Damages
The trial court determined that the
Concept of Damages
HEIRS OF BOLADO vs. Vda.deBulan
Facts:Borlado sold a parcel of land to Bacero for
P300.00. When Francisco died, his heirs sold the lot to
Sps. Bulan. Bulan declared the lot in her name and paid
the corresponding taxes. Bulan had been in continuous,
peaceful, uninterrupted, adverse, and exclusive
possession of the land when the heirs of Borlado
forcibly entered and wrested physical possession of the
land from them.
Bulan filed a complaint for ejectment and was granted
by the trial court. The heirs of Borlado were ordered to
vacate the lot. 1100 cavans of palay was awarded as
damages.
Issue: Is the award of palay for damages proper?
Ruling: No. Palay is not legal tender currency in the
Philippines.
[NOT RELEVANT TO THE SUBJECT: appellants
contended that the trial court was wrong in awarding
ownership of the land to Bulan. The SC said that it was
a question of fact. Thus, it cannot rule on the matter]
CHIANG YIA MIN VS. RCBC
FACTS: This petition is for the recovery of an amount
of $100,000.00 and damages. The said US$100,000.00
was sent by Hang Lung Bank Ltd. of Hong Kong on
February 7, 1979 to respondent banks head office.The
remittance was for petitioners own account and was
intended to qualify him as a foreign investor under
Philippine laws. As found by the trial court, it was sent
by petitioner himself prior to his arrival in the
Philippines.When petitioner checked on his money
sometime in mid-1985, he found out that that the
dollar deposit was transferred to the Shaw Boulevard
branch of respondent bank and converted to a peso
account, which had a balance of only P1,362.10 as of
October 29, 1979. A letter of respondent bank dated
August 9, 1985 stated that petitioners Current Account
No. 12-2009 was opened on February 8, 1979, with an
initial deposit of P729,752.20; a total of P728,390.00
was withdrawn by way of five checks respectively
dated February 13, 19 and 23, 1979 and October 5 and
29, 1979, apparently issued by petitioner in favor of
PaperconPhils. Inc., one of the respondents and a
business venture of Tom Pek.Petitioner insisted that he
did not cause the transfer of his money to the Shaw
Boulevard branch of RCBC, as his instructions in the
telegraphic transfer were for the money to be remitted
to the RCBC head office in Makati, nor its conversion to
pesos and the subsequent withdrawals. Nor did he
authorize anyone to perform these acts. Tom Pek and
Papercon did not deny receiving the checks worth
P712,700.00 but argued that unless proven otherwise,
the said checks should be presumed to have been
issued in their favor for a sufficient and valuable
consideration.
withdrawals were not made by petitioner nor
authorized by him, and held respondent bank liable for
the US$100,000.00, and the interest from date of filing
of the complaint, damages, attorneys fees, and costs.
CA reversed trial court. SC affirmed CA.
ISSUE: Whether or not petitioner has proved that
respondent bank connived with private respondents
and third party defendants Papercon and Tom Pek in
allowing thewithdrawals, knowing them to be
unauthorized by the petitioner, and with the purpose of
defrauding him, thereby warranting an award for
damages.
RULING: NO. There is no evidence to show that RCBC,
Papercon, Tom Pek colluded to defraud petitioner of his
money. Petitioners allegation that he did not authorize
the opening of the current account and the issuance of
the checks was countered by private respondents by a
witnessed they presented who testified that the
issuance of the questioned checks were all upon the
instructions of the petitioner. The evidence stands
unrebutted that petitioner instructed the opening of
the said account and signed the pertinent application
forms. Quite contrary to petitioners insinuations of
fraud or negligence, the evidence indicates that the
reason why respondent bank relaxed its rules in
handling petitioners application was because, in
addition to having been referred by a well-known
client, petitioner was in a hurry to have the remittance
credited to his account. The person who alleges fraud
or negligence must prove it, because the general
presumption is that men act with care and prudence.
Good faith is always presumed and it is the burden of
the party claiming otherwise to adduce clear and
convincing evidence to the contrary. No judgment for
damages could arise where the source of injury, be it
fraud, fault, or negligence, was not affirmatively
established by competent evidence.
KINDS OF DAMAGES
ACTUAL OR COMPENSATORY
a.) As to actual loss suffered
PRODUCERS BANK OF THE PHILIPPINES,
petitioner, vs .COURT OF APPEALS and SPOUSES
SALVADOR Y. CHUA and EMILIA U. CHUA,
respondents.
Topic: actual damages, exemplary damages
Facts: The spouses Chua, engaged in several
businesses including gasoline proprietorship, obtained
a P2-million loan from Producers Bank secured by a
real estate mortgage and payable within 3 years or
from 1982 to 1985. In January 1984, the spouses
deposited the total sum of P960,000 which was duly
entered in their account. However, the bank failed to
credit the deposit because its branch manager
absconded with the bank's money. The bank
dishonored their checks for insufficiency of funds
despite their remaining balance of more than a million
pesos and denied their request for copies of their
account ledgers. Thus, the action for damages by
respondent spouses against petitioner. (You can stop
here for your digests.)
Meanwhile, in October 1984, PB applied for
extrajudicial foreclosure of the real estate mortgage
including 2 other loans not covered by the mortgage.
With this, the spouses filed a complaint for injunction
and damages alleging that the foreclosure was
maliciously instituted to harass them. The trial court
found that the spouses, who were constantly paying
their loan, were not in default; that the loan, with a 3
year period, is not yet due and demandable; and that
the foreclosure proceedings was initiated in evident
bad faith. Judgment was rendered in favor of the
spouses ordering PB to render an accounting, to allow
the off-setting of the obligation and awarding them
moral damages, actual damages on unrealized
profits, exemplary damages and attorney's fees. On
appeal, the Court of Appeals upheld the findings of the
trial court but reduced the amount of damages
awarded. A motion for partial reconsideration having
been denied, hence, this recourse with PB mainly
assailing the factual findings of the Court of Appeals.
Issue: Are the spouses entitled to actual damages and
exemplary damages?
Ruling: The spouses are entitled to exemplary
damages but not actual damages based on unrealized
profits. Foreclosure is but a necessary consequence of
non-payment of a mortgage indebtedness and that the
mortgage can be foreclosed only when the debt
remains unpaid at the time it is due. The application for
extrajudicial foreclosure of the mortgage which is not
due and demandable was premature. This entitles the
mortgagor to moral and exemplary damages and
attorney's fees. However, the award of actual damages
based on unrealized profits merely on the basis of the
sole testimony of one of the parties, was insufficient.
The same must be supported by independent
evidence. (Short form for your digests)
Exemplary damages
The award of exemplary damages is in order in view of
the malicious and unwarranted application for
extrajudicial foreclosure by petitioner which was
obviously done to harass, embarrass, annoy, or ridicule
private respondents. Likewise, petitioner, in its
application for extrajudicial foreclosure, included the
other loans of private respondents which were not
covered by the real estate mortgage agreement, such
as the loan of P175,000 which was a time loan, and the
amount of P400,000.00 which was a clean loan.
Moreover, petitioner unjustifiably refused to give
private respondents copies of their account ledgers
which would show the deposits made by them. Also,
petitioner bank's failure to credit the deposit in the
account of private respondents constituted gross
negligence in the performance of its contractual
obligation which amounts to evident bad faith. Verily,
all these acts of petitioner were accompanied by bad
faith and done in wanton, fraudulent and malevolent
manner warranting the award of exemplary damages in
favor of private respondents, in accordance with Article
2232 of the Civil Code.
