This petition raises the sole issue of whether or not the owner of a
private vehicle which figured in an accident can be held liable under Article
THIRD DIVISION
[G.R. No. 82318. May 18, 1989.]
GILBERTO M. DUAVIT, petitioner, vs. THE HON.
COURT OF APPEALS, Acting through the Third
Division, as Public Respondent, and ANTONIO
SARMIENTO, SR. & VIRGILIO CATUAR, respondents.
Rodolfo d. Dela Cruz for petitioner.
Bito, Lozada, Ortega & Castillo for respondents.
SYLLABUS
1. TORTS AND DAMAGES; OWNER OF A VEHICLE IS NOT LIABLE FOR AN
ACCIDENT INVOLVING THE VEHICLE IF DRIVEN WITHOUT THE OWNER'S
CONSENT BY ONE NOT EMPLOYED BY HIM. — The Supreme Court ruled
in Duquilleo v. Bayot (67 Phil. 131-133-134) [1939] that an owner of a vehicle
cannot be held liable for an accident involving the said vehicle if the same
was driven without his consent or knowledge and by a person not employed
by him.
2. CIVIL PROCEDURE; ABSOLUTE RULES NOT APPLIED UNQUALIFIEDLY
UNLESS THEY FIT FOUR SQUARE WITH PENDING CASES. — The Court
cannot blindly apply absolute rules based on precedents whose facts do not
jibe four square with pending cases. Every case must be determined on its
own peculiar factual circumstances. Where, as in this case, the records of
the petition fail to indicate the slightest indicia of an employer-employee
relationship between the owner and the erring driver or any consent given by
the owner for the vehicle's use, we cannot hold the owner liable.
DECISION
GUTIERREZ, JR., J p:
2180 of the Civil Code when the said vehicle was neither driven by an
employee of the owner nor taken with the consent of the latter.
The facts are summarized in the contested decision, as follows:
"From the evidence adduced by the plaintiffs, consisting
of the testimonies of witnesses Virgilio Catuar, Antonio
Sarmiento, Jr., Ruperto Catuar, Jr. and Norberto Bernarte
it appears that on July 28, 1971 plaintiffs Antonio
Sarmiento, Sr. and Virgilio Catuar were aboard a jeep with
plate number 77-99-F-1-Manila, 1971, owned by plaintiff,
Ruperto Catuar was driving the said jeep on Ortigas
Avenue, San Juan, Rizal; that plaintiff's jeep, at the time,
was running moderately at 20 to 35 kilometers per hour —
and while approaching Roosevelt Avenue, Virgilio Catuar
slowed down; that suddenly, another jeep with plate
number 99-97-F-J, Manila 1971 driven by defendant
Oscar Sabiniano hit and bumped plaintiff's jeep on the
portion near the left rear wheel, and as a result of the
impact plaintiff's jeep fell on its right and skidded by about
30 yards; that as a result plaintiff's jeep was damaged,
particularly the windshield, the differential, the part near
the left rear wheel and the top cover the jeep; that plaintiff
Virgilio Catuar was shown to the middle of the road; his
wrist was broken and he sustained contusions on the
head; that likewise plaintiff Antonio Sarmiento, Sr. was
trapped inside the fallen jeep, and one of his legs was
fractured.
"Evidence also shows that the plaintiff Virgilio Catuar
spent a total of P2,464.00 for repairs of the jeep, as
shown by the receipts of payment of labor and spare
parts (Exhs. H to H-7). Plaintiffs likewise tried to prove that
plaintiff Virgilio Catuar, immediately after the accident was
taken to Immaculate Concepcion Hospital, and then was
transferred to the National Orthopedic Hospital; that while
plaintiff Catuar was not confined in the hospital, his wrist
was in a plaster cast for a period of one month, and the
contusions on his head were under treatment for about
two (2) weeks; that for hospitalization, medicine and allied
expenses, plaintiff Catuar spent P5,000.00.
"Evidence also shows that as a result of the incident,
plaintiff Antonio Sarmiento, Sr. sustained injuries on his
leg; that at first, he was taken to the National Orthopedic
Hospital (Exh. K), but later he was confined at the Makati
Medical Center from July 29, to August 29, 1971 and then
from September 15 to 25, 1971; that his leg was in a
plaster cast for a period of eight (8) months; and that for
hospitalization and medical attendance, plaintiff Antonio
Sarmiento, Sr. spent no less than P13,785.25 as
evidenced by receipts in his possession. (Exhs. N to N-1).
"Proofs were adduced also to show that plaintiff Antonio
Sarmiento, Sr. is employed as Assistant Accountant of the
Canlubang Sugar Estate with a salary of P1,200.00 a
month; that as sideline, he also works as accountant of
United Haulers, Inc. with a salary of P500.00 a month; and
that as a result of this incident, plaintiff Sarmiento was
unable to perform his normal work for a period of at least
8 months. On the other hand, evidence shows that the
other plaintiff Virgilio Catuar is a Chief Clerk in Canlubang
Sugar Estate with a salary of P500.00 a month, and as a
result of the incident, he was incapacitated to work for a
period of one (1) month.
"The plaintiffs have filed this case both against Oscar
Sabiniano as driver, and against Gualberto Duavit as
owner of the jeep.
"Defendant Gualberto Duavit, while admitting ownership
of the other jeep (Plate No. 99-07-F-J Manila, 1971),
denied that the other defendant (Oscar Sabiniano) was his
employee. Duavit claimed that he has not been an
employer of defendant Oscar Sabiniano at anytime up to
the present.
"On the other hand documentary and testimonial evidence
show that defendant Oscar Sabiniano was an employee of
the Board of Liquidators from November 14, 1966 up to
January 4, 1973 (Annex A of Answer).
"Defendant Sabiniano, in his testimony, categorically
admitted that he took the jeep from the garage of
defendant Duavit without the consent or authority of the
latter (TSN, September 7, 1978, p. 8). He testified further,
that Duavit even filed charges against him for theft of the
jeep, but which Duavit did not push through as his
(Sabiniano's) parents apologized to Duavit on his behalf.
"Defendant Oscar Sabiniano, on the other hand in an
attempt to exculpate himself from liability, makes it appear
that he was taking all necessary precaution while driving
and the accident occurred due to the negligence of Virgilio
Catuar. Sabiniano claims that it was plaintiff's vehicle
which hit and bumped their jeep." (Rollo, pp. 21-23)
The trial court found Oscar Sabiniano negligent in driving the
vehicle but found no employer-employee relationship between him and
the petitioner because the latter was then a government employee and he
took the vehicle without the authority and consent of the owner. The
petitioner was, thus, absolved from liability under Article 2180 of the Civil
Code.
