on December 7,
1990 is the law between the parties. In resolving an issue based upon a contract, we must first
examine the contract itself, especially the provisions thereof which are relevant to the
controversy.24 The general rule is that if the terms of an agreement are clear and leave no doubt
as to the intention of the contracting parties, the literal meaning of its stipulations shall prevail.25 It
is further required that the various stipulations of a contract shall be interpreted together,
attributing to the doubtful ones that sense which may result from all of them taken jointly.26
In this case, the phrase "for the last six months only" should be taken in the context of the entire
agreement. We agree with and adopt the CAs interpretation of the phrase in this wise:
Their agreement speaks of two (2) periods of six months each. The first six-month period was
given to plaintiff-appellee (respondent) to make up her mind whether or not to purchase
defendant-appellants (petitioner's) property. The second six-month period was given to
defendant-appellant to pay the P2 million loan in the event that plaintiff-appellee decided not to
buy the subject property in which case interest will be charged "for the last six months only",
referring to the second six-month period. This means that no interest will be charged for the first
six-month period while appellee was making up her mind whether to buy the property, but only for
the second period of six months after appellee had decided not to buy the property. This is the
meaning of the phrase "for the last six months only". Certainly, there is nothing in their agreement
that suggests that interest will be charged for six months only even if it takes defendant-appellant
an eternity to pay the loan.27
The agreement that the amount given shall bear compounded bank interest for the last six months
only, i.e., referring to the second six-month period, does not mean that interest will no longer be
charged after the second six-month period since such stipulation was made on the logical and
reasonable expectation that such amount would be paid within the date stipulated. Considering
that petitioner failed to pay the amount given which under the Memorandum of Agreement shall be

considered as a loan, the monetary interest for the last six months continued to accrue until actual
payment of the loaned amount.
The payment of regular interest constitutes the price or cost of the use of money and thus, until the
principal sum due is returned to the creditor, regular interest continues to accrue since the debtor
continues to use such principal amount.28 It has been held that for a debtor to continue in
possession of the principal of the loan and to continue to use the same after maturity of the loan
without payment of the monetary interest, would constitute unjust enrichment on the part of the
debtor at the expense of the creditor.29
Petitioner and respondent stipulated that the loaned amount shall earn compounded bank
interests, and per the certification issued by Prudential Bank, the interest rate for loans in 1991
ranged from 25% to 32% per annum. The CA reduced the interest rate to 25% instead of the 32%
awarded by the trial court which petitioner no longer assailed.1awphi1.nt
In Bautista v. Pilar Development Corp.,30 we upheld the validity of a 21% per annum interest on
a P142,326.43 loan. In Garcia v. Court of Appeals,31 we sustained the agreement of the parties to
a 24% per annum interest on anP8,649,250.00 loan. Thus, the interest rate of 25% per annum
awarded by the CA to a P2 million loan is fair and reasonable.
Petitioner next claims that moral damages were awarded on the erroneous finding that she used a
fraudulent scheme to deprive respondent of her security for the loan; that such finding is baseless
since petitioner was acquitted in the case for perjury and false testimony filed by respondent
against her.
We are not persuaded.
Article 31 of the Civil Code provides that when the civil action is based on an obligation not arising
from the act or omission complained of as a felony, such civil action may proceed independently of
the criminal proceedings and regardless of the result of the latter.32
While petitioner was acquitted in the false testimony and perjury cases filed by respondent against
her, those actions are entirely distinct from the collection of sum of money with damages filed by
respondent against petitioner.
We agree with the findings of the trial court and the CA that petitioners act of trying to deprive
respondent of the security of her loan by executing an affidavit of loss of the title and instituting a
petition for the issuance of a new owners duplicate copy of TCT No. 168173 entitles respondent
to moral damages.1a\^/phi1.net Moral damages may be awarded in culpa contractual or breach of
contract cases when the defendant acted fraudulently or in bad faith. Bad faith does not simply
connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and
conscious doing of wrong. It partakes of the nature of fraud.33
The Memorandum of Agreement provides that in the event that respondent opts not to buy the
property, the money given by respondent to petitioner shall be treated as a loan and the property
shall be considered as the security for the mortgage. It was testified to by respondent that after
they executed the agreement on December 7, 1990, petitioner gave her the owners copy of the
title to the property, the Deed of Sale between petitioner and IMRDC, the certificate of occupancy,
and the certificate of the Secretary of the IMRDC who signed the Deed of Sale.34 However,
notwithstanding that all those documents were in respondents possession, petitioner executed an
affidavit of loss that the owners copy of the title and the Deed of Sale were lost.
Although petitioner testified that her execution of the affidavit of loss was due to the fact that she
was of the belief that since she had demanded from Atty. Lozada the return of the title, she
thought that the brown envelope with markings which Atty. Lozada gave her on May 5, 1991

already contained the title and the Deed of Sale as those documents were in the same brown
envelope which she gave to Atty. Lozada prior to the transaction with respondent.35 Such
statement remained a bare statement. It was not proven at all since Atty. Lozada had not taken
the stand to corroborate her claim. In fact, even petitioners own witness, Benilda Ynfante
(Ynfante), was not able to establish petitioner's claim that the title was returned by Atty. Lozada in
view of Ynfante's testimony that after the brown envelope was given to petitioner, the latter passed
it on to her and she placed it in petitioners attach case36and did not bother to look at the
envelope.37
It is clear therefrom that petitioners execution of the affidavit of loss became the basis of the filing
of the petition with the RTC for the issuance of new owners duplicate copy of TCT No. 168173.
Petitioners actuation would have deprived respondent of the security for her loan were it not for
respondents timely filing of a petition for relief whereby the RTC set aside its previous order
granting the issuance of new title. Thus, the award of moral damages is in order.
The entitlement to moral damages having been established, the award of exemplary damages is
proper.38Exemplary damages may be imposed upon petitioner by way of example or correction for
the public good.39 The RTC awarded the amount of P100,000.00 as moral and exemplary
damages. While the award of moral and exemplary damages in an aggregate amount may not be
the usual way of awarding said damages,40 no error has been committed by CA. There is no
question that respondent is entitled to moral and exemplary damages.
Petitioner argues that the CA erred in awarding attorneys fees because the trial courts decision
did not explain the findings of facts and law to justify the award of attorneys fees as the same was
mentioned only in the dispositive portion of the RTC decision.
We agree.
Article 220841 of the New Civil Code enumerates the instances where such may be awarded and,
in all cases, it must be reasonable, just and equitable if the same were to be granted.42 Attorney's
fees as part of damages are not meant to enrich the winning party at the expense of the losing
litigant. They are not awarded every time a party prevails in a suit because of the policy that no
premium should be placed on the right to litigate.43 The award of attorney's fees is the exception
rather than the general rule. As such, it is necessary for the trial court to make findings of facts and
law that would bring the case within the exception and justify the grant of such award. The matter
of attorney's fees cannot be mentioned only in the dispositive portion of the decision.44 They must
be clearly explained and justified by the trial court in the body of its decision. On appeal, the CA is
precluded from supplementing the bases for awarding attorneys fees when the trial court failed to
discuss in its Decision the reasons for awarding the same. Consequently, the award of attorney's
fees should be deleted.
WHEREFORE, in view of all the foregoing, the Decision dated June 18, 2002 and the Resolution
dated September 11, 2002 of the Court of Appeals in CA-G.R. CV No. 52839 are AFFIRMED with
MODIFICATION that the award of attorneys fees is DELETED.

ABELARDO LIM and ESMADITO GUNNABAN, petitioners, vs. COURT OF APPEALS and
DONATO H. GONZALES, respondents.
DECISION
BELLOSILLO, J.:
When a passenger jeepney covered by a certificate of public convenience is sold to another
who continues to operate it under the same certificate of public convenience under the socalled kabit system, and in the course thereof the vehicle meets an accident through the fault of
another vehicle, may the new owner sue for damages against the erring vehicle? Otherwise
stated, does the new owner have any legal personality to bring the action, or is he the real party in
interest in the suit, despite the fact that he is not the registered owner under the certificate of
public convenience?
Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu passenger
jeepney from Gomercino Vallarta, holder of a certificate of public convenience for the operation of
public utility vehicles plying the Monumento-Bulacan route. While private respondent Gonzales
continued offering the jeepney for public transport services he did not have the registration of the
vehicle transferred in his name nor did he secure for himself a certificate of public convenience for
its operation. Thus Vallarta remained on record as its registered owner and operator.
On 22 July 1990, while the jeepney was running northbound along the North Diversion Road
somewhere in Meycauayan, Bulacan, it collided with a ten-wheeler-truck owned by petitioner
Abelardo Lim and driven by his co-petitioner Esmadito Gunnaban. Gunnaban owned responsibility
for the accident, explaining that while he was traveling towards Manila the truck suddenly lost its
brakes. To avoid colliding with another vehicle, he swerved to the left until he reached the center
island.However, as the center island eventually came to an end, he veered farther to the left until
he smashed into a Ferroza automobile, and later, into private respondent's passenger jeepney
driven by one Virgilio Gonzales. The impact caused severe damage to both the Ferroza and the
passenger jeepney and left one (1) passenger dead and many others wounded.
Petitioner Lim shouldered the costs for hospitalization of the wounded, compensated the heirs
of the deceased passenger, and had the Ferroza restored to good condition. He also negotiated
with private respondent and offered to have the passenger jeepney repaired at his shop. Private
respondent however did not accept the offer so Lim offered him P20,000.00, the assessment of
the damage as estimated by his chief mechanic. Again, petitioner Lim's proposition was rejected;
instead, private respondent demanded a brand-new jeep or the amount of P236,000.00. Lim
increased his bid to P40,000.00 but private respondent was unyielding.Under the circumstances,
negotiations had to be abandoned; hence, the filing of the complaint for damages by private
respondent against petitioners.
In his answer Lim denied liability by contending that he exercised due diligence in
the selection and supervision of his employees. He further asserted that as the jeepney was
registered in Vallartas name, it was Vallarta and not private respondent who was the real party in
interest.[1] For his part, petitioner Gunnaban averred that the accident was a fortuitous event which
was beyond his control.[2]
Meanwhile, the damaged passenger jeepney was left by the roadside to corrode and
decay. Private respondent explained that although he wanted to take his jeepney home he had no
capability, financial or otherwise, to tow the damaged vehicle.[3]
The main point of contention between the parties related to the amount of damages due
private respondent. Private respondent Gonzales averred that per estimate made by an
automobile repair shop he would have to spend P236,000.00 to restore his jeepney to its original
condition.[4] On the other hand, petitioners insisted that they could have the vehicle repaired
for P20,000.00.[5]

On 1 October 1993 the trial court upheld private respondent's claim and awarded
him P236,000.00 with legal interest from 22 July 1990 as compensatory damages and P30,000.00
as attorney's fees. In support of its decision, the trial court ratiocinated that as vendee and current
owner of the passenger jeepney private respondent stood for all intents and purposes as the real
party in interest. Even Vallarta himself supported private respondent's assertion of interest over
the jeepney for, when he was called to testify, he dispossessed himself of any claim or pretension
on the property. Gunnaban was found by the trial court to have caused the accident since he
panicked in the face of an emergency which was rather palpable from his act of directing his
vehicle to a perilous streak down the fast lane of the superhighway then across the island and
ultimately to the opposite lane where it collided with the jeepney.
On the other hand, petitioner Lim's liability for Gunnaban's negligence was premised on his
want of diligence in supervising his employees. It was admitted during trial that Gunnaban doubled
as mechanic of the ill-fated truck despite the fact that he was neither tutored nor trained to handle
such task.[6]
Forthwith, petitioners appealed to the Court of Appeals which, on 17 July 1996, affirmed the
decision of the trial court. In upholding the decision of the court a quo the appeals court concluded
that while an operator under the kabit system could not sue without joining the registered owner of
the vehicle as his principal, equity demanded that the present case be made an
exception.[7] Hence this petition.
It is petitioners' contention that the Court of Appeals erred in sustaining the decision of the trial
court despite their opposition to the well-established doctrine that an operator of a vehicle
continues to be its operator as long as he remains the operator of record. According to petitioners,
to recognize an operator under the kabitsystem as the real party in interest and to countenance his
claim for damages is utterly subversive of public policy. Petitioners further contend that inasmuch
as the passenger jeepney was purchased by private respondent for only P30,000.00, an award
of P236,000.00 is inconceivably large and would amount to unjust enrichment.[8]
Petitioners' attempt to illustrate that an affirmance of the appealed decision could be
supportive of the pernicious kabit system does not persuade. Their labored efforts to demonstrate
how the questioned rulings of the courts a quo are diametrically opposed to the policy of the law
requiring operators of public utility vehicles to secure a certificate of public convenience for their
operation is quite unavailing.
The kabit system is an arrangement whereby a person who has been granted a certificate of
public convenience allows other persons who own motor vehicles to operate them under his
license, sometimes for a fee or percentage of the earnings.[9] Although the parties to such an
agreement are not outrightly penalized by law, the kabit system is invariably recognized as being
contrary to public policy and therefore void and inexistent under Art. 1409 of the Civil Code.
In the early case of Dizon v. Octavio[10] the Court explained that one of the primary factors
considered in the granting of a certificate of public convenience for the business of public
transportation is the financial capacity of the holder of the license, so that liabilities arising from
accidents may be duly compensated. The kabitsystem renders illusory such purpose and, worse,
may still be availed of by the grantee to escape civil liability caused by a negligent use of a vehicle
owned by another and operated under his license. If a registered owner is allowed to escape
liability by proving who the supposed owner of the vehicle is, it would be easy for him to transfer
the subject vehicle to another who possesses no property with which to respond financially for the
damage done. Thus, for the safety of passengers and the public who may have been wronged
and deceived through the baneful kabit system, the registered owner of the vehicle is not allowed
to prove that another person has become the owner so that he may be thereby relieved of
responsibility. Subsequent cases affirm such basic doctrine.[11]
It would seem then that the thrust of the law in enjoining the kabit system is not so much as to
penalize the parties but to identify the person upon whom responsibility may be fixed in case of an
accident with the end view of protecting the riding public. The policy therefore loses its force if the
public at large is not deceived, much less involved.

In the present case it is at once apparent that the evil sought to be prevented in enjoining
the kabit system does not exist. First, neither of the parties to the pernicious kabit system is being
held liable for damages. Second, the case arose from the negligence of another vehicle in using
the public road to whom no representation, or misrepresentation, as regards the ownership and
operation of the passenger jeepney was made and to whom no such representation, or
misrepresentation, was necessary. Thus it cannot be said that private respondent Gonzales and
the registered owner of the jeepney were in estoppel for leading the public to believe that the
jeepney belonged to the registered owner. Third, the riding public was not bothered nor
inconvenienced at the very least by the illegal arrangement. On the contrary, it was private
respondent himself who had been wronged and was seeking compensation for the damage done
to him. Certainly, it would be the height of inequity to deny him his right.
In light of the foregoing, it is evident that private respondent has the right to proceed against
petitioners for the damage caused on his passenger jeepney as well as on his business. Any effort
then to frustrate his claim of damages by the ingenuity with which petitioners framed the issue
should be discouraged, if not repelled.
In awarding damages for tortuous injury, it becomes the sole design of the courts to provide
for adequate compensation by putting the plaintiff in the same financial position he was in prior to
the tort. It is a fundamental principle in the law on damages that a defendant cannot be held liable
in damages for more than the actual loss which he has inflicted and that a plaintiff is entitled to no
more than the just and adequate compensation for the injury suffered. His recovery is, in the
absence of circumstances giving rise to an allowance of punitive damages, limited to a fair
compensation for the harm done. The law will not put him in a position better than where he
should be in had not the wrong happened.[12]
In the present case, petitioners insist that as the passenger jeepney was purchased in 1982
for only P30,000.00 to award damages considerably greater than this amount would be improper
and unjustified. Petitioners are at best reminded that indemnification for damages comprehends
not only the value of the loss suffered but also that of the profits which the obligee failed to
obtain. In other words, indemnification for damages is not limited to damnum emergens or actual
loss but extends to lucrum cessans or the amount of profit lost.[13]
Had private respondent's jeepney not met an accident it could reasonably be expected that it
would have continued earning from the business in which it was engaged. Private respondent
avers that he derives an average income of P300.00 per day from his passenger jeepney and this
earning was included in the award of damages made by the trial court and upheld by the appeals
court. The award therefore of P236,000.00 as compensatory damages is not beyond reason nor
speculative as it is based on a reasonable estimate of the total damage suffered by private
respondent, i.e. damage wrought upon his jeepney and the income lost from his transportation
business. Petitioners for their part did not offer any substantive evidence to refute the estimate
made by the courts a quo.
However, we are constrained to depart from the conclusion of the lower courts that upon the
award of compensatory damages legal interest should be imposed beginning 22 July 1990, i.e. the
date of the accident. Upon the provisions of Art. 2213 of the Civil Code, interest "cannot be
recovered upon unliquidated claims or damages, except when the demand can be established
with reasonable certainty." It is axiomatic that if the suit were for damages, unliquidated and not
known until definitely ascertained, assessed and determined by the courts after proof, interest at
the rate of six percent (6%) per annum should be from the date the judgment of the court is made
(at which time the quantification of damages may be deemed to be reasonably ascertained).[14]
In this case, the matter was not a liquidated obligation as the assessment of the damage on
the vehicle was heavily debated upon by the parties with private respondent's demand
for P236,000.00 being refuted by petitioners who argue that they could have the vehicle repaired
easily for P20,000.00. In fine, the amount due private respondent was not a liquidated account
that was already demandable and payable.

One last word. We have observed that private respondent left his passenger jeepney by the
roadside at the mercy of the elements. Article 2203 of the Civil Code exhorts parties suffering from
loss or injury to exercise the diligence of a good father of a family to minimize the damages
resulting from the act or omission in question. One who is injured then by the wrongful or negligent
act of another should exercise reasonable care and diligence to minimize the resulting
damage.Anyway, he can recover from the wrongdoer money lost in reasonable efforts to preserve
the property injured and for injuries incurred in attempting to prevent damage to it.[15]
However we sadly note that in the present case petitioners failed to offer in evidence the
estimated amount of the damage caused by private respondent's unconcern towards the damaged
vehicle. It is the burden of petitioners to show satisfactorily not only that the injured party could
have mitigated his damages but also the amount thereof; failing in this regard, the amount of
damages awarded cannot be proportionately reduced.
WHEREFORE, the
questioned
Decision
awarding
private
respondent
Donato
Gonzales P236,000.00 with legal interest from 22 July 1990 as compensatory damages
and P30,000.00 as attorney's fees is MODIFIED. Interest at the rate of six percent (6%) per
annum shall be computed from the time the judgment of the lower court is made until the finality of
this Decision. If the adjudged principal and interest remain unpaid thereafter, the interest shall be
twelve percent (12%) per annum computed from the time judgment becomes final and executory
until it is fully satisfied.
Costs against petitioners.
SO ORDERED.
Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.

VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO LEGASPI, petitioners, vs. THE
COURT
OF
APPEALS
and
PANTRANCO
NORTH
EXPRESS,
INCORPORATED, respondents.

[G.R. No. 99343. March 13, 1997]

PANTRANCO NORTH EXPRESS, INCORPORATED, petitioner, vs.


LUCILA H. KIERULF and PORFIRIO LEGASPI,respondents.

VICTOR

KIERULF,

DECISION
PANGANIBAN, J.:
How much moral, exemplary and actual damages are victims of vehicular accidents entitled
to?
In G.R. No. 99301, the victims of the vehicular mishap pray for an increase in the award of
damages, over and above those granted by the appellate court. In this case, the husband of the
victim of the vehicular accident claims compensation/damages for the loss of his right to marital
consortium which, according to him, has been diminished due to the disfigurement suffered by his
wife. In G.R. No. 99343, the transport company, which owned the bus that collided with the
victims' pickup truck, asks for exoneration by invoking an alleged fortuitous event as the cause of
the mishap.
Petitioners in both cases assail the Decision,[1] dated March 13, 1991, in CA-GR CV No.
23361 of the Court of Appeals, Sixth Division[2] ordering the following:[3]
"For reasons indicated and in the light of the law and jurisprudence applicable to the case
at bar, the judgment of the trial court is hereby modified as follows:
Under the first cause of action, the defendant is hereby ordered to pay Lucila H. Kierulf the
following:
(1) For actual damages incurred for hospitalization, medical case (sic) and
doctor's fees, the sum of P241,861.81;
(2) For moral damages the sum of P200,000.00;
(3) For exemplary damages the amount of P100,000.00.
Under the second cause of action, to pay Victor Kierulf, by way of indemnification damage
to the Isuzu Carry All with plate No. UV PGS 798, the amount of P96,825.15.
Under the third cause of action, to pay Porfirio Legaspi the following:
(1) For moral damages in the amount of P25,000.00;
(2) To reimburse the plaintiff the amount of P6,328.19 for actual damages incurred in
the treatment and hospitalization of the driver Porfirio Legaspi.
The defendant is further ordered to pay the amount of P50,000.00 as fair and reasonable
attorney's fees.
And to pay the costs of suit."

Respondent Court of Appeals modified the decision of the Regional Trial Court of Quezon
City, Branch 92,[4] rendered on May 24, 1989 in Civil Case No. Q-50732 for damages. The
dispositive portion of the said decision is quoted below:[5]
"WHEREFORE, in view of the foregoing, judgment is hereby rendered against the
defendant, ordering Pantranco to pay:
Under the First Cause of Action
1. In favor of plaintiff Lucila H. Kierulf actual damages in the amount on ONE
HUNDRED SEVENTY FOUR THOUSAND ONE HUNDRED and 77/100
(P174,100.77) PESOS;
2. To pay said plaintiff moral damages in the amount of ONE HUNDRED
THOUSAND and 00/100 (P100,000.00) PESOS;
3. To pay exemplary damages in the amount of TEN THOUSAND and 00/100
(P10,000.00) PESOS.
Under the Second Cause of Action
1. To pay plaintiff Victor Kierulf the amount of NINETY SIX THOUSAND EIGHT
HUNDRED TWENTY FIVE and 15/100 (P96,825.15) PESOS by way of
indemnification for the damages to the Isuzu Carry All with plate No. UV
PGS 796 registered in his name.
Under the Third Cause of Action
1. To pay the plaintiff spouses by way of reimbursement for actual damages
incurred for the treatment of injuries sustained by their driver Porfirio
Legaspi in the amount of SIX THOUSAND THREE HUNDRED TWENTY
EIGHT and 19/100 (P6,328.19) PESOS; and
2. To pay plaintiff Porfirio Legaspi moral damages in the amount of TEN
THOUSAND and 00/100 (P10,000.00) PESOS.
Defendant is further ordered to pay the amount of P25,000.00 for and as attorney's
fees, and to pay costs.
All other claims and counterclaims are dismissed."
The Facts
The following may be culled from the undisputed factual findings of the trial court and
Respondent Court of Appeals:
The initial investigation conducted by Pfc. D.O. Cornelio disclosed that at about 7:45 p.m. of 28
February 1987, the Pantranco bus, bearing plate number AVE-845 (TB PIL 86), was traveling
along Epifanio de los Santos Avenue (EDSA) from Congressional Avenue towards Clover Leaf,
Balintawak. Before it reached the corner of Oliveros Drive, the driver lost control of the bus,
causing it to swerve to the left, and then to fly over the center island occupying the east-bound
lane of EDSA. The front of the bus bumped the front portion of an Isuzu pickup driven by Legaspi,
which was moving along Congressional Avenue heading towards Roosevelt Avenue. As a result,
the points of contact of both vehicles were damaged and physical injuries were inflicted on
Legaspi and his passenger Lucila Kierulf, both of whom were treated at the Quezon City General
Hospital. The bus also hit and injured a pedestrian who was then crossing EDSA.

Despite the impact, said bus continued to move forward and its front portion rammed against a
Caltex gasoline station, damaging its building and gasoline dispensing equipment.
As a consequence of the incident, Lucila suffered injuries, as stated in the medical report[6] of the
examining physician, Dr. Pedro P. Solis of the Quezon City General Hospital. The injuries
sustained by Lucila required major surgeries like "tracheotomy, open reduction, mandibular
fracture, intermaxillary repair of multiple laceration" and prolonged treatment by specialists. Per
medical report of Dr. Alex L. Castillo, Legaspi also suffered injuries.[7]
The front portion of the pickup truck, owned by Spouses Kierulf, bearing plate number UV PGS
798, was smashed to pieces. The cost of repair was estimated at P107,583.50.
Pantranco, in its petition,[8] adds that on said day, the abovementioned bus was driven by Jose
Malanum. While cruising along EDSA, a used engine differential accidentally and suddenly
dropped from a junk truck in front of the bus. Said differential hit the underchassis of the bus,
throwing Malanum off his seat and making him lose control of said bus. The bus swerved to the
left, hit the center island, and bumped the pickup of the spouses.
The Issues
Spouses Kierulf and their driver Legaspi raise the following assignment of errors in this
appeal:[9]
"A
The respondent court of appeals erred in awarding only P200,000.00 and P25,000.00 as
and for moral damages for the petitioners Kierulf and Legaspi respectively when it should
at least have been P1,000,000.00 and P100,000.00 respectively.
B
The respondent court of appeals erred in awarding only P100,000.00 to the petitioners
Kierulf and nothing to petitioner Legaspi as and for exemplary damages when it should
have at least been P500,000.00 and P50,000.00 respectively.
C
The respondent court of appeals erred in not awarding any amount for the lost income due
to the petitioner Lucila H. Kierulf.
D
The respondent court of appeals erred in not awarding the amount of P107,583.50 for the
damages sustained by the Isuzu carry-all pick-up truck.
E
The respondent court of appeals erred in not awarding any legal interest on the sums
awarded."
On the other hand, Pantranco raises the following assignment of errors:[10]
4.1 The Honorable Court of Appeals erred in holding that the driver of Pantranco was
negligent;
4.2 The Honorable Court of Appeals erred in holding that the proximate cause of the
accident was the negligence of Pantranco and not a fortuitous event; and
4.2 (sic) The Honorable Court of Appeals erred in awarding excessive damages."

In sum, Spouses Kierulf and Legaspi argue that the damages awarded were inadequate while
Pantranco counters that they were astronomical, bloated and not duly proved.[11]
The Court's Ruling
First Issue: Negligence and Proximate Cause Are Factual Issues
Even on appeal, Pantranco insists that its driver was not negligent and that the mishap was
due to a fortuitous event. February 28, 1987, the date of the incident, was a Saturday; hence,
driving at the speed of 40-50 kilometers per hour (kph) was prudent. It contends that the proximate
cause was the accidental dropping of a used engine differential by a junk truck immediately ahead
of the bus.[12]
As to what really caused the bus to careen to the opposite lane of EDSA and collide with the
pickup truck driven by Legaspi is a factual issue which this Court cannot pass upon. As a rule, the
jurisdiction of this Court is limited to the review of errors of law allegedly committed by the
appellate court. This Court is not bound to analyze and weigh all over again the evidence already
considered in the proceedings below.[13]
Although the Court may review factual issues in some instances,[14] the case at bar does not
fall under any one of them. The fact that there is no conflict between the findings of the trial court
and respondent Court bolsters our position that a review of the facts found by respondent Court is
not necessary.[15] There being no conflict between the findings of the Court of Appeals and the trial
court that gross negligence was the real cause of the collision, we see no reason to digress from
the standard rule.
We quote with concurrence the factual findings of the appellate and trial courts, showing that
the accident was, contrary to the belief of Pantranco, the result of the gross negligence of its
driver. To wit:[16]
"The vehicular accident was certainly not due to a fortuitous event. We agree with the trial
court's findings that the proximate cause was the negligence of the defendant's driver,
such as: (1) Driving at that part of EDSA at 7:45 P.M. from Congressional Avenue towards
Clover Leaf overpass in the direction of Balintawak at 40-50 kph is certainly not a
manifestation of good driving habit of a careful and prudent man exercising the
extraordinary diligence required by law. Traffic in that place and at that time of the day is
always heavy. (2) Losing control of the wheel in such a place crowded with moving
vehicles, jumping over the island which separates the East bound from the West bound
lane of EDSA indicate that the defendant's bus was traveling at a speed limit beyond what
a prudent and careful driver is expected of, if such driver were exercising due diligence
required by law. (3) Finally, crossing over the island and traversing the opposite lane and
hitting an oncoming vehicle with such force as to smash the front of such vehicle and
finally being forced to stop by bumping against a Caltex service station -- all show not only
negligence, but recklessness of the defendant's driver. (4) If defendant's driver was not
driving fast, was not recklessly negligent and had exercised due care and prudence, with
due respect to human life and to others travelling in the same place, the driver could have
stopped the bus the moment it crossed the island, and avoided crossing over to the other
lane and bumping against vehicles travelling in opposite direction. The defendant's driver
did not take any evasive action and utterly failed to adopt any measure to avoid injuries
and damage to others because he 'lost control of the bus', which was like a juggernaut, let
loose in a big crowd, smashing everything on its path."
Second Issue: Moral Damages

Complainants aver that the moral damages awarded by Respondent Court are "clearly and
woefully not enough." The established guideline in awarding moral damages takes into
consideration several factors, some of which are the social and financial standing of the injured
parties and[17] their wounded moral feelings and personal pride.[18] The Kierulf spouses add that
the Respondent Court should have considered another factor: the loss of their conjugal fellowship
and the impairment or destruction of their sexual life.[19]
The spouses aver that the disfigurement of Lucila's physical appearance cannot but affect
their marital right to "consortium" which would have remained normal were it not for the
accident. Thus the moral damages awarded in favor of Lucila should be increased
to P1,000,000.00, not only for Lucila but also for her husband Victor who also suffered
"psychologically." A California case, Rodriguez vs. Bethlehem Steel Corporation,[20] is cited as
authority for the claim of damages by reason of loss of marital consortium, i.e. loss of conjugal
fellowship and sexual relations.[21]
Pantranco rebuts that Victor's claim of moral damages on alleged loss of consortium is without
legal basis. Article 2219 of the Civil Code provides that only the person suffering the injury may
claim moral damages. Additionally, no evidence was adduced to show that the consortium had
indeed been impaired and the Court cannot presume that marital relations disappeared with the
accident.[22]
The Courts notes that the Rodriguez case clearly reversed the original common law view first
enunciated in the case of Deshotel vs. Atchison,[23] that a wife could not recover for the loss of her
husband's services by the act of a third party. Rodriguez ruled that when a person is injured to the
extent that he/she is no longer capable of giving love, affection, comfort and sexual relations to his
or her spouse, that spouse has suffered a direct and real personal loss. The loss is immediate and
consequential rather than remote and unforeseeable; it is personal to the spouse and separate
and distinct from that of the injured person.
Rodriguez involved a couple in their early 20s, who were married for only 16 months and full
of dreams of building a family of their own, when the husband was struck and almost paralyzed by
a falling 600-pound pipe. The wife testified how her life had deteriorated because her husband
became a lifelong invalid, confined to the home, bedridden and in constant need of assistance for
his bodily functions; and how her social, recreational and sexual life had been severely
restricted. It also deprived her of the chance to bear their children. As a constant witness to her
husband's pain, mental anguish and frustration, she was always nervous, tense, depressed and
had trouble sleeping, eating and concentrating. Thus, the California court awarded her damages
for loss of consortium.
Whether Rodriguez may be cited as authority to support the award of moral damages to Victor
and/or Lucila Kierulf for "loss of consortium," however, cannot be properly considered in this case.
Victor's claim for deprivation of his right to consortium, although argued before Respondent
Court, is not supported by the evidence on record. His wife might have been badly disfigured, but
he had not testified that, in consequence thereof, his right to marital consortium was
affected. Clearly, Victor (and for that matter, Lucila) had failed to make out a case for loss of
consortium, unlike the Rodriguez spouse. Again, we emphasize that this claim is factual in origin
and must find basis not only in the evidence presented but also in the findings of the Respondent
Court. For lack of factual basis, such claim cannot be ruled upon by this Court at this time.
Third Issue: No Consideration of Social and Financial Standing in this Case
The social and financial standing of Lucila cannot be considered in awarding moral
damages. The factual circumstances prior to the accident show that no "rude and rough"
reception, no "menacing attitude," no "supercilious manner," no "abusive language and highly
scornful reference" was given her. The social and financial standing of a claimant of moral
damages may be considered in awarding moral damages only if he or she was subjected to

contemptuous conduct despite the offender's knowledge of his or her social and financial
standing.[24]
Be that as it may, it is still proper to award moral damages to Petitioner Lucila for her physical
sufferings, mental anguish, fright, serious anxiety and wounded feelings. She sustained multiple
injuries on the scalp, limbs and ribs. She lost all her teeth. She had to undergo several corrective
operations and treatments. Despite treatment and surgery, her chin was still numb and thick. She
felt that she has not fully recovered from her injuries. She even had to undergo a second operation
on her gums for her dentures to fit. She suffered sleepless nights and shock as a consequence of
the vehicular accident.[25] In this light and considering further the length of time spent in
prosecuting the complaint and this appeal, we find the sum of P400,000.00 as moral damages for
Petitioner Lucila to be fair and just under the circumstances.
Fourth Issue: Exemplary Damages
Complainants also pray for an increase of exemplary damages to P500,000.00
and P50,000.00 for Spouses Kierulf and Legaspi, respectively. This prayer is based on the
pronouncement of this Court in Batangas Transportation Company vs. Caguimbal[26] that "it is high
time to impress effectively upon public utility operators the nature and extent of their responsibility
in respect of the safety of their passengers and their duty to exercise greater care in the selection
of drivers and conductors x x x."
Pantranco opposes this, for under Article 2231 of the Civil Code, "exemplary damages may be
granted if the defendant acted with gross negligence." And allegedly, gross negligence is sorely
lacking in the instant case.
Exemplary damages are designed to permit the courts to mould behavior that has socially
deleterious consequences, and its imposition is required by public policy to suppress the wanton
acts of an offender.[27] However, it cannot be recovered as a matter of right. It is based entirely on
the discretion of the court.[28]Jurisprudence sets certain requirements before exemplary damages
may be awarded, to wit:[29]
"(1) (T)hey may be imposed by way of example or correction only in addition, among
others, to compensatory damages, and cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory damages that may be
awarded to the claimant;
(2) the claimant must first establish his right to moral, temporate, liquidated or
compensatory damages; and
(3) the wrongful act must be accompanied by bad faith, and the award would be
allowed only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner."
The claim of Lucila has been favorably considered in view of the finding of gross negligence
by Respondent Court on the part of Pantranco. This is made clear by Respondent Court in
granting Lucila's claim of exemplary damages:[30]
"(P)ublic utility operators like the defendant, have made a mockery of our laws, rules and
regulations governing operations of motor vehicles and have ignored either deliberately or
through negligent disregard of their duties to exercise extraordinary degree of diligence for
the safety of the travelling public and their passengers. x x x ."
To give teeth to this warning, the exemplary damages awarded to Petitioner Lucila is
increased to P200,000.00. The fact of gross negligence duly proven, we believe that Legaspi,
being also a victim of gross negligence, should also receive exemplary damages. Under the facts
proven, the Court awards him P25,000 as exemplary damages.