Actual damages
Under Articles 2199 and 2200 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. There are two kinds of actual or compensatory
damages: one is the loss of what a person already
possesses, and the other is the failure to receive as a
benefit that which would have pertained to him. In the
latter instance, the familiar rule is that damages
consisting of unrealized profits, frequently referred as
"ganaciasfrustradas" or lucrumcessans," are not to be
granted on the basis of mere speculation, conjecture,
or surmise, but rather by reference to some reasonably
definite standard such as market value, established
experienced, or direct inference from known
circumstances.
Anent the award of actual damages, the Court of
Appeals granted private respondents the amount of
P18,000 per month representing private respondents'
unrealized profits from his gasoline station business, to
commence from October 16, 1984. In the case at bar,
actual damages in the form of unrealized profits were
awarded on the basis of the sole testimony of private
respondent Salvador Chua. However, other than the
testimony of Salvador Chua, private respondents failed
to present documentary evidence which is necessary
to substantiate their claim for actual or compensatory
damages. In order to recover this kind of damages, the
injured party must prove his case. Applying the
foregoing test to the instant case, the Court finds the
evidence of private respondents insufficient to be
considered within the purview of "best evidence." The
bare assertion of private respondent Salvador Chua
that he lost an average of P18,000 per month is
inadequate if not speculative and should be admitted
with extreme caution especially because it is not
supported by independent evidence. Private
respondents could have presented such evidence as
reports on the average actual profits earned by their
gasoline business, their financial statements, and other
evidence of profitability which could aid the court in
arriving with reasonable certainty at the amount of
profits which private respondents failed to earn. Private
respondents did not even present any instrument or
deed evidencing their claim that they have transferred
their right to operate their gasoline station to their
relatives. We cannot, therefore, sustain the award of
P18,000 a month as unrealized profits commencing
from October 16, 1984 because this amount is not
amply justified by the evidence on record. Further,
well-settled is the rule that even if the petition for
extrajudicial foreclosure filed by petitioner against
private respondents is clearly unfounded, this does not
necessarily mean, in the absence of specific facts
proving damages, that actual damage has been
sustained. The Court cannot rely on speculations as to
the fact and amount of damages. It must depend on
actual proof of the damages alleged to have been
suffered.
DE VERA VS. SAN DIEGO CONSTRUCTION 18
October 2001
Facts:
For Digest:
San Diego Construction, Inc. (QPSDCI), owned a
parcel of land located on which it built Lourdes I
Condominium. To finance its construction and
development, QPSDCI entered into a Syndicate Loan
Agreement with respondents Asiatrust Development
Bank (ASIATRUST), Second Laguna Development Bank
(LAGUNA) and Capitol City Development Bank
(FUNDERS). Gregorio de Vera Jr. and QPSDCI entered
into a Condominium Reservation Agreement where De
Vera bought a condominium unit for P325,000.00
under the following agreed terms of payment: (a) an
option money of P5,000.00 payable upon signing of the
agreement to form part of the purchase price; (b) a full
downpayment of P175,675.00 broken down into the
reservation fee of P5,000.00 and three (3) equal
monthly installments payable beginning the month
after the signing of the contract; and, (c) the remaining
balance of P160,000.00 to be secured through
petitioner's Pag-IBIG and Open-Housing Loan. Pending
release of the loan, petitioner was to avail of a bridge
financing loan with ASIATRUST or any accredited
originating bank of the Pag-IBIG program. QPSDCI
failed to pay its obligations to the FUNDERS.
ASIATRUST extrajudicially foreclosed the mortgage on
twenty-seven (27) condominium units, including that of
petitioner De Vera Jr. The units were sold at public
auction, with the FUNDERS as the highest bidder.
Petitioner, upon discovering that the FUNDERS
had already published a notice of extrajudicial
foreclosure of the mortgage, filed a complaint for
damages and injunction with urgent prayer for
issuance of a writ of preliminary injunction, annulment
of mortgage based on fraud, with urgent prayer for the
issuance of a writ of preliminary attachment and
specific performance. The trial court rendered
judgment "directing the respondents to pay to the
petitioner jointly and severally the sum equivalent
to the penalties and charges plus whatever
amount may be necessary to redeem Unit 211-2C
from any lien and encumbrances so that the title may
be released and delivered to the plaintiff, free from any
lien and encumbrances, subject only to the deduction
of his unpaid balance of P139,000.00, which the
plaintiff should pay out of his own funds, plus
exemplary damages of P100,000.00 each and to
pay plaintiff attorney's fees jointly and severally x
xx P50,000.00 plus the expenses of litigation." The
lower court denied plaintiff's prayer for moral
damages and dismissed defendants' counterclaim
against the plaintiff and cross-claims against each
other. The Court of Appeals affirmed the decision of the
trial court with the modification that respondents were
ordered solidarily to pay petitioner P50,000.00 as
nominal damages, but the award for actual and
exemplary damages was deleted.
Issue:
WON Court of Appeals is correct in deleting the
award of actual and exemplary damages and
attorney's fees in favor of De Vera?
Ruling:
In deleting the award for damages, the Court of
Appeals explained - As earlier found, QPSDCI failed to
comply with its warranties as seller. Unfortunately,
plaintiff-appellee posits the propriety of the award of
actual damages only in the probable sense: that such
award is to the amount of interests, penalties and other
charges as plaintiff may stand liable for by reason of
the non-payment of the purchase price. In other words,
plaintiff-appellee admits not having suffered damages
in consequence of non-compliance of seller's
warranties. Since actual damages are predicated on
such pecuniary loss as duly proved, the award of the
lower court therefor is plainly not in order x xx
(citations omitted).
We agree with the respondent Court of Appeals
on this point. Petitioner did not present any proof that
he suffered any damage as a result of the breach of
seller's warranty. He did not lose possession of his
condominium unit, although the same had not yet
been registered in his name. In his Consolidated Reply,
petitioner came up with this feeble argument for
claiming actual damages, a rehash of his motion for
reconsideration with the Court of Appeals - Petitioner
reiterates that the compensatory damages awarded is
to the amount of interests, penalties and other charges
as (he) may stand liable for by reason of the non-
payment of the balance of the purchase price of Unit
#211 in consequence of the respondent's fault or
negligence as evidenced by Exhs. S and S-1. The
compensation is the same amount as whatever the
liability may be and therefore merely offsets the
liability x xxx
The cost of clearing the CCT of liens and
encumbrances and transferring it to the name of the
petitioner are also part of the actual or compensatory
damages and are its own proof. Article 2199 of the Civil
Code provides that one is entitled to adequate
compensation only for such pecuniary loss suffered by
him as is "duly proved." This provision denies the grant
of speculative damages, or such damage not actually
proved to have existed and to have been caused to the
party claiming the same. Actual damages, to be
recoverable, must not only be capable of proof, but
must actually be proved with reasonable degree of
certainty. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and
amount of damages.
This does not mean however that petitioner is
liable to private respondents for penalties, interests
and other charges that accrued by reason of non-
payment of the balance of the purchase price.
Respondent ASIATRUST had made several
representations to petitioner that his loan had been
approved. The tenor of the letters sent by ASIATRUST
would lead a reasonable man to believe that there was
nothing left to do but await the release of the loan.
ASIATRUST cannot hide behind the pithy excuse that
the grant of the bridge financing loan was subject to
the release of the Pag-IBIG loan. The essence of bridge
financing loans is to obtain funds through an interim
loan while the Pag-IBIG funds are not yet available. To
await the release of the Pag-IBIG loan would render any
bridge financing nugatory. Thus, we agree with the trial
court when it said that "the conclusion is inevitable
that although the plaintiff was not able to pay, he was
a victim of circumstances and his failure was not due to
his own fault."