The private respondents appealed the case.
On January 7, 1988, the Court of Appeals rendered the
questioned decision holding the petitioner jointly and severally liable with
Sabiniano. The appellate court in part ruled:
"We cannot go along with appellee's argument. It will be
seen that in Vargas v. Langcay, supra, it was held that it is
immaterial whether or not the driver was actually
employed by the operator of record or registered owner,
and it is even not necessary to prove who the actual
owner of the vehicle and who the employer of the driver
is. When the Supreme Court ruled, thus: `We must hold
and consider such owner-operator of record (registered
owner) as the employer in contemplation of law, of the
driver,' it cannot be construed other than that the
registered owner is the employer of the driver in
contemplation of law. It is a conclusive presumption of
fact and law, and is not subject to rebuttal of proof to the
contrary. Otherwise, as stated in the decision, we quote:
" 'The purpose of the principles evolved
by the decisions in these matters will be defeated
and thwarted if we entertain the argument of
petitioner that she is not liable because the actual
owner and employer was established by the
evidence. . . . .' "
Along the same vein, the defendant-appellee Gualberto
Duavit cannot be allowed to prove that the driver
Sabiniano was not his employee at the time of the
vehicular accident.
"The ruling laid down in Amar V. Soberano (1966), 63 O.G.
6850, by this Court to the effect that the burden of proving
the non-existence of an employer-employee relationship
 is upon the defendant and this he must do by a
satisfactory preponderance of evidence, has to defer to
the doctrines evolved by the Supreme Court in cases of
damages arising from vehicular mishaps involving
registered motor vehicle. (See Tugade v. Court of
Appeals, 85 SCRA 226, 230). (Rollo, pp. 26-27).
The appellate court also denied the petitioner's motion for
reconsideration. Hence, this petition.
The petitioner contends that the respondent appellate court
committed grave abuse of discretion in holding him jointly and severally
liable with Sabiniano in spite of the absence of an employer-employee
relationship between them and despite the fact that the petitioner's jeep
was taken out of his garage and was driven by Sabiniano without his
consent.
As early as in 1939, we have ruled that an owner of a vehicle
cannot be held liable for an accident involving the said vehicle if the same
was driven without his consent or knowledge and by a person not
employed by him. Thus, in Duquillo v. Bayot (67 Phil. 131-133-134) [1939]
we said:
"Under the facts established, the defendant cannot be
held liable for anything. At the time of the accident, James
McGurk was driving the truck, and he was not an
employee of the defendant, nor did he have anything to
do with the latter's business; neither the defendant nor
Father Ayson, who was in charge of her business,
consented to have any of her trucks driven on the day of
the accident, as it was a holy day, and much less by a
chauffeur who was not in charge of driving it; the use of
the defendant's truck in the circumstances indicated was
done without her consent or knowledge; it may, therefore,
be said, that there was not the remotest contractual
relation between the deceased Pio Duquillo and the
defendant. It necessarily follows from all this that articles
1101 and following of the Civil Code, cited by the
appellant, have no application in this case, and, therefore,
the errors attributed to the inferior court are without
basis."
The Court upholds the above ruling as still relevant and better
applicable to present day circumstances.
The respondent court's misplaced reliance on the cases of Erezo
v. Jepte (102 Phil. 103 [1957] and Vargas v. Langcay (6 SCRA 174 [1962])
cannot be sustained. In the Erezo case, Jepte, the registered owner of the
truck which collided with a taxicab, and which resulted in the killing of
Erezo, claimed that at the time of the accident, the truck belonged to the
Port Brokerage in an arrangement with the corporation but the same was
not known to the Motor Vehicles Office. This Court sustained the trial
court's ruling that since Jepte represented himself to be the owner of the
truck and the Motor Vehicles Office, relying on his representation,
registered the vehicle in his name, the Government and all persons
affected by the representation had the right to rely on his declaration of
ownership and registration. Thus, even if Jepte were not the owner of the
truck at the time of the accident, he was still held liable for the death of
Erezo. Significantly, the driver of the truck was fully authorized to drive it.
Likewise, in the Vargas case, just before the accident occurred,
Vargas had sold her jeepney to a third person, so that at the time of the
accident she was no longer the owner of the jeepney. This court,
nevertheless, affirmed Vargas' liability since she failed to surrender to the
Motor Vehicles Office the corresponding AC plates in violation of the
Revised Motor Vehicle Law and Commonwealth Act No. 146. We further
ruled that the operator of record continues to be the operator of the
vehicle in contemplation of law, as regards the public and third persons,
and as such is responsible for the consequences incident to its operator.
The vehicle involved was a public utility jeepney for hire. In such cases,
the law does not only require the surrender of the AC plates but orders the
vendor operator to stop the operation of the jeepney as a form of public
transportation until the matter is reported to the authorities.
As can be seen, the circumstances of the above cases are entirely
different from those in the present case. Herein petitioner does not deny
ownership of the vehicle involved in the mishap but completely denies
having employed the driver Sabiniano or even having authorized the latter
to drive his jeep. The jeep was virtually stolen from the petitioner's garage.
To hold, therefore, the petitioner liable for the accident caused by the
negligence of Sabiniano who was neither his driver nor employee would
be absurd as it would be like holding liable the owner of a stolen vehicle
for an accident caused by the person who stole such vehicle. In this
regard, we cannot ignore the many cases of vehicles forcibly taken from
their owners at gunpoint or stolen from garages and parking areas and the
instances of service station attendants or mechanics of auto repair shops
using, without the owner's consent, vehicles entrusted to them for
servicing or repair. LLpr
We cannot blindly apply absolute rules based on precedents
whose facts do not jibe four square with pending cases. Every case must
 be determined on its own peculiar factual circumstances. Where, as in this
case, the records of the petition fail to indicate the slightest indicia of an
employer-employee relationship between the owner and the erring driver
or any consent given by the owner for the vehicle's use, we cannot hold
the owner liable.
We, therefore, find that the respondent appellate court committed
reversible error in holding the petitioner jointly and severally liable with
Sabiniano to the private respondent.
WHEREFORE, the petition is GRANTED and the decision and
resolution appealed from are hereby ANNULLED and SET ASIDE. The
decision of the then Court of First Instance (now Regional Trial Court) of
Laguna, 8th Judicial District, Branch 6, dated July 30, 1981 is
REINSTATED.