Fifth Issue: Loss of Earnings as a Component of Damages


Lost income in the amount of P16,500.00 is also claimed by Legaspi stating that his "whole
future has been jeopardized."[31] This, in turn, is not rebutted by Pantranco.
It should be noted that Respondent Court already considered this when it stated that the
award of P25,000.00 included compensation for "mental anguish and emotional strain of not
earning anything with a family to support." Moral damages, though incapable of pecuniary
estimation, are in the category of an award designed to compensate the claimant for actual injury
and are not meant to enrich complainant at the expense of defendant.[32]
We find, however, the claim of Legaspi to be duly substantiated. Pantranco failed to rebut the
claim of Porfirio that he had been incapacitated for ten (10) months and that during said period he
did not have any income. Considering that, prior to the accident, he was employed as a driver and
was earning P1,650.00 a month, his claim for P16,500.00 as compensation for loss of earning
capacity for said period is amply supported by the records[33] and is demandable under Article
2205 of the Civil Code.[34]
Complainants contend that Lucila is also entitled to damages for "loss or impairment of
earning capacity in cases of temporary or permanent personal injury" under Article 2205 of the
Civil Code. Notably, both the trial court and public respondent denied this prayer because of her
failure to produce her income tax returns for the years 1985 and 1986, notwithstanding the
production of her 1983 and 1984 income tax returns.
Pantranco opposes the above claim for loss of earning capacity on the ground that there is no
proof "that for the two years immediately preceding the accident Lucila was indeed deriving
income from some source which was cut off by the accident."[35]
We agree with the findings of Respondent Court that Lucila's claim of loss of earning capacity
has not been duly proven. The alleged loss must be established by factual evidence for it partakes
of actual damages. A party is entitled to adequate compensation for such pecuniary loss actually
suffered and duly proved. Such damages, to be recoverable, must not only be capable of proof,
but must actually be shown with a reasonable degree of certainty. We have emphasized that
these damages cannot be presumed, and courts in making an award must point out specific facts
which can serve as basis for measuring whatever compensatory or actual damages are
borne.[36] Mere proof of Lucila's earnings consisting of her 1983 and 1984 income tax returns
would not suffice to prove earnings for the years 1985 and 1986. The incident happened on
February 28, 1987. If indeed Lucila had been earning P50,000.00 every month prior to the
accident, as she alleged, there are evidentiary proofs for such earnings other than income tax
returns such as, but not limited to, payroll receipts, payments to the SSS, or withholding tax paid
every month. Sad to say, these other proofs have not been presented, and we cannot presume
that they exist on the strength of the word of Lucila alone.
Sixth Issue: Reduction of Actual Damages on the Pickup Based on an Estimate
Complainants contend that the reduction of 10% from the written estimate of the cost of
repairs by the trial court is pure speculation.[37] Pantranco opposes this by pointing out that judicial
notice is made by respondent Court of the propensity of motor repair shops to exaggerate their
estimates.[38]
An estimate, as it is categorized, is not an actual expense incurred or to be incurred in the
repair. The reduction made by respondent court is reasonable considering that in this instance
such estimate was secured by the complainants themselves.
Epilogue

This Court cannot remind the bench and the bar often enough that in order that moral
damages may be awarded, there must be pleading and proof of moral suffering, mental anguish,
fright and the like. While no proof of pecuniary loss is necessary in order that moral damages may
be awarded, the amount of indemnity being left to the discretion of the court,[39] it is nevertheless
essential that the claimant should satisfactorily show the existence of the factual basis of
damages[40] and its causal connection to defendant's acts. This is so because moral damages,
though incapable of pecuniary estimation, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to impose a penalty on the
wrongdoer.[41] In Francisco vs. GSIS,[42] the Court held that there must be clear testimony on the
anguish and other forms of mental suffering. Thus, if the plaintiff fails to take the witness stand and
testify as to his/her social humiliation, wounded feelings and anxiety, moral damages cannot be
awarded. In Cocoland Development Corporation vs. National Labor Relations Commission,[43] the
Court held that "additional facts must be pleaded and proven to warrant the grant of moral
damages under the Civil Code, these being, x x x social humiliation, wounded feelings, grave
anxiety, etc., that resulted therefrom."
Moral damages are awarded to enable the injured party to obtain means, diversions or
amusements that will serve to alleviate the moral suffering he/she has undergone, by reason
of the defendant's culpable action.[44] Its award is aimed at restoration, as much as possible, of the
spiritual status quo ante; thus, it must be proportionate to the suffering inflicted.[45] Since each
case must be governed by its own peculiar circumstances, there is no hard and fast rule in
determining the proper amount. The yardstick should be that the amount awarded should not be
so palpably and scandalously excessive as to indicate that it was the result of passion, prejudice
or corruption on the part of the trial judge.[46] Neither should it be so little or so paltry that it rubs
salt to the injury already inflicted on plaintiffs.
WHEREFORE, premises considered, the petition for review in G.R. No. 99301 is PARTIALLY
GRANTED, while that of Pantranco North Express, Inc., in G.R. No. 99343 is DISMISSED. The
Decision appealed from is AFFIRMED with MODIFICATION. The award of moral damages to
Lucila and Legaspi is herebyINCREASED to P400,000.00 and P50,000.00 respectively;
exemplary damages to Lucila is INCREASED to P200,000.00. Legaspi is awarded exemplary
damages of P50,000.00. The amount of P16,500.00 as actual or compensatory damages is
also GRANTED to Legaspi. All other awards of Respondent Court of Appeals areAFFIRMED.
Pantranco shall also PAY legal interest of 6% per annum on all sums awarded from the date of
promulgation of the decision of the trial court, May 24, 1989, until actual payment.
SO ORDERED.
Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

PEOPLE OF THE PHILIPPINES,Appellee, G.R. No. 178771


Present:
CORONA, C.J.,*
CARPIO, J., Chairperson,
PERALTA,
ABAD, and
ALBERTO ANTICAMARA y CABILLO MENDOZA, JJ.
and
FERNANDO
CALAGUAS Promulgated:
FERNANDEZ a.k.a. LANDO CALAGUAS,
June 8, 2011
Appellants.
x--------------------------------------------------x
- versus -

DECISION

PERALTA, J.:
This is an appeal from the Decision[1] of the Court of Appeals (CA) in CA-G.R. CR-H.C. No.
00556, affirming the trial court's judgment finding appellants Fernando Calaguas Fernandez
(Lando) and Alberto Cabillo Anticamara (Al) guilty beyond reasonable doubt of the crime of Murder
in Criminal Case No. 4498-R and of the crime of Kidnapping and Serious Illegal Detention in
Criminal Case No. 4481-R.

Lando, Al, Dick Taedo (Dick), Roberto Taedo (Bet), Marvin Lim (Marvin), Necitas Ordeiza-Taedo
(Cita), and Fred Doe are charged with the crimes of Murder and of Kidnapping/Serious Illegal
Detention in two separate Informations, which read:
For Murder (Criminal Case No. 4498-R)

That on or about the early morning of May 7, 2002, in Sitio Rosalia, Brgy. San
Bartolome, Municipality of Rosales, Province of Pangasinan, and within the
jurisdiction of this Honorable Court, the above-named accused, being then armed
with a hand gun, conspiring, confederating and mutually helping one another, with
intent to kill, with treachery, evident premeditation and superior strength, did then
and there, willfully, unlawfully and feloniously take Sulpacio Abad, driver of the
Estrellas, hog tied (sic) him, brought (sic) to a secluded place, shoot and bury in a
shallow grave, to the damage and prejudice of the heirs of the victim.
Contrary to Article 248, Revised Penal Code.
For Kidnapping/Serious Illegal Detention (Criminal Case No. 4481-R)
That on or about the 7th day of May 2002, more or less 3:00 o'clock in the early
morning, at the Estrella Compound, Brgy. Carmen East, Municipality of Rosales,
Province of Pangasinan, and within the jurisdiction of this Honorable Court, the

above-named accused, who are private persons, conspiring, confederating and


mutually helping one another, armed with firearms, did then and there willfully,
unlawfully and feloniously kidnap Sulpacio Abad and AAA,[2] both employees of the
Estrellas, thereby depriving them of their liberty, all against their will for a period of
twenty-seven (27) days.
That in the course of the kidnapping, Sulpacio Abad was killed and buried in Brgy. Carmen,
Rosales, Pangasinan and AAA was raped for several times by her abductors.
Contrary to Article 267 of the Revised Penal Code, in relation to RA 7659.
When arraigned of the aforementioned crimes, Lando, Al and Cita all pleaded not guilty, while
Dick, Bet, Marvin and Fred Doe remained at-large. Thereafter, a joint trial ensued.
As summarized in the People's brief, the facts as established by the evidence of the prosecution
are as follows:
About 3 o'clock in the early morning of May 7, 2002, househelper AAA and
driver Abad Sulpacio were sleeping in their employers' house located in Barangay
Carmen East, Rosales, Pangasinan. Their employers, Conrado Estrella and his wife,
were out of the house at that time (TSN, December 4, 2002, pp. 4-7). Momentarily,
AAA was jolted from sleep when she heard voices saying, We will kill her, kill her
now and another voice saying, Not yet! Hiding under her blanket, AAA later heard
someone saying, We only need money, we only need money. Thereafter, she heard
someone talking in Ilocano which she could not understand. Then she heard
somebody say, Cebuana yan, Cebuana yan, kararating lang galing Cebu. AAA
heard the persons conversing which she estimated about four to five meters away
(TSN, ibid., pp. 11-12).
Thereafter, AAA observed about six (6) persons enter the house, who she
later identified as accused Dick Taedo, Marvin Lim, Bert Taedo, a certain Fred and
appellants Alberto Anticamara alias Al Camara, and Fernando Fernandez alias
Lando Calaguas. One of the intruders approached her and told her not to move
(TSN,ibid., p. 8).
Later, when AAA thought that the intruders were already gone, she attempted
to run but to her surprise, someone wearing a bonnet was watching her. Someone,
whom she later recognized as Dick Taedo, tapped her shoulder. AAA asked Taedo,
Why Kuya? Taedo replied, Somebody will die. After a brief commotion, appellant
alias Lando Calaguas asked the group saying, What shall we do now? They then
decided to tie AAA. Later, AAA was untied and led her outside the house. Outside,
AAA saw Abad, who was also tied and blindfolded, seated inside a vehicle (TSN,
April 26, 2004, pp. 6-10).
The group later brought AAA and Abad to the fishpond owned by their
employers. AAA saw Cita Taedo there. The group brought Abad outside the vehicle
and led him away (TSN, December 2, 2002, pp. 13-18; TSN, February 17, 2003, pp.
5-8).
Later, alias Fred returned telling the group, Make the decision now, Abad has
already four bullets in his body, and the one left is for this girl. When Cita Taedo
made a motion of cutting her neck, appellant alias Lando Calaguas and Fred
boarded the vehicle taking along with them AAA. They later proceeded towards San
Miguel Tarlac, where Lando Calaguas resided. They stayed in Lando's house where

they kept AAA from May 7 to May 9, 2002 (TSN, December 4, 2002, pp. 18-22; TSN,
February 17, 2003, pp. 7-9).
On May 9, 2002, appellant Lando Calaguas told AAA that Fred and Bert
Taedo would kill her. Lando then brought AAA to a hotel in Tarlac, telling AAA that
he would leave her there as soon as Fred and Bert Taedo leave the place. However,
once inside the hotel room, appellant Lando Calaguas sexually molested AAA.
Lando told AAA to follow what he wanted, threatening her that he would turn her
over to Fred and Bert Taedo. After Lando raped AAA, he brought her back to his
house. Later, Fred, Bert Taedo and Lando Calaguas transferred AAA to Riles, Tarlac
(TSN, ibid., pp. 9-13).
AAA was brought to the residence of Fred's niece, a certain Minda, where
Fred kept AAA as his wife. At nighttime, Fred would repeatedly ravish AAA,
threatening her that he would give her back to appellant Lando Calaguas who, AAA
knew, killed Abad Sulpacio. She was afraid Lando might also kill her (TSN, ibid., pp.
14-16).
On May 22, 2002, Fred brought AAA to Carnaga (should be Kananga), Leyte,
together with his wife Marsha and their children. AAA stayed in the house of
Marsha's brother Sito, where she was made as a house helper (TSN, ibid., p. 17).
On June 4, 2002, AAA escaped from the house of Sito. She proceeded to
Isabel, Leyte and sought the help of her friend Susana Ilagan. After hearing AAA's
plight, Susana called AAA's brother in Cebu, who later fetched AAA in Isabel, Leyte
and brought her to Mandaue City. When they arrived in Mandaue City, they
immediately reported the incident to the police authorities. On June 23, 2002, AAA
executed a Sworn Statement (Exh. D, TSN, ibid., pp. 18-20).
Meanwhile, Dr. Ronald Bandonil, Medico-Legal Officer of the National Bureau
of Investigation (NBI), conducted an autopsy on the cadaver of Sulpacio Abad. Dr.
Bandonil prepared Autopsy Report No. N-T2-23-P (Exh. A) which contains the
following findings, to wit:
x Remains placed in a sealed metal coffin, wrapped in two (2) layers of
black, plastic garbage bags, and covered in (sic) a red-stripped cotton
blanker. A thick layer of lime embeds the whole torso.
x Remains in a far advanced state of decomposition, with the head
completely devoid of soft tissue. A cloth is wrapped around the
eyesockets and tied to the back of the skull. The skull does not show
any signs of dents, chips nor fractures. The other recognizable body
part is the chest area which retained a few soft tissues and skin, but
generally far advanced in decomposition. The whole gamut of internal
organs have undergone liquefaction necrosis and have been turned
into grayish-black pultaceous masses. Worn on top of the remaining
chest is a sando shirt with observable holes at the left side, both front
and back. A large hole is seen at the area of the left nipple, with traces
of burning at its edges and inward in direction. A tied cloth is also
observable at the remnants of the left wrist.
x At the upper chest, which is the most recognizable, remaining and
intact part of the torso, a hole, 1.0 cm. x 2.0 cms., with signs of burning,
edges inverted, is seen at the left anterior axillary line just below the left
nipple. Another hole is seen 1.5 cms. x 2.5 cms. in diameter, edged

averted (sic) at the right chest, along the right anterior axillary line, 5.0
cms. below the right nipple. A 3rd hole, almost unrecognizable is seen
at the left groin area.
x The other parts of the cadaver are too far advanced in decomposition
to have remarkable findings.
CAUSE OF DEATH:
GUNSHOT WOUNDS, TRUNK[3]
In his defense, Lando denied having committed the crimes charged and interposed alibi as a
defense. He claims that at the time of the incident on May 7, 2002, he was in Barangay Maligaya,
San Miguel, Tarlac, with his family. He denied ever going to the Estrella farm in Sitio Rosalia,
Barangay San Bartolome, Rosales, Pangasinan.

Al claimed that he acted as a lookout and was tasked to report to his companions if any person or
vehicle would approach the house of the Estrellas. He said that he was forced to follow what was
ordered of him and did not report the matter to the police because he was threatened to be killed,
including the members of his family who were in Cebu.

On August 23, 2004, the Regional Trial Court (RTC) of Rosales, Pangasinan, Branch 53, rendered
its Decision,[4] the dispositive portion of which states:

WHEREFORE, judgment is hereby rendered as follows:


I.

In Criminal Case No. 4498-R for Murder:

A. Accused Nicetas Cita Taedo is hereby acquitted of the crime charged for
insufficiency of evidence;
B. Accused Fernando Calaguas Fernandez (alyas Lando Calaguas) and
Alberto Anticamara (alyas Al Camara) are hereby found guilty beyond reasonable
doubt, as principal, of the crime of Murder qualified by treachery, defined and
penalized under Article 248 of the Revised Penal Code. Considering the presence of
aggravating circumstance of pre-meditation, with no mitigating circumstance to offset
the same, the penalty of DEATH is hereby imposed upon the two (2) accused
Fernando Calaguas Fernandez (Lando Calaguas) and Alberto Anticamara (Al
Camara). They are also ordered jointly and severally [to] pay the heirs of the victim
Abad Sulpacio the following:
1) Fifty Thousand Pesos (P50,000.00) as moral damages;
2) Seventy-Five Thousand Pesos (P75,000.00) as indemnity for
the death of the victim;
3) Fifty-Seven Thousand One Hundred Twenty-Two Pesos and Thirty
Centavos (P57,122.30) as actual damages; and
4) The cost of suit.
II.
Criminal Case No. 4481-R for Kidnapping/Serious Illegal
Detention:

A) Accused Nicetas Cita Taedo is hereby acquitted of the crime charged for insufficiency of
evidence;
B) Accused Fernando Calaguas Fernandez (alyas Lando Calaguas) and Alberto
Anticamara (alyas Al Camara) are hereby found guilty beyond reasonable doubt, as
principal, of the crime of Kidnapping/Serious Illegal Detention of the victim AAA as
charged, defined and penalized under Article 267 of the Revised Penal Code, as
amended by R.A. 7659. Considering that the victim AAA was raped during her
detention, the maximum penalty of DEATH is hereby imposed upon the two
accused, Fernando Calaguas Fernandez (Lando Calaguas) and Alberto Anticamara
(Al Camara). The two accused are also ordered to pay, jointly and severally, the
victim AAA the amount of:
1) One Hundred Thousand Pesos (P100,000.00) as moral damages;
2) Fifty Thousand Pesos (P50,000.00) as exemplary damages; and
3) Cost of suit.
As to the rest of the accused who are still at-large, let this case be set to the
archives until they are apprehended.
SO ORDERED.[5]

In light of the Courts ruling in People v. Mateo,[6] the records of the cases were forwarded by the
RTC to the CA for its review. The CA rendered a Decision dated December 15, 2006, affirming the
decision of the RTC in Criminal Case Nos. 4498-R and 4481-R. However, in view of the abolition
of the death penalty pursuant to Republic Act (R.A.) No. 9346, which was approved on June 24,
2006, the appellants were sentenced to reclusion perpetua.

On January 9, 2007, Lando, through the Public Attorney's Office (PAO), appealed the Decision of
the CA to this Court. Lando had assigned the following errors in his appeal initially passed upon by
the CA, to wit:
I
THE TRIAL COURT GRAVELY ERRED IN HOLDING THAT CONSPIRACY
EXISTED BETWEEN AND AMONG THE ALLEGED PERPETRATORS OF THE
CRIME.
II
ASSUMING THAT THE ACCUSED-APPELLANT IS GUILTY, THE LOWER COURT
GRAVELY ERRED IN CONVICTING HIM OF THE CRIME OF MURDER INSTEAD
OF HOMICIDE.
III
THE TRIAL COURT GRAVELY ERRED IN IMPOSING UPON THE ACCUSEDAPPELLANT THE SUPREME PENALTY OF DEATH FOR THE CRIME OF
KIDNAPPING/SERIOUS ILLEGAL DETENTION, AGGRAVATED BY RAPE, IN
SPITE OF THE FACT THAT THE CRIME OF RAPE WAS NOT DULY PROVEN
BEYOND REASONABLE DOUBT.
IV

THE TRIAL COURT GRAVELY ERRED IN GIVING SCANT CONSIDERATION TO


THE EVIDENCE PRESENTED BY THE ACCUSED-APPELLANT WHICH IS MORE
CREDIBLE THAN THAT OF THE PROSECUTION
V
THE TRIAL COURT GRAVELY ERRED IN RENDERING A VERDICT OF
CONVICTION DESPITE THE FACT THAT THE GUILT OF THE ACCUSEDAPPELLANT WAS NOT PROVEN BEYOND REASONABLE DOUBT.[7]
On January 9, 2007, Al, through the PAO, appealed the Decision of the CA to this Court. Al had
assigned the following errors, to wit:
I
THE TRIAL COURT ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY OF
THE CRIME OF KIDNAPPING/SERIOUS ILLEGAL DETENTION IN SPITE OF THE
FAILURE OF THE PROSECUTION TO PROVE BEYOND REASONABLE DOUBT
THAT HE CONSPIRED WITH HIS CO-ACCUSED TO COMMIT THE CRIME
CHARGED.
II
THE TRIAL COURT GRAVELY ERRED IN IMPOSING UPON THE ACCUSED THE
SUPREME PENALTY OF DEATH FOR THE SPECIAL COMPLEX CRIME OF
KIDNAPPING/SERIOUS ILLEGAL DETENTION WITH RAPE, IN SPITE OF THE
FACT THAT HE HAD NO PARTICIPATION IN THE COMMISSION OF [TWO]
SEXUAL ABUSES AGAINST THE VICTIM.
III
THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT
GUILTY OF THE CRIME OF MURDER IN SPITE OF THE FAILURE OF THE
PROSECUTION TO PROVE BEYOND REASONABLE DOUBT THAT HE
CONSPIRED WITH HIS CO-ACCUSED TO COMMIT THE SAME.[8]

In capsule, the main issue is whether the appellants are guilty of the crimes charged.
In Criminal Case No. 4498-R for Murder:
Circumstantial Evidence
The trial court found that although there was no direct eyewitness in the killing of Sulpacio in the
early morning of May 7, 2002 at Sitio Rosalia, Barangay San Bartolome, Rosales, Pangasinan, the
prosecution adduced sufficient circumstantial evidence to establish with moral certainty the
identities and guilt of the perpetrators of the crime.
Circumstantial evidence consists of proof of collateral facts and circumstances from which the
existence

of

the

main

fact

may

be

inferred

according

to

reason

and

common

experience .[9] Circumstantial evidence is sufficient to sustain conviction if: (a) there is more than
one circumstance; (b) the facts from which the inferences are derived are proven; (c) the
combination of all circumstances is such as to produce a conviction beyond reasonable
doubt.[10] A judgment of conviction based on circumstantial evidence can be sustained when the
circumstances proved form an unbroken chain that results in a fair and reasonable conclusion
pointing to the accused, to the exclusion of all others, as the perpetrator.[11]
In this case, the circumstantial evidence presented by the prosecution, when analyzed and taken
together, lead to the inescapable conclusion that the appellants are responsible for the death of
Sulpacio. The Court quotes with approval the lower court's enumeration of those circumstantial
evidence:
The testimony of AAA had clearly established the following facts:
1. At about 3:00 in the early morning of May 7, 2002, while she and the victim Abad
Sulpacio were sleeping inside the house of the Estrella family in Barangay Carmen,
Rosales, Pangasinan several persons entered to rob the place;
2. Inside the house, she saw and recognized the accused Lando Calaguas and Dick
Taedo, and heard the latter uttering somebody will die;
3. Bringing her outside the house, Lando pushed her into the Revo where she saw
inside Abad Sulpacio who was blindfolded and with his hands tied;
4. Inside the Revo, she recognized the accused Dick Taedo, Lando Calaguas, Marvin
Lim, Roberto Taedo, Alberto Anticamara and Fred;
5. The Revo then proceeded towards the fishpond owned by the Estrellas in Sitio
Rosalia, Brgy. San Bartolome, Rosales, Pangasinan;
6. The last time that she saw Abad Sulpacio was when he was dragged out from the
vehicle by Lando, Fred, Marvin and Al upon reaching Sitio Rosalia. At that, time Dick
Taedo stayed with her in the vehicle;
7. Thereafter, when Fred returned to the vehicle, she heard him uttered (sic): Make a
decision now. Abad has already four (4) bullets in his body, and the one left is for this
girl.[12]

In addition to these circumstances, the trial court further found that AAA heard Fred utter Usapan
natin pare, kung sino ang masagasaan, sagasaan. (Our agreement is that whoever comes our
way should be eliminated). Moreover, NBI Agent Gerald V. Geralde testified that on June 23,
2002, appellant Al admitted his participation as lookout and naming his companions Dick, Lando,
Fred, Marvin and Bet as the ones who took AAA and Sulpacio from the house of the Estrellas and
brought them to the fishpond. Al also pointed and led the authorities to a shallow grave in Sitio
Rosalia, Barangay San Bartolome, Rosales, Pangasinan, where the remains of Sulpacio were
buried. The autopsy conducted on the body, prepared by the Medico Legal Officer Dr. Bandonil,
shows that several holes were found on various parts of the body of the victim and Dr. Bandonil
concluded that the cause of the victim's death was the gunshot wounds. The report also indicates

that a piece of cloth was found wrapped around the eye sockets and tied at the back of the skull,
and another cloth was also found tied at the remnants of the left wrist.
In the case at bar, although no one directly saw the actual killing of Sulpacio, the prosecution was
able to paint a clear picture that the appellants took Sulpacio away from the house of the Estrellas,
tied and blindfolded him, and brought him to another place where he was repeatedly shot and
buried.
Conspiracy
Under Article 8 of the Revised Penal Code, there is conspiracy when two or more persons come to
an agreement concerning a felony and decide to commit it. It may be inferred from the acts of the
accused before, during or after the commission of the crime which, when taken together, would be
enough to reveal a community of criminal design, as the proof of conspiracy is frequently made by
evidence of a chain of circumstances.[13] To be a conspirator, one need not participate in every
detail of the execution; he need not even take part in every act or need not even know the exact
part to be performed by the others in the execution of the conspiracy. Each conspirator may be
assigned separate and different tasks which may appear unrelated to one another but, in fact,
constitute a whole collective effort to achieve their common criminal objective. Once conspiracy is
shown, the act of one is the act of all the conspirators. The precise extent or modality of
participation of each of them becomes secondary, since all the conspirators are principals.[14]
In the present case, prior to the commission of the crime, the group met at the landing field in
Carmen, Pangasinan and discussed their plan to rob the house of the Estrellas with the
agreement that whoever comes their way will be eliminated.[15] Appellant Al served as a lookout by
posting himself across the house of the Estrellas with the task of reporting any movements
outside. Fred then climbed the old unserviceable gate of the Estrella compound and then opened
the small door and the rest of the group entered the house of the Estrellas through that
opening.[16] After almost an hour inside the house, they left on board a vehicle with AAA and
Sulpacio. AAA and Sulpacio were brought to Sitio Rosalia, Brgy. San Bartolome, Rosales,
Pangasinan. In that place, Sulpacio was killed and AAA was brought to another place and
deprived of her liberty. These circumstances establish a community of criminal design between the
malefactors in committing the crime. Clearly, the group conspired to rob the house of the Estrellas
and kill any person who comes their way.The killing of Sulpacio was part of their
conspiracy. Further, Dick's act of arming himself with a gun constitutes direct evidence of a
deliberate plan to kill should the need arise.

Appellant Al attempts to evade criminal liability by alleging that he was only forced to participate in
the commission of the crime because he and his family were threatened to be killed. Al's defense
fails to impress us. Under Article 12[17] of the Revised Penal Code, a person is exempt from
criminal liability if he acts under the compulsion of an irresistible force, or under the impulse of
an uncontrollable fear of equal or greater injury, because such person does not act with
freedom.[18] To avail of this exempting circumstance, the evidence must establish: (1) the
existence of an uncontrollable fear; (2) that the fear must be real and imminent; and (3) the fear of
an injury is greater than, or at least equal to, that committed.[19] For such defense to prosper, the
duress, force, fear or intimidation must be present, imminent and impending, and of such nature
as to induce a well-grounded apprehension of death or serious bodily harm if the act be done. A
threat of future injury is not enough.[20]
There is nothing in the records to substantiate appellant Al's insistence that he was under duress
from his co-accused while participating in the crime that would suffice to exempt him from incurring
criminal liability. The evidence shows that Al was tasked to act as a lookout and directed to station
himself across the house of the Estrellas. Al was there from 7:30 p.m. to 1:00 a.m.[21] of the
following day, while the rest of the group was waiting in the landing field. Thus, while all alone, Al
had every opportunity to escape since he was no longer subjected to a real, imminent or
reasonable fear. However, he opted to stay across the house of the Estrellas for almost six (6)
hours,[22] and thereafter returned to the landing field where the group was waiting for his report.
Subsequently, the group proceeded to the Estrellas house. When the group entered the house, Al
stayed for almost one (1) hour outside to wait for his companions. Later, when the group left the
house aboard a vehicle, Al rode with them in going to Sitio Rosalia, Brgy. San Bartolome, Rosales,
Pangasinan, bringing with them Sulpacio and AAA.[23] Clearly, appellant Al had ample opportunity
to escape if he wished to, but he never did. Neither did he request for assistance from the
authorities or any person passing by the house of the Estrellas during the period he was stationed
there. Clearly, Al did not make any effort to perform an overt act to dissociate or detach himself
from the conspiracy to commit the felony and prevent the commission thereof that would exempt
himself from criminal liability.[24] Therefore, it is obvious that he willingly agreed to be a part of the
conspiracy.
Alibi and Denial
Appellant Lando denied having committed the crime charged and interposed alibi as a defense.
He claims that at the time of the incident he was in his house at Tarlac, together with his
family. On the other hand, the appellants were positively identified by AAA, as two (2) of the six (6)
malefactors who forcibly took her and Sulpacio from the Estrella house in the early morning of May

7, 2002. Both the trial court and the CA found the testimony of AAA credible. The Court gives
great weight to the trial courts evaluation of the testimony of a witness because it had the
opportunity to observe the facial expression, gesture, and tone of voice of a witness while
testifying; thus, making it in a better position to determine whether a witness is lying or telling the
truth.[25]

Between the categorical statements of the prosecution witness, on one hand, and the bare denial
of the appellant, on the other, the former must perforce prevail. An affirmative testimony is far
stronger than a negative testimony especially when it comes from the mouth of a credible witness.
Alibi and denial, if not substantiated by clear and convincing evidence, are negative and selfserving evidence undeserving of weight in law. They are considered with suspicion and always
received with caution, not only because they are inherently weak and unreliable but also because
they are easily fabricated and concocted.[26] Denial cannot prevail over the positive testimony of
prosecution witnesses who were not shown to have any ill-motive to testify against the
appellants.[27]

As to the defense of alibi. Aside from the testimony of appellant Lando that he was in Tarlac at the
time of the incident, the defense was unable to show that it was physically impossible for Lando to
be at the scene of the crime. Basic is the rule that for alibi to prosper, the accused must prove that
he was somewhere else when the crime was committed and that it was physically impossible for
him to have been at the scene of the crime. Physical impossibility refers to the distance between
the place where the appellant was when the crime transpired and the place where it was
committed, as well as the facility of access between the two places.[28] Where there is the least
chance for the accused to be present at the crime scene, the defense of alibi must fail.[29]During
the trial of the case, Lando testified that the distance between his house in Brgy. Maligaya, San
Miguel, Tarlac to the town of Rosales, Pangasinan is only around forty (40) kilometers. Such
distance can be traversed in less than 30 minutes using a private car and when the travel is
continuous.[30] Thus, it was not physically impossible for the appellant Lando to be at the locus
criminis at the time of the incident. In addition, positive identification destroys the defense of alibi
and renders it impotent, especially where such identification is credible and categorical.[31]

Qualifying and Aggravating Circumstances


In convicting the appellants, the courts a quo appreciated treachery in qualifying the killing to
murder and evident premeditation in imposing the penalty of death. There is treachery when the

offender commits any of the crimes against persons, employing means, methods or forms in the
execution thereof which tend directly and specially to ensure its execution without risk to himself
arising from the defense that the offended party might make.[32] Two conditions must concur
for treachery to exist, namely, (a) the employment of means of execution gave the person attacked
no opportunity to defend himself or to retaliate; and (b) the means or method of execution was
deliberately and consciously adopted.[33]
In the case at bar, it was proven that when AAA boarded the vehicle, she saw Sulpacio tied and
blindfolded. Later, when they reached the fishpond, Sulpacio, still tied and blindfolded, was led out
of the vehicle by the group. When the remains of Sulpacio was thereafter found by the authorities,
the autopsy report indicated that a piece of cloth was found wrapped around the eye sockets and
tied at the back of the skull and another cloth was also found tied at the left wrist of the
victim. There is no question therefore, that the victim's body, when found, still had his hands tied
and blindfolded. This situation of the victim when found shows without doubt that he was killed
while tied and blindfolded; hence, the qualifying aggravating circumstance of treachery was
present in the commission of the crime. In People v. Osianas,[34] the Court held that:
x x x In the case at bar, the means used by the accused-appellants to insure the
execution of the killing of the victims, so as to afford the victims no opportunity to
defend themselves, was the act of tying the hands of the victims. Teresita saw the
accused-appellants hog-tie the victims and take them away with them. Later that
night, Dionisio Palmero saw the victims, still hog-tied, walking with the accusedappellants. The following day, the victims were found dead, still hog-tied. Thus, no
matter how the stab and hack wounds had been inflicted on the victims in the case at
bar, we are sure beyond a reasonable doubt that Jose, Ronilo and Reymundo
Cuizon had no opportunity to defend themselves because the accused-appellants
had earlier tied their hands. The fact that there were twelve persons who took and
killed the Cuizons further assured the attainment of accused-appellants' plans
without risk to themselves.[35]