For Recit:
Respondent Q. P. San Diego Construction, Inc.
(QPSDCI), owned a parcel of land located on which it
built Lourdes I Condominium. To finance its
construction and development, QPSDCI entered into a
Syndicate Loan Agreement with respondents Asiatrust
Development Bank (ASIATRUST), Second Laguna
Development Bank (LAGUNA) and Capitol City
Development Bank (CAPITOL, hereafter collectively
known as FUNDERS). QPSDCI mortgaged to the creditor
banks as security the property and the condominium
constructed, it was registered with the Register of
Deeds and annotated on the individual condominium
certificates of title (CCT) of each condominium unit.
Petitioner Gregorio de Vera Jr. and QPSDCI,
through its authorized agent Fil-Estate Realty
Corporation (FIL-ESTATE), entered into a Condominium
Reservation Agreement where petitioner undertook to
buy a condominium unit for P325,000.00 under the
following agreed terms of payment: (a) an option
money of P5,000.00 payable upon signing of the
agreement to form part of the purchase price; (b) a full
downpayment of P175,675.00 broken down into the
reservation fee of P5,000.00 and three (3) equal
monthly installments payable beginning the month
after the signing of the contract; and, (c) the remaining
balance of P160,000.00 to be secured through
petitioner's Pag-IBIG and Open-Housing Loan. Pending
release of the loan, petitioner was to avail of a bridge
financing loan with ASIATRUST or any accredited
originating bank of the Pag-IBIG program.
Petitioner paid the reservation fee of
P5,000.00, and the balance of the downpayment of
P167,000.00, well before the due date. As incentive,
petitioner was given a full discount on cash payment
by QPSDCI to bring the total payment to P184,040.00.
Pursuant to their Condominium Reservation
Agreement, petitioner submitted through FIL-ESTATE
his application for the Pag-IBIG loan. On 28 December
1983 ASIATRUST as originating bank notified FIL-
ESTATE that petitioner's Pag-IBIG loan application had
been approved. In a letter dated 18 January 1984
QPSDCI President Quintin P. San Diego forwarded the
letter to petitioner. However, the amount approved was
only P139,100.00 and not P160,000.00. Additional
charges further reduced the amount to P117,043.33.
Petitioner De Vera Jr. approached QPSDCI to have the
P12,040.00 discount credited to his additional equity.
Since the resultant net loan of P117,043.33 was
insufficient to cover the balance of the purchase price,
De Vera Jr. negotiated with QPSDCI to defer payment of
the P23,916.67 deficiency until the project was
completed and the unit was ready for turnover. QPSDCI
agreed. The condominium project was substantially
completed in June 1984 and the unit was turned over
to De Vera Jr. the following month. Petitioner paid
QPSDCI the P23,916.67 shortfall between the balance
and the granted loan.
On 26 June 1984 ASIATRUST through its Vice-
President Pedro V. Lucero and Manager Nicanor T.
Villanueva wrote to QPSDCI asking the unit buyers to
pay in advance the costs of the transfer of titles and
registration of their Pag-IBIG loan mortgages. QPSDCI
forwarded the letter to De Vera Jr. and requested that
he pay the amount to QPSDCI. As ASIATRUST indicated
that the amount be paid directly to it, De Vera Jr. went
to the bank for clarification. On 23 August 1983, after
learning that ASIATRUST was in possession of the
certificate of title, De Vera Jr. paid the transfer
expenses directly to ASIATRUST.
On 17 September 1984 ASIATRUST sent
another notice of approval to QPSDCI and De Vera Jr.
with the notation, "additional equity of all accounts
have (sic) to be paid directly to the Bank." On 3
October 1984 ASIATRUST wrote another letter asking
QPSDCI to advise the unit buyers, among others, to
pay all additional and remaining equities on 10 October
1984; that their Pag-IBIG loan mortgages would be
registered only upon payment of those equities; and,
that loan mortgages registered after 31 October 1984
would be subject to the increased Pag-IBIG interest
rates. On 12 October 1984 ASIATRUST also wrote a
letter to petitioner and signed by its Assistant Manager
Leticia R. de la Cruz informing him that his housing
loan would only be implemented upon the following
conditions: (a) Payment of the remaining equity
directly to ASIATRUST Development Bank; and (b)
Signing of all Pag-IBIG documents not later than 20
October 1984, so his mortgages could be registered on
or before 31 October 1984. Mortgages registered
beyond said date shall subject the Pag-IBIG loan to the
increased interest rates of the National Home Mortgage
Finance Corp. (per Circular #27 dated June 21, 1984).
The letter came as a total surprise to the
petitioner; all the while he thought that his loan had
already been released to QPSDCI and the titles
transferred to his name; he promptly wrote ASIATRUST
to seek clarification; ASIATRUST responded by
informing De Vera Jr. that the developmental loan
agreement between QPSDCI and the three (3) banks,
under which the individual titles of the condominium
units were mortgaged in favor of the FUNDERS to
secure the loan, shall be paid out of the net proceeds
of the Pag-IBIG loans of the buyers; that the total
amount of loan from the FUNDERS was distributed
among all condominium units such that each unit had
to bear a certain portion of the total loan, or a "loan
value;" that per agreement with QPSDCI, ASIATRUST
would only grant the Pag-IBIG Housing Loan with the
release of the mortgage liens, which could not be
released unless the buyers fully paid their respective
loan values; and that petitioner's equity payments to
QPSDCI had not been remitted to the bank. On 30 May
1985 ASIATRUST informed QPSDCI that it could no
longer extend the bridge financing loan to some of the
buyers, including petitioner, for various reasons,
among which was that petitioner had already exceeded
the age limit, hence, he was disqualified.
After learning of the disapproval of his loan,
petitioner wrote the president of QPSDCI to make
arrangements to settle his balance. Since petitioner
had already invested a substantial amount in
remodeling and improving his unit, rescinding the sale
was no longer a viable option. Consequently, he only
asked the president of QPSDCI for some assurance that
the title would be turned over to him upon full
payment. As petitioner failed to obtain the housing
loan, he was not able to pay the balance of the
purchase price. QPSDCI sent him a letter dated 6
August 1987 presenting him with two options: (a) to
pay the remaining balance of the purchase price, with
interest, which had already ballooned to P263,751.63,
on or before 15 August 1987; or, (b) to pay rent for the
use of the unit from 28 July 1984 to June 1987.
On 20 May 1988 petitioner, upon discovering
that the FUNDERS had already published a notice of
extrajudicial foreclosure of the mortgage, filed a
complaint against respondents for damages and
injunction with urgent prayer for issuance of a writ of
preliminary injunction, annulment of mortgage based
on fraud, with urgent prayer for the issuance of a writ
of preliminary attachment and specific performance.
Meanwhile, QPSDCI failed to pay its obligations to the
FUNDERS. On 23 May 1988 ASIATRUST extrajudicially
foreclosed the mortgage on twenty-seven (27)
condominium units, including that of petitioner De Vera
Jr. The units were sold at public auction, with the
FUNDERS as the highest bidder. The certificate of sale
was issued and annotated on the CCTs.
On 3 March 1992 the trial court rendered
judgment "directing the defendants (herein
respondents) to pay to the plaintiff (herein petitioner)
jointly and severally the sum equivalent to the
penalties and charges plus whatever amount
may be necessary to redeem Unit 211-2C from
any lien and encumbrances so that the title may be
released and delivered to the plaintiff, free from any
lien and encumbrances, subject only to the deduction
of his unpaid balance of P139,000.00, which the
plaintiff should pay out of his own funds, plus
exemplary damages of P100,000.00 each and to
pay plaintiff attorney's fees jointly and severally x
xx P50,000.00 plus the expenses of litigation." The
lower court denied plaintiff's prayer for moral
damages and dismissed defendants' counterclaim
against the plaintiff and cross-claims against each
other. The Court of Appeals affirmed the decision of the
trial court with the modification that respondents were
ordered solidarily to pay petitioner P50,000.00 as
nominal damages, but the award for actual and
exemplary damages was deleted.