SO ORDERED.
Fernan (C.J., Chairman), Feliciano, Bidin and Cortes, JJ., concur.
||| (Duavit v. Court of Appeals, G.R. No. 82318, [May 18, 1989], 255 PHIL
470-476)
SECOND DIVISION
[G.R. No. 161946. November 14, 2008.]
MEDARDO AG. CADIENTE, petitioner, vs. BITHUEL
MACAS, respondent.
DECISION
QUISUMBING, Acting C.J p:
For review on certiorari are the Decision 1 dated September 16,
2002 and the Resolution 2 dated December 18, 2003 of the Court of
Appeals in CA-G.R. CV No. 64103, which affirmed the Decision 3 of the
Regional Trial Court (RTC) of Davao City, Branch 10, in Civil Case No.
23,723-95. aETDIc
The facts are undisputed.
Eyewitness Rosalinda Palero testified that on July 19, 1994, at
about 4:00 p.m., at the intersection of Buhangin and San Vicente Streets
in Davao City, 15-year old high school student Bithuel Macas, herein
respondent, was standing on the shoulder of the road. She was about
two and a half meters away from the respondent when he was bumped
and run over by a Ford Fiera, driven by Chona C. Cimafranca. Rosalinda
and another unidentified person immediately came to the respondent's
rescue and told Cimafranca to take the victim to the hospital.
Cimafranca rushed the respondent to the Davao Medical Center.
Dr. Hilario Diaz, the orthopedic surgeon who attended to the
respondent, testified that the respondent suffered severe muscular and
major vessel injuries, as well as open bone fractures in both thighs and
other parts of his legs. In order to save his life, the surgeon had to
amputate both legs up to the groins. 4
Cimafranca had since absconded and disappeared. Records
showed that the Ford Fiera was registered in the name of herein
petitioner, Atty. Medardo Ag. Cadiente. However, Cadiente claimed that
when the accident happened, he was no longer the owner of the Ford
Fiera. He alleged that he sold the vehicle to Engr. Rogelio Jalipa on
March 28, 1994, 5 and turned over the Certificate of Registration and
Official Receipt to Jalipa, with the understanding that the latter would be
the one to cause the transfer of the registration.
The victim's father, Samuel Macas, filed a complaint 6 for torts
and damages against Cimafranca and Cadiente before the RTC of
Davao City, Branch 10. Cadiente later filed a third-party
complaint 7 against Jalipa.
In answer, Jalipa claimed that he was no longer the owner of the
Ford Fiera at the time of the accident. He alleged that he sold the
vehicle to Abraham Abubakar on June 20, 1994. 8 He thus filed a fourth-
party complaint 9 against Abubakar.
After trial, the court ruled:
WHEREFORE, judgment is rendered in favor of
the plaintiff declaring Atty. Medardo Ag. Cadiente and
Engr. Rogelio Jalipa jointly and severally liable for
damages to the plaintiff for their own negligence as
stated above, and ordering them to indemnify the
plaintiff jointly and severally as follows: TcDIaA
(a) P300,000.00 as compensatory damages for
the permanent and almost total disability being suffered
by him;
(b) P150,000.00 for moral damages;
 (c) P18,982.85 as reimbursement of medical The petitioner contends that the victim's negligence contributed
expenses; to his own mishap. The petitioner theorizes that if witness Rosalinda
Palero, who was only two and a half meters away from the victim, was
(d) P30,000.00 for attorney's fees; and
not hit by the Ford Fiera, then the victim must have been so negligent as
(e) costs of suit. to be bumped and run over by the said vehicle. 13 DHAcET
SO ORDERED. 10 The petitioner further argues that having filed a third-party
complaint against Jalipa, to whom he had sold the Ford Fiera, the Court
On appeal, the Court of Appeals held that the findings of the trial
of Appeals should have ordered the latter to reimburse him for any
court were in accordance with the established facts and was supported
amount he would be made to pay the victim, instead of ordering him
by the evidence on record. Thus, it decreed as follows:
solidarily liable for damages. 14
WHEREFORE, premises considered, the instant
The respondent, for his part, counters that the immediate and
appeal is DENIED and the decision of the Regional Trial
proximate cause of the injuries he suffered was the recklessly driven
Court of Davao City in Civil Case No. 23723-95 is
Ford Fiera, which was registered in the petitioner's name. He insists that
hereby AFFIRMED.
when he was hit by the vehicle, he was standing on the uncemented
SO ORDERED. 11 portion of the highway, which was exactly where pedestrians were
supposed to be. 15
From the aforequoted decision of the Court of Appeals and the
subsequent denial of the motion for reconsideration, only Cadiente The respondent stresses that as the registered owner of the
appealed to this Court. Ford Fiera which figured in the accident, the petitioner is primarily liable
for the injury caused by the said vehicle. He maintains that the alleged
The instant petition alleges that the Court of Appeals committed
sale of the vehicle to Jalipa was tainted with irregularity, which indicated
serious errors of law in affirming the decision of the trial court. Petitioner
collusion between the petitioner and Jalipa. 16
Cadiente raises the following as issues:
After a careful consideration of the parties' submissions, we find
I.
the petition without merit.
WAS THERE . . . CONTRIBUTORY Article 2179 of the Civil Code provides:
NEGLIGENCE ON THE PART OF THE INJURED
PARTY? When the plaintiff's own negligence was the
immediate and proximate cause of his injury, he cannot
II. recover damages. But if his negligence was only
ARE BOTH DEFENDANT CADIENTE AND contributory, the immediate and proximate cause of the
THIRD-PARTY DEFENDANT JOINTLY AND SEVERALLY injury being the defendant's lack of due care, the
LIABLE TO THE INJURED PARTY? plaintiff may recover damages, but the courts shall
mitigate the damages to be awarded.
III.