The aggravating circumstance of superior strength cannot be separately appreciated because it is


absorbed by treachery.[36]
The circumstance of evident premeditation requires proof showing: (1) the time when the accused
determined to commit the crime; (2) an act manifestly indicating that the accused has clung to his
determination; and (3) sufficient lapse of time between such determination and execution to allow
him to reflect upon the consequences of his act.[37] The essence of premeditation is that the
execution of the act was preceded by cool thought and reflection upon the resolution to carry out
the criminal intent during a space of time sufficient to arrive at a calm judgment.[38] From the time

the group met at the landing field at around 6:30 p.m. of May 6, 2002, and discussed the
possibility of killing anyone who stands on their way, up to the time they took Sulpacio away from
the Estrellas house and eventually killed him thereafter at around past 3:00 a.m., more than eight
hours had elapsed sufficient for the appellants to reflect on the consequences of their actions and
desist from carrying out their evil scheme, if they wished to. Instead, appellants evidently clung to
their determination and went ahead with their nefarious plan.
In Criminal Case No. 4481-R for Kidnapping and Serious Illegal Detention.
The Court finds appellant Lando guilty of the special complex crime of kidnapping and serious
illegal detention with rape, defined in and penalized under Article 267 of the Revised Penal Code.
The elements of kidnapping and serious illegal detention under Article 267 of the Revised Penal
Code[39] are: (1) the offender is a private individual; (2) he kidnaps or detains another or in any
other manner deprives the latter of his liberty; (3) the act of detention or kidnapping must be illegal;
and (4) in the commission of the offense, any of the following circumstances is present: (a) the
kidnapping or detention lasts for more than 3 days; or (b) it is committed by simulating public
authority; or (c) any serious physical injuries are inflicted upon the person kidnapped or detained
or threats to kill him are made; or (d) the person kidnapped or detained is a minor, female, or a
public officer.[40]
The crime of kidnapping was proven beyond reasonable doubt by the prosecution. Appellants
Lando and Al, both private individuals, forcibly took AAA, a female, away from the house of the
Estrellas and held her captive against her will. Thereafter, appellant Lando brought AAA to his
house in San Miguel Tarlac, whereby she was deprived of her liberty for almost one month. It is
settled that the crime of serious illegal detention consists not only of placing a person in an
enclosure, but also in detaining him or depriving him in any manner of his liberty.[41] For there to be
kidnapping, it is enough that the victim is restrained from going home.[42] Its essence is the actual
deprivation of the victim's liberty, coupled with indubitable proof of the intent of the accused to
effect such deprivation.[43] Although AAA was not confined in an enclosure, she was restrained
and deprived of her liberty, because every time appellant Lando and his wife went out of the
house, they brought AAA with them. The foregoing only shows that AAA was constantly guarded
by appellant Lando and his family.
The crime of rape was also established by the prosecution. Appellant Lando succeeded in having
carnal knowledge of AAA through the use of threat and intimidation. AAA testified that on May 9,
2002, appellant Lando brought her to a hotel to hide her from Fred and Bert, who intended to kill
her. Appellant Lando told her to follow his orders, otherwise, he will give her to Fred and

Bert. While in the hotel, appellant Lando raped her.[44] Clearly, for fear ofbeing delivered to Fred
and Bert and of losing her life, AAA had no choice but to give in to appellant Lando's lustful
assault. In rape cases, the credibility of the victim's testimony is almost always the single most
important factor. When the victim's testimony is credible, it may be the sole basis for the accused's
conviction.[45] This is so because owing to the nature of the offense, in many cases, the only
evidence that can be given regarding the matter is the testimony of the offended party.[46]
The last paragraph of Article 267 of the Revised Penal Code provides that if the victim is killed or
dies as a consequence of the detention, or is raped or subjected to torture or dehumanizing acts,
the maximum penalty shall be imposed. In People v. Larraaga,[47] this provision gives rise to a
special complex crime. Thus, We hold that appellant Lando is guilty beyond reasonable doubt of
the special complex crime of kidnapping and serious illegal detention with rape in Criminal Case
No. 4481-R.
However, the Court does not agree with the CA and trial court's judgment finding appellant Al
liable for Rape in Criminal Case No. 4481-R. In People v. Suyu,[48] We ruled that once conspiracy
is established between several accused in the commission of the crime of robbery, they would all
be equally culpable for the rape committed by anyone of them on the occasion of the robbery,
unless anyone of them proves that he endeavored to prevent the others from committing
rape.[49] Also, in People v. Canturia,[50] the Court held that:
x x x For while the evidence does convincingly show a conspiracy among the accused,
it also as convincingly suggests that the agreement was to commit robbery only; and
there is no evidence that the other members of the band of robbers were aware of
Canturia's lustful intent and his consummation thereof so that they could have
attempted to prevent the same. x x x

The foregoing principle is applicable in the present case because the crime of robbery with rape is
a special complex crime defined in and penalized under Article 294, paragraph 1 of the Revised
Penal Code, and the crime of kidnapping with rape in this case is likewise a special complex crime
as held in the case of People v. Larraaga.[51] There is no evidence to prove that appellant Al was
aware of the subsequent events that transpired after the killing of Sulpacio and the kidnapping of
AAA. Appellant Al could not have prevented appellant Lando from raping AAA, because at the
time of rape, he was no longer associated with appellant Lando. AAA even testified that only Fred
and appellant Lando brought her to Tarlac,[52] and she never saw appellant Al again after May 7,
2002, the day she was held captive. She only saw appellant Al once more during the trial of the
case.[53] Thus, appellant Al cannot be held liable for the subsequent rape of AAA.

The Penalties
In Criminal Case No. 4498-R, the attendant circumstance of treachery qualified the killing
to murder. The penalty for murder under Article 248 of the Revised Penal Code is reclusion
perpetua to death. Since the aggravating circumstance of evident premeditation was alleged and
proven, the imposable penalty upon the appellants is death, pursuant to Article 63, paragraph 1, of
the Revised Penal Code.[54] In view, however, of the passage of R.A. No. 9346,[55] prohibiting the
imposition of the death penalty, the penalty of death is reduced to reclusion perpetua,[56] without
eligibility for parole.[57]
In Criminal Case No. 4481-R, the penalty for the special complex crime of kidnapping and serious
illegal detention with rape is death. In view of R.A. No. 9346, the penalty of death is reduced
to reclusion perpetua,[58] without eligibility for parole.[59] Accordingly, the imposable penalty for
appellant Lando is reclusion perpetua.

As to appellant Al, the prescribed penalty for serious illegal detention under Article 267 of the
Revised Penal Code is reclusion perpetua to death. There being no aggravating or mitigating
circumstance in the commission of the offense, the proper penalty to be imposed is reclusion
perpetua, pursuant to Article 63[60] of the Revised Penal Code.
The Damages
In Criminal Case No. 4498-R, the award of civil indemnity is mandatory and granted to the heirs of
the victim without need of proof other than the commission of the crime.[61] In People v.
Quiachon,[62] even if the penalty of death is not to be imposed because of the prohibition in R.A.
9346, the civil indemnity of P75,000.00 is proper, because it is not dependent on the actual
imposition of the death penalty but on the fact that qualifying circumstances warranting the
imposition of the death penalty attended the commission of the offense. As explained in People v.
Salome,[63] while R.A. No. 9346 prohibits the imposition of the death penalty, the fact remains that
the penalty provided for by law for a heinous offense is still death, and the offense is still heinous.
Accordingly, the award of civil indemnity in the amount of P75,000.00 is proper.
Anent moral damages, the same are mandatory in cases of murder, without need of allegation and
proof other than the death of the victim.[64] However, consistent with recent jurisprudence on
heinous crimes where the imposable penalty is death but reduced to reclusion perpetua pursuant

to R.A. No. 9346, the award of moral damages should be increased from P50,000.00
to P75,000.00.[65]
The award of exemplary damages is in order, because of the presence of the aggravating
circumstances of treachery and evident premeditation in the commission of the crime.[66] The
Court awards the amount of P30,000.00, as exemplary damages, in line with current jurisprudence
on the matter.[67]
Actual damages is also warranted. Modesta Abad, the spouse of victim Sulpacio, incurred
expenses in the amount of P57,122.30, which was duly supported by receipts.[68]
In Criminal Case No. 4481-R, AAA is entitled to civil indemnity in line with prevailing jurisprudence
that civil indemnification is mandatory upon the finding of rape.[69] Applying prevailing
jurisprudence, AAA is entitled to P75,000.00 as civil indemnity.[70]
In addition, AAA is entitled to moral damages pursuant to Article 2219 of the Civil Code,[71] without
the necessity of additional pleadings or proof other than the fact of rape.[72] Moral damages is
granted in recognition of the victim's injury necessarily resulting from the odious crime of
rape.[73] Such award is separate and distinct from the civil indemnity.[74] However, the amount
of P100,000.00 awarded as moral damages is reduced to P75,000.00, in line with current
jurisprudence.[75]
The award of exemplary damages to AAA in the amount of P50,000 is hereby reduced
to P30,000.00 in accordance with recent jurisprudence.[76]
As to appellant Al. In the absence of conspiracy, the liability of the accused is individual and not
collective.[77] Since appellant Al is liable only for the crime of serious illegal detention, he is jointly
and severally liable only to pay the amount of P50,000.00 as civil indemnity. For serious illegal
detention, the award of civil indemnity is in the amount of P50,000.00, in line with prevailing
jurisprudence.[78]
Along that line, appellant Al's liability for moral damages is limited only to the amount
of P50,000.00.[79] Pursuant to Article 2219 of the Civil Code, moral damages may be recovered in
cases of illegal detention. This is predicated on AAA's having suffered serious anxiety and fright
when she was detained for almost one (1) month.[80]

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CR-H.C. No. 00556
is AFFIRMED with MODIFICATIONS as follows:
(a) In Criminal Case No. 4498-R, appellants Fernando Calaguas Fernandez alias Lando and
Alberto Cabillo Anticamara alias Al are found GUILTYbeyond reasonable doubt of the crime of
Murder and are sentenced to suffer the penalty of Reclusion Perpetua, without eligibility of parole,
and to pay, jointly and severally, the heirs of Sulpacio Abad the amounts of P75,000.00 as civil
indemnity, P75,000.00 as moral damages, P30,000.00 as exemplary damages, and P57,122.30
as actual damages.
(b) In Criminal Case No. 4481-R, appellant Fernando Calaguas Fernandez alias Lando is
found GUILTY beyond reasonable doubt of the special complex crime of kidnapping and serious
illegal detention with rape and is sentenced to suffer the penalty of Reclusion Perpetua, without
eligibility of parole, and to pay the offended party AAA, the amounts of P75,000.00 as civil
indemnity, P75,000.00 as moral damages and P30,000.00 as exemplary damages.Appellant
Alberto Cabillo Anticamara alias Al is found GUILTY beyond reasonable doubt of the crime of
kidnapping and serious illegal detention and is sentenced to suffer the penalty of Reclusion
Perpetua. He is also directed to pay, jointly and severally, with appellant Fernando Calaguas
Fernandez alias Lando, the victim AAA the amounts of P50,000.00 as civil indemnity
and P50,000.00 as moral damages.
SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

B.F. METAL (CORPORATION), petitioners,


vs.
SPS. ROLANDO M. LOMOTAN and LINAFLOR LOMOTAN and RICO UMUYON, respondents.
DECISION
TINGA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the award of damages against petitioner in the Decision1 and Resolution2 of
the Court of Appeals in CA-G.R. CV No. 58655. The Court of Appeals affirmed with modification
the Decision of the Regional Trial Court (RTC), Branch 72, Antipolo, Rizal in Civil Case No. 1567A, which found petitioner corporation and its driver, Onofre V. Rivera, solidarily liable to
respondents for damages.
The following factual antecedents are not disputed.
In the morning of 03 May 1989, respondent Rico Umuyon ("Umuyon") was driving the owner-type
jeep owned by respondents, Spouses Rolando and Linaflor Lomotan ("Spouses Lomotan"). The
jeep was cruising along Felix Avenue in Cainta, Rizal at a moderate speed of 20 to 30 kilometers
per hour. Suddenly, at the opposite lane, the speeding ten-wheeler truck driven by Onofre Rivera
overtook a car by invading the lane being traversed by the jeep and rammed into the jeep. The
jeep was a total wreck while Umuyon suffered "blunt thoracic injury with multiple rib fracture,
fractured scapula (L), with pneumohemothorax," which entailed his hospitalization for 19 days.
Also in view of the injuries he sustained, Umuyon could no longer drive, reducing his daily income
from P150.00 to P100.00.
On 27 October 1989, respondents instituted a separate and independent civil action for damages
against petitioner BF Metal Corporation ("petitioner") and Rivera before the Regional Trial Court
(RTC) of Antipolo, Rizal. The complaint essentially alleged that defendant Riveras gross
negligence and recklessness was the immediate and proximate cause of the vehicular accident
and that petitioner failed to exercise the required diligence in the selection and supervision of
Rivera. The complaint prayed for the award of actual, exemplary and moral damages and
attorneys fees in favor of respondents.
In the Answer, petitioner and Rivera denied the allegations in the complaint and averred that
respondents were not the proper parties-in-interest to prosecute the action, not being the
registered owner of the jeep; that the sole and proximate cause of the accident was the fault and
negligence of Umuyon; and that petitioner exercised due diligence in the selection and supervision
of its employees.
During the trial, respondents offered the testimonies of Umuyon, SPO1 Rico Canaria, SPO4
Theodore Cadaweg and Nicanor Fajardo, the auto-repair shop owner who gave a cost estimate
for the repair of the wrecked jeep. Among the documentary evidence presented were the 1989
cost estimate of Pagawaan Motors, Inc.,3 which pegged the repair cost of the jeep at P96,000.00,
and the cost estimate of Fajardo Motor Works4 done in 1993, which reflected an increased repair
cost at P130,655.00. They also presented in evidence a copy of the Decision of the RTC,
Assisting Branch 74, Cainta, Rizal in Criminal Case No. 4742, entitled People of the Philippines v.
Onofre V. Rivera, finding Rivera guilty of reckless imprudence resulting in damage to property with
physical injuries.
For its part, petitioner presented at the hearing Rivera himself and Habner Revarez, petitioners
production control superintendent. Included in its documentary evidence were written guidelines in
preventive maintenance of vehicles and safety driving rules for drivers.

On 21 April 1997, the trial court rendered its Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants to
pay jointly and severally to herein plaintiffs the following sums:
(a) Actual Damages

---

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


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

(b) Moral Damages

---

P100,000.00

(c) Exemplary Damages

---

P100,000.00

(d) Attorneys Fees

---

P25,000.00 plus P1,000.00 for every Court appeara

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

---

i. P130,655.00, for cost of repairing the owne


ii. P10,167.99 in medical expenses.

iii. P2,850.00 for lost earnings during medical


(b) Moral Damages

---

P100,000.00

(c) Exemplary Damages

---

P100,000.00

(d) Attorneys Fees

---

P25,000.00

Costs of suit."
SO ORDERED.7
On 12 December 2005, the Court of Appeals denied the motion for reconsideration of its Decision.
Only petitioner filed the instant petition, expressly stating that it is assailing only the damages
awarded by the appellate court.

The instant petition raises the following issues: (1) whether the amount of actual damages based
only on a job estimate should be lowered; (2) whether Spouses Lomotan are also entitled to moral
damages; and (3) whether the award of exemplary damages and attorneys is warranted. For their
part, respondents contend that the aforementioned issues are factual in nature and therefore
beyond the province of a petitioner for review under Rule 45.
This is not the first instance where the Court has given due course to a Rule 45 petition seeking
solely the review of the award of damages.8 A partys entitlement to damages is ultimately a
question of law because not only must it be proved factually but also its legal justification must be
shown. In any case, the trial court and the appellate court have different findings as to the amount
of damages to which respondents are entitled. When the factual findings of the trial and appellate
courts are conflicting, the Court is constrained to look into the evidence presented before the trial
court so as to resolve the herein appeal.9
The trial court split the award of actual damages into three items, namely, the cost of the wrecked
jeep, the medical expenses incurred by respondent Umuyon and the monetary value of his
earning capacity. On appeal, the Court of Appeals reduced the amount of medical expenses and
loss of earning capacity to which respondent Umuyon is entitled but increased from P96,700.00
to P130,655.00 the award in favor of Spouses Lomotan for the cost of repairing the wrecked jeep.
The instant petition assails only the modified valuation of the wrecked jeep. Petitioner points out
that the alleged cost of repairing the jeep pegged at P130,655.00 has not been incurred but is only
a job estimate or a sum total of the expenses yet to be incurred for its repair. It argues that the
best evidence obtainable to prove with a reasonable degree of certainty the value of the jeep is
the acquisition cost or the purchase price of the jeep minus depreciation for one year of use
equivalent to 10% of the purchase price.
Petitioners argument is partly meritorious.
Except as provided by law or by stipulation, one is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as
actual or compensatory damages.10Actual damages are such compensation or damages for an
injury that will put the injured party in the position in which he had been before he was injured.
They pertain to such injuries or losses that are actually sustained and susceptible of
measurement. To justify an award of actual damages, there must be competent proof of the actual
amount of loss. Credence can be given only to claims which are duly supported by receipts.11
In People v. Gopio,12 the Court allowed the reimbursement of only the laboratory fee that was duly
receipted as "the rest of the documents, which the prosecution presented to prove the actual
expenses incurred by the victim, were merely a doctors prescription and a handwritten list of food
expenses."13 In Viron Transportation Co., Inc. v. Delos Santos,14 the Court particularly disallowed
the award of actual damages, considering that the actual damages suffered by private
respondents therein were based only on a job estimate and a photo showing the damage to the
truck and no competent proof on the specific amounts of actual damages suffered was presented.
In the instant case, no evidence was submitted to show the amount actually spent for the repair or
replacement of the wrecked jeep. Spouses Lomotan presented two different cost estimates to
prove the alleged actual damage of the wrecked jeep. Exhibit "B," is a job estimate by Pagawaan
Motors, Inc., which pegged the repair cost of the jeep atP96,000.00, while Exhibit "M," estimated
the cost of repair at P130,655.00. Following Viron, neither estimate is competent to prove actual
damages. Courts cannot simply rely on speculation, conjecture or guesswork in determining the
fact and amount of damages.15
As correctly pointed out by petitioner, the best evidence to prove the value of the wrecked jeep is
reflected in Exhibit "I," the Deed of Sale showing the jeeps acquisition cost at P72,000.00.

However, the depreciation value of equivalent to 10% of the acquisition cost cannot be deducted
from it in the absence of proof in support thereof.
Petitioner also questions the award of moral and exemplary damages in favor of Spouses
Lomotan. It argues that the award of moral damages was premised on the resulting physical
injuries arising from the quasi-delict; since only respondent Umuyon suffered physical injuries, the
award should pertain solely to him. Correspondingly, the award of exemplary damages should
pertain only to respondent Umuyon since only the latter is entitled to moral damages, petitioner
adds.
In the case of moral damages, recovery is more an exception rather than the rule. Moral damages
are not punitive in nature but are designed to compensate and alleviate the physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar harm unjustly caused to a person. In order that an award of moral
damages can be aptly justified, the claimant must be able to satisfactorily prove that he has
suffered such damages and that the injury causing it has sprung from any of the cases listed in
Articles 221916 and 222017 of the Civil Code. Then, too, the damages must be shown to be the
proximate result of a wrongful act or omission. The claimant must establish the factual basis of the
damages and its causal tie with the acts of the defendant. In fine, an award of moral damages
would require, firstly, evidence of besmirched reputation or physical, mental or psychological
suffering sustained by the claimant; secondly, a culpable act or omission factually established;
thirdly, proof that the wrongful act or omission of the defendant is the proximate cause of the
damages sustained by the claimant; and fourthly, that the case is predicated on any of the
instances expressed or envisioned by Article 2219 and Article 2220 of the Civil Code.18
In culpa aquiliana, or quasi-delict, (a) when an act or omission causes physical injuries, or (b)
where the defendant is guilty of intentional tort, moral damages may aptly be recovered. This rule
also applies, as aforestated, to breaches of contract where the defendant acted fraudulently or in
bad faith. In culpa criminal, moral damages could be lawfully due when the accused is found guilty
of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal
arrest, illegal search, or defamation.19
Undoubtedly, petitioner is liable for the moral damages suffered by respondent Umuyon. Its liability
is based on aquasi-delict or on its negligence in the supervision and selection of its driver, causing
the vehicular accident and physical injuries to respondent Umuyon. Rivera is also liable for moral
damages to respondent Umuyon based on either culpa criminal or quasi-delict. Since the decision
in the criminal case, which found Rivera guilty of criminal negligence, did not award moral
damages, the same may be awarded in the instant civil action for damages.
Jurisprudence show that in criminal offenses resulting to the death of the victim, an award within
the range ofP50,000.00 to P100,000.00 as moral damages has become the trend.20 Under the
circumstances, because respondent Umuyon did not die but had become permanently
incapacitated to drive as a result of the accident, the award of P30,000.00 for moral damages in
his favor is justified.21
However, there is no legal basis in awarding moral damages to Spouses Lomotan whether arising
from the criminal negligence committed by Rivera or based on the negligence of petitioner under
Article 2180.22 Article 221923 speaks of recovery of moral damages in case of a criminal offense
resulting in physical injuries or quasi-delicts causing physical injuries, the two instances where
Rivera and petitioner are liable for moral damages to respondent Umuyon. Article 222024 does
speak of awarding moral damages where there is injury to property, but the injury must be willful
and the circumstances show that such damages are justly due. There being no proof that the
accident was willful, Article 2220 does not apply.

Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to moral, temperate, liquidated or compensatory damages.25 Exemplary
damages cannot be recovered as a matter of right; the court will decide whether or not they should
be adjudicated.26 In quasi-delicts, exemplary damages may be granted if the defendant acted with
gross negligence.27 While the amount of the exemplary damages need not be proved, the plaintiff
must show that he is entitled to moral, temperate or compensatory damages before the court may
consider the question of whether or not exemplary damages should be awarded.28
As correctly pointed out by the Court of Appeals, Spouses Lomotan have shown that they are
entitled to compensatory damages while respondent Umuyon can recover both compensatory and
moral damages. To serve as an example for the public good, the Court affirms the award of
exemplary damages in the amount of P100,000.00 to respondents. Because exemplary damages
are awarded, attorneys fees may also be awarded in consonance with Article 2208 (1).29 The
Court affirms the appellate courts award of attorneys fees in the amount of P25,000.00.
WHEREFORE, the instant petition for certiorari is PARTIALLY GRANTED. The Decision of the
Court of Appeals in CA-G.R. CV No. 58655 is AFFIRMED with MODIFICATION. The award of
actual damages for the cost of repairing the owner-type jeep is hereby REDUCED to P72,000.00
while the moral damages of P30,000.00 is awarded solely to respondent Umuyon. All other
awards of the Court of Appeals are AFFIRMED. Following jurisprudence,30 petitioner is ordered to
PAY legal interest of 6% per annum from the date of promulgation of the Decision dated 21 April
1997 of the Regional Trial Court, Branch 72, Antipolo, Rizal and 12% per annum from the time the
Decision of this Court attains finality, on all sums awarded until their full satisfaction.
SO ORDERED.

PEOPLE OF THE PHILIPPINES, G.R. No. 174470


Appellee, [Formerly G. R. Nos. 159844-46]
Present:
QUISUMBING, J.,
Chairman,
- versus - CARPIO,
CARPIO MORALES, and
TINGA,
VELASCO, JJ.
FILOMINO LIZANO y MARVILLA
Appellant.
Promulgated:
April 27, 2007
x------------------------------------------------------------------------------------x
DECISION
TINGA, J.:
For consideration is an appeal by Filomino Lizano y Marvilla[1] (appellant) from the
Decision[2] dated 28 April 2006 of the Court of Appeals in CA-G.R. CR-H.C. No. 01659, affirming
the 30 May 2003 Decision[3] of the Regional Trial Court (RTC) of Calauag, Quezon, which found
him guilty beyond reasonable doubt of the crime of rape.
On 20 February 1997, appellant was charged with three (3) counts of rape in three (3)
separate Informations, which, except for the date, similarly read as follow:
That on or about the month of January 1996, at Sitio San Jose Ilaya,
Barangay Sta. Cecilia, in the Municipality of Tagkawayan, Province of Quezon,
Philippines and within the jurisdiction of this Honorable Court, the above-named
accused, who is the uncle of the offended party, with lewd design, by means of force,
violence and intimidation, did then and there willfully, unlawfully and feloniously have
carnal knowledge of one [AAA],[4] a minor, 11 years of age, against her will.
Contrary to law.[5]
The two (2) other Informations[6] alleged that appellant had raped AAA on 18 and 19
January 1997, respectively.
Appellant pleaded not guilty on all three charges. Trial then proceeded.
The victim, AAA, testified that she had been staying in her grandmothers house in
Barangay Sta. Cecilia, Tagkawayan, Quezon, together with appellant and his wife, BBB who is
AAAs aunt. Sometime in January 1996, AAA, who was then only 11 years old, was sleeping inside
the house when appellant lay down beside her and began undressing her while threatening to kill
her, her grandmother and aunt should she reveal his acts to anybody.Afterwards, appellant also

took off his clothes. He then went on top of AAA and inserted his penis into her vagina, causing
her to feel pain.[7] A year later, on 18 January 1997, appellant raped AAA again. The following day,
at around 10:30 a.m., appellant raped her for the third time. She, however, declared during directexamination that there were only slight penetrations in these two occasions.[8] AAA was only
forced to disclose the incident to an uncle, a brother of her mother, upon the prodding of BBB, who
chanced upon AAA while inside the room of appellant.[9]

The prosecution also presented CCC to testify on the age of her daughter, AAA. CCC
stated in court that AAA was born on 14 May 1985.[10] AAAs birth certificate[11] attesting to the
same data was likewise presented in court.
The third witness for the prosecution was Delia Mayuga Ayuda, a Medical Clerk at
the Tagkawayan District Hospital, whose duty was to keep all the files of the patients in the
hospital. She identified the signature of Dr. Juvy Paz Purino in the Medico-Legal Certificate which
contained the following findings:
-

superficial lacerations at 6 oclock and 8 oclock positions, hymen

NOI- Allegedly raped by someone


DOI- January 18, 1997
TOI- P.M.
POI- San Jose Tagkawayan, Quezon[12]

Appellant testified on his behalf, raising denial and alibi as defenses. Appellant denied
raping AAA sometime January 1996.[13] He averred that on19 January 1997, he was driving his
tricycle the whole day and got home 11 a.m. the next day. He however recalled an incident where
he asked AAA to get a spare part of a tricycle in the living room. Unable to follow his orders,
appellant followed AAA inside the house. It was at that moment when his wife, BBB, arrived and
accused him of raping AAA.[14] Appellant maintained that BBB had induced AAA to charge him
with rape because of their frequent quarrels.[15]
The trial court found the first incident of rape as credible and found appellant guilty in Criminal
Case No. 2857-C. However, he was acquitted in Criminal Case Nos. 2858-C and 2859-C for
insufficiency of evidence.[16]
From the decision in Criminal Case No. 2857-C, appellant directly appealed to this
Court. Conformably with our ruling in People v. Mateo,[17] the appeal was remanded to the Court of
Appeals for intermediate review.
On 28 April 2006, the Court of Appeals promulgated a Decision dismissing the appeal and
affirming in toto the decision of the RTC.

Both parties opted not to file Supplemental Briefs and instead adopted their Briefs before the
appellate court.[18]
In this appeal, appellant contends that the prosecutions evidence is insufficient to sustain
his conviction, especially taking into account the alleged delay on the part of the victim in reporting
the rape. Thus, the resolution of this case hinges on the straightforward issue of whether the
prosecution was able to establish appellants guilt beyond reasonable doubt based on the
complainants testimony.
In the prosecution of rape cases, conviction or acquittal depends on the credence to be
accorded to the complainants testimony because of the fact that usually the participants are the
only witnesses to the occurrences.[19] Thus, the issue boils down to credibility. Significantly,
findings of fact of the trial court should not be disturbed on appeal since conclusions as to the
credibility of witnesses in rape cases hinge heavily on the sound judgment of the trial court which
is in a better position to decide the question, having heard the witnesses and observed their
deportment and manner of testifying.[20]
In the case at bar, the trial court aptly observed:
In the first incident, the private complainant AAA then an 11 years old [sic] girl
in a clear, convincing and straightforward manner testified how the accused Filomino
Lizano undressed her and then afterwards, he undressed also, put himself on top of
her and inserted his penis to her private part. AAA clearly stated that the accuseds
penis was able to fully penetrate her vagina and it was painful. . . Her clear account
of the first incident of rape unequivocally show that she was indeed raped by the
accused Filomino Lizano.[21]

We find no cogent reason to depart from these findings. During the direct examination, AAA
recounted the rape incident and positively identified appellant as the perpetrator, thus:
Q: Do you know this Filomino Lizano?
A: Yes, sir.
Q: Why do you know him?
A: He is the husband of my auntie, sir.
xxxx
Q: If this Filomino Lizano is in Court, will you be able to point to him?
A: Yes, sir.
Q: Please do so. (Witness pointing to a man who identified himself to be Filomino
Lizano).
Q: Now, in January, 1996, how old were you then?
A: 11 years old, sir.

Q: And on that month, do you remember any unusual incident that happened to you?
A: Yes, sir.
Q: And what was that unusual incident?
A: I was raped by Filomino Lizano, sir.
Q: Where?
A: In the house of my grandmother, sir.
Q: Where is that house of your Lola located?
A: In Brgy. Sta. Cecilia, Tagkawayan, Quezon.
Q: Will you tell or relay to this Court that particular incident that you are referring to
that you were raped by Filomino Lizano?
A: He slept beside me, sir.
Q: And after sleeping beside you, what did he do if he did anything?
A: He undressed me, sir.
Q: After undressing you, did he do anything more?
A: He told me not to tell anybody.
Q: And did he tell you what will happen if you will tell anyone about that incident?
xxxx
WITNESS:
Because if I inform [sic] about the incident, he will kill us, sir.
FISCAL BONIFACIO
Q: When you say us, whom was he referring to?
A: My grandmother, auntie, and myself, sir.
Q: After he undressed you, is there anything more he did?
A: He undressed himself also, sir.
Q: Then anything more?
A: He put himself on top of me, sir.
Q: And when he put himself on top of you, did he do anything more?
A: He entered his penis to my private part, sir.
Q: Do you know if he was able to fully penetrate his penis on your private part?
A: Yes, sir.
Q: What did you feel when he was doing that?
A: It was painful, sir.[22]
In her sworn statement[23] taken before the Police Station in Tagkawayan Quezon, AAA
narrated the same details contained in her testimony before the trial court.

These positive declarations bolster the inevitable conclusion that appellant had indeed raped
AAA. The trial court correctly lent credence to the straightforward version of the victim as against
the bare denial by appellant. It has been an oft-repeated rule that mere denial, if unsubstantiated
by clear and convincing evidence, has no weight in law and cannot be given greater evidentiary
value than the positive testimony of a rape victim.[24] As between a categorical testimony that rings
of truth on one hand, and a bare denial on the other, the former is generally held to prevail. [25]

Appellants main argument, however, is premised on the delay incurred by the victim in
reporting the crime. Appellant underscores the failure of the victim to report the alleged rape which
occurred in January 1996 even when there was no showing that appellant was continuously
threatening her after the said incident.[26]
His does not persuade.
The Solicitor General correctly points out that delay in reporting a rape incident does not impair the
credibility of the victim in the face of threats of death or physical violence.[27] Indeed, delay in
revealing the commission of rape is not an indication of a fabricated charge. Such intimidation
must be viewed in light of the victim's perception and judgment at the time of the commission of
the crime and not by any hard and fast rule. It is enough that the intimidation produces a fear that
if the victim does not yield to the perverse impulses of the accused, something would happen to
her at the moment, or even thereafter, as when she is threatened with death if she would report
the incident.[28]
AAA satisfactorily explained the delay. Appellant threatened to kill her, her grandmother
and aunt should she report the incident to anybody.[29]This immediate threat directed at AAA, who
was then only eleven (11) years old, engendered fear on her part to reveal the unpleasant
incident. A rape victim cannot, after all, be expected to summon the courage to report a sexual
assault committed against her person, where the act was accompanied by a death threat.[30]
Under Article 335 of the Revised Penal Code, rape, which is punishable by reclusion
perpetua is committed by having carnal knowledge of a woman under any of the following
circumstances:
1. By using force or intimidation;
2. When the woman is deprived of reason or otherwise unconscious;
3. When the woman is under twelve years of age or is demented.
Hence, the trial court correctly imposed the penalty of reclusion perpetua for the rape of
AAA, who was then under 12 years old, as proven by the prosecution through the testimony of her
mother and the presentation of AAAs birth certificate. We affirm the trial courts award of civil
indemnity and moral damages each in the amounts of P50,000.00 in line with current

jurisprudence.[31] Civil indemnity is automatically imposed upon the accused without need of proof
other than the fact of the commission of rape. Moral damages is also automatically granted in rape
cases without need of further proof other than the commission of the crime because it is assumed
that a rape victim had actually suffered moral injuries entitling her to such award.[32]
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated 28 April
2006 is AFFIRMED. Appellant FILOMINO LIZANO y MARVILLA is hereby found guilty beyond
reasonable doubt of statutory rape and is sentenced to suffer the penalty of reclusion perpetua,
and is ordered to pay the victim the amounts of P50,000.00 as civil indemnity and P50,000.00 as
moral damages.
SO ORDERED.