MERALCO vs. TEAM Electronics Corp. ET AL
FACTS: Respondent Technology Electronics Assembly
and Management Pacific Corporation (TPC) wholly own
Respondent T.E.A.M. Electronics Corporation (TEC). On
the other hand, petitioner Manila Electric Company
(Meralco) is a utility company supplying electricity in
the Metro Manila area. MERALCO alleges that TEC
tampered the electric meters in its buildings and
should thus be liable for differential billings. For failure
of TEC to pay such differential billing, petitioner
disconnected the electricity supply to said buildings.
TEC and TPC filed a complaint for damages against
MERALCO before the RTC Pasig. The RTC ruled in favor
of TEC-TPC and ordered MERALCO to pay the former
Actual Damages, Moral damages, Exemplary Damages
and Attorneys Fees. The court found the evidence of
petitioner insufficient to prove that TEC was guilty of
tampering the meter installations. The CA affirmed the
RTC decision with modifications, hence this petition for
review on certiorari under Rule 45.
ISSUE 1:
RULING 1:
As to the damages awarded by the CA, SC modified the
same. Actual damages are compensation for an injury
that will put the injured party in the position where it
was before the injury. They pertain to such injuries or
losses that are actually sustained and susceptible of
measurement. Except as provided by law or by
stipulation, a party is entitled to adequate
compensation only for such pecuniary loss as is duly
proven. Basic is the rule that to recover actual
damages, not only must the amount of loss be capable
of proof; it must also be actually proven with a
reasonable degree of certainty, premised upon
competent proof or the best evidence obtainable.
Respondent TEC sufficiently established, and petitioner
in fact admitted, that the former paid P1,000,000.00
and P280,813.72 under protest, the amounts
representing a portion of the latter's claim of
differential billing. With the finding that no tampering
was committed and, thus, no differential billing due,
the aforesaid amounts should be returned by
petitioner, with interest, as ordered by the Court of
Appeals and pursuant to the guidelines set forth by the
Court.46
However, despite the appellate court's conclusion that
no tampering was committed, it held Ultra solidarily
liable with petitioner for P1,000,000.00, only because
the former, as occupant of the building, promised to
settle the claims of the latter. This ruling is erroneous.
Ultra's promise was conditioned upon the finding of
defect or tampering of the meters. It did not
acknowledge any culpability and liability, and absent
any tampered meter, it is absurd to make the lawful
occupant liable. It was petitioner who received the P1
million; thus, it alone should be held liable for the
return of the amount.
ISSUE 2: is the award of MD proper?
RULING 2:
NO. SC deems it proper to delete the award of moral
damages. TECs claim was premised allegedly on the
damage to its goodwill and reputation. As a rule, a
corporation is not entitled to moral damages because,
not being a natural person, it cannot experience
physical suffering or sentiments like wounded feelings,
serious anxiety, mental anguish and moral shock. The
only exception to this rule is when the corporation has
a reputation that is debased, resulting in its humiliation
in the business realm. But in such a case, it is
imperative for the claimant to present proof to justify
the award. It is essential to prove the existence of the
factual basis of the damage and its causal relation to
petitioners acts. In the present case, the records are
bereft of any evidence that the name or reputation of
TEC/TPC has been debased as a result of petitioners
acts
b.) As to earnings
Pleyto vs Lomboy
FACTS:A head-on collision between a bus and a car
along McArthur Highway in Gerona, Tarlac happened on
May 16, 1995 at around 11:30am. Petitioner Philippine
Rabbit Bus Lines, Inc (PRBL), bound for Vigan, Ilocos
Sur at the time of the accident, is engaged in carrying
passengers and goods for a fare servicing various
routes in Central and Northern Luzon. Its driver was
Ernesto Pleyto. Ricardo Lomboy was a passenger to a
Mitsubishi Lancer car driven by Arnulfo Asuncion,
Ricardos brother-in-law. Carmela, the daughter of
Ricardo, also a passenger to said car, suffered injuries
requiring hospitalization. But her father Ricardo
Lomboy died. Ricardos heirs filed an action for
damages against Pleyto and PRBL. A witness and one
of the bus passengers, RollyOrpilla, testified that Pleyto
tried to overtake a tricycle but hit it instead. Pleyto
then swerved in to the left opposite lane and smashed
the Manila-bound car killing Arnulfo and Ricardo
Lomboy while the other passengers, Carmela and
friend Rhino Daba suffered injuries. According to
Pleyto, the tricycle suddenly stopped without warning
to which Pleyto stepped on the brakes and bus lost
speed but swerved to the other lane to avoid hitting
the tricycle. Unfortunately, it collided with the Manila-
bound Mitsubishi car.
The trial court rendered decision in favor of the
plaintiffs awarding P1,642,521.00 for lost earnings of
Ricardo Lomboy. It found that Pleyto is negligent and
lacked precaution when he overtook the tricycle
disregarding completely the approaching car in the
other lane. Pleyto should have been more prudent in
overtaking considering the slippery road. The court
held that Pleyto violated traffic rules and regulations
and was negligent under Article 2185 of the Civil Code
and PRBL liable as owner of the bus and as employer of
Pleyto under Article 2180 of the Civil Code for its failure
to observe the required diligence in its supervision of
its employees and the safe maintenance of its buses.
CA affirmed the trial courts decision with modification
in the award of damages reducing the award for loss of
earning capacity to P1,152,000.00 and took note of the
amounts that were duly supported by receipts only.
Petitioners moved for reconsideration but the appellate
court denied it. Hence, this petition.
ISSUE: Whether the CA erred in pegging the monthly
living expenses at 50% of gross earnings considering
that no substantial proof was presented to prove
Lomboys gross income
RULING:No reversible error may be attributed to the
court in fixing the loss of earning capacity at the
amount P1,152,000.00. In considering the earning
capacity of the victim as an element of damages, the
net earnings, which is computed by deducting
necessary expenses from the gross earnings, and not
the gross earnings, is to be utilized in the
computation. The amount of net earnings was arrived
at after deducting the necessary expenses (pegged at
50% of gross income) from the gross annual income.
This computation is in accord with settled
jurisprudence. (Villa Rey case) The testimony of the
wife, Maria Lomboy, that her husband was earning a
monthly income of P8,000.00 is sufficient to establish a
basis for an estimate of damages for loss of earning
capacity. Jurisprudence provides that the factors that
should be taken into account in determining the
compensable amount of lost earnings are:
the number of years for which the victim would
otherwise have lived; and,
the rate of loss sustained by the heirs of the
deceased.
Factor No. 1
Life expectancy is computed by applying the formula
(2/3 x [80-age at death]) adopted from the American
Expectancy Table of Mortality or the Actuarial
Combined Experience Table of Mortality.
Factor No. 2
Multiply the life expectancy by the net earnings of the
deceased, i.e, the total earnings less expenses
necessary in the creation of such earnings or income
and less living and other incidental expenses. The net
earning is ordinarily computed at fifty percent of the
gross earnings.