The underlying precept on contributory negligence is that a
THE HONORABLE COURT OF APPEAL[S] plaintiff who is partly responsible for his own injury should not be
COMMIT[T]ED GRAVE LEGAL ERROR IN ORDERING entitled to recover damages in full, but must proportionately bear the
DEFENDANT CADIENTE AND THIRD-PARTY consequences of his own negligence. The defendant is thus held liable
DEFENDANT JALIPA JOINTLY AND SEVERALLY only for the damages actually caused by his negligence. 17
LIABLE. 12
In this case, records show that when the accident happened,
Essentially, the issues to be resolved are: (1) Whether there was the victim was standing on the shoulder, which was the uncemented
contributory negligence on the part of the victim; and (2) whether the portion of the highway. As noted by the trial court, the shoulder was
petitioner and third-party defendant Jalipa are jointly and severally liable intended for pedestrian use alone. Only stationary vehicles, such as
to the victim. those loading or unloading passengers may use the shoulder. Running
vehicles are not supposed to pass through the said uncemented portion respondent, who had since stopped schooling and is now forced to face
of the highway. However, the Ford Fiera in this case, without so much life with nary but two remaining limbs.
as slowing down, took off from the cemented part of the highway,
WHEREFORE, the petition is DENIED for lack of merit. The
inexplicably swerved to the shoulder, and recklessly bumped and ran
assailed Decision dated September 16, 2002 and Resolution dated
over an innocent victim. The victim was just where he should be when
December 18, 2003 of the Court of Appeals in CA-G.R. CV No. 64103
the unfortunate event transpired. cAHIaE
are hereby AFFIRMED. Costs against the petitioner. ADCTac
Cimafranca, on the other hand, had no rightful business driving
SO ORDERED.
as recklessly as she did. The respondent cannot be expected to have
foreseen that the Ford Fiera, erstwhile speeding along the cemented Carpio-Morales, Tinga, Velasco, Jr. and Brion, JJ., concur.
part of the highway would suddenly swerve to the shoulder, then bump
||| (Cadiente v. Macas, G.R. No. 161946, [November 14, 2008], 591 PHIL
and run him over. Thus, we are unable to accept the petitioner's
719-726)
contention that the respondent was negligent.

Coming now to the second and third issues, this Court has
recently reiterated in PCI Leasing and Finance, Inc. v. UCPB General
Insurance Co., Inc., 18 that the registered owner of any vehicle, even if FIRST DIVISION
he had already sold it to someone else, is primarily responsible to the
public for whatever damage or injury the vehicle may cause. We [G.R. No. 11154. March 21, 1916.]
explained,
. . . Were a registered owner allowed to evade
E. MERRITT, plaintiff-appellant, vs. GOVERNMENT OF
responsibility by proving who the supposed transferee
THE PHILIPPINE ISLANDS, defendant-appellant.
or owner is, it would be easy for him, by collusion with
others or otherwise, to escape said responsibility and
transfer the same to an indefinite person, or to one who Crossfield & O'Brien for plaintiff.
possesses no property with which to respond financially
for the damage or injury done. A victim of recklessness Attorney-General Avanceña for defendant.
on the public highways is usually without means to
discover or identify the person actually causing the
injury or damage. He has no means other than by a SYLLABUS
recourse to the registration in the Motor Vehicles Office
to determine who is the owner. The protection that the
1. DAMAGES; MEASURE OF. — Where the evidence shows
law aims to extend to him would become illusory were
that the plaintiff was wholly incapacitated for six months it is an error to
the registered owner given the opportunity to escape
restrict the damages to a shorter period during which he was confined in
liability by disproving his ownership. 19
the hospital.
In the case of Villanueva v. Domingo, 20 we said that the policy 2. SPECIAL STATUTES; CONSENT OF THE STATE TO BE
behind vehicle registration is the easy identification of the owner who SUED; CONSTRUCTION. — The Government of the Philippine Islands
can be held responsible in case of accident, damage or injury caused by having been "modeled after the federal and state governments of the
the vehicle. This is so as not to inconvenience or prejudice a third party United States' the decisions of the high courts of that country may be
injured by one whose identity cannot be secured. 21 used in determining the scope and purpose of a special statute.
Therefore, since the Ford Fiera was still registered in the 3. ID.; ID.; ID. — The state not being liable to suit except by its
petitioner's name at the time when the misfortune took place, the express consent, an act abrogating that immunity will be strictly
petitioner cannot escape liability for the permanent injury it caused the construed.
 4. ID.; ID.; ID. — An act permitting a suit against the state gives
rise to no liability not previously existing unless it is clearly expressed in
the act.
5. GOVERNMENT OF THE PHILIPPINE ISLANDS; LIABILITY
FOR THE NEGLIGENT ACTS OF ITS OFFICERS, AGENTS, AND
EMPLOYEES. — The Government of the Philippine Islands in only liable
for the negligent acts of its officers, agents, and employees when they
are acting as special agents within the meaning of paragraph 5 of article
1903 of the Civil code, and a chauffeur of the General Hospital is not
such a special agent.
DECISION
TRENT, J p:
This is an appeal by both partied from a judgment of the Court
of First Instance of the city of Manila in favor of the plaintiff for the sum
of P14,741, together with the costs of the cause.
Counsel for the plaintiff insist that the trial court erred (1) "in
limiting the general damages which the plaintiff suffered to P5,000,
instead of P25,000 as claimed in the complaint," and (2) "in limiting the
time when plaintiff was entirely disabled to two months and twenty-one
days and fixing the damage accordingly in the sum of P2,666, instead of
P6,000 as claimed by plaintiff in his complaint."
The Attorney-General on behalf of the defendant urges that the
trial court erred: (a) in finding that the collision between the plaintiff's
motorcycle and the ambulance of the General Hospital was due to the
negligence of the chauffeur; (b) in holding that the Government of the
Philippine Islands is liable for the damages sustained by the plaintiff as a
result of the collision, even if it be true that collision was due to the
negligence of the chauffeur; and (c) in rendering judgment against the
defendant for the sum of P14,741.
The trial court's findings of fact, which are fully supported by the
record, are as follows:
"It is a fact not disputed by counsel for the
defendant that when the plaintiff, riding on a motorcycle,
was going toward the western part of Calle Padre Faura,
passing along the west side thereof at a speed of ten to
twelve miles and hour, upon crossing Taft Avenue and
when he was ten feet from the southwestern intersection
of said streets, the General Hospital ambulance, upon
reaching said avenue, instead of turning toward the south,
after passing the center thereof, so that it would be on the
left side of said avenue, as is prescribed by the ordinance
and the Motor Vehicle Act, turned suddenly and
unexpectedly and long before reaching the center of the
street, into the right side of Taft Avenue, without having
sounded any whistle or horn, by which movement it struck
the plaintiff, who was already six feet from the
southwestern point or from the post placed there.
"By reason of the resulting collision, the plaintiff
was so severely injured that, according to Dr. Saleeby,
who examined him on the very same day that he was
taken to the General Hospital, he was suffering from a
depression in the left parietal region, a wound in the same
place and in beck part of his head, while blood issued
from his nose and he was entirely unconscious.