ERLINDA FRANCISCO, doing business in the name and style of Cebu Fountainhead
Bakeshop and JULIANA PAMAONG, petitioners, vs.RICARDO FERRER, JR.,
ANNETTE FERRER, ERNESTO LO AND REBECCA LO, respondents.
DECISION
PARDO, J.:
Appeal via certiorari[1] taken by petitioners from the decision of the Court of
Appeals[2] increasing the trial courts award of moral damages to Ricardo Ferrer, Jr., Annette
Ferrer, Ernesto Lo and Rebecca Lo to two hundred fifty thousand pesos (P250,000.00) and
awarding exemplary damages in the amount of one hundred thousand pesos (P100,000.00), in
addition to the following:
1. The cost of the wedding cake in the amount of P3,175.00;
2. Attorneys fees in the amount of P10,000.00; and
3. Cost of litigation.
The facts, as found by the Court of Appeals,[3] are as follows:
On November 19, 1992 Mrs. Rebecca Lo and her daughter Annette Ferrer ordered a three layered
cake from Fountainhead Bakeshop, Mango Avenue Branch. It was then agreed that the wedding
cake shall be delivered at 5:00 oclock in the afternoon at the Cebu Country Club, Cebu City,
stating clearly that the wedding is scheduled on December 14, 1992.
Plaintiffs made their first deposit in the amount of P1,000.00 on November 19, 1992 and two
weeks thereafter made a full payment on the remaining balance.
On the day of the wedding, December 14, 1992, plaintiffs arrived at the Cebu Country club around
6:00 oclock in the evening. They immediately notice the absence of the wedding cake.
At 7:00 oclock in the evening they made a follow-up call to Fountainhead Bakeshop and was
informed that it was probably late because of the traffic.
At 8:00 oclock they were informed that no wedding cake will be delivered because the order slip
got lost. Plaintiffs were then compelled to buy the only available cake at the Cebu Country Club
which was a sans rival. Even though they felt that it was a poor substitute to a wedding cake, the
cutting of the cake is always a part of the ceremony.
At 10:00 oclock in the evening, the wedding cake arrived but plaintiffs declined to accept it,
besides their order was a three-layered cake and what was actually delivered was a two-layered
one.
Subsequently, defendant Erlinda Francisco sent a letter of apology accompanied with a P5,000.00
check, however, the same was declined by plaintiffs because they felt it was inadequate.
Two weeks after the wedding, defendant Erlinda Francisco called Mrs. Rebecca Lo and
apologized.
Ricardo Ferrer, son-in-law of Rebecca Lo corroborated the latters testimony, stating that two
weeks after the wedding, as a result of the non-delivery of the wedding cake, Ramon Montinola,
the son-in-law of Erlinda Francisco, went to Rebecca Los residence and offered the sum of
P5,000.00 to indemnify for the damage done, but it was rejected.[4]

On March 12, 1993, respondents filed with the Regional Trial Court, Cebu City an action for
breach of contract with damages against petitioners.[5]
After due trial, on May 19, 1995, the trial court rendered a decision in favor of plaintiffs [herein
defendants], the dispositive portion of which reads as follows:
THE FOREGOING CONSIDERED, judgment is hereby rendered in favor of the plaintiffs and
against Erlinda Francisco.
Directing the latter to pay the former the following:
1. The cost of the wedding cake in the amount of P3,175.00;
2. Moral damages in the amount of P30,000.00;
3. Attorneys fees in the amount of P10,000.00; and
4. Cost of litigation.
SO ORDERED.[6]
On May 25, 1995, petitioners appealed to the Court of Appeals.[7]
After due proceedings, on July 05, 1999, the Court of Appeals promulgated its decision
modifying the appealed decision as set out in the opening paragraph of this opinion.[8]
Hence, this appeal.[9]
The issues raised are (1) whether the Court of Appeals erred in affirming the trial courts award
of moral damages and increasing the amount from thirty thousand (P30,000.00) to two hundred
fifty thousand pesos (P250,000.00); and (2) whether the Court of Appeals was justified in awarding
in addition to moral damages, exemplary damages of one hundred thousand pesos
(P100,000.00).
Petitioners submit that the Court of Appeals and the trial court erred in awarding moral
damages in favor of respondents because moral damages are recoverable in breach of contract
cases only where the breach was palpably wanton, reckless, malicious, in bad faith, oppressive or
abusive.[10]
We agree. To recover moral damages in an action for breach of contract, the breach must be
palpably wanton, reckless, malicious, in bad faith, oppressive or abusive.[11]
Under the provisions of this law,[12] in culpa contractual or breach of contract, moral damages
may be recovered when the defendant acted in bad faith or was guilty of gross negligence
(amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally,
when the act of breach of contract itself is constitutive of tort resulting in physical injuries.[13]
Moral damages may be awarded in breaches of contracts where the defendant acted
fraudulently or in bad faith.[14]
Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose
or some moral obliquity and conscious doing of a wrong, a breach of known duty through some
motive or interest or ill will that partakes of the nature of fraud.[15]
In this case, [w]e find no such fraud or bad faith.[16]
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.[17]
The person claiming moral damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith. It is not enough that one merely

suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the
other party. Invariably such action must be shown to have been willfully done in bad faith or with ill
motive.[18] Mere allegations of besmirched reputation, embarrassment and sleepless nights are
insufficient to warrant an award for moral damages. It must be shown that the proximate cause
thereof was the unlawful act or omission of the [private respondent] petitioners.[19]
An award of moral damages would require certain conditions to be met, to wit: (1) first, there
must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
(2) second, there must be culpable act or omission factually established; (3) third, the wrongful act
or omission of the defendant is the proximate cause of the injury sustained by the claimant; and
(4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the
Civil Code. 21
It must again stressed that moral damages are emphatically not intended to enrich a plaintiff at
the expense of the defendant. 22 When awarded, moral damages must not be palpably and
scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on
the part of the trial court judge23 or appellate court justices. 24
In the same fashion, to warrant the award of exemplary damages, [t]he wrongful act must be
accompanied by bad faith, and an award of damages would be allowed only if the guilty party
acted in a wanton, fraudulent, reckless or malevolent manner. 25
The requirements of an award of exemplary damages are: (1) they may be imposed by way of
example in addition to compensatory damages, and only after the claimants right to them has
been established; (2) that they can not be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that may be awarded to the claimant; (3)
the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or
malevolent manner. 26
Nevertheless, the facts show that when confronted with their failure to deliver on the wedding
day the wedding cake ordered and paid for, petitioners gave the lame excuse that delivery was
probably delayed because of the traffic, when in truth, no cake could be delivered because the
order slip got lost. For such prevarication, petitioners must be held liable for nominal damages for
insensitivity, inadvertence or inattention to their customers anxiety and need of the hour. Nominal
damages are recoverable where a legal right is technically violated and must be vindicated against
an invasion that has produced no actual present loss of any kind or where there has been a
breach of contract and no substantial injury or actual damages whatsoever have been or can be
shown. 27Nominal damages may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, not for
indemnifying the plaintiff for any loss suffered. 28
WHEREFORE, the Court GRANTS the petition. The Court REVERSES the decision of the
Court of Appeals in CA-G. R. CV No. 50894, and in lieu thereof, sentences petitioners to pay
respondents, as follows:
1. The cost of the wedding cake in the amount of P3, 175.00;
2. Nominal damages in the amount of P10,000.00;
3. Attorneys fees in the amount of P10,000.00; and
4. Costs of litigation.
No costs in this instance.
SO ORDERED.

ABS-CBN BROADCASTING CORPORATION, petitioner,


vs.
HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP, VIVA
PRODUCTION, INC., and VICENTE DEL ROSARIO, respondents.

DAVIDE, JR., CJ.:


In this petition for review on certiorari, petitioner ABS-CBN Broadcasting Corp. (hereafter ABSCBN) 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-92-12309. 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.
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 out 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 our 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 SantosConcio
On February 27, 1992, defendant Del Rosario approached ABS-CBN's 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-CBN 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-CRN 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 Viva's 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 vicepresident for Finance discussed the terms and conditions of Viva's 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: "Here's 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 films right to 53 films and contains a right of first
refusal to "1992 Viva Films." The said counter proposal was however rejected by
Viva's Board of Directors [in the] evening of the same 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 Viva's 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 27 May 1992, 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 respondents RBS' channel 7 at seven o'clock 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-CBN's posting of 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 counterbound. 9
In the meantime, private respondents filed separate answers 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 petitioner's 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 1992, the RTC conducted a pre-trial. 16
Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a
petition 17challenging the RTC's Orders 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. 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 as G.R. No. 108363.
In the meantime the RTC received the evidence for the parties in Civil Case No. Q-192-1209.
Thereafter, on 28 April 1993, it rendered a decision 20 in favor of RBS and VIVA and against ABSCBN disposing as follows:
WHEREFORE, under cool reflection and prescinding from the foregoing, judgments
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:
a) P107,727.00, the amount of premium paid by RBS to
the surety which issued defendant RBS's bond to lift the
injunction;
b) P191,843.00 for the amount of print advertisement for
"Maging Sino Ka Man" in various newspapers;
c) Attorney's 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 defendant VIVA, plaintiff ABS-CBN is ordered to pay
P212,000.00 by way of reasonable attorney's 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-CBN's 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. Concio's 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-CBN's 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 RTC's 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 attorney's 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, it's agent, might have agreed with Lopez III. The appellate
court did not even believe ABS-CBN's evidence that Lopez III actually wrote down such an
agreement on a "napkin," as the same was never produced in court. It likewise rejected ABSCBN's 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 subject 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-CBN's 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 V1VA 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, Ms. 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 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 ABSCBN after the letter of Mrs. Concio, still the fifteen (15) day period within which ABSCBN shall exercise its right of first refusal has already expired.22
Accordingly, respondent court sustained the award of actual 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 had suffered as a result of the filing of the complaint by ABSCBN. As to the award of moral damages, the Court of Appeals found reasonable basis therefor,
holding that RBS's reputation was debased by the filing of the complaint in Civil Case No. Q-9212309 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 petitioner's knowledge that the contract with VIVA had
not been perfected, It also upheld the award of attorney's fees, reasoning that with ABS-CBN's act
of instituting Civil Case No, Q-92-1209, RBS was "unnecessarily forced to litigate." The appellate
court, however, reduced the awards of moral damages to P2 million, exemplary damages to P2
million, and attorney's fees to P500, 000.00.
On the other hand, respondent Court of Appeals denied VIVA and Del Rosario's appeal because it
was "RBS and not VIVA which was actually prejudiced when the complaint was filed by ABSCBN."
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
PREPONDERANCE 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 ATTORNEY'S FEES IN FAVOR 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 Lopez's 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 or 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 or 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 "Maging Sino Ka Man"; on the contrary, it was brought out during trial that with or without
the case or the injunction, RBS would have spent such an amount to generate interest in the film.
ABS-CBN further contends that there was no 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 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 front the 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 attorney's fees, ABS-CBN maintains that the same had no factual, legal,
or equitable justification. In sustaining the trial court's award, the Court of Appeals acted in clear
disregard of the doctrines laid down in Buan v. Camaganacan 32 that the text of the decision
should state the reason why attorney's 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 party' s persistence in a case other than an erroneous conviction of the
righteousness of his cause, attorney's 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 any meeting of minds between them regarding the object and consideration of the
alleged contract. It affirms that the ABS-CBN's claim of a right of first refusal was correctly rejected
by the trial court. RBS insist the premium it had paid for the counterbond constituted a pecuniary
loss upon which it may recover. It was obliged to put up the counterbound 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 put out to announce the
showing on a particular day and hour on Channel 7, i.e., in its entirety at one time, not a series to

be shown on a periodic basis. Hence, the print advertisement were good and relevant for the
particular date 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 Article 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 act
done is not illicit and there is abuse of rights were plaintiff institutes and 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
respondents RBScited 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-CBN's 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 canceled, late viewers called up RBS' offices
and subjected RBS to verbal abuse ("Announce kayo nang 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 planned 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 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.
The second is that it is a competitor that caused RBS to 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-CBN's 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 attorney's fees. It may be noted
that the award of attorney's 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 to 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 with 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 VIVA's offer to ABSCBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent, through Ms. Concio, a
counter-proposal in the form of 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 VIVA's offer, for it was met by a counter-offer which substantially varied the terms of
the offer.
ABS-CBN's 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 all 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 meeting 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 vendor's 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 VIVA's offer. Hence, they
underwent a 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.
Under 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 bindings 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-CBN's counter-offer was best evidenced by his submission of the draft
contract to VIVA's Board of Directors for the latter's 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-CBN's 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 a 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 Exhibits "C"
reflected the true intent of the parties, then ABS-CBN's 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 contracts, so as to
preclude perfection thereof. For settled is the rule that there can be no contract
where there is no object 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 (P19,950,000.00 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-CBN's 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-CBN's 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 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 Tamarind 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 Board of Directors. (Vicente vs. Geraldez, 52 SCRA 210; Arnold
vs. Willetsand 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 Barner [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
contract 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 140 films be maintained (Exh. "7-1"
- Viva ). 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-CBN
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 crossexamination 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 the 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
rights of the 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, It 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 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 defendant 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 has 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 plaintiff's business standing or
commercial credit. 55

The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasidelict. It arose from the fact of filing of the complaint despite ABS-CBN's alleged knowledge of lack
of cause of action. Thus paragraph 12 of RBS's 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
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 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 tile 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 attorney's fees, the law is clear that in the absence of stipulation, attorney's 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 attorney's 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 to award attorney's fees under Article 2208
demands factual, legal, and equitable justification. 60 Even when claimant is compelled to litigate
with third persons or to incur expenses to protect his rights, still attorney's fees may not be
awarded where no sufficient showing of bad faith could be reflected in a party's persistence in a
case other than 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. RBS's 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 then 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 on 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 call 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-contracts, 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, quasicontract, 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 other provisions of law which do not
especially provide for their own sanction; while Article 21 deals with acts contra bonus mores, and
has the following elements; (1) there is an act which is legal, (2) but which is contrary to morals,
good custom, public order, or public policy, and (3) and it is done with intent to injure. 72
Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies
a conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity. 73 Such must be substantiated by evidence. 74
There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly
convinced of the merits of its cause after it had undergone serious negotiations culminating in its
formal submission of a draft contract. Settled is the rule that the adverse result of an action does
not per se make the action wrongful and subject the actor to damages, for the law could not have
meant to impose a penalty on the right to litigate. If damages result from a person's exercise of a
right, it is damnum absque injuria. 75
WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals
in CA-G.R. CV No, 44125 is hereby REVERSED except as to unappealed award of attorney's fees
in favor of VIVA Productions, Inc.1wphi1.nt
No pronouncement as to costs.
SO ORDERED.

Melo, Kapunan, Martinez and Pardo JJ., concur.

NATIONAL POWER CORPORATION, petitioner, vs. PHILIPP


INC., respondent.

BROTHERS

OCEANIC,

DECISION
SANDOVAL-GUTIERREZ, J.:
Where a person merely uses a right pertaining to him, without bad faith or intent to injure, the
fact that damages are thereby suffered by another will not make him liable.[1]
This principle finds useful application to the present case.
Before us is a petition for review of the Decision[2] dated August 27, 1996 of the Court of
Appeals affirming in toto the Decision[3] dated January 16, 1992 of the Regional Trial Court,
Branch 57, Makati City.
The facts are:
On May 14, 1987, the National Power Corporation (NAPOCOR) issued invitations to bid for
the supply and delivery of 120,000 metric tons of imported coal for its Batangas Coal-Fired
Thermal Power Plant in Calaca, Batangas. The Philipp Brothers Oceanic, Inc. (PHIBRO)
prequalified and was allowed to participate as one of the bidders. After the public bidding was
conducted, PHIBROs bid was accepted. NAPOCORs acceptance was conveyed in a letter dated
July 8, 1987, which was received by PHIBRO on July 15, 1987.
The Bidding Terms and Specifications[4] provide for the manner of shipment of coals, thus:
SECTION V
SHIPMENT
The winning TENDERER who then becomes the SELLER shall arrange and provide gearless bulk
carrier for the shipment of coal to arrive at discharging port on or before thirty (30) calendar days
after receipt of the Letter of Credit by the SELLER or its nominee as per Section XIV hereof to
meet the vessel arrival schedules at Calaca, Batangas, Philippines as follows:
60,000 +/ - 10 % July 20, 1987
60,000 +/ - 10% September 4, 1987[5]
On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might soon plague
Australia, the shipments point of origin, which could seriously hamper PHIBROs ability to supply
the needed coal.[6] From July 23 to July 31, 1987, PHIBRO again apprised NAPOCOR of the
situation in Australia, particularly informing the latter that the ship owners therein are not willing to
load cargo unless a strike-free clause is incorporated in the charter party or the contract of
carriage.[7] In order to hasten the transfer of coal, PHIBRO proposed to NAPOCOR that they
equally share the burden of a strike-free clause. NAPOCOR refused.
On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable letter of
credit. Instead of delivering the coal on or before the thirtieth day after receipt of the Letter of
Credit, as agreed upon by the parties in the July contract, PHIBRO effected its first shipment only
on November 17, 1987.
Consequently, in October 1987, NAPOCOR once more advertised for the delivery of coal to its
Calaca thermal plant. PHIBRO participated anew in this subsequent bidding. On November 24,
1987, NAPOCOR disapproved PHIBROs application for pre-qualification to bid for not meeting the
minimum requirements.[8] Upon further inquiry, PHIBRO found that the real reason for the
disapproval was its purported failure to satisfy NAPOCORs demand for damages due to the delay
in the delivery of the first coal shipment.

This prompted PHIBRO to file an action for damages with application for injunction against
NAPOCOR with the Regional Trial Court, Branch 57, Makati City.[9] In its complaint, PHIBRO
alleged that NAPOCORs act of disqualifying it in the October 1987 bidding and in all subsequent
biddings was tainted with malice and bad faith. PHIBRO prayed for actual, moral and exemplary
damages and attorneys fees.
In its answer, NAPOCOR averred that the strikes in Australia could not be invoked as reason
for the delay in the delivery of coal because PHIBRO itself admitted that as of July 28, 1987 those
strikes had already ceased. And, even assuming that the strikes were still ongoing, PHIBRO
should have shouldered the burden of a strike-free clause because their contract was C and F
Calaca, Batangas, Philippines, meaning, the cost and freight from the point of origin until the
point of destination would be for the account of PHIBRO.Furthermore, NAPOCOR claimed that
due to PHIBROs failure to deliver the coal on time, it was compelled to purchase coal from ASEA
at a higher price. NAPOCOR claimed for actual damages in the amount of P12,436,185.73,
representing the increase in the price of coal, and a claim of P500,000.00 as litigation
expenses.[10]
Thereafter, trial on the merits ensued.
On January 16, 1992, the trial court rendered a decision in favor of PHIBRO, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Philipp Brothers Oceanic Inc.
(PHIBRO) and against the defendant National Power Corporation (NAPOCOR) ordering the said
defendant NAPOCOR:
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant National Power
Corporations list of accredited bidders and allow PHIBRO to participate in any and all
future tenders of National Power Corporation for the supply and delivery of imported
steam coal;
2 To pay Philipp Brothers Oceanic, Inc. (PHIBRO);
a. The peso equivalent at the time of payment of $864,000 as actual damages;
b. The peso equivalent at the time of payment of $100,000 as moral damages;
c. The peso equivalent at the time of payment of $ 50,000 as exemplary damages;
d. The peso equivalent at the time of payment of $73,231.91 as reimbursement for
expenses, cost of litigation and attorneys fees;
3. To pay the costs of suit;
4. The counterclaims of defendant NAPOCOR are dismissed for lack of merit.
SO ORDERED.[11]
Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to the Court of
Appeals. On August 27, 1996, the Court of Appeals rendered a Decision affirming intoto the
Decision of the Regional Trial Court. It ratiocinated that:
There is ample evidence to show that although PHIBROs delivery of the shipment of coal was
delayed, the delay was in fact caused by a) Napocors own delay in opening a workable letter of
credit; and b) the strikes which plaqued the Australian coal industry from the first week of July to
the third week of September 1987. Strikes are included in the definition of force majeure in Section
XVII of the Bidding Terms and Specifications, (supra), so Phibro is not liable for any delay caused
thereby.

Phibro was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was to be
effected thirty (30) days from Napocors opening of a confirmed and workable letter of credit.
Napocor was only able to do so on August 6, 1987.
By that time, Australias coal industry was in the middle of a seething controversy and unrest,
occasioned by strikes, overtime bans, mine stoppages. The origin, the scope and the effects of
this industrial unrest are lucidly described in the uncontroverted testimony of James Archibald, an
employee of Phibro and member of the Export Committee of the Australian Coal Association
during the time these events transpired.
xxxxxx
The records also attest that Phibro periodically informed Napocor of these developments as early
as July 1, 1987, even before the bid was approved. Yet, Napocor did not forthwith open the letter
of credit in order to avoid delay which might be caused by the strikes and their after-effects.
Strikes are undoubtedly included in the force majeure clause of the Bidding Terms and
Specifications (supra). The renowned civilist, Prof. Arturo Tolentino, defines force majeureas an
event which takes place by accident and could not have been foreseen. (Civil Code of the
Philippines, Volume IV, Obligations and Constracts, 126, [1991]) He further states:
Fortuitous 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.
Tolentino adds that the term generally applies, broadly speaking, to natural accidents. In order that
acts of man such as a strike, may constitute fortuitous event, it is necessary that they have the
force of an imposition which the debtor could not have resisted. He cites a parallel example in the
case of Philippine National Bank v. Court of Appeals, 94 SCRA 357 (1979), wherein the Supreme
Court said that the outbreak of war which prevents performance exempts a party from liability.
Hence, by law and by stipulation of the parties, the strikes which took place in Australia from the
first week of July to the third week of September, 1987, exempted Phibro from the effects of delay
of the delivery of the shipment of coal.[12]
Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to the Court of
Appeals the following errors:
I
Respondent Court of Appeals gravely and seriously erred in concluding and so holding
that PHIBROs delay in the delivery of imported coal was due to NAPOCORs alleged delay in
opening a letter of credit and to force majeure, and not to PHIBROs own deliberate acts and
faults.[13]
II
Respondent Court of Appeals gravely and seriously erred in concluding and so holding
that NAPOCOR acted maliciously and unjustifiably in disqualifying PHIBRO from
participating in the December 8, 1987 and future biddings for the supply of imported coal
despite the existence of valid grounds therefor such as serious impairment of its track
record.[14]
III

Respondent Court of Appeals gravely and seriously erred in concluding and so holding
that PHIBRO was entitled to injunctive relief, to actual or compensatory, moral and
exemplary damages, attorneys fees and litigation expenses despite the clear absence of
legal and factual bases for such award.[15]
IV
Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO from any
liability for damages to NAPOCOR for its unjustified and deliberate refusal and/or failure to
deliver the contracted imported coal within the stipulated period.[16]
V
Respondent Court of Appeals gravely and seriously erred in dismissing NAPOCORs
counterclaims for damages and litigation expenses.[17]
It is axiomatic that only questions of law, not questions of fact, may be raised before this Court
in a petition for review under Rule 45 of the Rules of Court.[18] The findings of facts of the Court of
Appeals are conclusive and binding on this Court[19] and they carry even more weight when the
said court affirms the factual findings of the trial court.[20]Stated differently, the findings of the Court
of Appeals, by itself, which are supported by substantial evidence, are almost beyond the power of
review by this Court.[21]
With the foregoing settled jurisprudence, we find it pointless to delve lengthily on the factual
issues raised by petitioner. The existence of strikes in Australia having been duly established in
the lower courts, we are left only with the burden of determining whether or not NAPOCOR acted
wrongfully or with bad faith in disqualifying PHIBRO from participating in the subsequent public
bidding.
Let us consider the case in its proper perspective.
The Court of Appeals is justified in sustaining the Regional Trial Courts decision exonerating
PHIBRO from any liability for damages to NAPOCOR as it was clearly established from the
evidence, testimonial and documentary, that what prevented PHIBRO from complying with its
obligation under the July 1987 contract was the industrial disputes which besieged Australia during
that time. Extant in our Civil Code is the rule that no person shall be responsible for those events
which could not be foreseeen, or which, though foreseen, were inevitable.[22] This means that
when an obligor is unable to fulfill his obligation because of a fortuitous event or force majeure, he
cannot be held liable for damages for non-performance.[23]
In addition to the above legal precept, it is worthy to note that PHIBRO and NAPOCOR
explicitly agreed in Section XVII of the Bidding Terms and Specifications[24] that neither seller
(PHIBRO) nor buyer (NAPOCOR) shall be liable for any delay in or failure of the performance of
its obligations, other than the payment of money due, if any such delay or failure is due to
Force Majeure. Specifically, they defined force majeure as any disabling cause beyond the control
of and without fault or negligence of the party, which causes may include but are not restricted to
Acts of God or of the public enemy; acts of the Government in either its sovereign or contractual
capacity; governmental restrictions;strikes, fires, floods, wars, typhoons, storms, epidemics and
quarantine restrictions.
The law is clear and so is the contract between NAPOCOR and PHIBRO. Therefore, we have
no reason to rule otherwise.
However, proceeding from the premise that PHIBRO was prevented by force majeure from
complying with its obligation, does it necessarily follow that NAPOCOR acted unjustly,
capriciously, and unfairly in disapproving PHIBROs application for pre-qualification to bid?
First, it must be stressed that NAPOCOR was not bound under any contract to approve
PHIBROs pre-qualification requirements. In fact, NAPOCOR had expressly reserved its right to

reject bids. The Instruction to Bidders found in the Post-Qualification Documents/ Specifications
for the Supply and Delivery of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca,
Batangas Philippines,[25] is explicit, thus:
IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS
NAPOCOR reserves the right to reject any or all bids, to waive any minor informality in
the bids received. The right is also reserved to reject the bids of any bidder who
has previously failed to properly perform or complete on time any and all
contracts for delivery of coal or any supply undertaken by a bidder.[26](Emphasis
supplied)
This Court has held that where the right to reject is so reserved, the lowest bid or any bid for
that matter may be rejected on a mere technicality.[27] And where the government as advertiser,
availing itself of that right, makes its choice in rejecting any or all bids, the losing bidder has no
cause to complain nor right to dispute that choice unless an unfairness or injustice is
shown. Accordingly, a bidder has no ground of action to compel the Government to award
the contract in his favor, nor to compel it to accept his bid. Even the lowest bid or any bid
may be rejected.[28] In Celeste v. Court of Appeals,[29] we had the occasion to rule:
Moreover, paragraph 15 of the Instructions to Bidders states that the Government hereby
reserves the right to reject any or all bids submitted. In the case of A.C. Esguerra and Sons v.
Aytona, 4 SCRA 1245, 1249 (1962), we held:
x x x [I]n the invitation to bid, there is a condition imposed upon the bidders to the effect that the
bidders shall be subject to the right of the government to reject any and all bids subject to its
discretion. Here the government has made its choice, and unless an unfairness or injustice
is shown, the losing bidders have no cause to complain, nor right to dispute that choice.
Since there is no evidence to prove bad faith and arbitrariness on the part of the petitioners
in evaluating the bids, we rule that the private respondents are not entitled to damages
representing lost profits. (Emphasis supplied)
Verily, a reservation of the government of its right to reject any bid, generally vests in the
authorities a wide discretion as to who is the best and most advantageous bidder. The exercise of
such discretion involves inquiry, investigation, comparison, deliberation and decision, which are
quasi-judicial functions, and when honestly exercised, may not be reviewed by the
court.[30] In Bureau Veritas v. Office of the President,[31] we decreed:
The discretion to accept or reject a bid and award contracts is vested in the Government
agencies entrusted with that function. The discretion given to the authorities on this matter
is of such wide latitude that the Courts will not interfere therewith, unless it is apparent that
it is used as a shield to a fraudulent award. (Jalandoni v. NARRA, 108 Phil. 486 [1960]).
x x x. The exercise of this discretion is a policy decision that necessitates prior inquiry,
investigation, comparison, evaluation, and deliberation. This task can best be discharged by the
Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether
a branch or instrumentality of the Government has transgresses its constitutional boundaries. But
the Courts will not interfere with executive or legislative discretion exercised within those
boundaries. Otherwise, it strays into the realm of policy decision-making. x x x. (Emphasis
supplied)
Owing to the discretionary character of the right involved in this case, the propriety of
NAPOCORs act should therefore be judged on the basis of the general principles regulating
human relations, the forefront provision of which is Article 19 of the Civil Code which provides that
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.[32] Accordingly, a person will
be protected only when he acts in the legitimate exercise of his right, that is, when he acts with
prudence and in good faith; but not when he acts with negligence or abuse.[33]
Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the public bidding?
We rule in the negative.
In practice, courts, in the sound exercise of their discretion, will have to determine under all
the facts and circumstances when the exercise of a right is unjust, or when there has been an
abuse of right.[34]
We went over the record of the case with painstaking solicitude and we are convinced that
NAPOCORs act of disapproving PHIBRO's application for pre-qualification to bid was without any
intent to injure or a purposive motive to perpetrate damage. Apparently, NAPOCOR acted on the
strong conviction that PHIBRO had a seriously-impaired track record. NAPOCOR cannot be
faulted from believing so. At this juncture, it is worth mentioning that at the time NAPOCOR issued
its subsequent Invitation to Bid, i.e., October 1987, PHIBRO had not yet delivered the first
shipment of coal under the July 1987 contract, which was due on or before September 5,
1987. Naturally, NAPOCOR is justified in entertaining doubts on PHIBROs qualification or
capability to assume an obligation under a new contract.
Moreover, PHIBROs actuation in 1987 raised doubts as to the real situation of the coal
industry in Australia. It appears from the records that when NAPOCOR was constrained to
consider an offer from another coal supplier (ASEA) at a price of US$33.44 per metric ton,
PHIBRO unexpectedly offered the immediate delivery of 60,000 metric tons of Ulan steam coal at
US$31.00 per metric ton for arrival at Calaca, Batangas on September 20-21, 1987.[35] Of course,
NAPOCOR had reason to ponder-- how come PHIBRO could assure the immediate delivery of
60,000 metric tons of coal from the same source to arrive at Calaca not later than
September 20/21, 1987 but it could not deliver the coal it had undertaken under its
contract?
Significantly, one characteristic of a fortuitous event, in a legal sense, and consequently in
relations to contracts, is that the concurrence must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner.[36] Faced with the above circumstance,
NAPOCOR is justified in assuming that, may be, there was really no fortuitous event or
force majeure which could render it impossible for PHIBRO to effect the delivery of
coal. Correspondingly, it is also justified in treating PHIBROs failure to deliver a serious
impairment of its track record. That the trial court, thereafter, found PHIBROs unexpected offer
actually a result of its desire to minimize losses on the part of NAPOCOR is inconsequential. In
determining the existence of good faith, the yardstick is the frame of mind of the actor at the time
he committed the act, disregarding actualities or facts outside his knowledge. We cannot fault
NAPOCOR if it mistook PHIBROs unexpected offer a mere attempt on the latters part to undercut
ASEA or an indication of PHIBROs inconsistency. The circumstances warrant such contemplation.
That NAPOCOR believed all along that PHIBROs failure to deliver on time was unfounded is
manifest from its letters[37] reminding PHIBRO that it was bound to deliver the coal within 30 days
from its (PHIBROs) receipt of the Letter of Credit, otherwise it would be constrained to take legal
action. The same honest belief can be deduced from NAPOCORs Board Resolution, thus:
On the legal aspect, Management stressed that failure of PBO to deliver under the contract
makes them liable for damages, considering that the reasons invoked were not valid. The
measure of the damages will be limited to actual and compensatory damages. However, it
was reported that Philipp Brothers advised they would like to have continuous business relation
with NPC so they are willing to sit down or even proposed that the case be submitted to the
Department of Justice as to avoid a court action or arbitration.
xxxxxx

On the technical-economic aspect, Management claims that if PBO delivers in November 1987
and January 1988, there are some advantages. If PBO reacts to any legal action and fails to
deliver, the options are: one, to use 100% Semirara and second, to go into urgent coal order. The
first option will result in a 75 MW derating and oil will be needed as supplement. We will stand to
lose around P30 M. On the other hand, if NPC goes into an urgent coal order, there will be an
additional expense of $786,000 or P16.11 M, considering the price of the latest purchase with
ASEA. On both points, reliability is decreased.[38]
The very purpose of requiring a bidder to furnish the awarding authority its pre-qualification
documents is to ensure that only those responsible and qualified bidders could bid and be
awarded with government contracts. It bears stressing that the award of a contract is measured
not solely by the smallest amount of bid for its performance, but also by the responsibility of the
bidder. Consequently, the integrity, honesty, and trustworthiness of the bidder is to be
considered. An awarding official is justified in considering a bidder not qualified or not responsible
if he has previously defrauded the public in such contracts or if, on the evidence before him, the
official bona fide believes the bidder has committed such fraud, despite the fact that there is yet
no judicial determination to that effect.[39] Otherwise stated, if the awarding body bona
fide believes that a bidder has seriously impaired its track record because of a particular conduct,
it is justified in disqualifying the bidder. This policy is necessary to protect the interest of the
awarding body against irresponsible bidders.
Thus, one who acted pursuant to the sincere belief that another willfully committed an act
prejudicial to the interest of the government cannot be considered to have acted in bad faith. Bad
faith has always been a question of intention. It is that corrupt motive that operates in the mind. As
understood in law, it contemplates a state of mind affirmatively operating with furtive design or with
some motive of self-interest or ill-will or for ulterior purpose.[40] While confined in the realm of
thought, its presence may be ascertained through the partys actuation or through circumstantial
evidence.[41] The circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification
to bid do not show an intention to cause damage to the latter. The measure it adopted was one of
self-protection. Consequently, we cannot penalize NAPOCOR for the course of action it
took. NAPOCOR cannot be made liable for actual, moral and exemplary damages.
Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000, the Regional
Trial Court computed what could have been the profits of PHIBRO had NAPOCOR allowed it to
participate in the subsequent public bidding. It ruled that PHIBRO would have won the tenders for
the supply of about 960,000 metric tons out of at least 1,200,000 metric tons from the public
bidding of December 1987 to 1990. We quote the trial courts ruling, thus:
x x x. PHIBRO was unjustly excluded from participating in at least five (5) tenders beginning
December 1987 to 1990, for the supply and delivery of imported coal with a total volume of about
1,200,000 metric tons valued at no less than US$32 Million. (Exhs. AA, AA-1, to AA-2). The price
of imported coal for delivery in 1988 was quoted in June 1988 by bidders at US$ 41.35 to US $
43.95 per metric ton (Exh. JJ); in September 1988 at US$41.50 to US$49.50 per metric ton (Exh.
J-1); in November 1988 at US$ 39.00 to US$ 48.50 per metric ton (Exh. J-2) and for the 1989
deliveries, at US$ 44.35 to US$ 47.35 per metric ton (Exh. J-3) and US$38.00 to US$48.25 per
metric ton in September 1990 (Exh. JJ-6 and JJ-7). PHIBRO would have won the tenders for the
supply and delivery of about 960,000 metric tons of coal out of at least 1,200,000 metric tons
awarded during said period based on its proven track record of 80%. The Court, therefore finds
that as a result of its disqualification, PHIBRO suffered damages equivalent to its standard
3% margin in 960,000 metric tons of coal at the most conservative price of US$ 30.000 per
metric ton, or the total of US$ 864,000 which PHIBRO would have earned had it been
allowed to participate in biddings in which it was disqualified and in subsequent tenders
for supply and delivery of imported coal.
We find this to be erroneous.