Thus, in the given case, the formula used by this Court
in computing loss of earning capacity is:
Net Earning Capacity = [2/3 x (80 age at the time of
death) x (gross annual income reasonable and
necessary living expenses)]
= [2/3 x (80 44)] x [(P96,000 50%of P96,000)]
= [2/3 x (36)] x [(P96,000 P48,000)]
= 24 x P48,000
= P1,152,000.00
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 defendants culpable
action. Its award is aimed at restoration of the spiritual
proportionate to the suffering inflicted. Thus, moral
damages of P500,000 is reduced to P100,000 in
keeping with the purpose of the law and jurisprudence
in allowing moral damages.
Lambert v. Heirs of Castillon
Facts: In the evening of January 13, 1991, Ray
Castillon visited the house of his brother Joel Castillon
and borrowed his motorcycle. He then invited his
friend, Sergio Labang, to roam around Iligan City. Ray
drove the motorcycle with Sergio as the backrider. At
around past 10:00 p.m., after eating supper at Honas
Restaurant and imbibing a bottle of beer, they
traversed the highway towards Tambo at a high
speed. Upon reaching Brgy.Sto. Rosario, they figured in
an accident with a Tamarawjeepney, owned by
petitioner Nelen Lambert and driven by Reynaldo
Gamot, which was traveling on the same direction but
made a sudden left turn. The incident resulted in the
instantaneous death of Ray and injuries to Sergio.
Respondents, the heirs of Ray Castillon, filed an
action for damages. On June 29, 1993, after a full-
blown trial, the court rendered a decision in favor of
the Castillon heirs but reduced Lamberts liability by
20% in view of the contributory negligence of Ray. The
sum of P633,091Php, representing loss of support,
death indemnity, funeral and related expenses, moral
damages and attorneys fees was awarded to the heirs.
The CA affirmed the decision of the trial court. Upon
petition to the SC, Lambert assigns as error the trial
courts computation as to the loss of earning capacity
of Ray Castillon because the computation is contrary to
the formula enunciated by the Court in the case of Villa
Rey Transit, Inc. vs. The Honorable Court of Appeals
Issue: WON the trial court erred in the
computation the loss of earning capacity of the
deceased Castillon?
Ruling:Yes. In considering the earning capacity of the
victim as an element of damages, the following factors
are considered in determining the compensable
amount of lost earnings: (1) the number of years for
which the victim would otherwise have lived; and (2)
the rate of loss sustained by the heirs of the deceased.
Jurisprudence provides that the first factor, i.e., life
expectancy, is computed by applying the formula (2/3
x [80 - age at death]) adopted in the American
Expectancy Table of Mortality or the Actuarial
Combined Experience Table of Mortality. As to the
second factor, it is computed by multiplying the life
expectancy by the net earnings of the deceased, i.e.,
the total earnings less expenses necessary in the
creation of such earnings or income and less living and
other incidental expenses. The net earning is
ordinarily computed at fifty percent (50%) of the
gross earnings. Thus, the formula used by the Court
in computing loss of earning capacity is: Net Earning
Capacity = [2/3 x (80 age at time of death) x
(gross annual income reasonable and necessary
living expenses)].
It was established that Ray was 35 at the time of
his death and was earning a gross annual income of
P31,876.00 as a driver at the Mindanao State
University. In arriving at the net earnings, the trial court
deducted from the gross annual income the annual
living expenses in the amount of P9,672.00, broken
down as follows: P20.00 a day for travel or P520.00 per
month; P60.00 a month for cigarettes; P26.00 for
drinks; and other personal expenses like clothing,
toiletries, etc. estimated at P200.00 per month. The
amount of P9,672.00, however, appears unrealistic,
and constitutes only 30.34% of the gross earnings. It
even includes expenses for cigarettes which by no
means can be classified as a necessary expense. Using
the cited formula with the net earnings computed at
50% of the gross earnings, a detailed computation is as
follows:
NET EARNING = LIFE EXPECTANCY [2/3 (80-
CAPACITY (X) age at the time of death)]
X = [2/3 (80-35)]
X = [2/3 (45)]
X = 30
X = P478,140.00
c.) As to requisites for extraordinary
inflation
Equitable PCI Bank vs Ng Sheung Ngor, GR No. 171545,
December 19, 2007
Facts: Ng Sheung Ngor doing business under the name
of Ken Marketing, Ken Appliance Division and Benjamin
Go went into an agreement with Equitable Bank to
avail of their peso and dollar credit facilities because
they had low interest rates. The group then signed the
promissory notes on various dates beginning on 1996.
However, they were unaware of the escalation clauses
in the documents which allowed Equitable Bank to
increase the interest rates at their pleasure, so they
filed an action for annulment and/or reformation of the
document.
The group did not pay the interest due on February 9,
2001 as well as the amount due on July 9, 2001. So
Equitable then set-off their deposits with the interest
and principal due them.
The RTC ruled that the group should pay their
obligations based on the date they contracted the
obligation (which was in 1996) instead of on the date
of maturity since there was extraordinary deflation.
However, it also ruled that the business reputation of
the group was severely damaged when Equitable froze
their accounts so it awarded moral and exemplary
damages to them.
Issue1: What are the requisites of extraordinary
deflation? Was it present in this case?
Ruling: No. The elements are:
1. that there was an official declaration of
extraordinary inflation or deflation from the Bangko
Sentral ng Pilipinas (BSP)
2. that the obligation was contractual in nature and
3. that the parties expressly agreed to consider the
effects of the extraordinary inflation or deflation.
Despite the devaluation of the peso, the BSP never
declared a situation of extraordinary inflation.
Moreover, although the obligation in this instance
arose out of a contract, the parties did not agree to
recognize the effects of extraordinary inflation (or
deflation). The RTC never mentioned that there was
such stipulation either in the promissory note or loan
agreement. The general rule is that the basis of
x GROSS
payment ANNUAL
will be the value of the currency at the date
INCOME (GAI)
of the maturity of the obligation. The exception is when
x [P31,876.00
under Article 1250, there is extraordinary inflation or
x [P31,876.00
deflation in which the basis of the payment will be the
x 15,938.00
value of the currency at the making of the obligation.
Since there was no deflation, they should pay at the
dollar exchange rate on the day of maturity.
Note: Extraordinary inflation exists when there is an
unusual decrease in the purchasing power of currency
(that is, beyond the common fluctuation in the value of
currency) and such decrease could not be reasonably
foreseen or was manifestly beyond the contemplation
of the parties at the time of the obligation.
Extraordinary deflation, on the other hand, involves an
inverse situation
Issue2: Can a depositor claim moral and exemplary
damages when the bank set-off his deposits with his
obligations because he failed to pay them?
Ruling: No. The elements for a grant of moral damages
are:
a) that he or she suffered besmirched reputation, or
physical, mental or psychological suffering sustained
by the claimant;
b) that the defendant committed a wrongful act or
omission
c)that the wrongful act or omission was the proximate
cause of the damages the claimant sustained
d) The case is predicated on any of the instances in
Articles 2219 and 2220.
In culpa contractual or breach of contract, moral
damages are recoverable only if the defendant acted in
fraudulently or in bad faith or in wanton disregard of
his contractual obligations. In this case, it was only
right for Equitable to set-off the deposits with their
debt since they have a creditor-debtor relationship.
Thus, any damage suffered by the group was purely
the consequence of their failure to pay the loan. Since
they were not entitled to moral damages, they were
also not entitled to exemplary damages. (And since
they were not entitled to both moral and exemplary
damages, they could also not be awarded attorneys
fees and litigation expenses.)
d.) Attorneys Fees
JOSE V. LAGON vs. HOOVEN
COMALCO INDUSTRIES, INC
FACTS:Sometime in April 1981 Lagon, a businessman
and HOOVEN entered into two (2) contracts,
denominated Proposal, whereby for a total
consideration of P104,870.00 HOOVEN agreed to sell
and install various aluminum materials in Lagons
commercial building in Tacurong, Sultan Kudarat.