"The marks revealed that he had one or more
fractures of the skull and that the grey matter and brain
mass had suffered material injury. At ten o'clock of the
night in question, which was the time set for performing
the operation, his pulse was so weak and so irregular that,
in his opinion, there was little hope that he would live. His
right leg was broken in such a way that the fracture
extended to the outer skin in such manner that it might be
regarded as double and the wound would be expose to
infection, for which reason it was of the most serious
nature.
"At another examination six days before the day
of the trial, Dr. Saleeby notice that the plaintiff's leg
showed a contraction of an inch and a half and a
curvature that made his leg very weak and painful at the
point of the fracture. Examination of his head revealed a
notable re-adjustment of the functions of the brain and
nerves. The patient apparently was slightly deaf, had a
slight weakness in his eyes and in his mental condition.
This latter weakness was always noticed when the plaintiff
had to do any difficult mental labor, especially when he
attempted to use his memory for mathematical
calculations.
"According to the various merchants who testified
as witnesses, the plaintiff's mental and physical condition
 prior to the accident was excellent, and that after having
received the injuries that have been discussed, his
physical condition had undergone a noticeable
depreciation, for he had lost the agility, energy, and ability
that he had constantly displayed before the accident as
one of the best constructors of wooden buildings and he
could not now earn even a half of the income that he had
secured for his work because he had lost 50 per cent of
his efficiency. As a contractor, he could no longer, as he
had before done, climb up ladders and scaffoldings to
reach the highest parts of the building.
"As a consequence of the loss the plaintiff
suffered in the efficiency of his work as a contractor, he
had to dissolve the partnership he had formed with the
engineer, Wilson, because he was incapacitated from
making mathematical calculations on account of the
condition of his leg and of his mental faculties, and he had
to give up a contract he had for the construction of the Uy
Chaco building."
We may say at the outset that we are in full accord with the trial
court to the effect that the collision between the plaintiff's motorcycle
and the ambulance of the General Hospital was due solely to the
negligence of the chauffeur.
The two items which constitute a part of the P14,741 and which
are drawn in question by the plaintiff are (a) P5,000, the amount
awarded for permanent injuries, and (b) the P2,666, the amount allowed
for the loss of wages during the time the plaintiff was incapacitated from
pursuing his occupation. We fund nothing in the record which would
justify us in increasing the amount of the first. as to the second, the
record shows, and the trial court so found, that the plaintiff's services as
a contractor were worth P1,000 per month. The court, however, limited
the time to two months and twenty-one days, which the plaintiff was
actually confined in the hospital. In this we think there was error,
because it was clearly established that the plaintiff was wholly
incapacitated for a period of sex months. The mere fact that he
remained in the hospital only two months and twenty-one days while the
remainder of the six months was spent in his home, would not prevent
recovery for the whole time. We, therefore, find that the amount of
damages sustained by the plaintiff, without any fault on his part, is
P18,075.
As the negligence which caused the collision is a tort committed
by an agent or employee of the Government, the inquiry at once arises
whether the Government is legally liable for the damages resulting
therefrom.
Act No. 2457, effective February 3, 1915, reads:
"An act authorizing E. Merritt to bring suit against
the Government of the Philippine Islands and authorizing
the Attorney-General of said Islands to appear in said suit.
"Whereas a claim has been filed against the
Government of the Philippine Islands by Mr. E. Merritt, of
Manila, for damages resulting from a collision between his
motorcycle and the ambulance of the General Hospital on
March twenty-fifth, nineteen hundred and thirteen;
"Whereas it is not known who is responsible for
the accident nor is it possible to determine the amount of
damages, if any , to which the claimant is entitled; and
"Whereas the Director of Public Works and the
Attorney-General recommend that an act be passed by
the Legislature authorizing Mr. E. Merritt to bring suit in
the courts against the Government, in order that said
questions may be decided: Now, therefore,
"By authority of the United States, be it enacted
by the Philippine Legislature, that:
"SECTION 1. E. Merritt is hereby authorized to
bring suit in the Court of First Instance of the city of
Manila against the Government of the Philippine Islands in
order to fix the responsibility for the collision between his
motorcycle and the ambulance of the General Hospital,
and to determine the amount of the damages, if any, to
which Mr. E. Merritt is entitled on account of said collision,
and the attorney-General of the Philippine Islands is
hereby authorized and directed to appear at the trial on
the behalf of the Government of said Islands, to defend
said Government at the same.
"SEC. 2. This Act shall take effect on its passage.
"Enacted, February 3, 1915."
Did the defendant, in enacting the above quoted act, simply
waive its immunity from suit or did it also concede its liability to the
plaintiff? If only the former, then it cannot be held that the Act created
any new cause of action in favor of the plaintiff or extended the
defendant's liability to any case not previously recognized.
 All admit that the Insular Government (the defendant) cannot be
sued by an individual without its consent. It is also admitted that the
instant case is one against the Government. As the consent of the
Government to be sued by the plaintiff was entirely voluntary on its part,
it is our duty to look carefully into the terms of the consent, and render
judgment accordingly.
The plaintiff was authorized to bring this action against the
Government "in order to fix the responsibility for the collision between
his motorcycle and the ambulance of the General Hospital and to
determine the amount of the damages, if any, to which Mr. E. Merritt is
entitled on account of said collision, . . . ." These were the two questions
submitted to the court for determination. The Act was passed "in order
that said questions may be decided." We have "decided" that the
accident was due solely to the negligence of the chauffeur, who was at
the time an employee of the defendant, and we have also fixed the
amount of damages sustained by the plaintiff as a result of the collision.
Does the Act authorize us to hold that the Government is legally liable
for that amount? If not, we must look elsewhere for such authority, if it
exists.
The Government of the Philippine Islands having been "modeled
after the Federal and state Governments in the United States," we may
look to the decisions of the high courts of that country for aid in
determining the purpose and scope of Act No. 2457.
In the United States the rule that the state is not liable for the
torts committed by its officers or agents whom it employs, except when
expressly made so by legislative enactment, is well settled. "The
Government," says Justice Story, "does not undertake to guarantee to
any person the fidelity of the officers or agents whom it employs, since
that would involve it in all its operations in endless embarrassments,
difficulties and losses, which would be subversive of the public interest."
(Claussen vs. City of Luverne, 103 Minn., 491, citing U.S. vs. Kirkpatrick,
9 Wheat, 720; 6 L. Ed., 199; and Beers vs.State, 20 How., 527; 15 L.
Ed., 991.)