Basic is the rule that to recover actual damages, the amount of loss must not only be capable
of proof but must actually be proven with reasonable degree of certainty, premised upon
competent proof or best evidence obtainable of the actual amount thereof.[42] A court cannot
merely rely on speculations, conjectures, or guesswork as to the fact and amount of
damages. Thus, while indemnification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits which the obligee failed to obtain,[43] it is imperative that
the basis of the alleged unearned profits is not too speculative and conjectural as to show the
actual damages which may be suffered on a future period.
In Pantranco North Express, Inc. v. Court of Appeals,[44] this Court denied the plaintiffs claim
for actual damages which was premised on a contract he was about to negotiate on the ground
that there was still the requisite public bidding to be complied with, thus:
As to the alleged contract he was about to negotiate with Minister Hipolito, there is no showing that
the same has been awarded to him. If Tandoc was about to negotiate a contract with Minister
Hipolito, there was no assurance that the former would get it or that the latter would award the
contract to him since there was the requisite public bidding. The claimed loss of profit arising
out of that alleged contract which was still to be negotiated is a mere expectancy. Tandocs
claim that he could have earned P2 million in profits is highly speculative and no concrete
evidence was presented to prove the same. The only unearned income to which Tandoc is
entitled to from the evidence presented is that for the one-month period, during which his business
was interrupted, which is P6,125.00, considering that his annual net income was P73, 500.00.
In Lufthansa German Airlines v. Court of Appeals,[45] this Court likewise disallowed the trial
court's award of actual damages for unrealized profits in the amount of US$75,000.00 for being
highly speculative. It was held that the realization of profits by respondent x x x was not a
certainty, but depended on a number of factors, foremost of which was his ability to invite investors
and to win the bid. This Court went further saying that actual or compensatory damages cannot
be presumed, but must be duly proved, and proved with reasonable degree of certainty.
And in National Power Corporation v. Court of Appeals,[46] the Court, in denying the bidders
claim for unrealized commissions, ruled that even if NAPOCOR does not deny its (bidder's) claims
for unrealized commissions, and that these claims have been transmuted into judicial admissions,
these admissions cannot prevail over the rules and regulations governing the bidding for
NAPOCOR contracts, which necessarily and inherently include the reservation by the NAPOCOR
of its right to reject any or all bids.
The award of moral damages is likewise improper. To reiterate, NAPOCOR did not act in bad
faith. Moreover, moral damages are not, as a general rule, granted to a corporation.[47] While it is
true that besmirched reputation is included in moral damages, it cannot cause mental anguish to a
corporation, unlike in the case of a natural person, for a corporation has no reputation in the sense
that an individual has, and besides, it is inherently impossible for a corporation to suffer mental
anguish.[48] In LBC Express, Inc. v. Court of Appeals,[49] we ruled:
Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. A corporation, being an artificial person and having existence only in legal contemplation,
has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and
mental anguish. Mental suffering can be experienced only by one having a nervous system and it
flows from real ills, sorrows, and griefs of life all of which cannot be suffered by respondent bank
as an artificial person.
Neither can we award exemplary damages under Article 2234 of the Civil Code. Before the
court may consider the question of whether or not exemplary damages should be awarded, the
plaintiff must show that he is entitled to moral, temperate, or compensatory damages.

NAPOCOR, in this petition, likewise contests the judgment of the lower courts awarding
PHIBRO the amount of $73,231.91 as reimbursement for expenses, cost of litigation and attorneys
fees.
We agree with NAPOCOR.
This Court has laid down the rule that in the absence of stipulation, a winning party may be
awarded attorney's fees only in case plaintiff's action or defendant's stand is so untenable as to
amount to gross and evident bad faith.[50] This cannot be said of the case at bar. NAPOCOR is
justified in resisting PHIBROs claim for damages. As a matter of fact, we partially grant the prayer
of NAPOCOR as we find that it did not act in bad faith in disapproving PHIBRO's pre-qualification
to bid.
Trial courts must be reminded that attorney's fees may not be awarded to a party simply
because the judgment is favorable to him, for it may amount to imposing a premium on the right to
redress grievances in court. We adopt the same policy with respect to the expenses of litigation. A
winning party may be entitled to expenses of litigation only where he, by reason of plaintiff's clearly
unjustifiable claims or defendant's unreasonable refusal to his demands, was compelled to incur
said expenditures. Evidently, the facts of this case do not warrant the granting of such litigation
expenses to PHIBRO.
At this point, we believe that, in the interest of fairness, NAPOCOR should give PHIBRO
another opportunity to participate in future public bidding. As earlier mentioned, the delay on its
part was due to a fortuitous event.
But before we dispose of this case, we take this occasion to remind PHIBRO of the
indispensability of coal to a coal-fired thermal plant. With households and businesses being
entirely dependent on the electricity supplied by NAPOCOR, the delivery of coal cannot be
venturesome. Indeed, public interest demands that one who offers to deliver coal at an appointed
time must give a reasonable assurance that it can carry through. With the deleterious possible
consequences that may result from failure to deliver the needed coal, we believe there is greater
strain of commitment in this kind of obligation.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 126204 dated August
27, 1996 is hereby MODIFIED. The award, in favor of PHIBRO, of actual, moral and exemplary
damages, reimbursement for expenses, cost of litigation and attorneys fees, and costs of suit, is
DELETED.
SO ORDERED.

ROMEL P. ALMEDA, in substitution of the late PONCIANO L. ALMEDA and/or ALMEDA,


INC., petitioners, vs. LEONOR A. CARIO, the surviving spouse, and his children,
namely: ROSARIO C. SANTOS, REMEDIOS C. GALSIM, RAMON A. CARIO,
REGINALDO A. CARIO, RANIEELA C. DIONELA and RACHELLE C. SAMANIEGO, in
substitution of the late AVELINO G. CARIO, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision,[1] dated February 12, 2002, of the
Court of Appeals in CA-G.R. CV No. 57778, affirming the decision[2] of the Regional Trial Court of
Laguna, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff [Avelino
G. Cario] and against the defendants [Ponciano L. Almeda and Almeda, Inc.] as follows:
1. Ordering the latter to pay the former jointly and severally the amount of P477,589.47 with a 12%
rate of interest per annum as agreed upon from the date of demand on March [9], 1983 until fully
paid;
2. Ordering the latter to pay the former jointly and severally the amount of P150,000.00 as nominal
damages; and
3. Ordering the latter to pay the former jointly and severally the amount of P15,000.00 as and for
attorneys fees plus costs of this suit.
Plaintiffs claim for moral and exemplary damages is hereby dismissed for want of merit.
SO ORDERED.[3]
The facts of the case are undisputed:
On April 30, 1980, Ponciano L. Almeda and Avelino G. Cario, predecessors-in-interest of
petitioners and respondents, entered into two agreements to sell, one covering eight titled
properties[4] and another three untitled properties,[5] all of which are located in Bian, Laguna. The
agreed price of the eight titled properties wasP1,743,800.00, 20% of which was to be paid upon
the signing and execution of the agreement and the balance to be paid in four equal semi-annual
installments, beginning six months from the signing thereof, with the balance earning 12% interest
per annum. On the other hand, the purchase price of the three untitled properties
was P1,208,580.00, 15% of which was to be paid upon the signing and execution of the
agreement, and the balance, bearing a 12% annual interest from the signing thereof, to be paid as
follows: 15% of the purchase price plus interest to be paid upon the issuance of titles to the lots,
and the balance plus interests to be paid in semi-annual installments starting from the date of
issuance of the respective certificates of title to the lots involved, which must be not later than
March 30, 1982.
On April 3, 1982, Cario and Almeda executed an amendment to their agreements to sell (a)
extending the deadline for the production of the titles to the untitled properties from March 31,
1982 to June 30, 1982, (b) providing for a partial payment of P300,000.00 for the titled properties,
(c) requiring Cario to render an accounting of the proceeds of the sugar cane crop on the
properties subject of the sale up to the 1982 harvest season and (d) obliging the vendor (Cario) to
pay the vendee (Almeda) the sum of P10,000.00 a month in case of the failure of the former to
produce the certificates of title to the untitled properties by June 30, 1982.
Before the end of April 1982, Almeda asked Cario for the execution of a Deed of Absolute
Sale over the eight titled properties although they had not been fully paid. Cario granted the

request and executed on May 3, 1982 the deed of sale over the eight titled lots in favor of Almeda,
Inc.[6] On April 30, 1982, Almeda executed an undertaking[7] to pay Cario the balance of the
purchase price. Deeds of sale for two of the three untitled lots were also executed on July 2, 1982
and October 9, 1982.[8]
Subsequently, Cario made demands for the full and final payment of the balance due him in
the amount of P477,589.47 and the interests thereon. Despite demand letters sent to Almeda on
March 9, 1983 and on July 20, 1983, however, the balance was not paid. Hence, Cario filed before
the RTC of Bian a complaint against Almeda and Almeda, Inc., in whose name the titles to the
properties had been transferred. Cario prayed that Almeda and/or Almeda, Inc. be ordered to pay
to him the balance of P477,589.47, the legal interests thereon from demand until full payment,
15% of all the amounts due, including interests as attorneys fees,P10,000.00 as litigation
expenses, P100,000.00 as moral, exemplary and nominal damages and the costs of suit.
Almeda and Almeda, Inc. contended that the purchase price, including interest charges, of the
eight titled properties had been fully paid as of April 3, 1982. With respect to the three untitled lots,
they contended that the purchase price of Lot Nos. 2272 and 2268-B had likewise been fully paid,
while that of Lot No. 3109 had only a remaining balance of P167,522.70.
The RTC of Bian, Laguna found the claim of Cario to be well founded and gave judgment in
his favor as quoted at the beginning of this opinion.
Without questioning the amount of judgment debt for which they were held liable, Ponciano
Almeda and Almeda, Inc. appealed to the Court of Appeals for a modification of judgment,
contending that the lower court erred in awarding nominal damages and attorneys fees in favor of
Cario and imposing a 12% annual interest on the judgment debt from the time of demand on
March 9, 1983 until it was fully paid. They maintained that they were not guilty of any unfair
treatment or reckless and malevolent actions so as to justify an award of nominal damages. They
claimed that they refused to pay the remaining balance because the proceeds of certain harvests
from the lands in question and liquidated damages were also due them. As for the award of
attorneys fees, they contended that there was no finding that they acted in gross and evident bad
faith in refusing to satisfy Carios demand so as to justify its award under Art. 2208 (5) of the Civil
Code, because they had acted on the basis of what they honestly believed to be correct as their
residual obligations. Finally, they contended that the imposition of a 12% interest rate was contrary
to law and jurisprudence since Cario sought payment of legal interest, which, under Central Bank
Circular No. 416, was only 6%.
During the pendency of the case, Almeda died. He was substituted by his heirs, namely, his
wife Eufemia P. Almeda and their children, Elenita A. Cervantes, Susan A. Alcazar, Florecita A.
Datoc, Laurence P. Almeda, Edwin P. Almeda, Marlon P. Almeda, Wenilda A. Diaz, Carolyn A.
Santos, Alan P. Almeda and Romel P. Almeda, the last having been designated to act as their
representative.[9]
The Court of Appeals affirmed the decision of the lower court. It held that the award of nominal
damages was justified by the unjust refusal of Almeda and Almeda, Inc. to settle and pay the
balance of the purchase price in violation of the rights of Cario. The award of attorneys fees was
also affirmed, it being shown that Cario was forced to litigate to protect his interests. Finally, the
appeals court also affirmed the 12% interest rate per annum, as agreed upon by the parties in
their contracts, following Art. 2209 of the Civil Code. The appeals court also ruled that the amount
of the unpaid purchase price, P477,589.47, should be awarded to Cario, considering the failure of
Almeda and/or Almeda, Inc. to respond to the two demand letters and the computation sheet sent
to them by Cario, as well as their failure to rebut the correctness of the outstanding balance before
the lower court.
Hence, this petition for review on certiorari under Rule 45 filed by Romel P. Almeda, based on
the following assignment of errors:
I. THE COURT OF APPEALS ERRED IN AWARDING NOMINAL DAMAGES IN THE
AMOUNT OF P150,000.00.

II. THE COURT OF APPEALS ERRED IN AWARDING ATTORNEYS FEES IN THE


AMOUNT OF P15,000.00 IN FAVOR OF THE RESPONDENT.
III. THE COURT OF APPEALS ERRED IN ORDERING THE PETITIONER TO PAY
JOINTLY AND SEVERALLY THE AMOUNT OF P477,589.47 WITH A 12% RATE OF
INTEREST PER ANNUM FROM THE DATE OF DEMAND ON MARCH [9], 1983
UNTIL FULLY PAID.[10]
In this appeal, petitioners do not dispute the amount of the outstanding balance on the
purchase price of the lots. Petitioners only seek a modification of the decision of the appeals court
insofar as it upheld the trial courts award of nominal damages, attorneys fees, and 12%
interest. We find their appeal to be without merit and, accordingly, affirm the decision of the Court
of Appeals.
First. Petitioners contend that the trial court erred in awarding nominal damages in favor of
respondents since there was no showing that they acted in an unfair, reckless or malevolent
manner so as to justify such an award.
Petitioners argument is based on a misreading of the decision in FNCB Finance v.
Estavillo.[11] Contrary to petitioners claim, this Court did not award nominal damages to the
respondent in that case because of petitioners reckless action, malevolent manner and lack of
regard to the feelings and reputation of the other party. Such factors were cited in that case to
justify the award of exemplary, not nominal, damages.
Indeed, nominal damages may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for
indemnifying the plaintiff for any loss suffered by him.[12] Its award is thus not for the purpose of
indemnification for a loss but for the recognition and vindication of a right.[13] Indeed, nominal
damages are damages in name only and not in fact. When granted by the courts, they are not
treated as an equivalent of a wrong inflicted but simply a recognition of the existence of a technical
injury.[14] A violation of the plaintiffs right, even if only technical, is sufficient to support an award of
nominal damages. Conversely, so long as there is a showing of a violation of the right of the
plaintiff, an award of nominal damages is proper.
Applying such principles to the instant case, we have on record the fact that petitioners have
an unpaid balance on the purchase price of lots sold to them by respondents. Their refusal to pay
the remaining balance of the purchase price despite repeated demands, even after they had sold
the properties to third parties, undoubtedly constitutes a violation of respondents right to the said
amount under their agreements. The facts show that the right of the vendor to receive the unpaid
balance to the lots sold was violated by petitioners, and this entitles respondents at the very least
to nominal damages.
Second. Petitioners claim that the imposition of a 12% annual interest rate is erroneous
because it is contrary to law and jurisprudence. According to them, the applicable rate is 6% since
the case does not involve a loan or forbearance of money.
This contention is without merit. 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.
The contracts to sell of the parties stipulated that the balance of the purchase price shall earn
an interest rate of 12% per annum upon signing of the contract.Such stipulations have the force of
law between the contracting parties and should be complied with by them in good faith.[15] The
interest in this case should be allowed to run from March 9, 1993, respondents extrajudicial
demand for payment of the remaining balance plus interest having begun on said date.[16]

In addition, in accordance with our decision in Eastern Shipping Lines, Inc. v. Court of
Appeals,[17] when the judgment of the court awarding the sum of money becomes final and
executory, a 12% legal interest per annum shall also be imposed from such finality until
satisfaction thereof, this interim period being deemed to be by then an equivalent to a forbearance
of credit.
Third. Nor is there any basis for petitioners claim that the appellate court erred in awarding
attorneys fees in favor of respondents. Under the Civil Code, attorneys fees and litigation
expenses can be recovered in cases where the court deems it just and equitable.[18] We see no
reason therefore to set aside the order of the trial court, as affirmed by the appeals court, granting
to respondents attorneys fees in the amount of P15,000.00.
Fourth. We observe that this case has dragged on for more than a decade. While the records
reveal that respondents engaged the services of two lawyers, petitioners had a total of sixteen
counsels starting from January 24, 1984 up to December 22, 1997. Of the sixteen, one lawyer
served for more than 2 years, another for 8 days only, and still another entered his appearance
and withdrew it only to re-enter his appearance after some time. The records show that most of
the lawyers who entered their appearances either filed only motions to cancel hearings or motions
for postponements, claiming to have misplaced the calendar of court hearings or to be staying
abroad. These unduly delayed the disposition of the case in violation of the right of respondents to
claim what is rightfully due them. This fact further justifies the award of nominal damages and
supports the grant of attorneys fees.
WHEREFORE, the petition for review on certiorari is DENIED and the decision of the Court of
Appeals is AFFIRMED. Interest at the rate of twelve percent (12%) shall be imposed on the
amount due upon finality of this decision until payment thereof.
SO ORDERED.
Bellosillo, (Chairman), Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur.

ERLINDA FRANCISCO, doing business in the name and style of Cebu Fountainhead
Bakeshop and JULIANA PAMAONG, petitioners, vs.RICARDO FERRER, JR.,
ANNETTE FERRER, ERNESTO LO AND REBECCA LO, respondents.
DECISION
PARDO, J.:
Appeal via certiorari[1] taken by petitioners from the decision of the Court of
Appeals[2] increasing the trial courts award of moral damages to Ricardo Ferrer, Jr., Annette
Ferrer, Ernesto Lo and Rebecca Lo to two hundred fifty thousand pesos (P250,000.00) and
awarding exemplary damages in the amount of one hundred thousand pesos (P100,000.00), in
addition to the following:
1. The cost of the wedding cake in the amount of P3,175.00;
2. Attorneys fees in the amount of P10,000.00; and
3. Cost of litigation.
The facts, as found by the Court of Appeals,[3] are as follows:
On November 19, 1992 Mrs. Rebecca Lo and her daughter Annette Ferrer ordered a three layered
cake from Fountainhead Bakeshop, Mango Avenue Branch. It was then agreed that the wedding
cake shall be delivered at 5:00 oclock in the afternoon at the Cebu Country Club, Cebu City,
stating clearly that the wedding is scheduled on December 14, 1992.
Plaintiffs made their first deposit in the amount of P1,000.00 on November 19, 1992 and two
weeks thereafter made a full payment on the remaining balance.
On the day of the wedding, December 14, 1992, plaintiffs arrived at the Cebu Country club around
6:00 oclock in the evening. They immediately notice the absence of the wedding cake.
At 7:00 oclock in the evening they made a follow-up call to Fountainhead Bakeshop and was
informed that it was probably late because of the traffic.
At 8:00 oclock they were informed that no wedding cake will be delivered because the order slip
got lost. Plaintiffs were then compelled to buy the only available cake at the Cebu Country Club
which was a sans rival. Even though they felt that it was a poor substitute to a wedding cake, the
cutting of the cake is always a part of the ceremony.
At 10:00 oclock in the evening, the wedding cake arrived but plaintiffs declined to accept it,
besides their order was a three-layered cake and what was actually delivered was a two-layered
one.
Subsequently, defendant Erlinda Francisco sent a letter of apology accompanied with a P5,000.00
check, however, the same was declined by plaintiffs because they felt it was inadequate.
Two weeks after the wedding, defendant Erlinda Francisco called Mrs. Rebecca Lo and
apologized.
Ricardo Ferrer, son-in-law of Rebecca Lo corroborated the latters testimony, stating that two
weeks after the wedding, as a result of the non-delivery of the wedding cake, Ramon Montinola,
the son-in-law of Erlinda Francisco, went to Rebecca Los residence and offered the sum of
P5,000.00 to indemnify for the damage done, but it was rejected.[4]

On March 12, 1993, respondents filed with the Regional Trial Court, Cebu City an action for
breach of contract with damages against petitioners.[5]
After due trial, on May 19, 1995, the trial court rendered a decision in favor of plaintiffs [herein
defendants], the dispositive portion of which reads as follows:
THE FOREGOING CONSIDERED, judgment is hereby rendered in favor of the plaintiffs and
against Erlinda Francisco.
Directing the latter to pay the former the following:
1. The cost of the wedding cake in the amount of P3,175.00;
2. Moral damages in the amount of P30,000.00;
3. Attorneys fees in the amount of P10,000.00; and
4. Cost of litigation.
SO ORDERED.[6]
On May 25, 1995, petitioners appealed to the Court of Appeals.[7]
After due proceedings, on July 05, 1999, the Court of Appeals promulgated its decision
modifying the appealed decision as set out in the opening paragraph of this opinion.[8]
Hence, this appeal.[9]
The issues raised are (1) whether the Court of Appeals erred in affirming the trial courts award
of moral damages and increasing the amount from thirty thousand (P30,000.00) to two hundred
fifty thousand pesos (P250,000.00); and (2) whether the Court of Appeals was justified in awarding
in addition to moral damages, exemplary damages of one hundred thousand pesos
(P100,000.00).
Petitioners submit that the Court of Appeals and the trial court erred in awarding moral
damages in favor of respondents because moral damages are recoverable in breach of contract
cases only where the breach was palpably wanton, reckless, malicious, in bad faith, oppressive or
abusive.[10]
We agree. To recover moral damages in an action for breach of contract, the breach must be
palpably wanton, reckless, malicious, in bad faith, oppressive or abusive.[11]
Under the provisions of this law,[12] in culpa contractual or breach of contract, moral damages
may be recovered when the defendant acted in bad faith or was guilty of gross negligence
(amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally,
when the act of breach of contract itself is constitutive of tort resulting in physical injuries.[13]
Moral damages may be awarded in breaches of contracts where the defendant acted
fraudulently or in bad faith.[14]
Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose
or some moral obliquity and conscious doing of a wrong, a breach of known duty through some
motive or interest or ill will that partakes of the nature of fraud.[15]
In this case, [w]e find no such fraud or bad faith.[16]
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.[17]
The person claiming moral damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith. It is not enough that one merely

suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the
other party. Invariably such action must be shown to have been willfully done in bad faith or with ill
motive.[18] Mere allegations of besmirched reputation, embarrassment and sleepless nights are
insufficient to warrant an award for moral damages. It must be shown that the proximate cause
thereof was the unlawful act or omission of the [private respondent] petitioners.[19]
An award of moral damages would require certain conditions to be met, to wit: (1) first, there
must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
(2) second, there must be culpable act or omission factually established; (3) third, the wrongful act
or omission of the defendant is the proximate cause of the injury sustained by the claimant; and
(4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the
Civil Code. 21
It must again stressed that moral damages are emphatically not intended to enrich a plaintiff at
the expense of the defendant. 22 When awarded, moral damages must not be palpably and
scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on
the part of the trial court judge23 or appellate court justices. 24
In the same fashion, to warrant the award of exemplary damages, [t]he wrongful act must be
accompanied by bad faith, and an award of damages would be allowed only if the guilty party
acted in a wanton, fraudulent, reckless or malevolent manner. 25
The requirements of an award of exemplary damages are: (1) they may be imposed by way of
example in addition to compensatory damages, and only after the claimants right to them has
been established; (2) that they can not be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that may be awarded to the claimant; (3)
the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or
malevolent manner. 26
Nevertheless, the facts show that when confronted with their failure to deliver on the wedding
day the wedding cake ordered and paid for, petitioners gave the lame excuse that delivery was
probably delayed because of the traffic, when in truth, no cake could be delivered because the
order slip got lost. For such prevarication, petitioners must be held liable for nominal damages for
insensitivity, inadvertence or inattention to their customers anxiety and need of the hour. Nominal
damages are recoverable where a legal right is technically violated and must be vindicated against
an invasion that has produced no actual present loss of any kind or where there has been a
breach of contract and no substantial injury or actual damages whatsoever have been or can be
shown. 27Nominal damages may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, not for
indemnifying the plaintiff for any loss suffered. 28
WHEREFORE, the Court GRANTS the petition. The Court REVERSES the decision of the
Court of Appeals in CA-G. R. CV No. 50894, and in lieu thereof, sentences petitioners to pay
respondents, as follows:
1. The cost of the wedding cake in the amount of P3, 175.00;
2. Nominal damages in the amount of P10,000.00;
3. Attorneys fees in the amount of P10,000.00; and
4. Costs of litigation.
No costs in this instance.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.

ROBES-FRANCISCO REALTY & DEVELOPMENT CORPORATION, petitioner,


vs.
COURT OF FIRST INSTANCE OF RIZAL (BRANCH XXXIV), and LOLITA
MILLAN, respondents.
Purugganan & Bersamin for petitioner.
Salvador N. Beltran for respondent.

MUOZ PALMA, J.:


This is a direct appeal on questions of law from a decision of the Court of First Instance of Rizal,
Branch XXXIV, presided by the Honorable Bernardo P. Pardo, the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered commanding the defendant to register
the deed of absolute sale it had executed in favor of plaintiff with the Register of
Deeds of Caloocan City and secure the corresponding title in the name of plaintiff
within ten (10) days after finality of this decision; if, for any reason, this not possible,
defendant is hereby sentenced to pay plaintiff the sum of P5,193.63 with interest at
4% per annum from June 22, 1972 until fully paid.
In either case, defendant is sentenced to pay plaintiff nominal damages in the
amount of P20,000.00 plus attorney's fee in the amount of P5,000.00 and costs.
SO ORDERED.
Caloocan City, February 11, 1975. (rollo, p. 21)
Petitioner corporation questions the award for nominal damages of P20,000.00 and attorney's fee
of P5,000.00 which are allegedly excessive and unjustified.
In the Court's resolution of October 20, 1975, We gave due course to the Petition only as regards
the portion of the decision awarding nominal damages. 1
The following incidents are not in dispute:
In May 1962 Robes-Francisco Realty & Development Corporation, now petitioner, agreed to sell to
private respondent Lolita Millan for and in consideration of the sum of P3,864.00, payable in
installments, a parcel of land containing an area of approximately 276 square meters, situated in
Barrio Camarin, Caloocan City, known as Lot No. 20, Block No. 11 of its Franville Subdivision. 2
Millan complied with her obligation under the contract and paid the installments stipulated therein,
the final payment having been made on December 22, 1971. The vendee made a total payment of
P5,193.63 including interests and expenses for registration of title. 3
Thereafter, Lolita Millan made repeated demands upon the corporation for the execution of the
final deed of sale and the issuance to her of the transfer certificate of title over the lot. On March 2,
1973, the parties executed a deed of absolute sale of the aforementioned parcel of land. The deed
of absolute sale contained, among others, this particular provision:
That the VENDOR further warrants that the transfer certificate of title of the abovedescribed parcel of land shall be transferred in the name of the VENDEE within the

period of six (6) months from the date of full payment and in case the VENDOR fails
to issue said transfer certificate of title, it shall bear the obligation to refund to the
VENDEE the total amount already paid for, plus an interest at the rate of 4% per
annum. (record on appeal, p. 9)
Notwithstanding the lapse of the above-mentioned stipulated period of six (6) months, the
corporation failed to cause the issuance of the corresponding transfer certificate of title over the lot
sold to Millan, hence, the latter filed on August 14, 1974 a complaint for specific performance and
damages against Robes-Francisco Realty & Development Corporation in the Court of First
Instance of Rizal, Branch XXXIV, Caloocan City, docketed therein as Civil Case No. C-3268. 4
The complaint prayed for judgment (1) ordering the reformation of the deed of absolute sale; (2)
ordering the defendant to deliver to plaintiff the certificate of title over the lot free from any lien or
encumbrance; or, should this be not possible, to pay plaintiff the value of the lot which should not
be less than P27,600.00 (allegedly the present estimated value of the lot); and (3) ordering the
defendant to pay plaintiff damages, corrective and actual in the sum of P15 000.00. 5
The corporation in its answer prayed that the complaint be dismissed alleging that the deed of
absolute sale was voluntarily executed between the parties and the interest of the plaintiff was
amply protected by the provision in said contract for payment of interest at 4% per annum of the
total amount paid, for the delay in the issuance of the title. 6
At the pretrial conference the parties agreed to submit the case for decision on the pleadings after
defendant further made certain admissions of facts not contained in its answer. 7
Finding that the realty corporation failed to cause the issuance of the corresponding transfer
certificate of title because the parcel of land conveyed to Millan was included among other
properties of the corporation mortgaged to the GSIS to secure an obligation of P10 million and that
the owner's duplicate certificate of title of the subdivision was in the possession of the Government
Service Insurance System (GSIS), the trial court, on February 11, 1975, rendered judgment the
dispositive portion of which is quoted in pages 1 and 2 of this Decision. We hold that the trial court
did not err in awarding nominal damages; however, the circumstances of the case warrant a
reduction of the amount of P20,000.00 granted to private respondent Millan.
There can be no dispute in this case under the pleadings and the admitted facts that petitioner
corporation was guilty of delay, amounting to nonperformance of its obligation, in issuing the
transfer certificate of title to vendee Millan who had fully paid up her installments on the lot bought
by her. Article 170 of the Civil Code expressly provides that those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the
tenor thereof, are liable for damages.
Petitioner contends that the deed of absolute sale executed between the parties stipulates that
should the vendor fail to issue the transfer certificate of title within six months from the date of full
payment, it shall refund to the vendee the total amount paid for with interest at the rate of 4% per
annum, hence, the vendee is bound by the terms of the provision and cannot recover more than
what is agreed upon. Presumably, petitioner in invoking Article 1226 of the Civil Code which
provides that in obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance, if there is no stipulation to the
contrary.
The foregoing argument of petitioner is totally devoid of merit. We would agree with petitioner if the
clause in question were to be considered as a penal clause. Nevertheless, for very obvious
reasons, said clause does not convey any penalty, for even without it, pursuant to Article 2209 of
the Civil Code, the vendee would be entitled to recover the amount paid by her with legal rate of
interest which is even more than the 4% provided for in the clause.7-A

It is therefore inconceivable that the aforecited provision in the deed of sale is a penal clause
which will preclude an award of damages to the vendee Millan. In fact the clause is so worded as
to work to the advantage of petitioner corporation.
Unfortunately, the vendee, now private respondent, submitted her case below without presenting
evidence on the actual damages suffered by her as a result of the nonperformance of petitioner's
obligation under the deed of sale. Nonetheless, the facts show that the right of the vendee to
acquire title to the lot bought by her was violated by petitioner and this entitles her at the very least
to nominal damages.
The pertinent provisions of our Civil Code follow:
Art. 2221. 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.
Art. 2222. The court may award nominal damages in every obligation arising from
any source enumerated in article 1157, or in every case where any property right has
been invaded.
Under the foregoing provisions nominal damages are not intended for indemnification of loss
suffered but for the vindication or recognition of a right violated or invaded. They are recoverable
where some injury has been done the amount of which the evidence fails to show, the assessment
of damages being left to the discretion of the court according to the circumstances of the case. 8
It is true as petitioner claims that under American jurisprudence nominal damages by their very
nature are small sums fixed by the court without regard to the extent of the harm done to the
injured party.
It is generally held that a nominal damage is a substantial claim, if based upon the
violation of a legal right; in such case, the law presumes a damage, although actual
or compensatory damages are not proven; in truth nominal damages are damages in
name only and not in fact, and are allowed, not as an equivalent of a wrong inflicted,
but simply in recogniton of the existence of a technical injury. (Fouraker v. Kidd
Springs Boating and Fishing Club, 65 S. W. 2d 796-797, citing 17 C.J. 720, and a
number of authorities). 9
In this jurisdiction, in Vda. de Medina, et al. v. Cresencia, et al. 1956, which was an action for
damages arising out of a vehicular accident, this Court had occasion to eliminate an award of
P10,000.00 imposed by way of nominal damages, the Court stating inter alia that the amount
cannot, in common sense, be demeed "nominal". 10
In a subsequent case, viz: Northwest Airlines, Inc. v. Nicolas L. Cuenca, 1965, this Court,
however, through then Justice Roberto Concepcion who later became Chief Justice of this
Court, sustained an award of P20,000.00 as nominal damages in favor of respnodent Cuenca.
The Court there found special reasons for considering P20,000.00 as "nominal". Cuenca who was
the holder of a first class ticket from Manila to Tokyo was rudely compelled by an agent of
petitioner Airlines to move to the tourist class notwithstanding its knowledge that Cuenca as
Commissioner of Public Highways of the Republic of the Philippines was travelling in his official
capacity as a delegate of the country to a conference in Tokyo." 11
Actually, as explained in the Court's decision in Northwest Airlines, there is no conflict between
that case and Medina, for in the latter, the P10,000.00 award for nominal damages was eliminated
principally because the aggrieved party had already been awarded P6,000.00 as compensatory

damages, P30,000.00 as moral damages and P10,000.00 as exemplary damages, and "nominal
damages cannot coexist with compensatory damages," while in the case of Commissioner
Cuenca, no such compensatory, moral, or exemplary damages were granted to the latter. 12
At any rate, the circumstances of a particular case will determine whether or not the amount
assessed as nominal damages is within the scope or intent of the law, more particularly, Article
2221 of the Civil Code.
In the situation now before Us, We are of the view that the amount of P20,000.00 is excessive.
The admitted fact that petitioner corporation failed to convey a transfer certificate of title to
respondent Millan because the subdivision property was mortgaged to the GSIS does not in itself
show that there was bad faith or fraud. Bad faith is not to be presumed. Moreover, there was the
expectation of the vendor that arrangements were possible for the GSIS to make partial releases
of the subdivision lots from the overall real estate mortgage. It was simply unfortunate that
petitioner did not succeed in that regard.
For that reason We cannot agree with respondent Millan Chat the P20,000.00 award may be
considered in the nature of exemplary damages.
In case of breach of contract, exemplary damages may be awarded if the guilty party acted in
wanton, fraudulent, reckless, oppressive or malevolent manner. 13 Furthermore, exemplary or
corrective damages are to be imposed by way of example or correction for the public good, only if
the injured party has shown that he is entitled to recover moral, temperate or compensatory
damages."
Here, respondent Millan did not submit below any evidence to prove that she suffered actual or
compensatory damages. 14
To conclude, We hold that the sum of Ten Thousand Pesos (P10,000.00) by way of nominal
damages is fair and just under the following circumstances, viz: respondent Millan bought the lot
from petitioner in May, 1962, and paid in full her installments on December 22, 1971, but it was
only on March 2, 1973, that a deed of absolute sale was executed in her favor, and
notwithstanding the lapse of almost three years since she made her last payment, petitioner still
failed to convey the corresponding transfer certificate of title to Millan who accordingly was
compelled to file the instant complaint in August of 1974.
PREMISES CONSIDERED, We modify the decision of the trial court and reduce the nominal
damages to Ten Thousand Pesos (P10,000.00). In all other respects the aforesaid decision
stands.
Without pronouncement as to costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Fernandez and Guerrero, JJ., concur.