HOOVEN filed an action against Lagon claiming that
the latter failed to pay his due despite HOOVENs
performance of its obligation. Lagon, in his answer,
denied liability and averred that HOOVEN was the party
guilty of breach of contract by failing to deliver and
install some of the materials specified in the proposals;
that as a consequence he was compelled to procure
the undelivered materials from other sources; that as
regards the materials duly delivered and installed by
HOOVEN, they were fully paid.
ISSUE:Who among the parties is entitled to damages?
RULING:HOOVEN's bad faith lies not so much on its
breach of contract - as there was no showing that its
failure to comply with its part of the bargain was
motivated by ill will or done with fraudulent intent - but
rather on its appalling temerity to sue petitioner for
payment of an alleged unpaid balance of the purchase
price notwithstanding knowledge of its failure to make
complete delivery and installation of all the materials
under their contracts. Although petitioner was found to
be liable to respondent to the extent of P6,377.66,
petitioner's right to withhold full payment of the
purchase price prior to the delivery and installation of
all the merchandise cannot be denied since under the
contracts the balance of the purchase price became
due and demandable only upon the completion of the
project. Consequently, the resulting social humiliation
and damage to petitioner's reputation as a respected
businessman in the community, occasioned by the
filing of this suit provide sufficient grounds for the
award of P50,000.00 as moral damages. On the part of
Lagon, he is ordered by the court to pay HOOVEN the
amount corresponding to the value of the materials
admittedly delivered to him.
SCC Chemicals vs State Investment (2001)
Facts:SCC Chemicals Corporation (SCC) obtained a
loan from State Investment House In. (State
Investment) amounting to P129,824.48. The chairman
and vice president of SCC executed a Comprehensive
Surety Agreement (similar to promissory note) binding
themselves to pay the obligation on maturity date. SCC
failed to pay when it matured. State Investment sent
demand letters but no payment was made.
State Investment filed a case for recovery of
money. SCC contended that the promissory note was
null and void for lack of consideration. Trial court ruled
in favor of State Investment. CA affirmed.
Note: There are two issues in this case. First on
the topic of attorneys fees and the other the
substantial issue (for recit purposes ang 2 nd issue in
case maam will ask)
Issue 1: Does the award by CA of attorneys fees
proper?
Ruling:No. SCC contended that CA sustained RTC
award of attorneys fees even if RTC did not state the
reason for the award. Citing Radio Communications vs
Rodriguez, when attorneys fees are awarded, the
reason for the award must be stated in the text of the
courts decision. Award of attorneys fess is the
exception rather than the rule, hence it is necessary for
the trial court to make findings of fact and law, which
would bring the case within the exception and justify
the grant of the award. Since the failure of explicitly
stating the rationale for the award, is shall be
disallowed.
Issue 2: Does State Investment sufficiently proved
authenticity of promissory note?
Ruling:Yes. SCC failed to appear several times on
hearing dates despite notice and was unable to cross-
examine the only witness of State investment. Thus,
SCC cannot claim that the testimony of witness is
hearsay since under ROC, when a party failed to object
to a hearsay evidence, the same is admissible.
Furthermore, SCC cannot claim that State Investment
needs to present the original documents because SCC
already admitted during pre-trial of the existence and
execution of the promissory note and receipt of the
demand letter. It is now too late to question the
authenticity of the presented documents.
e.) Temperate damages
BPI INVESTMENT CORP. vs. D.G. CARREON
COMMERCIAL CORP.
Facts:BPI Investment Corporation was engaged in
money market operations. D. G. Commercial
Corporation was a client of petitioner and started its
money market placements in September, 1978. BPI
Investments paid D. G. Carreon twice in interest of the
amount of P323,518.22, representing a single money
market placement, the first on December 12, 1979,
and the second on December 17, 1979. According to
petitioner, their bookkeeper made an error in posting
12-17 on the sales order slip for 12-12. BPI Investments
claimed that the same placement was also booked as
maturing on December 12, 1979. Aurora Carreon
instructed BPI Investments to roll over the whole
amount of P323,518.22 for another thirty days, or up to
January 11, 1980, at 19% interest. BPI Investments
claimed that roll overs were subsequently made from
maturing payments on which BPI Investments had
made over payments at a total amount of P410,937.09.
BPI Investments wrote respondents Daniel
Carreon and Aurora Carreon, demanding the return of
the overpayment of P410,937.09. The respondents
asserted that there was no overpayment and asked for
time to look for the papers. Upon the request of BPI
Investments, the spouses Daniel and Aurora Carreon
sent to BPI Investments a proposed memorandum of
agreement. Howver, BPI Investments, without
responding to the memorandum and proposal of D. G.
Carreon filed with the Court of First Instance of Rizal,
Branch 36, Makati, a complaint for recovery of a sum of
money against D. G. Carreon with preliminary
attachment. The trial court issued an order for
preliminary attachment after submission of affidavit of
merit to support the petition, and the posting of a bond
in the amount of P200,000.00. Susequently, the trial
court lifted the writ of attachment. BPI Investments
moved for reconsideration, but the trial court denied
the motion after finding the absence of double
payment to the defendants.
Both parties appealed to the CA. After due
proceedings, the CA promulgated a decision ordering
plaintiff BPI to pay the following amounts of damages:
Moral Damages of a)P1,000,000.00 to the late Daniel
G. Carreon or his estate represented by Aurora J.
Carreon; b)P1,000,000.00 to Aurora J. Carreon;
P500,000.00 to the late Josefa M. Jeceil or her estate
represented by Aurora J. Carreon;
Compensatory Damages of P1,500,000.00 to D. G.
Carreon Commercial Corporation; Exemplary Damages
ofP1,000,000.00 to all defendants; Attorneys Fees of
P500,000.00 to all defendants.
ISSUE: Whether or not BPI is guilty of gross negligence
in the handling of momey market placement and the
award for dames was proper?
HELD: No.Gross negligence implies a want or absence
of or failure to exercise slight care or diligence, or the
entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort
to avoid them. However, while petitioner BPI
Investments may not be guilty of gross negligence, it
failed to prove by clear and convincing evidence that
D. G. Carreon indeed received money in excess of what
was due them. The alleged payments in the complaint
were admitted by plaintiff itself to be withdrawals from
validly issued commercial papers, duly verified and
signed by at least two authorized high-ranking officers
of BPI Investments.
Exemplary damages are imposed by way of example or
correction for the public good, in addition to moral,
temperate, liquidated, or compensatory
damages. They are recoverable in criminal cases as
part of the civil liability when the crime was committed
with one or more aggravating circumstances; in quasi-
delicts, if the defendant acted with gross negligence;
and in contracts and quasi-contracts, if the defendant
acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner. BPI Investments did not act in a
wanton, fraudulent, reckless, oppressive, or malevolent
manner, when it asked for preliminary attachment. It
was just exercising a legal option. The sheriff of the
issuing court did the execution and the
attachment. Hence, BPI Investments is not to be
blamed for the excessive and wrongful attachment.
The award of moral damages and attorneys fees is also
not in keeping with existing jurisprudence. Moral
damages may be awarded in a breach of contract 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.
There is no doubt, however, that the damages
sustained by respondents were due to petitioners fault
or negligence, short of gross negligence. Temperate or
moderate 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 Court deems it prudent to
award reasonable temperate damages to respondents
under the circumstances.