In the case of Melvin vs. State ( 121 Cal., 16), the plaintiff sought
to recover damages from the state for personal injuries received on
account of the negligence of the state officers at the state fair, a state
institution created by the legislature for the purpose of improving
agricultural and kindred industries; to disseminate information
calculated to educate and benefit the industrial classes; and to advance
to educate and benefit the industrial classes; and to advance by such
means the material interests of the state, being objects similar to those
sought by the public school system. In passing upon the question of the
state's liability for the negligent acts of its officers or agents, the court
said:
"No claim arises against any government in favor
of an individual, by reason of the misfeasance, laces, or
unauthorized exercise of powers by its officers or agents."
(Citing Gibbons vs. U.S., 8 Wall., 269; Clodfelter vs. State,
86 N.C., 51, 53; 41 Am. Rep., 440; Chapman vs. State,
104 Cal., 690; 43 Am. St. Rep., 158; Green vs. State, 73
Cal., 29; Bourn vs. Hart, 93 Cal., 321; 27 Am. St. Rep.,
203; Story on Agency, sec. 319.)
As to the scope of legislative enactments permitting individuals
to sue the state where the cause of action arises out of either tort or
contract, the rule is stated in 36 Cyc., 915, thus:
"By consenting to be sued a state simply waives
its immunity from suit. It does not thereby concede its
liability to plaintiff, or create any cause of action in his
favor, or extend its liability to any cause not previously
recognized. It merely gives a remedy to enforce a
preexisting liability and submits itself to the jurisdiction of
the court, subject to its right to interpose any lawful
defense."
In Apfelbacher vs. State (152 N. W., 144, advanced sheets),
decided April 16, 1915, the Act of 1913, which authorized the bringing of
this suit, read:
"SECTION 1. Authority is hereby given to George
Apfelbacher, of the town of Summit, Waukesha County,
Wisconsin, to bring suit in such court or courts and in
such form or forms as he may be advised for the purpose
of settling and determining all controversies which he may
now have with the State of Wisconsin, or its duly
authorizes officers and agents, relative to the mill property
of said George Apfelbacher, the fish hatchery of the State
Wisconsin on the Bark River, and the mill property of Evan
Humphrey at the lower end of Nagawicka Lake, and
relative to the use of the waters of said Bark River and
Nagawicka Lake, all in the county of Waukesha,
Wisconsin."
In determining the scope of this act, the court said;
"Plaintiff claims that by the enactment of this law
the legislature admitted liability on the part of the state for
the acts of its officers, and that the suit now stands just as
it would stand between private parties. It is difficult to see
 how the act does, or was intended to do, more than
remove the state's immunity from suit. It simply gives
authority commence suit for the purpose of settling
plaintiff's controversies with the state. Nowhere in the act
is there a whisper or suggestion that the court or courts in
the disposition of the suit shall depart from well
established principles of law, or that the amount of
damages is the only question to be settled. The act
opened the door of the court to the plaintiff. It did not
pass upon the question of liability, but left the suit just
where it would be in the absence of the state's immunity
from suit. If the Legislature had intended to change the
rule that obtained in this state so long and to declare
liability on the part of the state, it would not have left so
important a matter to mere inference but would have done
so in express terms. (Murdoc Grate
Co. vs. Commonwealth, 152 Mass., 28; 24 N. E., 854; 8 L.
R.A., 399)"
In Denning vs. state (123 Cal., 316), the provisions of the Act of
1893, relied upon and considered, are as follows:
"All persons who have, or shall hereafter have
claims on contract or for negligence against the state not
allowed by the state board of examiners, are hereby
authorized, on the terms and conditions herein contained,
to bring suit thereon against the state in any of the courts
of this state of competent jurisdiction, and prosecute the
same to final judgment. The rules of practice in civil cases
shall apply to such suits, except as herein otherwise
provided."
And the court said:
"This statute has been considered by this court in
at least two cases, arising under different facts, and in
both it was held that said statute did not create any
liability or cause of action against the state where none
existed before, but merely gave an additional remedy to
enforce such liability as would have existed if the statute
had not been enacted. (Chapman vs. State, 104 Cal., 690;
43 Am. St. Rep., 158; Melvin vs. State, 121 Cal., 16.)"
A statute of Massachusetts enacted in 1887 gave to the
superior court "jurisdiction of all claims against the commonwealth,
whether at law or in equity," with an exception not necessary to be here
mentioned. In construing this statute the court, in Murdock Grate
Co. vs. Commonwealth (152 Mass., 28), said:
"The statute we are discussing discloses no
intention to create against the state a new and heretofore
unrecognized class of liabilities, but only an intention to
provide a judicial tribunal where well recognized existing
liabilities can be adjudicated."
In Sipple vs. State (99 N. Y., 284), where the board of the canal
claims had, by the terms of the statute of New York, jurisdiction of
claims for damages for injuries in the management of the canals such as
the plaintiff had sustained, Chief Justice Ruger remarks; "It must be
conceded
that the state can be made liable for injuries arising from the
negligence of its agents or servants, only by force of some positive
statute assuming such liability."
It being quite clear that Act No. 2457 does not operate to extend
the Government's liability to any cause not previously recognized, we
will now examine the substantive law touching the defendant's liability
for the negligent acts of its officers, agents, and employees. Paragraph
5 of article 1903 of the civil Code reads:
"The state is liable in this sense when it acts
through a special agent, but not when the damage should
have been caused by the official to whom properly it
pertained to do the act performed, in which case the
provisions of the preceding article shall be applicable."
The supreme court of Spain in defining the scope of this
paragraph said:
"That the obligation to indemnify for damages
which a third person causes another by his fault or
negligence is based, as is evidenced by the same Law 3,
Title 15, Partida 7, on that the person obligated, by his
own fault or negligence, takes part in the act or omission
of the third party who caused the damage. It follows
therefrom that the state by virtue of such provision of law,
is not responsible for the damages suffered by private
individuals in consequence of acts performed by its
employees in the discharge of the functions pertaining to
their office, because neither fault nor even negligence can
be presumed on the part of the state in the organization of
branches of the public service and in the appointment of
its agents; on the contrary, we must presuppose all
foresight humanly possible on its part in order that each
branch of service serves the general weal and that of
private persons interested in its operation. Between these
latter and the state therefore, no relations of a private
nature governed by the civil law can arise except in a case
where the state acts as a judicial person capable of
acquiring rights and contracting obligations." (Supreme
Court of Spain, January 7, 1898; 83 Jur. Civ., 24.)