MAXIMO PLENO, petitioner,


vs.
THE HONORABLE COURT OF APPEALS, PHILIPPINE PAPER PRODUCTS, INC., and
FLORANTE DE LUNArespondents.
Oben, Oben & Fruto Law Office for petitioner.
Poblador, Azada, Tomacruz, Cacanindin & Orbos Law Office for respondents.

GUTTIERREZ, JR., J.:


This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. No.
64497 which modified the decision of the Court of First Instance of Rizal in a vehicular accident
case and reduced by one-half the award for temperate damages, moral damages, and attorney's
fees from a total of P430,000.00 to P215,000.00. The awards for actual damages in the amount of
P48,244.08 and exemplary damages in the amount of P50,000.00 were affirmed.
The facts of the case are summarized as follows:
On April 11, 1972, plaintiff commenced an action for damages in the Court of First
Instance of Rizal (Pasig) against defendants Philippine Paper Products, Inc., and
Florante de Luna.
The material allegations of the complaint are to the following effect. That the
Philippine Paper Products, Inc., is the owner of a delivery truck (Ford Stake) with
Plate No. 30-51 Y/Y T-Rizal '71, having in its regular employ in conducting business
several motor vehicle drivers, one of them being Florante de Luna who, on
December 21, 1971, at about 12:45 P.M., was in charge of and driving said delivery
truck (Ford Stake) on the right lane of the South Super Highway in Taguig, Rizal, in a
careless, reckless and imprudent manner, by driving the vehicle at a speed greater
than what is reasonable and proper at the time without taking necessary precaution
to avoid accident to persons and damage to property, that as a consequence of the
said driver's reckless and imprudent driving, said vehicle of the defendant Philippine
Paper Products, Inc., hit, bumped and sideswiped plaintiffs Volkswagen Delivery
Van, with Plate No. 52-50 Y/Y, Manila '71, driven by said plaintiff causing the
Volkswagen Delivery Van to swerve to the right that it rammed into the rear part of a
truck with Plate No. 8157W T-Manila '71 parked at the shoulder of the road; that as a
result of the vehicular accident, plaintiff suffered various serious injuries, was
hospitalized, and because he suffered injuries affecting his brain, he acted beyond
normalcy at times, that as a consequence he suffered actual and compensatory
damages of approximately P100,000.00; moral damages of P500,000.00 for
suffering from bodily pain, mental anguish, serious anxiety for Florante de Luna's
wanton and brazen disregard of traffic laws and regulations aggravated by his
running away from the scene of the accident, without rendering aid to the victim,
plaintiff should be adjudged as exemplary or corrective damages of P 300,000.00 as
an example to all, owners, operators and drivers of motor vehicles and in the interest
of public safety and welfare, as well as the sum of P100,000.00 for the payment of
attorney's fees. Plaintiff prays that defendants be jointly and severally ordered to pay
him P100,000.00 for actual and compensatory damages; for moral damages
P500,000.00; P300,000.00 as exemplary damages; for attorney's fees P100,000.00,
interest at the rate of 6% on the actual and moral damage ages and loss of earnings
computed from the filing of the complaint until the P100,000.00 and the P500,000.00
are fully paid and the costs of suit.

On May 19, 1972, defendant Philippine Paper Products., Inc., filed its answer with
counterclaim. While it admits the allegation of paragraph 1 of the complaint
pertaining to it, the Id defendant denies the substantial allegations of the complaint
and alleges as defenses that it exercises and continues to exercise the requisite
diligence in the employment and supervision of its employees and laborers as well
as in keeping in constant repair and in good condition all its vehicles; and that
plaintiff is the one grossly negligent, careless and imprudent in driving and operating
his vehicle who has neither the license nor the permit to drive the said vehicle. It
prays that plaintiffs complaint be dismissed with cost against him; and on the
counterclaim, that plaintiff be ordered to pay to the herein defendant actual damages
and other expenses of litigation as shall be proved in the course of the proceedings
as well as exemplary damages sufficient for the purposes sought to be attained
thereby apart from reasonable attorney's fees.
On May 24, 1972, plaintiff filed his Answer to Counterclaim denying the allegations of
the counterclaim of defendant.
On May 25, 1972, defendant Florante de Luna filed his answer with counterclaim.
While he admits the allegations of paragraphs 1, 2 and 3 of the complaint, he denies
the substantial allegations of the same and, as affirmative and/or special defenses,
avers that plaintiff without proper license to drive a Volkswagen Kombi delivery van
drove said vehicle along a portion of the east service road of the South Super
Highway in Taguig, Rizal in a reckless and imprudent manner by operating and
driving said kombi delivery van at a speed very much more than reasonable without
taking the precautions to prevent injury to persons and damage to property and
without considering the traffic condition at the place and time that as a consequence
the delivery van titled to its left side of the road following its travel direction that
somewhere in the front part of the vehicle being driven by him made a slight contact
with the rear left side of the vehicle driven by plaintiff and despite the same, plaintiff
did not bother to put to a stop his vehicle instead and continued to drive that his
vehicle smashed against another vehicle driven by a certain Ruben Rivera and that
in view of the circumstance plaintiff is not entitled from defendant even if only
attorney's fees. As counterclaim, he avers that as a result of the filing of the
unwarranted complaint he suffered mental anguish, serious anxiety besides forcing
himself to retain the services of counsel. He prays for the dismiss of the complaint in
addition for payment for moral damages and attorney's fees and costs of suit.
On June 1, 1972, plaintiff filed his answer to defendant Florante de Luna's
counterclaim by denying the substantial allegations of said counterclaim with the
averment that the complaint was initiated and filed for a just cause.
After due trial, on August 30, 1977, the Court a quo rendered its decision sentencing
jointly and severally defendants to pay plaintiff (1) P 48,244.08 actual damages: (2)
temperate or moderate damage of P200,000.00; (3) moral damages of P200,000.00;
(4) exemplary damages of P50,000.00; (5) attorney's fees of P30,000.00; and (6)
costs of suit.
The facts, as related by the trial court and as borne out by the records, are as
follows:
As brought out in the trial, the incident which is the basis of this
complaint involves a three vehicle collision which happened about past
noon of December 21,1971 at the South Super Highway in the portion
of Taguig, Rizal. At about 12:45 in the afternoon of said date, a snubnosed volkswagen kombi with plate No. 52-50, Manila '71, was cruising

towards Manila along the asphalt pavement of the service road of the
South Super Highway. The kombi had two passengers, Maximo Pleno
who was at the wheel, and, a New Zealander, James Arthur Longley,
who was sitting beside Mr. Pleno on the front seat. The volkswagen
was suddenly and without warning hit on its left rear corner by a red
colored cargo truck. Due to the impact, the volkswagen moved faster
veering to the right and smashing unto the right rear portion of a truck
with plate No. 81-87, T-Manila '71, parked along the shoulder of the
road in front of the National Manpower Building. The parked truck was
also moved forward when it was hit on its back by the Volkswagen and
the driver of the parked truck, Ruben Rivera who was at that time
standing in front of his parked truck urinating was bumped by his own
truck. Witness to all these was Diego Orca, a gardener, who at such
time, was watering his plants in front of the National Manpower
Building.
Having been hit from behind by the red colored cargo truck and having
smashed into the rear portion of the parked truck, the right front portion
of the volkswagen on the driver's side was reduced to a pulp. At
impact, the front door on the right side burst open and Langley, who
was seated on that side, was thrown out of the vehicle and landed on a
ditch. Pleno, the driver of the volkswagen was crushed in the driver's
seat since the kombi's front portion offered no protection, being the
snub-nosed type, with the motor at the back. His legs were trapped in
the wreckage. The red cargo truck stopped for a while and then spead
away. Ruben Rivera, the driver of the parked truck, was brought by a
passing jeepney to the hospital. Langley who was thrown out of the
volkswagen but was not seriously hurt, with the help of a few persons
nearby, extricated Pleno from the volkswagen after pushing the truck
away and thereafter took him to the Makati Medical Center. Pleno
suffered extensive injuries on his head and legs and affected his
eyesight and stayed in the hospital for almost five (5) months.
The hit and run incident was reported to the Taguig Police Department
several hours later or about 3:15 in the afternoon of the same day by
Manuel Pleno, son of plaintiff Maximo Pleno. An investigator was sent
by the Taguig Police Department at the scene of the incident where an
initial report was submitted containing a description of the suspect
vehicle as a delivery truck colored red all over with yellow, canvass at
the top. A team to investigate this hit and run incident was formed
thereafter by Patrolman Maximo de Guzman of the Taguig Police
Department.
Days later or on January 8, 1972, a certain Atty. Tagumpay Eusebio,
who is connected with the Philippine Paper Products, Inc., went to Pat.
de Guzman's precinct at Taguig, Rizal inquiring why one of the
Taguig's Police Traffic Officers at the service road of the South Super
Highway stopped and investigated Florante de Luna, driver of the said
company. Pat. de Guzman told Atty. Eusebio that De Luna was
stopped and investigated because the delivery truck he was driving
matched the description of the delivery truck in a hit and run incident
which occured at about 12:45 p.m. of December 21, 1971. Atty.
Eusebio promised to bring De Luna to the police precinct. After
receiving such information, Pat. de Guzman and his team proceeded to
the compound of the Philippine Paper Products, Inc., at Sun Valley

Subdivision, South Super Highway, Paranaque, Rizal on the same day,


January 8, 1972. Pat. de Guzman and his team made further visits at
said compound and during these visits, they discovered that the
suspect vehicle exmbited plate No. 3- 51 Taguig, Rizal, T-Manila '71
and was painted red all over. The team also discovered
a'dented'or'depressed'portion of the right front portion of the vehicle.
The distance from the ground to the 'denied' or 'depressed' portion of
the truck was three feet and 3 inches, the same distance from the
ground to the depressed portion of the volkswagen on its left rear
portion. The paint was scratched off and there were blue colored
stains. The volkswagen was blue colored. On one of the visits by Pat.
de Guzman, he brought with him Dr. Diego Orca, the gardener who, at
the time of the incident on December 21, 1971, was tending to his
plants in front of the National Manpower Corporation and who
witnessed the 3 vehicle collision, Orca positively Identified the vehicle
of the defendant corporation as the one involved in the incident. Also
brought along the team in one of their visits was a photographer,
Bernardo Beduya who took photographs of the suspect vehicle
(Exhibits "D-l" to "D- 2").<re||an1w> Pat. de Guzman was also able
to look into the logbook of the Philippine Paper Products, Inc., which
showed that the suspect vehicle with Florante de Luna driving it, left
the compound of the company on December 21, 1971 at 12:00 p.m. or
barely 25 minutes before the incident. A photograph of the log book
with a finger pointing at the above entry was taken by photographer
Beduya (Exh. "F-a").
On January 12, 1972, while Patrolman de Guzman and his team were
in the compound of the Philippine Paper Products, Inc., they met Atty.
Eusebio with two companions who later turned out to be Florante de
Luna and an insurance adjuster. Atty. Eusebio invited Pat. de Guzman
in Ms office and asked him about the progress of the investigation to
which de Guzman informed him that 99% of the evidence in their
hands pointed to the delivery truck of the defendant company as the
vehicle involved in the accident. Atty. Eusebio then took Pat. de
Guzman aside and revealed to him that it was only sometime that their
driver, Florante de Luna, admitted to him the involvement of the
company truck in the incident and that was the reason why a
representative or adjuster of the insurance company was with them so
that they can settle the case. Thereafter, Pat. de Guzman, together
with Atty. Eusebio, Florante de Luna and the adjuster, went to De
Guzman's precinct where De Luna executed a written statement
(Exhibits "G" and "G-l"). De Luna's statement, although admitting that
the delivery truck of the company was involved in the incident,
however, claimed that the fault lay in Mr. Pleno because while a truck
was moving on its way to the main road, Pleno who was driving the
volkswagen applied his brakes and his left rear portion veered towards
the right and came in contact with the delivery truck being driven by De
Luna. Thereafter, the volkswagen accelerated and went out of control
veering further towards the right and hitting the truck which was then
moving towards the direction of the highway. In other words, De
Guzman claimed that the braked track was no longer parked at the
time of the collision but that it was already moving, and the fault in the
collision was on the part of Mr. Maximo Pleno. Before the written
statement of Pleno was sub-scribed before the mayor of Taguig, Rizal,
an incident transpired as testified by Pat. De Guzman:

WITNESS (Pat. de Guzman)


A. Before you went to the Municipal Building of Taguig,
Rizal, for the subscription of the statement of Mr. de
Luna, while I was along inside your investigation room,
Atty. Eusebio with a certain adjuster of the insurance
company approached me and offered me something.
ATTY. OBEN:
Q. What is that something?
A. He told me in vernacular, to wit ;
Tsip, iyon pala naman ay hindi pa nalalaman ng pamilya
ng victim ang pagkakadeskobre ninyo nito tungkol sa
involvement ni De Luna sa kasong ito. Kung maari ay
pag-usapan na lang natin ito.' And I answered: Ano ang
ibig mong sabihin ng pagusapan?
Q. What did Atty. Eusebio tell you?
A. He told me that if you will not divulge this incident to
the family of the victim, we will just give you the amount,
all the expenses that may be incurred by the Philippine
Paper Products, Inc., in this case.
Q. If Atty. Eusebio is in the courtroom, can you point to
him up in the courtroom?
A. He is in the middle. (witness pointing to Atty. Eusebio
who is seated in the courtroom). (TSN., Nov. 21, 1972,
pp. 5-9).
As regards the injuries suffered by Maximo Pleno, it may be seen from the exhibits
shown particularly the photographs of the volkswagen that it is the driver's side
which was severely damaged considering that the vehicle is the snub-nosed type
with its motor at the back. Due to the impact, Pleno's head was dashed and he lost
consciousness with his legs trapped in the wreckage. It took several persons to
extricate him therefrom. And they have to push the parked truck away before they
could do so. Pleno was brought to the Makati Medical Center in the afternoon of
December 21, 1971 and he left the hospital almost five (5) months later or on May 9,
1972. The orthopedic surgeon who treated Pleno at the emergency room of the
Makati Medical Hospital testified that Pleno sustained multiple fractures of both thigh
bones and the left shin bone or tibia He sustained multiple lacerations in his
forehead and left thigh. There was evidence of head injury, according to the surgeon.
Pleno was incoherent in pain and disabled, Pleno had to undergo about five surgical
operations of his thighs one of which involving the insertion of these many
operations, he still finds it difficult to stand up even with the aid of crutches or a cane.
He walks with a limp and his left is shorter than the right.
As regards his eyesight, Pleno complained that his left eye suffers from double vision
so that whenever he looks to the left, he sees two objects of the same thing The
injuries above mentioned affected his social and business life for he could not longer

attend social gatherings nor could he concentrate on his business ventures.'(at pp.
30-39, Panted Amended Joint Record on Appeal). (pp. 39-47)
Upon appeal, the Court of Appeals affirmed the factual findings of the lower court, to wit:
We find the findings of the lower court after hearing the parties to be more in
consonance to the truth and what actually occurred. We fully agree that the Kombi
delivery panel was hit by the cargo truck driven by the driver at the left rear corner
when the cargo truck of the driver was overtaking it. Naturally, when one overtakes
another vehicle the overtaking vehicle must run faster than the vehicle to be
overtaken. The impact caused the Kombi delivery panel upon being hit to swerve to
the light at the same time due to the force and suddenness of impact Pleno lost
control of his vehicle, as it happened in this case it accelerated towards the parked
cargo truck with chairs.
A table re-enactment of the incident convinces us that the claim of the driver that he
saw a cargo truck moving out from the curve into the road a moment before the
collision is false. It is a fact that the driver appellant was about to overtake the Kombi
delivery panel momentt before the accident. Therefore, he must have been only
about 2 to 5 meters to the left behind the Kombi delivery panel. At this position and
distance, it is impossible for the driver to see the cargo truck with chairs he claimed
to be moving out of the curve as his vision or view to the right is covered by the
Kombi delivery panel which he was about to overtake.
We likewise refuse to behave the driver's claim that the Kombi delivery panel
swerved to the left towards his (driver's) lane to avoid the cargo truck with chairs
then moving out of the shoulder of the road. Ruben Rivera, driver of the cargo truck
with chairs, testified that his truck was parked and was not about to move out of the
showder. Rivera testified that he was standing in front of his truck. Witness Diego
Orca corroborated Ruben Rivera.
Efforts of appellants to discredit Rivera notwithstanding, we are convinced that the
driver hitting the left rear corner of the Kombi delivery panel in the manner to
overtake it was the proximate cause of the accident.
It is also unbelievable that the driver did not feel or notice any contact between his
cargo truck and the Kombi delivery panel. After all, it has been established and
admitted after police investigation that the protruding front right edge of the loading
platform of the cargo truck, establishrd by the telltale marks and measurement, hit
the left rear corner of the Kombi delivery panel.
Considering the accelerated speed of the cargo truck of the driver in attempting to
overtake the Kombi delivery panel, in all probability upon contact there would have
emitted an impact sound similar to a sound of a hard object hit by another hard
object. This kind of sound one cannot miss to feel or notice. We are not, therefore,
persuaded by the pretense of the driver.
We are in full accord with the Court a quo when it said:
Having been hit from behind by the red colored cargo truck and having
smashed unto the rear portion of the parked car the right front portion
of the volkswagen on the driver's truck side was reduced to a pulp. At
impact, the front door on the right side burst open and Langley, who
was seated on that side, was thrown out of the vehicle and landed on a
ditch. Pleno, the driver of the volkswagen was crushed in the driver's

seat since the Kombi's front portion offered no protection being the
snub-nosed type, with the motor at the back. His legs were trapped in
the wreckage. The red cargo truck stopped for a while and then sped
away. Ruben Rivera, the driver of the parked truck, was brought by a
passing jeepney to the hospital. Langley who was thrown out of the
volkswagen but was not seriously hurt, with the help of a few persons
nearby, extricated Pleno from the volkswagen after pushing the truck
away and thereafter took him to the Makati Medical Center. Pleno
suffered extensive injuries on his head and legs and affected his
eyesight and stayed in the hospital for almost five (5) months. (at pp.
31-32, Printed Record on Appeal).
The immediately preceding discussion disposes of the second, third, fourth, and fifth
errors assigned by appellant driver.
From the reconstruction of the incident, we find the driver the one negligent and not
the plaintiff-appellee as assailed by the appellants. Neither do we find any
contributory negligence attributable to plaintiff-appellee. The proximate cause as
hereintofore discussed above was the recklessness of the driver De Luna in
miscalculate his distance to and from the Kombi delivery panel on overtaking. So
much so that the front right edge of his loading platform hit the left rear corner of the
Kombi delivery panel Causing the Kombi delivery panel to swerve to the right forcing
it to run smack into the parked cargo truck with chairs. Having been found negligent,
which negligence resulted to serious injuries, the lower court did not err in
sentencing defendant driver De Luna to pay actual, moral, temperate and exemplary
damages, likewise to pay attorney's fees.
To justify these awards, we consider the established fact that it is beyond dispute,
despite driver's protestation that he did not hit the Kombi delivery panel at the left
rear corner; that he did not attempt to evade responsibility; even knowingly realizing
that he caused the accident, he merely stopped a while (which we doubt if he did);
and, upon seeing the extensiveness of the resulting damage and the seriousness of
the injury, left the scene of the accident and kept quiet all about it until discovered
thru police investigation thus making it a hit and run case, pure and simple.
Appellant chiver De Luna's seventh, eight and ninth errors will be treated together
with the errors assigned by appellant corporation.
Appellant Corporation asserts that it exercised due diligence in the selection and
supervision of its employees. Therefore, it claimed it was error for the trial court not
to so hold and further claimed that it erred in holding the Corporation able to plaintiff
appellee.
Contending that at the time of the accident its employee driver De Luna, a duly
licensed professional driver, had been driving for five years before his employment
with the Corporation in 1970; that he was given examination in driving and found fit;
that he was assigned to drive small vehicles before being assigned to drive cargo
trucks for two months and after being tested for his driving ability, appellant
Corporation professes that it had exercised the due diligence of a good father of a
family in the selection and supervision of its employee driver De Luna. One of the
overriding circumstances considered by the court a quo in disregarding the defense
of exercise of due diligence interposed by appellant Corporation is the record of
defendant driver De Luna that he was once accused of serious physical injuries thru
reckless imprudence. Appellant Corporation argued that in that case driver De Luna
was acquitted. True. But the records did not show that his acquittal was in a trial on

the merits. The case may have been dismissed and he was acquitted for failure of
the prosecution to prosecute thru desistance of the aggrieved party. his innocence
was not therefore proven. It is not enough that defendant Corporation hold high and
waves driver's acquittal of that charge but Corporation should have presented
evidence that in the trial on the merits his employed defendant driver was declared
innocent. A diligent and thorough inquiry of the background of driver De Luna was
not undertaken. Otherwise, defendant-appellant Corporation should not have hired
De Luna had it exercised the due diligence it is required by law in hiring the driver,
the accident would not have occurred in the manner it happened and would have
been avoided.
The lower court, as we are, was not satisfied with the testimonies of Manuel Zurbano
and Benjamin Francisco, both employees of appellant Corporation. Their
testimonies, aside from dealing merely on generalities and mere observations on
defendant driver De Luna's driving were not thorough. It war, not enough. They
should have declared on the different company procedures in hiring its employees,
particularly its drivers. There are steps, manual of procedures to be followed strictly
by employers before hiring its employees. In the case at bar, evidence has it that
there was unexcusable laxity in the supervision of its driver by the Corporation. Proof
of this is that the accident happened on December 21, 1972 and not until January 8,
1972 when the defendant-appellant Corporation, thru Atty. Tagumpay Eusebio,
came to know that one of its vehicles was involved in an accident. Indeed, if there
was close supervision exercised by the defendant-appellant Corporation on its
employees and proper care of its equipments, it would have known of the
involvement of its driver De Luna in the accident in question. As it was lax in its
supervision, it did not know until confronted that its cargo truck met an accident and
caused the damage and injury in question. It is very difficult for us to believe the
claim of the appellant that it did not report the accident because no one in its
company knew about the accident. That even De Luna himself did not realize that
the truck he was driving came in contact with the plaintiffs Kombi delivery panel. We
have discarded driver De Luna's pretense that he did not realize that his truck came
in contact with the Kombi delivery panel of plaintiff. His pretense is contrary to
human and factual experience. A carefull driver can even detect a small pebble
hitting his vehicle. Even a slight nudge becomes discernible. How much more with
the contact and impact which have been established beyond doubt and ultimately
admitted by driver De Luna that his truck, after all, hit the Kombi at its rear left corner
which sent the Kombi delivery panel careening to the right smack against the parked
cargo truck with chairs. Not only did the defendant-appellant corporation not report
the accident to the authorities, but we are convinced by the conclusion arrived at by
the trial court that defendant-appellant Corporation thru its representative and
counsel, Atty. Eusebio, attempted to cover up the involvement of its driver and truck
in the accident from the victim's family (Testimony of Pat. de Guzman). (pp. 49-54,
Rollo)
The court, however, modified the award on damages such that temperate damages were reduced
from P200,000.00 to P100,000.00; moral damages were reduced from P200,000.00 to
Pl00,000.00; and attorney's fees were reduced from P30,000.00 to P15,000.00. It further ruled that
the employer's ability is subsidiary.
All the parties assailed the decision by filing two separate petitions before us. Philippine Paper
Products, Inc., sought the reversal of the factual findings of the appellate court as regards their
lialibility The case was docketed as G.R. No. 56511. On the other hand, Maximo Pleno filed G.R.
No. 56505 questioning the reduction of the damages awarded to him and the court's ruling that the
ability of Philippine Paper Products, Inc., as employer is only subsidiary.

On May 20, 1981, we issued a resolution in both petitions. G.R. No. 56511 was denied, "the
questions raised being factual and for insufficient showing that findings of facts by respondent
court are unsupported by substantial evidence." G.R. No. 56505, was given due course and it is
the petition which we now resolve. In this same resolution, we declared "that with respect to the
affirmed judgment of the Court of Appeals ordering respondents to pay jointly and severally the
petitioner P48,244.08, actual damages, P100,000.00 temperate or moderate damages,
P100,000.00 moral damages, P50,000.00 exemplary damages, and P15,000.00 attorney's fees,
and the costs of suit, (with reduction of a total of P215,000.00) wherein the petition for review in
G.R. No. 56511 has been herein DENIED, execution may issue immediately by the court a
quo upon receipt of this resolution." (p. 79, Rollo)
The resolution became final and executory on September 7, 1981 and an entry of judgment was
made.
The issues raised in this petition are two-fold. They are: (1) whether or not the employer's liability
in quasi-delict is subsidiary, and (2) whether or not the appellant court was correct in reducing the
amount of damages awarded to the petitioner.
We sustain the view of the petitioner that the ability of an employer in quasi-delict
is primary and solidary and not subsidiary. This, we have ruled in a long line of cases. (See
Bachrach Motor Co. v. Gamboa, L-110296, May 21, 1957; Malipol v. Tan, 55 SCRA 202; Barredo
v. Garcia and Almario, 73 Phil. 607; Vinluan v. Court of Appeals, et al., 16 SCRA 742; Anuran, et
al. v. Buno, et al., 17 SCRA 224; Poblete v. Fabros, 93 SCRA 20; Lanuzo v. Ping, 100 SCRA 205;
Prudenciado v. Alliance Transport System, Inc., 148 SCRA 440)
The Court of Appeals affirmed the awards of damages based on its findings, as follows:
Both appellants assailed the awards of damages. Appellant Corporation claims that
damages were not alleged in the complaint nor competent evidence adduced to
prove the damages awarded. This is a sweeping statement. We find on record
sufficient evidence supporting the adjudication of damages in favor of the plaintiffappellee. Maximo Pleno is a mechanical engineer, a topnotcher, and at the time of
the accident was a director, vice-president and general manager of Mayon Ceramics
Corporation. He was confined from the date of the accident up to May, 1972. He
could not work immediately. He sustained serious wounds on his forehead and legs.
In short, he became an invalid. According to Dr. Ramon Borromeo, plaintiff-appellee
Maximo Pleno sustained multiple fractures involving both thigh bones and the left
shin bone or tibia and there is evidence of head imjury. Dr. Borromeo conducted a
series of operations. In order to be more detailed, we quote from the brief of the
appellee the condition of the plaintiff-appellee Mr. Pleno, borne by the records and
remained unrefuted as follows:
Dr. Ramon Borromeo, the orthopedic surgeon who treated Mr. Pleno
and saw him at the emergency room of the Makati Medical Center on
the day of the accident, testified that Mr. Pleno sustained multiple
fractures involving both thigh bones and the left shin bone or tibia
multiple laceration involving wound in his forehead and left thigh; and,
evidence of head injury (t.s.n. Borromeo, February 22, 1974, p. 10 and
11). Mr. Pleno was incoherent when he first saw him (ibid, p. 11). He
was in pain (ibid); limited in leg motion because of the fractures and
disabled (ibid, pp. 11-12). On that same day, Mr. Pleno's wound in the
thighs were cleaned followed by skeletal traction to both legs by which
a wire is inserted to the bone to obtain more or less sittisfactory ent a
temporary procedure, Dr. Borromeo explained, to relieved swelling and
spasm of the muscles (ibid, pp. 13 and 14). Two weeks thereafter, Dr.

Borromeo conducted another operation, this time what he described to


be an open surgery on the left thigh bone, the purpose of which was to
obtain an accurate alignment of the fractures (ibid, p. 15). Dr.
Borromeo performed still another operation three weeks thereafter, this
time on the right thigh bone (ibid, p. 16). This was not to be the last of
the operations Mr. Pleno underwent. A year later, Mr. Pleno developed
foreign body reaction, which according to Dr. Borromeo, necessitated
another surgery, this time the action of the metallic appliance (Exh. I)
on both thighs (ibid, P. 16). Then, again, several months later he
developed rejection of the metallic appliance with secondary infection
of the bones which required another operation (ibid, p.
17).<re||an1w> The metallic appliance, the surgeon explained, is
inserted throughout the whole canal of the thigh bone to obtain
adequate alignment and in the case of Mr. Pleno, the appliance was
inserted on both thigh bones (ibid, p. 18). Mr. Pleno had to use
crutches because the fracture was not just an ordinary fracture; it was
what the doctor called 'comminute fractures,' meaning the bone was
broken up into several fragments, multiple fragments which naturally
would prolong the healing period (ibid, p. 19). After Identifying the
various x-ray Films presented (Exhibits M, M-1, M-2 and M-4), Dr.
Borromeo testified that definitely there is shortening of oneleg of Mr.
Pleno, the left leg, despite the surgery (ibid, pp. 23 and 24).
Mr. Pleno had complained of defective eyesight (t.s.n., Pleno, July
13,1973, pp. 28 and 29). On the witness stand, an eye specialist, Dr.
Reynaldo Bordador testified that Mr. Pleno was suffering from
horizontal deplopia or double vision of the left eye which can be caused
by injury resulting from a blunt instrument hitting the forehead or any
part of the head (t.s.n. Bordador, April looks to the left, he would be
seeing two objects (ibid, p. 8). Prolonged reading Will result in
headache (ibid). Dr. Bordador described Mr. Pleno's eye condition as
one which resulted from paralysis of one of the occular musde (ibid, p.
9). While surgery could be performed, the outcome is not guaranteed
there will also be double vision no matter how good the surgery is, the
doctor concluded (ibid, p. 9). (at pp. 14-17)
There is clear and convinced evidence establishing actual and compensatory
damages.
The gravity of the injuries Mr. Pleno received and the result pain and mental suffer is
very much evident from the medical diaganosis and prognosis initated above. pp. 5457, Rollo)
Nevertheless, as stated earlier, the appellate court reduced the amount of temperate and moral
damages as well as the amount of attorney's fees on the ground that the awards were "too high"
.The award of temperate damages was reduced by the appellate court on the ground that the
amount of P200,000.00 is rather "too high" especially considering the fact that the driver De Luna
is a mere driver and defendant-appellant Corporation is only subsidiarily liable thereof. The award
was reduced to P100,000.00.
The petitioner now assails the reduction of the damages as without justification. It specifically
mentions the findings of the trial court which were affirmed by the appellate court regarding the
gravity of the injuries suffered by the petitioner, the effect of the injuries upon him as a person, and
his business as well as his standing in society. And yet, it reduced the amount of damages.