MORAL DAMAGES
ALFONSO L. IRINGAN vs. HON. COURT OF
APPEALS and ANTONIO PALAO, represented by
his Attorney-in-Fact, FELISA P. DELOS SANTOS
Facts: On March 22, 1985, private respondent Antonio
Palao sold to petitioner Alfonso Iringan, an undivided
portion of lot at the Poblacion of Tuguegarao and
covered by Transfer Certificate of Title. The parties
executed a Deed of Sale on the same date with the
purchase price of P295,000.00, payable as follows:
P10,000.00 - upon the execution of the instrument;
P140,000.00 - on or before April 30, 1985; and
P145,000.00 - on or before December 31, 1985. When
the second payment was due, Iringan paid only
P40,000. Thus, on July 18, 1985, Palao sent a letter to
Iringan stating that he considered the contract as
rescinded. On August 20, 1985, Iringan through his
counsel Atty. Hilarion L. Aquino, replied that they were
not opposing the revocation of the Deed of Sale but
asked for the reimbursement of P50,000.00 - cash paid
P3,200.00 - geodetic engineer's fee; P500.00 -
attorney's fee; and the current interest. Palao stated in
a letter that he was not amenable to the
reimbursements. After correspondence through letters,
the parties still failed to arrive at an agreement. Palao
filed a Complaint for Judicial Confirmation of Rescission
of Contract and Damages against Iringan and his wife.
RTC ruled in favor of Palao and affirmed the rescission
of the contract and ordering, among others, to pay
P50,000.00 as moral damages; P10,000.00 as
exemplary damages; and P50,000.00 as attorney's fee;
and to pay the costs of suit.CA affirmed the above
decision.
ISSUE: Is the award of moral and exemplary damages
proper?
HELD: Yes.
Petitioner claims that the Court of Appeals erred in
finding bad faith on his part when he resisted the
rescissionand claimed he was ready to pay but never
actually paid respondent, notwithstanding that he
knew that appellee's principal motivation for selling the
lot was to raise money to pay his SSS loan. Petitioner
would have us reverse the said CA findings based on
the exception that these findings were made on a
misapprehension of facts.
The records do not support petitioner's claims. First,
per the records, petitioner knew respondent's reason
for selling his property. As testified to by petitionerand
in the deposition of respondent, such fact was made
known to petitioner during their negotiations as well as
in the letters sent to petitioner by Palao. Second,
petitioner adamantly refused to formally execute an
instrument showing their mutual agreement to rescind
the contract of sale, notwithstanding that it was
petitioner who plainly breached the terms of their
contract when he did not pay the stipulated price on
time, leaving private respondent desperate to find
other sources of funds to payoff his loan. Lastly,
petitioner did not substantiate by clear and convincing
proof, his allegation that he was ready and willing to
pay respondent. We are more inclined to believe his
claim of readiness to pay was an afterthought intended
to evade the consequence of his breach. There is no
record to show the existence of such amount, which
could have been reflected, at the very least, in a bank
account in his name, if indeed one existed; or,
alternatively, the proper deposit made in court which
could serve as a formal tender of payment. Thus, SC
finds the award of moral and exemplary damages
proper. Petition is denied.
CITY TRUST VS VILLANUEVA
FACTS:Isagani Villanueva filed a complaint for
damages based on breach of contract and/or quasi-
delict before the Regional Trial Court of Makati City
against City Trust Banking Corporation. Villanueva
alleged in his complaint that the bank breached its
contractual obligation to him as a depositor because of
its repeated dishonor of his valid and well-funded
check. The breach arose from the bank's gross
negligence and culpable recklessness in supplying the
wrong account number. The account number assigned
to Villanueva's new checkbook was the account
number of another depositor also named "Isagani
Villanueva," but with a different middle initial.
Villanueva, therefore, prayed for the award of actual,
moral and exemplary damages, and attorney's fees,
litigation expenses and costs of the suit. The bank
asserted, among others, that Villanueva's negligence
to remember his current account number was the
proximate cause of his self-proclaimed injury. It claimed
that it acted in good faith when it twice dishonored the
check and interposed counterclaims. After due
proceedings, the trial court rendered a decision which
dismissed the complaint and the compulsory
counterclaim for lack of merit. The trial court held that
Villanueva's negligence set the chain of events, which
resulted in his alleged losses and damages. Hence, he
must bear the consequent damages and losses he
allegedly suffered. With respect to Villanueva's claim
for actual damages in the form of loss of profits, the
court found the evidence in support thereof hearsay,
unreliable and not the best evidence. On appeal, the
Court of Appeals found the bank negligent and
awarded moral damages and attorney's fees to
Villanueva despite its findings that the bank's
negligence was not attended with malice and bad faith.
The appellate court, however, rejected Villanueva's
claim for compensatory damages and affirmed the trial
court's finding thereon. Both Villanueva and the bank
appealed to the Supreme Court by way of a petition for
review.
ISSUE:
Whether or not Villanueva suffered actual or
compensatory damages in the form of loss of profits
RULING:
Both the Court of Appeals and the trial court have
ascertained that Villanueva was unable to prove his
demand for compensatory damages arising from loss.
The unanimity of the factual ascertainment on this
point by the trial court and the Court of Appeals barred
Court from supplanting their finding and substituting it
with their own assessment.
The Court deleted the award of moral damages since
Villanueva failed to support his claim. None of the
circumstances mentioned in Article 2219 of the Civil
Code exists to sanction the award for moral damages.
Anent the award of attorney's fees, the Court deleted
the same. Attorney's fees may not be awarded where
there is no sufficient showing of bad faith in the parties'
persistence of a case other than an erroneous
conviction of the righteousness of his cause.
Accordingly, the Court reinstated the judgment of the
trial court.
FOR RECIT LANG PO
1. CIVIL LAW; DAMAGES; ACTUAL DAMAGES; CANNOT
BE PRESUMED BUT MUST BE PROVED WITH
REASONABLE CERTAINTY. The issue of whether
VILLANUEVA suffered actual or compensatory damages
in the form of loss of profits is factual. Both the Court of
Appeals and the trial court have ascertained that
VILLANUEVA was unable to prove his demand for
compensatory damages arising from loss. His evidence
thereon was found inadequate, uncorroborated,
speculative, hearsay and not the best evidence. Basic
is the jurisprudential principle that in determining
actual damages, the court cannot rely on mere
assertions, speculations, conjectures or guesswork but
must depend on competent proof and on the best
obtainable evidence of the actual amount of the loss.
Actual damages cannot be presumed but must be duly
proved with reasonable certainty.
2. ID.; ID.; MORAL DAMAGES; REQUISITES FOR AWARD
THEREOF. Moral damages include physical suffering,
mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social
humiliation, and similar injury. Although incapable of
pecuniary computation, moral damages may be
recovered if they are the proximate result of the
defendant's wrongful act or omission. Thus, case law
establishes the requisites for the award of moral
damages, viz: (1) there must be an injury, whether
physical, mental or psychological, clearly sustained by
the claimant; (2) there must be a culpable act or
omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of
the injury sustained by the claimant; and (4) the award
of damages is predicated on any of the cases stated in
Article 2219 of the Civil Code.
3. ID.; ID.; ID.; JUSTIFICATION FOR AWARD, NOT
PRESENT IN CASE AT BAR. It is beyond cavil that
VILLANUEVA had sufficient funds for the check. Had his
account number been correct, the check would not
have been dishonored. Hence, we can say that
VILLANUEVA's injury arose from the dishonor of his
well-funded check. We have already ruled that the
dishonor of the check does not entitle him to
compensatory damages. But, could the dishonor result
in his alleged "intolerable physical inconvenience and
discomfort, extreme humiliation, indignities, etc. which
he had borne before his peers, trading partners and
officers of Kingly Commodities?" True, we find that
under the circumstances of this case, VILLANUEVA
might have suffered some form of inconvenience and
discomfort as a result of the dishonor of his check.