"That the Civil Code in chapter 2, title 16, book 4,
regulates the obligations which arise out of fault or
negligence; and whereas in the first articles thereof, No.
1902, where the general principle is laid down that where
a person who by an act or omission causes damage to
another through fault or negligence, shall be obliged to
repair the damage so done, reference is made to acts or
omissions of the persons who directly or indirectly cause
the damage, the following article refers to third persons
and imposes an identical obligation upon those who
maintain fixed relations of authority and superiority over
the authors of the damage, because the law presumes
that in consequence of such relations the evil caused by
their own fault or negligence is imputable to them. This
legal presumption gives way to proof, however, because,
as held in the last paragraph of article 1903, responsibility
for acts of third persons ceases when the persons
mentioned in said article prove that they employed all the
diligence of a good father of a family to avoid the damage,
and among these persons, called up[on to answer in a
direct and not a subsidiary manner, are found, in addition
to the mother or the father in a proper case, guardians
and owners or director of an establishment or enterprise,
the state, but not always, except when it acts through the
agency of a special agent, doubtless because and only in
this case, the fault or negligence, which is the original
basis of this kind of objections, must be presumed to lie
with the state.
"That although in some cases the state might by
virtue of the general principle set forth in article 1902
respond for all the damage that is occasioned to private
parties by orders or resolutions which by fault or
negligence are made by branches of the central
administration acting in the name and representation of
the state itself and as an external expression of its
sovereignty in the exercise of its executive powers, yet
said article is not applicable in the case of damages said
to have been occasioned to the petitioners by
an executive official, acting in the exercise of his powers,
in proceedings to enforce the collections of certain
property taxes owing by the owner of the property which
they hold in sublease.
"That the responsibility of the state is limited by article 1903 to
the case wherein it acts through a special agent (and a special agent, in
the sense in which these words are employed, is one who receives a
definite and fixed order or commission, foreign to the exercise of the
duties of his office if he is a special official) so that in representation of
the state and being bound to act as an agent thereof he executed the
trust confided to him. this concept does not apply to any executive
agent who is an employee of the active administration and who in his
own responsibility performs the functions which are inherent in and
naturally pertain to his office and which are regulated by law and the
regulations." (Supreme Court of Spain, May 18, 1904; 98 Jur. Civ., 389,
390.)
"That according to paragraph 5 of article 1903 of
the Civil Code and the principle laid down in a decision,
among others, of the 18th of May, 1904, in a damage
case, the responsibility of the state is limited to that which
it contracts through a special agent, duly empowered by
a definite order or commission to perform some act or
charged with some definite purpose which gives rise to
the claim, and not where the claim is based on acts or
omissions imputable to a public official charge with some
administrative or technical office who can be held to the
proper responsibility in the manner laid down by the law
of civil responsibility. Consequently, the trial court in not
so deciding and in sentencing the said entity to the
payment of damages, caused by an official of the second
class referred to, has by erroneous interpretation infringed
the provisions of articles 1902 and 1903 of the Civil
Code." (Supreme Court of Spain, July 30, 1911; 122 Jur.
Civ., 146)
It is, therefore, evident that the State (the Government of the
Philippine Islands) is only liable, according to the above quoted
decisions of the Supreme Court of Spain, for the acts of its agents,
officers and employees when they act as special agents within the
meaning of paragraph 5 of article 1903, supra, and that the chauffeur of
the ambulance of the General Hospital was not such an agent.
For the foregoing reasons, the judgment appealed from must be
reversed, without costs in this instance. Whether the Government
intends to make itself legally liable for the amount of damages above set
 forth, which the plaintiff has sustained by reason of the negligent acts of
one of its employees, by legislative enactment and by appropriating
sufficient funds therefor, we are not called upon to determine. This
matter rests solely with the Legislature and not with the courts.
Arellano, C.J., Torres, Johnson and Moreland, JJ., concur.
||| (Merritt v. Government of the Philippine Islands, G.R. No. 11154, [March
21, 1916], 34 PHIL 311-323)
FIRST DIVISION
[G.R. No. 52179. April 8, 1991.]
MUNICIPALITY OF SAN FERNANDO, LA
UNION, petitioner, vs. HON. JUDGE ROMEO N. FIRME,
JUANA RIMANDO-BANIÑA, LAUREANO BANIÑA, JR.,
SOR MARIETA BANIÑA, MONTANO BANIÑA ORJA
BANIÑA AND LYDIA R. BANIÑA, respondents.
Mauro C . Cabading, Jr. for petitioner.
Simeon G. Hipol for private respondent.
DECISION
MEDIALDEA, J p:
This is a petition for certiorari with prayer for the issuance of a writ of
preliminary mandatory injunction seeking the nullification or modification of
the proceedings and the orders issued by the respondent Judge Romeo N.
Firme, in his capacity as the presiding judge of the Court of First Instance of
La Union, Second Judicial District, Branch IV, Bauang, La Union in Civil
Case No. 107-BG, entitled "Juana Rimando Baniña, et al. vs. Macario
Nieveras, et al." dated November 4, 1975; July 13, 1976; August 23, 1976;
February 23, 1977; March 16, 1977; July 26, 1979; September 7, 1979;
November 7, 1979 and December 3, 1979 and the decision dated October
10, 1979 ordering defendants Municipality of San Fernando, La Union and
Alfredo Bislig to pay, jointly and severally, the plaintiffs for funeral expenses,
actual damages consisting of the loss of earning capacity of the deceased,
attorney's fees and costs of suit and dismissing the complaint against the
Estate of Macario Nieveras and Bernardo Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a municipal corporation
existing under and in accordance with the laws of the Republic of the
Philippines. Respondent Honorable Judge Romeo N. Firme is impleaded in
his official capacity as the presiding judge of the Court of First Instance of
La Union, Branch IV, Bauang, La Union. While private respondents Juana
Rimando-Baniña, Laureano Baniña, Jr., Sor Marietta Baniña, Montano
Baniña, Orja Baniña and Lydia R. Baniña are heirs of the deceased Laureano
Baniña Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision
occurred involving a passenger jeepney driven by Bernardo Balagot and
owned by the Estate of Macario Nieveras, a gravel and sand truck driven by
Jose Manandeg and owned by Tanquilino Velasquez and a dump truck of
the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due
to the impact, several passengers of the jeepney including Laureano Baniña
Sr. died as a result of the injuries they sustained and four (4) others suffered
varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted a complaint for
damages against the Estate of Macario Nieveras and Bernardo Balagot,
owner and driver, respectively, of the passenger jeepney, which was
docketed Civil Case No. 2183 in the Court of First Instance of La Union,
Branch I, San Fernando, La Union. However, the aforesaid defendants filed
a Third Party Complaint against the petitioner and the driver of a dump truck
of petitioner. llcd
Thereafter, the case was subsequently transferred to Branch IV, presided
over by respondent judge and was subsequently docketed as Civil Case No.