As stated earlier, the employer's liability in quasi-delict is primary and solidary. The award of
temperate, moral, and exemplary damages as well as attorney's fees lies upon the discretion of
the court based on the facts and circumstances of each case. (See Magbanua v. Intermediate
Appellate Court, 137 SCRA 328; Siquenza v. Court of Appeals, 137 SCRA 570; San Andres v.
Court of Appeals, 116 SCRA 81; Sarkies Tours Phil., Inc. v. Intermediate Appellate Court, 124
SCRA 588; Prudenciado v. Alliance Transport System, Inc., supra.).
The court's discretion is, of course, subject to the condition that the award for damages is not
excessive under the attendant facts and circumstance of the case.
Temperate damages are included within the context of compensatory damages (Radio
Communications of the Philippines, Inc. (RCPI) v. Court of Appeals, supra.). In arriving at a
reasonable level of temperate damages to be awarded, trial courts are guided by our ruling that:
... There are cases where from the nature of the case, defenite 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 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. (Araneta v. Bank of America, 40 SCRA 144,145)
In the case of moral damages, the yardstick shaould be that the "amount awarded should not be
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 (Gerada v. Warner Barnes & Co., Inc., 57 O.G. (4) 7347,
7358; Sadie v. Bachrach Motor Co., Inc., 57 O.G. (4) 636; Adone v. Bachrach Motor Co., Inc., 656
cited in Prudenciado v. Alliance Transport System, Inc.,supra.).<re||an1w> Moreover, the
actual losses sustained by the aggrieved parties and the gravity of the injuries must be considered
in arriving at reasonable levels (Siquenza v. Court of Appeals, supra, cited in Prudenciado v.
Alliance Transport System, Inc., supra.).
The trial court based the amounts of damages awarded to the petitioner on the following
circumstances:
Coming now to the damages suffered by plaintiff Maximo Pleno, it is not controverted
that Pleno was hospitalized for about five months beginning December 21, 1971, the
day of the incident, up to May 9, 1972. While in the hospital, he underwent several
major operations on his legs and in spite of Id operations, a deformity still resulted
and that his left leg is shorter than the right. The medical expenses, hospital bills and
doctor's fees were properly exhibited and not rebutted by defendants. This being the
case, actual expenses of P48,244.08 may be awarded.
As to the loss or impairment of earning capacity, there is no doubt that Pleno is an
enterpreneur and the founder of his own corporation, the Mayon Ceramics
Corporation. It appears also that he is an industrious and resourceful person with
several projects in line and were it not for the incident, might have pushed them
through. On the day of the incident, Pleno was driving homeward with geologist
Langley after an ocular inspection of the site of the Mayon Ceramics Corporation.
His actual income however has not been sufficiently established so that this Court
cannot award actual damages, but, an award of temperate or moderate damages
may still be made on loss or impairment of earning capacity. That Pleno sustained a
permanent deformity due to a shortened left leg and that he also suffers from double
vision in his left eye is also established. Because of this, he suffers from some
inferiority complex and is no longer active in business as well as in social life. In
similar cases as in Borromeo v. Manila Electric Railroad Co., 44 Phil 165; Cordage,

et al. v. LTB Co., et al., L-11037, Dec. 29,1960, and in Araneta, et al. v. Arreglado, et
al., L-11394, Sept. 9, 1958, the proper award of damages were given.
There is also no doubt that due to the incident, Pleno underwent physical suffering,
mental anguish, fight, severe arudety and that he also underwent several major
operations. As previously stated, Pleno is the founder of Mayon Ceramics
Corporation, manufacturer of the now famous Crown Lynn ceramic wares. He is a
mechanical engineer and the topnotcher of the professional examination for
mechanical engineering in 1938. From the record, most if not all of his children
excelled in academic studies here and abroad. The suffering, both mental and
physical, which he experienced, the anxiety and fright that he underwent are
sufficiently proved, if not patent. He is therefore entitled to moral damages. Pleno is
also entitled to exemplary damages since it appears that gross negligence was
committed in the hiring of driver de Luna. In spite of his past record, he was still hired
by the corporation. As regards de Luna, the very fact that he left the scene of the
incident without assisting the victims and without reporting to the authorities entitles
an award of exemplary damages, so as to serve as an example that in cases of
accidents of this kind, the drivers involved should not leave their victims behind but
should stop to assist the victims or if this is not possible, to report the matter
immediately to the authorities. That the corporation did not also report the matter to
the authorities and that their lawyer would attempt to bribe the police officers in order
that the incident would be kept a secret shows that the corporation ratified the act of
their employees and such act also shows bad faith. Hence, Id corporation is able to
pay exemplary damages.
The award of attorney's fees is also proper in this case considering the
circumstances and that it took more than five years of trial to finish this case. Also,
plaintiffs counsel prepared lengthy and exhausive memorandum. (pp- 48-50,
Amended Joint Record on Appeal)
We rule that the lower court's awards of damages are more consonant with the factual
circumstances of the instant case. The trial court's findings of facts are clear and well-developed.
Each item of damages is adequately supported by evidence on record. On the other hand, there
are no substantial reasons and no references to any misimpressions of facts in the appellate
decision. The Court of Appeals has shown no sufficient reasons for altering factual findings which
appear correct. We, therefore, affirm the lower court's awards of damages and hold that the
appellate court's reduction of the amounts of temperate and moral damages is not justified.
However, we modify the award of attorney's fees to P20,000.00 which we deem to be just and
equitable under the circumstances of the case.
WHEREFORE, the instant petition is GRANTED. The questioned decision is REVERSED and
SET ASIDE. The decision of the Court of First Instance of Rizal (Pasig) in Civil Case No. 16024 is
AFFIRMED in all respects, except for the award of attorney's fees which is reduced to P20,000.00.
SO ORDERED.
Feman (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

PEOPLE OF THE PHILIPPINES, plaintiff and appellee, vs. BALWINDER SINGH, GURMOK
SINGH, DALVIR SINGH, DIAL SINGH, AMARJIT SINGH, MOHINDER SINGH, MALKIT
SINGH DHILLON, JOHINDER SINGH and KULDIP SINGH, defendant,
BALWINDER SINGH, MALKIT, SINGH, MOHINDER SINGH and DALVIR SINGH, defendantsappellants.
DECISION
BUENA, J.:
Appellants Balwinder, Malkit, Mohinder and Dalvir, all surnamed Singh, were convicted of the
crime of Murder in Criminal Case No. 8683 for killing Surinder Singh, and Frustrated Murder in
Criminal Cases No. 8682 for stabbing Dilbag Singh. Each of them were sentenced to suffer the
penalty of reclusion perpetua for murder, and the indeterminate penalty of 8 years and one (1) day
of prision mayor as minimum, to twelve (12) years and one (1) day of reclusion temporal as
maximum for frustrated murder.
It appears that these four (4) appellants, who are Indian nationals, were charged with murder
and frustrated murder along with their six (6) compatriots, namely: Gurmok, Dalvir, Dial, Johinder,
Kuldip and Amarjit Singh. Only these four (4) appellants were prosecuted because the rest of their
co-accused are at-large, except for Dial Singh, who died while under detention.
Dilbag Singh, private complainant for frustrated murder in Criminal Case No. 8682, recounts
that on November 26, 1993, at around 7:30 in the morning while he was cleaning his motorbike in
front of the Mendiola Apartment in Barangay Canlalay, Bian, Laguna, Dalvir, Balwinder, Gurmok,
Jarnail, Amarjit, Mohinder, Dial, Kuldip- all surnamed Singh-Johander Singh Dhillon, and Malkit
Singh Dhillon arrived, shouting foul remarks in their native language and demanding Surinder
Singh to come out of the apartment. When Surinder Singh came out of his apartment, Dalvir Singh
tried to stab him but Surinder Singh was able to move away. Dalvir Singh told his companions to
hold Surinder Singh as he will kill him. Thereafter, Dial Singh and Johinder Singh each held the
right and left arms of Surinder Singh, with Kuldip Singh pushing Surinder Singh on his back. Dalvir
Singh then stabbed Surinder Singh, hitting him on the right side of his stomach, and causing him
to fall on the ground. Dial Singh remarked that Surinder Singh failed to give money and if others
will likewise refuse, the same fate will befall them. As Surinder Singh tried to get up, Malkit Singh
Dhillon and Jarnail Singh started hitting him with lead pipes all over his body, while Johinder Singh
and Dial Singh punched and kicked Surinder. Amarjit Singh, who was holding a gun, warned
everyone not to help Surinder Singh or else he will shoot.Thereat, when all these things were
going on, private complainant Dilbag Singh tried to stop them but Balwinder Singh stabbed him on
the left side of his back. Gurmok Singh likewise stabbed him with a bolo, but he was not hit as he
was able to move to one side. After that, the ten (10) accused Indians left.
Dilbag Singh and Surinder Singh, both injured, were brought to the Perpetual Help Hospital,
Bian, Laguna, by Jaswinder Singh, Johinder Singh Gill, Balwinder Singh Gill and Alwan Singh, for
treatment. There, Surinder Singh was pronounced dead on arrival.
From the hospital, private complainant Dilbag Singh, Jaswinder Singh, Balwinder Singh Gill, a
lady named Vilma, and other companions went to the police station in Bian, Laguna, and reported
the incident. Both Dilbag Singh and Jaswinder Singh executed a sworn statement.
On the basis of the sworn statement, the Chief Investigator of the Bian Police Station filed on
November 28, 1993, a complaint for the crime of homicide with the Municipal Trial Court (MTC) of
Bian, Laguna for purposes of preliminary investigation.
On January 7, 1994,[1] after finding probable cause, the MTC recommended to upgrade the
charges to Murder and Frustrated Murder, and forwarded the records of the case to the Provincial
Prosecutor.[2]
On February 17, 1994, 3rd Assistant Prosecutor of Laguna, Fernando V. Balinado, rendered a
resolution recommending that only Dalvir Singh be charged with homicide, and that frustrated

homicide be filed against Balwinder and Gurmok Singh.[3] Thereafter, the Information for homicide
was filed against Dalvir Singh, and frustrated homicide against Balwinder and Gurmok
Singh[4] with the Regional Trial Court of Laguna. Before arraignment, private complainants Dilbag
Singh and their heirs of Surinder Singh, thru their counsel, moved for reinvestigation.[5]
On June 30, 1994, a resolution on reinvestigation[6] resulted in the filing of two (2) Informations
for Murder and Frustrated Murder against all ten (10) Indian nationals, to wit:
CRIMINAL CASE No. 8683[7] For Murder
That on or about November 26, 1993, in the Municipality of Bian, Province of Laguna, Philippines
and within the jurisdiction of this Honorable Court, the above-named accused conspiring,
confederating and mutually helping with one another, and armed with a fan knife, hand gun and
lead pipes, did then and there willfully, unlawfully and feloniously attack, assault, stab and wound
and hit with said knife and lead pipes one SURINDER SINGH thereby inflicting upon him fatal
wounds, with abuse of superior strength, treachery and with evident premeditation, the said
accused, having inflicted the wounds upon SURINDER SINGH while being held by the other
accused, and as a result thereof, the said wounds being necessarily mortal/fatal, thereby causing
the direct and immediate death of said SURINDER SINGH, to the damage and prejudice of his
surviving heirs.
All contrary to law and with the qualifying/aggravating circumstances of abuse of superior strength,
evident premeditation and alevosia, and the generic aggravating circumstance of known
conspiracy.
Criminal Case No. 8682[8] Frustrated Murder
That on or about November 26, 1993 in the Municipality of Bian, Province of Laguna, Philippines
and within the jurisdiction of this Honorable Court, the above-named accused conspiring,
confederating and mutually helping with one another, did then and there willfully, unlawfully and
feloniously, with abuse of superior strength, treachery and evident premeditation, while armed with
bolos, lead pipes, fan knife and hand-gun, with the intent of taking the life of DILBAG SINGH,
attack, assault thereby inflicting upon him mortal wound on the left side of his body directly by
overt acts thus, performing all the acts of execution which would have nevertheless did not
produce it, by reason of causes independent of their will, that is: the able and timely medical
assistance given the said DILBAG SINGH which prevented his death.
CONTRARY TO LAW.
Initially, the case was filed with the Regional Trial Court of Bian, Laguna and was raffled to
Branch 24. Both cases were tried jointly.
Upon arraignment, on September 23, 1994, three (3) appellants, Balwinder, Malkit and
Mohinder Singh, manifested that they are not entering any plea. Thus, the court entered for them
a plea of not guilty pursuant to Section 1(c), Rule 116 of the Rules of Court.[9] The arraignment of
Dalvir and Dial Singh followed on October 25, 1994.[10]
On October 6, 1994, appellants filed a petition for bail.[11] While hearing the petition for bail,
appellants filed a motion to inhibit and a petition for change of venue.[12]Subsequently, on May 30,
1995, the hearing on the petition for bail was continued before the Regional Trial Court of San
Pedro, Laguna. On December 13, 1995, RTC of San Pedro, Laguna denied the petition for bail.[13]
The evidence presented during the bail hearings were automatically reproduced at the trial.
The events, according to appellants, happened in this wise. Appellant Dalvir Singh testified
that on November 26, 1993, at around 7:30 in the morning, he was conducting his buy and sell
business along Brgy. Canlalay, Bian, Laguna. While collecting from his customers, he was
accosted by Jaswinder, Dilbag and Surinder Singh to stop at the corner of the street. When he

stopped, he alighted from his motorcycle. Jaswinder, Dilbag and Surinder Singh accused him of
squealing their status to the immigration authorities. Then, Jaswinder Singh punched
him. Appellant Dalvir Singh retaliated by slapping Jaswinder Singh afterwhich, Jaswinder Singh,
went inside his apartment to get a pipe. When Surinder Singh was about to stab him, he wrestled
the knife from him and, in the process, private complainant Dilbag Singh was stabbed on his back
with the same knife.[14] As Dalvir Singh grappled for the possession of the knife from Surinder
Singh, both of them fell down, with him landing on top of Surinder Singh and that was the time
when Surinder Singh was stabbed on the right portion of his stomach. Then, Surinder Singh lost
his grip and appellant Dalvir Singh was able to get hold of the knife. Appellant Dalvir Singh was so
nervous that he left the place on his motorcycle while holding the knife. He threw the knife along
the highway of Bian, Laguna.[15]
To bolster this version, appellants offered the testimonies of Wilfredo Rivera and SPO4
Manuel Francisco. Wilfredo Rivera corroborated the testimonies of appellant Dalvir
Singh. According to him, he testified in court in exchange for the favor extended to him by an
Indian national who is a friend of appellant Dalvir Singh. With respect to the testimonies of SPO4
Manuel Francisco, then chief investigator of the PNP, Bian, Laguna, the same were confined to
the fact that private complainants Dilbag Singh and Jaswinder Singh executed their respective
sworn statements of the incident.
After trial, appellants were convicted of the crime charged, thus
WHEREFORE, the guilt of accused Balwinder Singh, Malkit Singh Dhillon, Mohinder Singh, Dalvir
Singh and Dial Singh having been established beyond reasonable doubt of the crimes of
frustrated murder in Criminal Case No. 8282 and murder in Criminal Case 8683 defined and
penalized in Articles 248 and 250 of the Revised Penal Code, this Court hereby sentences them
(except Dial Singh who died during the presentation of defense evidence on the main case) as
follows:
Criminal Case No. 8682
1. each to suffer an indeterminate penalty of imprisonment of from eight (8) years and one
(1) day of prision mayor as minimum, to twelve (12) years and one (1) day of reclusion
temporalmaximum;
2. jointly and severally, to pay private complainant Dilbag Singh the amounts of P16,000
representing his hospitalization and medical expenses, and P30,000 for and as
attorneys fees; and
3. jointly and severally, to pay the costs of suit.
Criminal Case No. 8683
1. each to suffer the penalty of reclusion perpetua;
2. jointly and severally, to pay the heirs of Surinder Singh the following sums:
a) P50,000.00 as civil indemnity;
b) P41,500.00 representing funeral, wake and transportation expenses;
c) P5,760,000.00 for lost earnings/income;
d) P400.00 for hospitalization expenses;
e) P50,000.00 for moral damages; and
f) P500,000.00 for and as attorneys fees; and

3. jointly and severally, to pay the costs of suit.


Since accused Jarnail Singh, Gurmok Singh, Amarjit Singh, Johinder Singh and Kuldip Singh have
remained at-large to date, in order not to clog the docket of this court, let the records of these two
cases be sent to the files and warrant be issued for their immediate arrest.
SO ORDERED.[16]
Due to the penalty of reclusion perpetua imposed in murder, the case is now before us on
appeal.
Appellants challenge their conviction and interpose the following errors allegedly committed by
the trial court-[17]
1. The court a quo erred in sanctioning errors and irregularities of procedure which resulted in
denial of due process to accused-appellants.
2. The court a quo erred in accepting the prosecutions version of the incident which gave rise to
these cases, overlooking the testimonies of the three (3) unbiased witnesses thereto.
3. The court a quo erred in awarding excessive damages against accused-appellants.
First error

According to appellants, an irregularity attended the admission of the amended


Informations. They claim that the prosecution failed to conduct a preliminary investigation for the
upgraded crime of murder and frustrated murder. This claim lacks basis.
Evidence on record reveals that when private complainants filed a motion for re-investigation
to upgrade the charge to murder and frustrated murder, in the course thereof, the prosecutor who
handled the reinvestigation[18] conducted another preliminary investigation. Subpoenas were
issued and sent to both contending parties requiring them to appear and be present on the
scheduled date and time for the said re-investigation, and to present, or submit, their evidence in
support of their complaints and defense, respectively."[19] The prosecutor propounded clarificatory
questions to the prosecution witnesses revealing the necessity to raise the category of the criminal
charge to murder and frustrated murder.
Appellants likewise alleged that the procedure followed by the trial court in resolving their
petitions for bail departed from the usual course of judicial proceedings, because the prosecution
presented its evidence ahead of appellants, and the presentation of the prosecution took 10
months from January 27 to October 30, 1995, while the accused were afforded only two days to
rebut the prosecution evidence. This allegation is misplaced.
In hearing the petition for bail, the prosecution has the burden of showing that the evidence of
guilt is strong. Section 8, Rule 114 of the Rules of Court specifically provides that the burden of
proof in bail application lies in the prosecution, thusSection 8, Burden of proof in bail application.- At the hearing of an application for admission to bail
filed by any person who is in custody for the commission of an offense punishable by
death, reclusion perpetua or life imprisonment, the prosecution has the burden of showing that
evidence of guilt is strong. The evidence presented during the bail hearings shall be considered
automatically reproduced at the trial, but upon motion of either party, the court may recall any
witness for additional examination unless the witness is dead, outside of the Philippines or
otherwise unable to testify.

In bail proceedings, the prosecution must be given ample opportunity to show that the
evidence of guilt is strong. While the proceeding is conducted as a regular trial, it must be limited
to the determination of the bailability of the accused. It should be brief and speedy, lest the
purpose for which it is available is rendered nugatory. Antecedents of this case show that the case
was initially raffled to Branch 24, RTC, Bian, Laguna, and then transferred to RTC San Pedro,
Laguna. From the filing of the two (2) criminal Informations, several motions and petitions were
received by the trial court, which include, among others, application for bail, motion for reinvestigation, motion to inhibit and change of venue, motion to transfer appellants from the
municipal jail to Sta. Cruz provincial jail, petition for review filed with the Department of Justice and
motion for postponements. In the course of hearing the petition for bail, several petitions and
motions cluttered the records of the trial court. In fact, the records of the case were not
immediately forwarded to RTC San Pedro, Laguna when the hearing was transferred. We have
scoured the records of this case and we found that the delay was caused by these factors. These,
however, did not justify the length of time consumed by the prosecution in the presentation of its
evidence because the trial court, exercising its discretion, ought to control the course of bail
proceedings, avoiding unnecessary thoroughness in the examination and cross-examination of
witnesses, and reducing to a reasonable minimum the amount of corroboration particularly on
details that are not essential to the purpose of the hearing.[20] While the prosecution tarried too
long, such fact did not amount to a denial of due process because bail is granted only where it is
uncertain whether the accused is guilty or innocent,[21] which is not attendant in this case.
Appellants also challenge their transfer from the municipal jail in Bian, Laguna, to the
provincial jail in Sta. Cruz, Laguna. The transfer of appellants to the Sta. Cruz provincial jail was
sought for because during the scheduled hearings, appellants were always late.[22] Considering
that the jail guards in the municipal jail at Bian reasoned that they are undermanned, thus, late in
going to court, the trial court deemed it best to transfer appellants to the provincial jail. Besides,
the trial court took cognizance of the fact that appellants complained of poor jail facilities in Bian,
Laguna.[23] Circumstances surrounding this case justify appellants transfer to the provincial jail for
the purpose of insuring the speedy disposition of the case.
Appellants claim that no evidence was presented by the prosecution to prove the allegations
in the amended information, and that there is nothing in the records of these cases which support
the statement of the court a quo that the documentary evidence, as well as the testimonies of the
xxx witnesses presented by the prosecution in a petition for bail, was considered as automatically
reproduced at the trial on the main cases,[24] is misleading.
On May 30, 1995, the trial court declared that the evidence presented during the bail hearings
are considered automatically reproduced at the trial of the main case.[25] In fact, Section 8, Rule
114 of the Rules of Court specifically provides that the evidence presented during the bail
hearings shall be considered automatically reproduced at the trial. The mandate of the Rules is
clear and there is no need for the trial court to issue an order so that the evidence presented in the
bail proceedings may be considered automatically reproduced at the trial.
Appellants contend that they were deprived of their rights to be heard and to present evidence
with the issuance of the trial court Order dated February 24, 1997. As culled from the records,
appellants were protracting the trial by filing motions for postponement on scheduled hearings. On
February 24,1997, the scheduled date for appellants presentation of additional evidence,
appellants filed a motion for leave to file demurrer to evidence and set the same for hearing on
that same day.[26] It bears stressing that judicial action on a motion to dismiss, or demurrer to
evidence, is left to the exercise of sound judicial discretion.[27] The trial court, mindful of the
violation of the three-day notice rule by appellants, declared that the trial court must be given time
to resolve the motion, and ordered the parties to proceed with the hearing, without prejudice to the
outcome of the motion. The trial court emphasized that there should be a limitation or an end to
unnecessary postponements. Thus, it disclosed that when the Court of Appeals denied appellants
Petition for Certiorari with a prayer for temporary restraining order,[28] no legal hindrance existed to
defer the scheduled hearings. Appellants were given all the opportunity to be heard and defend
their cause but opted not to utilize the same by its continued refusal to proceed with the

trial. Nevertheless, appellants were given time to file their formal offer of exhibits to bolster their
defense.[29] This negates the appellants claim of denial of due process.
Second error
Appellants fault the trial court in accepting the prosecutions version. This Court is convinced
that appellants are guilty of the crime charged. Appellants Dalvir Singh admitted stabbing the
deceased and wounding Dilbag Singh, which was claimed to have been caused while grappling
for the possession of the knife. This version invoking the justifying circumstance of self-defense
must be proven by clear and convincing evidence.[30] After invoking self-defense, for exculpation,
appellants have the burden of proving their allegation to substantiate such assertion, which they
failed to do so. In addition, their imputation of alleged discrepancy between the sworn statement
executed by private complainants Dilbag and Jaswinder Singh on November 26, 1993, and their
joint sworn statement executed on December 13, 1993,[31] is not impressed with merit. Reviews of
both sworn statements negate any inconsistency. Immediately after the incident, private
complainants Dilbag and Jaswinder Singh, reported the circumstances surrounding the death of
Surinder Singh, and the stab wound sustained by Dilbag Singh to police authorities.[32] Both of
them revealed the presence of all the appellants and disclosed their participation in the
incident. On November 26, 1993, their narrations collectively and individually demonstrate
appellants concerted action to inflict injury upon private complainant Dilbag Singh and the
deceased Surinder Singh. In fine, we quote with approval, the trial courts findings, holding all the
appellants guilty of murder and frustrated murder, thusx x x prosecution evidence has established that Surinder Singh was stabbed in the stomach by
accused Dalvir Singh while the former was being held on his arms by accused Dial Singh and
Johinder Singh, and pushed on his back by accused Kuldip Singh. At that juncture, accused Malkit
Singh Dhillon and Jarnail Singh held lead pipes, accused Balwinder Singh, a big bolo-like knife,
accused Gurmok Singh, a small bolo-like knife, and Amarjit Singh, a hand gun. Also, accused
Mohinder Singh shouted kill him, Im responsible, I will bring you out of trouble in Punjabi and the
rest of the accused remarked come on, kill him, kill him also in Punjabi. While all these acts were
transpiring, accused Amarjit Singh threatened to shoot anybody who will help with the gun that he
was holding. After he was stabbed, Surinder Singh was still hit with lead pipes by accused Malkit
Singh Dhillon and Jarnail Singh and boxed and kicked by Johinder Singh and Dial Singh and
pushed at his back by Kuldip Singh. When Dilbag pleaded with the accused not to hit anymore
(sic) Surinder Singh, he, too, was stabbed on his back by Balwinder Singh followed by an attempt
to stab him also by Gurmok Singh. Evidently, the foregoing concerted acts sufficiently
demonstrated a common purpose or design to kill Surinder Singh and Dilbag Singh with
treachery. As held in a number of cases, there is treachery when offender commits any of the
crimes against person, employing means, methods or forms in the execution thereof, without risk
to himself from the defense which the offended party might make. xxx xxx xxx Thus, treachery
which was alleged in the informations, qualifies the killing of Surinder Singh to murder and the
inflicting of a mortal wound on Dilbag Singh with intent to kill to frustrated murder. Where criminal
conspiracy is shown to exist, all the conspirators are liable as co-principals regardless of the
extent and character of their participation, in contemplation of law, the act of one conspirator is the
act of all xxx xxx xxx and the participation in all details of execution of the crime is not necessary
for such a finding. xxx xxx xxx Although superior strength is found to be attendant in the killing of
Surinder Singh and wounding of Dilbag Singh, it is deemed absorbed in treachery and is not
appreciated as a separate aggravating circumstances. As regards the circumstance of evident
premeditation, prosecution evidence failed to show when accused meditated and reflected upon
their decision to kill their victims. In short, it cannot also be appreciated because there is wanting
of any direct evidence of the planning and the preparation to kill.[33]
The other errors allegedly committed by the trial court call for the calibration of credibility of
witnesses, which we find no reason to disturb since it is best left to the trial court to pass upon,
having had the opportunity to observe firsthand the demeanor and actuation of the witnesses
while on the witness stand.[34]

Third error

In Criminal Case No. 8682 for frustrated murder, the trial court awarded private complainant
Dilbag Singh the amount of P16,000.00 representing his hospitalization and medical expenses,
and P 30,000.00 as attorneys fees. For his hospitalization and medical expenses, the receipts
submitted to support said claim amounted only to P370.50.[35] Hence, private complainant Dilbag
Singh is entitled only to the said amount.[36] The award of attorneys fees is hereby
deleted.[37] Nonetheless, private complaint is entitled to moral damages[38] in the amount of
P50,000.00 for the suffering he endured from appellants felonious acts.
In Criminal Case No. 8683 for murder, the following amount of actual damages were duly
proven P16,500.00 funeral expenses[39] and air ticket/freight of the cadaver $600.27.[40] The
amount of P400.00 for hospitalization expenses should be deleted for not being supported by
evidence. The trial courts award of P50,000.00 as civil indemnity, and P50,000.00 moral damages
are affirmed. The award of P500,000.00 as attorneys fees[41] and P5,760,000 as compensation for
loss of earning capacity, are likewise deleted for lack of basis. Awards for loss of earning capacity
partake of damages which must be proven not only by credible and satisfactory evidence, but also
by unbiased proof.[42] The testimony of Balwinder Singh Gill, first cousin of the deceased, on the
alleged income of the deceased while in the Philippines, is not enough. The best evidence to
substantiate income earned by foreigners while in the Philippines is the payment of taxes with the
Bureau of Internal Revenue. Absent such proof, bare allegation is insufficient. Nevertheless,
considering that the definite proof of pecuniary loss cannot be offered, and the fact of loss has
been established, appellants shall pay the heirs of Surinder Singh temperate damages[43] in the
amount of P200,000.00.
WHEREFORE, in accordance with the foregoing disquisition, the decision appealed from is
hereby affirmed subject to the following modifications1. In Criminal Case No. 8682 for frustrated murder, appellants shall only be liable to pay
a. P370.50 for hospitalization expenses;
b. P50,000.00, as moral damages, plus costs; and,
2. In Criminal Case No. 8683 for murder, in addition to the civil indemnity, moral damages and
attorneys fees awarded by the trial court, appellants shall paya. P16,500.00, as funeral expenses;
b. $600.27, as air ticket/freight of the cadaver, to be computed at the prevailing rate of
exchange at the time of the promulgation of this decision; and,
c. P200,000.00, as temperate damages, plus costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. EDISON PLAZO,[1] accused-appellant.