However, the same could not have been so grave or
intolerable as he attempts to portray or impress upon
us. Further, it is clear from the records that the BANK
was able to remedy the caveat of Kingly Commodities
to VILLANUEVA that his trading account would be
closed at 5:30 p.m. on 26 June 1986. The BANK was
able to issue a manager's check in favor of Kingly
Commodities before the deadline. It was able to
likewise explain to Kingly Commodities the
circumstances surrounding the unfortunate situation.
Verily, the alleged embarrassment or inconvenience
caused to VILLANUEVA as a result of the incident was
timely and adequately contained, corrected, mitigated,
if not entirely eradicated. VILLANUEVA, thus, failed to
support his claim for moral damages. In short, none of
the circumstances mentioned in Article 2219 of the
Civil Code exists to sanction the award for moral
damages.
4. ID.; ID.; ATTORNEY'S FEES NOT AWARDED ABSENT
BAD FAITH. The award of attorney's fees should
likewise be deleted. 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. 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 of the Civil Code
demands factual, legal and equitable justification. Even
when a 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 there is no
sufficient showing of bad faith in the parties'
persistence of a case other than an erroneous
conviction of the righteousness of his cause.
Filipinas Broadcasting Network vs. Ago Medical
and Educational Center
Facts: "Expos" is a radio documentary program aired
every morning over DZRC-AM which is owned by
Filipinas Broadcasting Network, Inc. ("FBNI"). It is heard
over Legazpi City, the Albay municipalities and other
Bicol areas. In the morning of December 14 and 15,
1989, the hosts of the program exposed various
alleged complaints from students, teachers and
parents against Ago Medical and Educational Center-
Bicol Christian College of Medicine ("AMEC") and its
administrators. The alleged complaint include issues
like requiring students to take and pay for the subject
even if the subject does not have an instructor and that
AMEC is a dumping ground for moral and physically
misfit people. Claiming that the broadcasts were
defamatory, AMEC and Angelita Ago ("Ago"), as Dean
of AMECs College of Medicine, filed a complaint for
damages against FBNI including the hosts. The
complaint further alleged that AMEC is a reputable
learning institution and with the supposed expos, FBNI
and the hosts transmitted malicious imputations, and
as such, destroyed AMECs and Agos reputation. AMEC
and Ago included FBNI as defendant for allegedly
failing to exercise due diligence in the selection and
supervision of its employees, particularly the hosts.
The Court of Appeals affirmed the trial courts decision,
making FBNI and the hosts liable for libel. In holding
FBNI liable for libel, the lower court found that FBNI
failed to exercise diligence in the selection and
supervision of its employees.
Issues: 1: Whether or not the broadcasts are libelous
2: Whether or not AMEC is entitled to moral
damages
Ruling:
1 The broadcasts are libelous. Every defamatory
imputation is presumed malicious. The hosts failed
to show adequately their good intention and
justifiable motive in airing the supposed gripes of
the students. As hosts of a documentary or public
affairs program, they should have presented
the public issues free from inaccurate and
misleading information. Hearing the students
alleged complaints a month before the expos,
they had sufficient time to verify their sources and
information. However, they hardly made a
thorough investigation of the students alleged
gripes. Had the comments been an expression of
 opinion based on established facts, it is
immaterial that the opinion happens to be
mistaken, as long as it might reasonably be
inferred from the facts. However, the comments of
said hosts were not backed up by facts. Therefore,
the broadcasts are not privileged and remain
libelous per se. Moreover, there is insufficient
evidence on record that FBNI exercised due
diligence in the selection and supervision of its
employees, FBNI did not show how it exercised
diligence in supervising its broadcasters. FBNIs
alleged constant reminder to its broadcasters to
"observe truth, fairness and objectivity and to
refrain from using libelous and indecent language"
is not enough to prove due diligence in the
supervision of its broadcasters. Adequate training
of the broadcasters on the industrys code of
conduct, sufficient information on libel laws, and
continuous evaluation of the broadcasters
performance are but a few of the many ways of
showing diligence in the supervision of
broadcasters.
2 AMEC is entitled to moral damages. A juridical
person is generally not entitled to moral damages
because, unlike a natural person, it cannot
experience physical suffering or such
sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock. The Court of
Appeals cites Mambulao Lumber Co. v. PNB, et al.
to justify the award of moral damages. However,
the Courts statement in Mambulao that a
corporation may have a good reputation which, if
besmirched, may also be a ground for the award of
moral damages is an obiter dictum or only a
judge's incidental expression of opinion.
Nevertheless, AMECs claim for moral damages falls
under item 7 of Article 2219 of the Civil Code. This
provision expressly authorizes the recovery of
moral damages in cases of libel, slander or any
other form of defamation. Article 2219(7) does not
qualify whether the plaintiff is a natural or juridical
person. Therefore, a juridical person such as a
corporation can validly complain for libel or any
other form of defamation and claim for moral
damages.
MERALCO vs. TEAM ELECTRONICS
(see previous case)
Exemplary damages (Refer to previous cases)
BPI Investment vs DG Carreon
Producers Bank vs. Chua
Nominal Damages
Pedrosa v Rodriguez
Facts: Spouses Miguel and Rosalina de Rodriguez
adopted Maria Elena Rodriguez Pedrosa. Years later,
Miguel died intestate. Private respondents filed an
action to annul the adoption of Maria Elena. The RTC
upheld the validity of the adoption. While the case is
pending on appeal in the Court of Appeals, the
Rodriguezes entered into a Deed of Extrajudicial
Settlement and Partition with respondent Rosalina for
the partition of the estate of Miguel and of another
sister, Pilar. Rosalina acted as the representative of the
heirs of Miguel Rodriguez. New TCTs under the name of
the respondents were subsequently issued. Maria Elena
then sent her daughter to claim their share of the
properties from the Rodriguezes. The latter refused
saying that Maria Elena and Loreto were not heirs since
they were not their blood relatives. Maria Elena filed a
complaint to annul the partition.
Issue: Can Elena Rodriguez claim for nominal
damages?
Ruling: YES. Petitioner asks for the award of
damages. No receipts, agreements or any other
documentary evidence was presented to justify such
claim for damages. Actual damages, to be recoverable,
must be proved with a reasonable degree of
certainty. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and
amount of damages. The same is true for moral
damages. These cannot be awarded in the absence of
any factual basis. The unsubstantiated testimony of
Loreto Jocelyn Pedrosa is hearsay and has no probative
value. It is settled in jurisprudence that damages may
not be awarded on the basis of hearsay
evidence. Nonetheless, the failure of the petitioner to
substantiate her claims for damages does not mean
that she will be totally deprived of any damages. Under
the law, nominal damages are awarded, so that a
plaintiffs right, which has been invaded or violated by
defendants may be vindicated and recognized.
Considering that (1) technically, petitioner
sustained injury but which, unfortunately, was not
adequately and properly proved, (2) petitioner was
unlawfully deprived of her legal participation in the
partition of the estate of Miguel, her adoptive father,
(3) respondents had transferred portions of the
properties involved to third parties, and (4) this case
has dragged on for more than a decade, we find it
reasonable to grant in petitioners favor nominal
damages in recognition of the existence of a technical
injury. The amount to be awarded as such damages
should at least commensurate to the injury sustained
by the petitioner considering the concept and purpose
of said damages. Such award is given in view of the
peculiar circumstances cited and the special reasons
extant in this case. Thus, the grant of ONE HUNDRED
THOUSAND (P100,000.00) PESOS to petitioner as
damages is proper in view of the technical injury she
has suffered.