DECISION
QUISUMBING, J.:
On appeal is the decision[2] dated January 16, 1995 of the Regional Trial Court of San Jose,
Camarines Sur, Branch 30, convicting appellant of the crime of murder, sentencing him to suffer
the penalty of reclusion perpetua, and to pay the heirs of the victim P50,000.00 as indemnity,
P15,712.00 as actual damages, P10,000.00 as moral damages, and to pay the costs.
The facts, based on the records, are as follows:
On August 8, 1989, at around 4:00 in the afternoon, Leonor Fabula went out of her house in
May-anao, Tigaon, Camarines Sur to buy sugar at a nearby store. When she reached the store,
she saw appellant boxing her son Romeo Fabula and banging his head on the post of the store,
while asking him why he told the police about his brother and the location of appellants
house. When Leonor sought to intervene, appellant got angry at her. She became afraid and
asked for help but nobody went near them. Romeo freed himself from the hold of appellant and
ran away. Appellant chased Romeo with a small bolo known locally as gatab. Leonor shouted at
appellant to stop but the latter did not heed her pleas. Appellant caught up with Romeo and
stabbed him at the back causing Romeo to fall on the ground. Appellant continued to stab Romeo
in the upper and lower chest area. Leonor continued shouting for help and eventually someone
came to help. However, when she saw her son no longer moving, she told the people not to touch
or move him because she was going to the Poblacion of Tigaon to get a policeman.
When Patrolmen Virgilio Azucena and Jose Madera arrived at the scene of the crime, they
saw the fallen body of Romeo with a small bolo imbedded on his chest and the detached handle of
the bolo on the ground near his body. The policemen brought the body to the Municipal Building
where the Municipal Health Officer, Dr. Constancio Tam, conducted an autopsy.[3]
On June 10, 1991, appellant was charged with the crime of murder under the following
Information:[4]
That on or about the 8th day of August, 1989 at Barangay May-Anao, Municipality of Tigaon,
Province of Camarines Sur, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, armed with a knife, with intent to kill, with treachery and evident
premeditation, did then and there wilfully, unlawfully and feloneously (sic) attack, assault and stab
one Romeo Fabula directing the blow on the vital parts of his body which was the direct and
immediate cause of his death, to the damage and prejudice of his heirs in such amount as maybe
awarded by the Court.
Acts Contrary To Law.
On arraignment appellant, assisted by counsel de oficio, pleaded not guilty.[5]
During trial, the prosecution presented the following witnesses: (1) Leonor Fabula, the mother
of the victim; (2) SPO1 Jose Madera and SPO4 Virgilio Azucena, both members of the Philippine
National Police (PNP) of Tigaon, Camarines Sur, and (4) Dr. Constancio A. Tam, Municipal Health
Officer of Tigaon, Camarines Sur.
Leonor Fabula testified that she witnessed the stabbing incident and identified appellant as the
assailant of her son. She said that the police were looking for appellants brother who had a
pending case for robbery in Manila. The police asked her son where the house of appellants
brother was. Her son, who knew nothing of the case, pointed out the house to the police leading to
the arrest of appellants brother. This angered appellant who sought out and killed her son. She
also testified on damages sustained as a result of her sons death.[6]

SPO1 Jose Madera testified that he was present during the autopsy and that Dr. Tam turned
over to him the bolo which was imbedded in the body of the victim. He identified the same bolo in
court.[7]
SPO4 Virgilio Azucena testified that upon the report of Leonor Fabula of the stabbing incident,
he and four others immediately went to the place of the incident in May-anao, Tigaon. They found
the body of the victim in the ricefield some 50 meters away from the road. The bolo was
embedded in the victims chest and the handle lying beside him.[8]
Dr. Constancio A. Tam testified that the victim sustained four stab wounds in the left upper
abdomen, right eliac part of the abdomen, upper part of the left chest, and upper part of the left
back. The weapon was still embedded in the upper left abdomen when he examined the
body.[9] Dr. Tam testified that this wound was fatal since it pierced the heart. He said that the stab
wounds could have been caused by a sharp-bladed, sharp-pointed instrument, locally known as
gatab.[10]
The defense presented as its witnesses the appellant himself and his cousin, Alfredo
Siso. Appellants version is as follows:
In the afternoon of August 8, 1989, appellant was at a billiard hall in May-anao, Tigaon,
serving as a spotter in a game between Celso Plazo and Alfredo Siso. The victim suddenly arrived
drunk, placed a ball on top of the table, and said that he wanted to put a bet against Alfredo
Siso. Insulted, Alfredo told appellant to pacify the victim. However, the victim became angry and
struck appellant with a billiard stick. Alfredo and Celso helped pacify the victim who became even
angrier, and then drew a bladed weapon saying he would use it on appellant. Appellant ran away
followed by the victim. Appellant slipped and injured his foot and the victim caught up with
him. The two grappled with the small bolo and suddenly, the bolo was already imbedded in the
chest of the victim. Appellant fled and eventually went to Manila because of the threats of relatives
of the victim. Appellants cousin, Alfredo, merely testified that after the two protagonists ran away,
he already went home.[11]
After trial, the trial court rendered its decision[12] finding appellant guilty of the crime of murder,
disposing thus
WHEREFORE, the accused Edison Plazo is hereby sentenced to suffer the penalty of reclusion
perpetua with the inherent accessories provided by law, to indemnify the heirs of the late Romeo
Fabula for the latters death the sum of Fifty Thousand Pesos (P50,000.00); the sum of Fifteen
Thousand Seven Hundred Twelve Pesos (P15,712.00) as actual damages; and the sum of Ten
Thousand Pesos (P10,000.00) as moral damages, all of Philippine Currency and for the said
accused to pay the costs.
The accused Edison Plazo shall be entitled to full credit of his preventive imprisonment if he
agreed to abide with the rules imposed upon convicted persons, otherwise, he shall only be
entitled to four-fifth (4/5) credit thereof.
SO ORDERED.
Appellant assigns the sole error that -[13]
THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY
BEYOND REASONABLE DOUBT OF THE CRIME OF MURDER.
In his brief,[14] appellant assails the credibility of the testimony of Leonor Fabula, the victims
mother, considering that (1) contrary to her testimony, the medical findings did not indicate that the
victim was boxed nor his head banged on the store post; (2) her testimony that her son was
stabbed dead on a ditch did not jibe with the testimony of SPO4 Azucena that the body of the
victim was recovered from the ricefield; and (3) her actions after seeing her son dead and getting a
policeman instead of comforting him was contrary to normal human conduct. Further, appellant

claims that his testimony that he acted in self-defense was corroborated by the testimony of his
cousin, Alfredo Siso. Lastly, appellant claims there was no treachery because there was no proof
as to how the attack began.
For the State,[15] the Office of the Solicitor General (OSG) contends that appellant failed to
establish the elements of self-defense considering the number and location of the wounds of the
deceased. Further, the testimony of defense witness Alfredo Siso should not be given credence
because he did not actually witness the stabbing incident. The OSG asserts that treachery
attended the killing because appellant unleashed two separate attacks on the victim, the first
consisted only of fist blows, and the second consisted of the stabbing.
The issues for our consideration pertain to (1) the assessment of credibility of witnesses, (2)
the existence of valid self-defense, and (3) the sufficiency of the evidence to convict appellant of
the crime of murder.
Well-entrenched is the rule that findings of the trial court as to the credibility of witnesses are
accorded great weight, even finality, on appeal, unless the trial court has failed to appreciate
certain facts and circumstances which, if taken into account, would materially affect the result of
the case. Having had the opportunity to personally observe the witnessess demeanor and manner
of testifying, the trial judge is in a better position to pass judgment on their credibility.[16] As
observed by the trial court, Leonor Fabula testified in a straightforward, spontaneous and frank
manner.[17] A review of the records and transcript of stenographic notes leads us to agree with that
conclusion.
As to the alleged inconsistencies in Fabulas testimony, the fact that the medical findings did
not indicate that the victim was boxed nor his head banged does not negate the possibility of such
acts. The defense failed to question the medico-legal officer on the stand and it cannot now raise
such factual matter before this court. As to the location of the body of the victim, while Leonor
Fabula testified that her son was stabbed just by the ditch of the road of May-anao,[18] SPO4
Azucena testified that they found the body in the ricefield. The records show, however, that on
cross-examination, SPO4 Azucena clarified that they found the body on the embankment of the
rice-field (bas-og).[19] Hence, there is no inconsistency between their testimonies on the matter.
The testimony of witnesses to a crime could not be expected to be error-free
throughout. Different persons have different impressions and recollections of the same
incident.[20]Likewise, we find nothing extraordinary or unusual about a mother seeking help from
the authorities first before rushing to help her son. As repeatedly stressed, there is no standard
form of human behavioral response when one is confronted with a strange, startling, or frightful
experience.[21] Witnessing a crime is an unusual experience that elicits different reactions from the
witnesses, and for which no clear-cut standard form of behavior can be drawn.[22]
Further, while it was only the mother of the victim who testified on the events leading to the
stabbing incident, we have held that the testimony of a single eyewitness is sufficient to support
conviction so long as it is clear, straightforward, and found worthy of credence by the trial
court.[23] The mere fact that she is the mother of the victim does not impair her credibility. Blood
relationship between a witness and victim does not, by itself, impair the credibility of the
witness.[24] On the contrary, relationship strengthens credibility, for it is unnatural for an aggrieved
relative to falsely accuse someone other than the actual culprit.[25] The earnest desire to seek
justice for a dead kin is not served should the witness abandon his conscience and prudence and
blame one who is innocent of the crime.[26] More importantly, Leonor Fabulas version of the
stabbing incident, that appellant repeatedly stabbed her son in the upper and lower chest
area,[27] is duly supported by the findings of the medico-legal officer that the victim sustained four
stab wounds in the chest and abdomen area.
As to appellants claim of self-defense, there is no evidence to support such assertion. Selfdefense as a justifying circumstance must satisfy the following requirements: (1) unlawful
aggression on the part of the victim; (2) reasonable necessity of the means employed to repel the
aggression; and (3) lack of sufficient provocation on the part of the accused.[28] The burden of
proving by clear and convincing evidence that the killing was justified is on the accused.[29] In

doing so, he must rely on the strength of his own evidence and not on the weakness of that of the
prosecution.[30] Appellant herein failed to prove any of the elements of self-defense. As correctly
pointed out by the trial court, the number of wounds on the body of the victim negates selfdefense. If indeed, the victim was stabbed while the two protagonists were grappling with the small
bolo, then why did the victim sustain four stab wounds? The nature, location and number of
wounds inflicted on the victim negate the claim of self-defense[31]and, instead, indicate a
determined effort to kill the victim.[32]
Further, the flight of the appellant after the incident betrays the existence of his guilty
conscience.[33] According to his testimony, he went to Manila because his relatives and residents
of their barangay advised him to take care of himself because the relatives of the victim were
running after him.[34] Appellant himself admitted that he hid for several years. This conduct is
inconsistent with his protestations of self-defense.
While the information alleged the attendance of the qualifying circumstances of treachery and
evident premeditation, these were not proven by the prosecutions evidence. Circumstances which
qualify criminal responsibility must in no case rest upon mere presumptions, no matter how
reasonable or probable, but must be based on facts of unquestioned existence. It is settled that
circumstances which qualify killing to murder must be proved as indubitably as the crime itself.[35]
There was no treachery because there was no proof in this case as to how the attack
started. For treachery to be present, two conditions must be shown: (1) the employment of means
of execution that give the person attacked no opportunity to defend or retaliate and (2) the
deliberate or conscious adoption of the means of execution. Treachery cannot be presumed; it
must be proven as fully and as convincingly as the crime itself. The sole eyewitness testified that
when she arrived at the scene, appellant was already boxing her son.[36] Hence, she could not
have possibly witnessed the inception of the attack. Any doubt as to the existence of treachery
must be resolved in favor of the accused. Where no particulars are known regarding the manner in
which the aggression was made or how the act which resulted in the death of the victim began and
developed, it cannot be established from mere supposition that an accused perpetrated the killing
with treachery.[37]
Likewise, the prosecution failed to prove the following requisites of evident premeditation: (1)
the time when the offender determined to commit the crime; (2) an act manifestly indicating that
the culprit clung to his determination; and (3) sufficient lapse of time between the determination
and execution to allow him to reflect upon the consequences of his act.[38]
Hence, in the absence of any circumstance which would qualify the crime to murder, we find
that appellant should be found liable only for the crime of homicide.
Under Article 249 of the Revised Penal Code, the penalty for the crime of homicide
is reclusion temporal. There being no mitigating nor aggravating circumstance, the penalty
of reclusion temporal should be imposed in its medium period.[39] Applying the indeterminate
sentence law, the minimum of the indeterminate sentence should be taken from the penalty next
lower in degree, which is prision mayor.
The trial court correctly awarded the amount of P50,000.00 as indemnity. However, the award
of actual damages in the amount of P15,712.00 was based solely on the bare assertions of the
mother of the victim. The Court can only grant such amount for expenses if they are supported by
receipts.[40] In the absence thereof, no actual damages can be awarded.However, in lieu of actual
damages, temperate damages under Art. 2224 of the Civil Code may be recovered where it has
been shown that the victims family suffered some pecuniary loss but the amount thereof cannot be
proved with certainty.[41] We find the award of P15,000.00 as temperate damages
reasonable. Moral damages cannot be awarded in the absence of any evidence to support its
award.[42]
WHEREFORE, the decision of the Regional Trial Court of San Jose, Camarines Sur, Branch
30, in Criminal Case No. T-1009, is hereby MODIFIED. Appellant Edison Plazo is found guilty of
the crime of homicide, and sentenced to a minimum of eight (8) years, eight (8) months, and one

(1) day of prision mayor medium as minimum, to fifteen (15) years, six (6) months, and twenty (20)
days of reclusion temporal medium as maximum, and to pay the heirs of the victim the amount of
P50,000.00 as indemnity and P15,000.00 as temperate damages, and the costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

H.L. CARLOS CONSTRUCTION, INC., petitioner, vs. MARINA PROPERTIES CORPORATION,


JESUS K. TYPOCO SR. and TAN YU,respondents.
DECISION
PANGANIBAN, J.:
There is unjust enrichment when a building contractor is denied payment for increased labor
cost validly incurred and additional work validly rendered with the owners express or implied
agreement.
The Case
The Petition for Review[1] before the Court, filed under Rule 45, seeks the reversal of the
Decision[2] dated March 29, 2001, issued by the Court of Appeals[3] in CA-GR CV No. 60975. The
assailed Decision disposed as follows:
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE, and a new
one entered DISMISSING the [petitioners] Complaint, AND PARTIALLY GRANTING THE
[RESPONDENT-CORPORATIONS] COUNTERCLAIM, IN THAT THE [PETITIONER] IS
DIRECTED TO PAY UNTO THE [RESPONDENT-CORPORATION] THE SUM OF P4,604,579.00
in ACTUAL DAMAGES PLUS P3,549,416.00 AS AND FOR LIQUIDATED DAMAGES.[4]
The Facts
The facts of the case, summarized by the Court of Appeals (CA), are as follows:
[Respondent] MARINA PROPERTIES CORPORATION (MPC for brevity) is engaged in the
business of real estate development. On May 10, 1988, MPC entered into a contract[5]with
[Petitioner] H.[L.] CARLOS CONSTRUCTION, INC. (HLC) to construct Phase III of a condominium
complex called MARINA BAYHOMES CONDOMINIUM PROJECT, consisting of townhouses and
villas, totaling 31 housing units, for a total consideration of P38,580,609.00, within a period of 365
days from receipt of Notice to Proceed. The original completion date of the project was May 16,
1989, but it was extended to October 31, 1989 with a grace period until November 30, 1989.[6]
The contract was signed by Jovencio F. Cinco, president of MPC, and Honorio L. Carlos,
president of HLC.
On December 15, 1989, HLC instituted this case for sum of money against not only MPC but also
against the latters alleged president, [Respondent] Jesus K. Typoco, Sr. (Typoco) and
[Respondent] Tan Yu (Tan), seeking the payment of various sums with an aggregate amount
of P14 million pesos, broken down as follows:
a) P7,065,885.03 for costs of labor escalation, change orders and material price escalation;
b) P2,000,000.00 as additional compensatory damages, exclusive of the cost of suit.
c) P3,147,992.00 representing retention money allegedly withheld by MPC on HLCs Progress
Billings as of January 1990, and
d) P2,000,000.00 representing the value of construction materials allegedly withheld/detained by
MPC.

Traversing the allegations of the complaint, [respondents] filed separate answers, whereby the two
individual [respondents] alleged that they are not parties to the Construction Contract and
Amendatory Contract and are therefore not liable to HLC. [Respondent] MPC on the other hand
alleged that the [petitioner] has no cause of action against it and that it (HLC) is not entitled to its
various claims. MPC interposed a counterclaim in the aggregate sum of P68,296,227.14 for actual
and compensatory damages, liquidated damages, unliquidated advances, and attorneys fees.[7]
On May 15, 1997, the trial court[8] ruled as follows:[9]
WHEREFORE, premises above considered, judgment is hereby rendered for [Petitioner] H.L.
CARLOS CONSTRUCTION, INC. and as against [Respondents] MARINA PROPERTIES
CORPORATION, TAN YU, and JESUS K. TYPOCO, SR., who are hereby ordered to pay, jointly
and severally, the [petitioner], as follows:
1. the amount of P7,065,885.03, representing unpaid labor escalation costs, change orders and
material price escalations, plus 12% interest per annum from date of filing of the complaint, until
fully paid;
2. the amount of P3,147,992.39 representing the 10% retention money withheld by the
[respondents] [from] [petitioners] progress billing as of January 1990, plus 12% interest per annum
from the date of filing of the complaint, until fully paid;
3. the amount of P2,000,000.00 representing the value of construction materials and the like
detained by the [respondents], plus 12% legal interest from the date of filing of the complaint, until
fully paid;
4. the sum equivalent to 15% of the principal sum as and by way of attorneys fees; and to
5. [p]ay the costs of this suit.
The counterclaim for liquidated damages, are hereby DISMISSED for lack of evidence. Liquidated
damages can only be awarded under paragraph 2 of the amended construction contract that
extended the completion period and mainly on the finding of the 85% substantial completion of the
project, and that the delay and stoppage of the project was caused by [respondents] default in
payment of [the] progress billings that would have allowed [petitioner] to have the capability to
continue and complete the project.
Ruling of the Court of Appeals
On appeal, the CA held that respondents were not liable for escalations in the cost of labor
and construction materials, because of the following reasons: (1) the contract between the parties
was for a lump sum consideration, which did not allow for cost escalation; and (2) petitioner failed
to show any basis for the award sought.
Respondents were also absolved from paying for change orders and extra work, inasmuch as
there was no supplemental agreement covering them as required in the main Construction
Contract. Although Progress Billing No. 24 apparently indicates that extra work was rendered by
petitioner, this claim is not supported by sufficient evidence.
The CA further failed to find any basis for the release of the 10 percent retention fee. The
Construction Contract had provided that such release would be made only under certain
conditions, none of which was complied with, as petitioner failed to complete the work
required. Furthermore, MPC was not held liable for detained or withheld construction materials,
since petitioner had eventually withdrawn them.

Nothing in the records indicated any personal liability on the part of Typoco and
Tan. Moreover, they had nothing to assume, as MPC was not held liable to petitioner.
Furthermore, the CA ruled that petitioner was liable for actual and liquidated damages. The
latter had abandoned the project prior to its completion; hence, MPC contracted out the work to
another entity and incurred actual damages in excess of the remaining balance of the contract
price. In addition, the Construction Contract had stipulated payment of liquidated damages in an
amount equivalent to 1/1000 of the contract price for each calendar day of delay.
Hence, this Petition.[10]
Issues
In its Memorandum, petitioner raises the following issues:
a. Whether or not the respondents are liable to pay the petitioner its claim for price
escalation of construction materials and labor cost escalation.
b. Whether or not the respondents are liable to the petitioner for cost of change orders and
extra works.
c. Whether or not the respondents are liable to the petitioner for the ten percent retention
money.
d. Whether or not the respondents are liable to pay the petitioner attorneys fees.
e. Whether or not the respondents are liable to the petitioner for the cost of illegally
detained materials.
f. Whether or not the respondents Jesus Typoco Sr., and Tan Yu are jointly and solidarily
liable to the petitioner for the latters claims.
g. Whether or not the petitioner is liable to the respondents for actual and liquidated
damages.[11]
In simpler terms, the issues to be resolved are as follows:
(1) Whether petitioner is entitled to (a) a price escalation for labor and material cost, (b) the
cost of change orders and extra work, (c) the release of the 10 percent retention money, (d) the
cost of illegally detained materials, and (e) attorneys fees
(2) Whether Typoco and Tan are solidarily liable with MPC
(3) Whether petitioner is liable for actual and liquidated damages
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Liability for Additional Costs
Petitioner argues that it is entitled to price escalation for both labor and materials, because
MPC was delayed in paying for its obligations. The former admits that it is normally not entitled to
any price increase for labor and materials, because a contractor is expected to build into its price a
contingency factor to protect it from cost increases that may occur during the contract period.[12] It
justifies its claim, however, on the ground that a contractor cannot be expected to anticipate price

increases beyond the original contract period. Respondents, on the other hand, aver that it was
delayed in finishing the project; hence, it is not entitled to any price increase.
It must be pointed out that the reason for the CAs denial of petitioners claim was that the
contract between the parties was for a lump sum consideration, and petitioner was guilty of delay
in completing the project.
Labor and Material
Cost Escalation
We agree with petitioner that it is entitled to price escalation, but only for the labor component
of Progress Billing No. 24. The Construction Contract contains the following provision on the
considerations therefor:
6.1 For and in consideration of the true and faithful performance of the work by the
CONTRACTOR, the OWNER shall pay the Lump Sum Contract Price of
PESOS:THIRTY EIGHT MILLION FIVE HUNDRED EIGHTY THOUSAND SIX
HUNDRED NINE (P38,580,609.00) broken down as shown in the Bid Form. No
cost escalation shall be allowed except on the labor component of the work x x
x.[13]
Since the Contract allows escalation only of the labor component, the implication is that
material cost escalations are barred. There appears to be no provision, either in the original or in
the amended contract, that would justify billing of increased cost of materials. Furthermore, no
evidence -- like official economic data showing an increase in the price index of construction
materials -- was even adduced by petitioner to prove that there had indeed been increases in
material costs.[14]
Petitioner attempts to pass off these cost escalations as a form of damages suffered by it as a
natural consequence of the delay in the payment of billings and claims for additional work. It
argues that the baseless and malicious refusal to pay for those claims renders respondents liable
for damages under Article 2201 of the Civil Code.
We disagree. Without tackling the issue of delay, we find that the contentious Progress Billing
No. 24 contains no claim for material cost escalation. The other unsettled bills claimed by
petitioner are those for change orders or extra work, which have not been shown to be related to
the increase in cost of materials. Dealt with in separate contracts between the parties were such
claims, the costs of which were to be determined and agreed upon only when required by
MPC. Materials used for those additional jobs were to be purchased only when the work was
contracted, not prior thereto. As admitted by petitioner, expenses for change orders/additional
work were not included in the agreed contract price[15] and, hence, were not subject to increases.
MPC admits that the labor cost escalation clause was adopted by the parties to safeguard the
contractor against losses in the event that, during the execution of the Contract, the government
would order a minimum wage adjustment, which would then inflate the labor cost.[16] Respondents
deny liability for this added expense because, according to the Contract, the allowance for labor
cost escalation is available only within the duration of the original construction period.
We clarify. The claimed cost of labor escalation pertains to the period September 1 to
December 15, 1989, in the amount of P170,722.10; and December 16 to January 27,
1990, P45,983.91. During those periods, petitioner had not yet incurred any delay in the project,
originally stipulated to be finished by May 16, 1989. But by mutual agreement, the period was
extended up to October 31, 1989, with a grace period until November 30, 1989.
Furthermore, a legislated wage increase became effective after the expiration of the original
period.[17] Respondents are, therefore, liable for this increase in labor cost, because they allowed

petitioner to continue working on the project until April 20, 1990 (even beyond November 30,
1989).
MPC argues that to allow the claim for labor cost escalation would be to reward petitioner for
incurring delay, thereby breaching a contractual obligation.
This contention is untenable. Before the expiration of the extended period, petitioner was not
yet in delay. It was granted by MPC an extension to complete the project until November 30,
1989. Moreover, despite the expiration of the extended period, MPC allowed it to continue working
on the project until the former took over and awarded that project to another contractor. Hence,
labor costs were actually incurred by petitioner until April 20, 1990. It was thus entitled to
reimbursement for labor cost escalation until that date. MPC cannot now be allowed to question
the true valuation of the additional labor because, instead of submitting to an independent
evaluator, it violated the Temporary Restraining Order (TRO) issued by the trial court and hired
another contractor to finish the project.
Noteworthy is the fact that MPC paid for the labor cost escalation during the period August 115, 1989,[18] which was past the expiration of the original period.Apparently, it thereafter stopped
paying for labor cost escalation in response to the suit filed against it by petitioner.
The CA denied the labor cost escalation claim because, despite having billed MPC therefor,
petitioner accepted payments that did not include such claim. The appellate court construed the
acceptance by petitioner as a waiver of the latters right to be reimbursed for the increased labor
cost.
We believe that this position is untenable. The CA mistook Exhibits C-7-B[19] and D-1[20] as
bills coming from petitioner, when in truth they were Accomplishment Evaluation Sheets issued by
MPC. The notation labor escalation not included in the said Exhibits was an admission on the part
of MPC that it had not paid such amount, upon the advice of Atty. Jose C. Laureta, its resident
counsel. According to him, petitioner should be faulted for having incurred labor cost increases
after the expiration of the original period (after May 16, 1989). Not having waived such increases,
it should thus bear them.[21]
To allow MPC to acquire the partially accomplished project without paying for labor cost
escalation validly incurred would constitute unjust enrichment at the expense of
petitioner.[22] There is unjust enrichment under Article 22 of the Civil Code when (1) a person is
unjustly benefited, and (2) such benefit is derived at the expense of or with damages to
another.[23] Since petitioner had rendered services that were accepted by MPC, then the former
should be compensated for them.Labor cost escalation, in this case, has already been earned by
petitioner.
Change Orders and Extra Work
Petitioner claims entitlement to compensation for change orders and extra work that were
covered by construction memoranda. MPC counters, however, that the former never presented
any cost estimate for additional work. The estimate would have formed the basis for a consensual
agreement and a computation of actual accomplishment, for which MPC could have been
unilaterally billed. Worse, the extra work was allegedly assessed by its engineer to be worth
only P705.41.
We side with petitioner. The General Conditions to the Construction Contract provides:
13. CLAIMS FOR EXTRA AND FORCE ACCOUNT WORK:
If the Contractor claims that any construction by drawings or otherwise involve extra cost under
this Contract, he shall give the Owner and/or the Architect, written notice thereof within a
reasonable time after receipt of such instructions, and in any event before proceeding to execute

the work, except in emergency endangering life or property. No such claim shall be valid unless so
made.
Extra work for which no price is provided in the proposal shall be covered by a
supplementary agreement to be signed by both parties before such work is
commenced.[24]
The CA is correct in holding that there is no supplemental agreement covering the claimed
extra work and change orders. Exhibits C-1, C-2, C-2-A, C-3 and C-4 show billings for extra work
sent by petitioner to MPC. But the former did not submit in evidence the alleged construction
memoranda covering them. Neither were they mentioned in the letter[25] of Roilo Golez dated
November 24, 1989.
Progress Billing No. 24, which pertained to the project as covered by the Construction
Contract, did not mention any claim for extra work or change orders.These additional jobs were
covered by separate bills other than the twenty-four Progress Billings sent by petitioner.
MPC, however, never denied having ordered additional work. In Item No. 12 of its Amended
Answer,[26] it averred that petitioners claim for change orders and extra work were
premature. Limneo P. Miranda, respondents work engineer, manifested that additional work was
indeed done, but that claims therefor were not settled for the following reasons: (1) reconciliation
between the parties was never completed due to the absence of petitioners representative in
scheduled meetings; (2) difference in opinion on the proper valuation of the additional work, as
MPC wanted to use the net quantity method, while petitioner preferred the gross method; and (3)
some claims were rejected by MPC, because they had not been properly approved in accordance
with the Contract.[27]
Evidence on record further reveals that MPC approved some change order jobs despite the
absence of any supplementary agreement. In its Over-all Summary of Reconciled Quantities as of
September 6, 1989 (Annex C),[28] it valued petitioners valid claim therefor at P79,340.52. After
noting that the claim had extremely been bloated, Atty. Laureta, in-house counsel for respondent
corporation, affirmed as valid the amount stated in the summary.[29]
Petitioner may have failed to show the construction memoranda covering its claim, but it
inarguably performed extra work that was accepted by MPC. Hence, we will consider Annex C as
the proper valuation thereof.
Under the principle of quantum meruit, a contractor is allowed to recover the reasonable value
of the thing or services rendered despite the lack of a written contract, in order to avoid unjust
enrichment.[30] Quantum meruit means that in an action for work and labor, payment shall be
made in such amount as the plaintiff reasonably deserves.[31] To deny payment for a building
almost completed and already occupied would be to permit unjust enrichment at the expense of
the contractor.[32]
The CA held that since Billing No. 24 did not include any claim for additional work, such work
had presumably been previously paid for. This reasoning is not correct. It is beyond dispute that
the change orders and extra work were billed separately from the usual progress billings petitioner
sent to MPC.
Retention Money
The CA denied the claim for the 10 percent retention money, because petitioner had failed to
comply with the conditions under paragraph 6.3 of the Construction Contract. On the other hand,
the latter avers that these conditions were deemed fulfilled under Article 1186 of the Civil Code
because, when its contract was terminated, MPC prevented the fulfillment of those conditions. It

would allegedly be unfair and unreasonable for petitioner to guarantee a project finished by
another contractor.
We disagree with petitioner. In the construction industry, the 10 percent retention money is a
portion of the contract price automatically deducted from the contractors billings, as security for the
execution of corrective work -- if any -- becomes necessary. This amount is to be released one
year after the completion of the project, minus the cost of corrective work.[33] The conditions for its
release are stated in the Construction Contract as follows:
6.3 In all cases, however, payment of the progress billings shall be subject to deduction of
twenty percent (20%) recoupment of the downpayment, ten percent (10%)
retention and expanded withholding tax on CONTRACTORS income. Upon
issuance of the Certificate of Completion of the work by the OWNER and upon
submission of Guaranty Bond, Ninety Percent (90%) of the retained amount
shall be released to the CONTRACTOR and the balance thereof shall be
released by the OWNER within thirty (30) days after the expiration of the
guaranty period which is 365 days after issuance of the certificate of
completion. [34]
None of the foregoing conditions were satisfied; hence, the CA was correct in forfeiting the
retention fee. The completion of the work was stipulated in the Contract to be within 365 days from
the issuance of a Notice to Proceed or until May 16, 1989. Then the period was extended up to
November 30, 1989. Petitioner worked on the project till April 20, 1990. It was given by MPC
ample time and two extensions to complete the project. The simple truth is that in failing to finish
the project, the former failed to fulfill a prerequisite for the release of the retention money.
Detained Materials
Petitioner claims cost reimbursement of illegally detained materials, as it was allowed to
withdraw them from the site only after two years from the unilateral termination of the Contract. By
1992, only 30 percent of the materials detained were salvageable, while the rest had depreciated.
This contention has no merit. According to the CAs ruling, the only proof that MPC detained
materials belonging to petitioner was the denial of the request, contained in the latters February
1990 letter,[35] for the release of used form lumber. Aside from that letter, however, no other
attempt was shown to have been made by petitioner to obtain its request. It should have tried
again to do so before claiming that respondents unreasonably prevented it from removing its
construction materials from the premises. As to the other materials, there was absolutely no
attempt to remove them from the construction site. Hence, we cannot say that these were ever
withheld from petitioner.
Detention is not proved by Atty. Lauretas letter[36] dated July 4, 1992, allowing petitioner to
remove its materials from the site. The letter was merely a directive for it to clear out its belongings
therefrom, in view of the hiring of a second contractor to finish the project.
Moreover, in a specifically designated yard inside the construction site, petitioner maintained a
warehouse that was guarded by its own security complement and completely inaccessible to MPC
personnel.[37] It therefore had control over those materials and should have made provisions to
keep them safe from the elements and from pilferage.
Attorneys Fees
Petitioner argues that it is entitled to attorneys fees based on Article 2208 of the Civil Code,
because (1) respondents act or omission has compelled it to litigate with third persons or to incur

expenses to protect its interest; and (2) respondents acted in gross and evident bad faith in
refusing to satisfy its plainly valid, just and demandable claim.
The grant of some of the claims of petitioner does not change the fact that it did not finish the
project. Attorneys fees are not granted every time a party prevails in a suit, because no premium
should be placed on the right to litigate.[38] Petitioner is not, after all, blameless in the present
controversy. Just because MPC withheld some payments from petitioner does not mean that the
former was in gross or evident bad faith. MPC had claims that it wanted to offset with those of the
latter.
Second Issue:
Typoco and Tans Liabilities
Petitioner claims that Respondents Jesus Typoco and Tan Yu are solidarily liable with MPC.
We concur with the CA that these two respondents are not liable. Section 31 of the
Corporation Code (Batas Pambansa Blg. 68) provides:
Section 31. Liability of directors, trustees or officers. Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross
negligence or bad faith x x x shall be liable jointly and severally for all damages resulting therefrom
suffered by the corporation, its stockholders and other persons.
The personal liability of corporate officers validly attaches only when (a) they assent to a
patently unlawful act of the corporation; or (b) they are guilty of bad faith or gross negligence in
directing its affairs; or (c) they incur conflict of interest, resulting in damages to the corporation, its
stockholders or other persons.[39]
The records are bereft of any evidence that Typoco acted in bad faith with gross or
inexcusable negligence, or that he acted outside the scope of his authority as company
president. The unilateral termination of the Contract during the existence of the TRO was indeed
contemptible -- for which MPC should have merely been cited for contempt of court at the most -and a preliminary injunction would have then stopped work by the second contractor. Besides,
there is no showing that the unilateral termination of the Contract was null and void.
Respondent Tan is not an officer or a director of MPC. His participation is limited to an alleged
conversation between him and Engineer Mario Cornista, petitioners project manager. Supposedly,
the former verbally agreed therein to guarantee the payment of the latters progress billings. We
find no satisfactory evidence to show respondents alleged solidary liability to petitioner.
Third Issue:
Liability for Actual and Liquidated Damages
Petitioner avers that it should be exonerated from the counterclaims for actual and liquidated
damages, because its failure to complete the project was due to respondents acts.
Central to the resolution of this issue is the question of which party was in delay. Aside from
the contentious Progress Billing No. 24, there are no other unpaid claims. The bills for extra work
and change orders, aside from those for the beams and columns, were premature and still subject
to reconciliation and adjustment.Hence, we cannot hold MPC liable for them.
In comparison, petitioner did not fulfill its contractual obligations. It could not totally pass the
blame to MPC for hiring a second contractor, because the latter was allowed to terminate the
services of the contractor.

10.1 The OWNER shall have the right to terminate this Contract in the event that the
CONTRACTOR incurs a fifteen percent (15%) or greater slippage in the
prosecution of the overall work evaluated against the Project schedule as
indicated by the critical path of the approved PERT/CPM network for the Project
or as amended by Art. II herein.
Either party shall have the right to terminate this Contract for reason of violation or noncompliance by the other party of the terms and conditions herein agreed upon.[40]
As of November 30, 1989, petitioner accomplished only approximately 80 percent of the
project. In other words, it was already in delay at the time. In addition, Engineer Miranda testified
that it would lose money even if it finished the project;[41] thus, respondents already suspected that
it had no intention of finishing the project at all.
Petitioner was in delay and in breach of contract. Clearly, the obligor is liable for damages that
are the natural and probable consequences of its breach of obligation.[42] Petitioner was already
paid by MPC in the amount of P31,435,187 out of the total contract price of P38,580,609; thus,
only P7,145,422 remained outstanding. In order to finish the project, the latter had to contract the
services of a second construction firm for P11,750,000. Hence, MPC suffered actual damages in
the amount of P4,604,579 for the completion of the project.
Petitioner is also liable for liquidated damages as provided in the Contract,[43] the pertinent
portion of which is quoted as follows:
4.1 Time is an essential feature of this Contract and in the event that the CONTRACTOR
fails to complete the contracted work within the stipulated time inclusive of any
granted extension of time, the CONTRACTOR shall pay the OWNER, as
liquidated damages, the amount of one over one thousand (1/1000) of the value
of the contract price for each and every calendar day of delay (Sundays and
Holidays included), not to exceed 15% of [the] Contract amount, in the
completion of the work as specified in Article II above. It is understood that the
liquidated damages herein provided are fixed, agreed upon and not by way of
penalty, and as such, the OWNER shall not be further required to prove that he
has incurred actual damages to be entitled thereto. In the case of such delays,
the OWNER is hereby authorized to deduct the amount of liquidated damages
from any money due or which may become due the CONTRACTOR in this or
any other contract or to collect such amount from the CONTRACTORs
performance bond whichever is convenient and expeditious to the OWNER.
Liquidated damages are those that the parties agree to be paid in case of a breach.[44] As
worded, the amount agreed upon answers for damages suffered by the owner due to delays in the
completion of the project. Under Philippine laws, these damages take the nature of penalties.[45] A
penal clause is an accessory undertaking to assume greater liability in case of a breach. It is
attached to an obligation in order to ensure performance.
Thus, as held by the CA, petitioner is bound to pay liquidated damages for 92 days, or from
the expiration of the grace period in the Amended Contract until February 1, 1990, when it
effectively abandoned the project.
WHEREFORE,
the
Petition
is
partly GRANTED and the
assailed
Decision MODIFIED. Petitioner is AWARDED labor cost escalation in the sum of P1,196,202 and
cost of extra work in the sum of P79,340.52. In all other respects, the appealed Decision
is AFFIRMED.
SO ORDERED.
Davide, Jr., (Chairman), Ynares-Santiago and Carpio, JJ., concur.
Azcuna, J., on official leave - official business.