107-Bg. By virtue of a court order dated May 7, 1975, the private
respondents amended the complaint wherein the petitioner and its regular
employee, Alfredo Bislig were impleaded for the first time as defendants.
Petitioner filed its answer and raised affirmative defenses such as lack of
cause of action, non-suability of the State, prescription of cause of action
and the negligence of the owner and driver of the passenger jeepney as the
proximate cause of the collision. cdll
In the course of the proceedings, the respondent judge issued the following
questioned orders, to wit:
(1) Order dated November 4, 1975 dismissing the cross-
claim against Bernardo Balagot;
 (2) Order dated July 13, 1976 admitting the Amended
Answer of the Municipality of San Fernando, La Union and
Bislig and setting the hearing on the affirmative defenses
only with respect to the supposed lack of jurisdiction;
(3) Order dated August 23, 1976 deferring the resolution of
the grounds for the Motion to Dismiss until the trial;
(4) Order dated February 23, 1977 denying the motion for
reconsideration of the order of July 13, 1976 filed by the
Municipality and Bislig for having been filed out of time;
(5) Order dated March 16, 1977 reiterating the denial of
the motion for reconsideration of the order of July 13,
1976;
(6) Order dated July 26, 1979 declaring the case deemed
submitted for decision it appearing that parties have not
yet submitted their respective memoranda despite the
court's direction; and
(7) Order dated September 7, 1979 denying the
petitioner's motion for reconsideration and or order to
recall prosecution witnesses for cross examination.
On October 10, 1979 the trial court rendered a decision, the dispositive
portion is hereunder quoted as follows:
"IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is
hereby rendered for the plaintiffs, and defendants
Municipality of San Fernando, La Union and Alfredo Bislig
are ordered to pay jointly and severally, plaintiffs Juana
Rimando-Baniña, Mrs. Priscilla B. Surell, Laureano
Baniña, Jr., Sor Marietta Baniña, Mrs. Fe B. Soriano,
Montano Baniña, Orja Baniña and Lydia B. Baniña the
sums of P1,500.00 as funeral expenses and P24,744.24
as the lost expected earnings of the late Laureano Baniña
Sr., P30,000.00 as moral damages, and P2,500.00 as
attorney's fees. Costs against said defendants. cdasia
"The Complaint is dismissed as to defendants Estate of
Macario Nieveras and Bernardo Balagot.
"SO ORDERED." (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without
prejudice to another motion which was then pending. However, respondent
judge issued another order dated November 7, 1979 denying the motion for
reconsideration of the order of September 7, 1979 for having been filed out
of time.
Finally, the respondent judge issued an order dated December 3, 1979
providing that if defendants municipality and Bislig further wish to pursue
the matter disposed of in the order of July 26, 1979, such should be
elevated to a higher court in accordance with the Rules of Court. Hence, this
petition.
Petitioner maintains that the respondent judge committed grave abuse of
discretion amounting to excess of jurisdiction in issuing the aforesaid orders
and in rendering a decision. Furthermore, petitioner asserts that while
appeal of the decision may be available, the same is not the speedy and
adequate remedy in the ordinary course of law.
On the other hand, private respondents controvert the position of the
petitioner and allege that the petition is devoid of merit, utterly lacking the
good faith which is indispensable in a petition for certiorari and prohibition.
(Rollo, p. 42.) In addition, the private respondents stress that petitioner has
not considered that every court, including respondent court, has the
inherent power to amend and control its process and orders so as to make
them conformable to law and justice. (Rollo, p. 43.)
The controversy boils down to the main issue of whether or not the
respondent court committed grave abuse of discretion when it deferred and
failed to resolve the defense of non-suability of the State amounting to lack
of jurisdiction in a motion to dismiss.
In the case at bar, the respondent judge deferred the resolution of the
defense of non-suability of the State amounting to lack of jurisdiction until
trial. However, said respondent judge failed to resolve such defense,
proceeded with the trial and thereafter rendered a decision against the
municipality and its driver.
The respondent judge did not commit grave abuse of discretion when in the
exercise of its judgment it arbitrarily failed to resolve the vital issue of non-
suability of the State in the guise of the municipality. However, said judge
acted in excess of his jurisdiction when in his decision dated October 10,
1979 he held the municipality liable for the quasi-delict committed by its
regular employee. cdll
The doctrine of non-suability of the State is expressly provided for in Article
XVI, Section 3 of the Constitution, to wit: "the State may not be sued without
its consent."
Stated in simple parlance, the general rule is that the State may not be sued
except when it gives consent to be sued. Consent takes the form of express
or implied consent.
Express consent may be embodied in a general law or a special law. The
standing consent of the State to be sued in case of money claims involving
liability arising from contracts is found in Act No. 3083. A special law may be
passed to enable a person to sue the government for an alleged quasi-
delict, as in Merritt v. Government of the Philippine Islands (34 Phil 311).
(see United States of America v. Guinto, G.R. No. 76607, February 26, 1990,
182 SCRA 644, 654.)
Consent is implied when the government enters into business contracts,
thereby descending to the level of the other contracting party, and also
when the State files a complaint, thus opening itself to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are agencies
of the State when they are engaged in governmental functions and therefore
should enjoy the sovereign immunity from suit. Nevertheless, they are
subject to suit even in the performance of such functions because their
charter provided that they can sue and be sued. (Cruz, Philippine Political
Law, 1987 Edition, p. 39)
A distinction should first be made between suability and liability. "Suability
depends on the consent of the state to be sued, liability on the applicable
law and the established facts. The circumstance that a state is suable does
not necessarily mean that it is liable; on the other hand, it can never be held
liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving the plaintiff the chance to
prove, if it can, that the defendant is liable." (United States of America v.
Guinto, supra, p. 659-660).
Anent the issue of whether or not the municipality is liable for the torts
committed by its employee, the test of liability of the municipality depends
on whether or not the driver, acting in behalf of the municipality, is
performing governmental or proprietary functions. As emphasized in the
case of Torio v. Fontanilla (G.R. No. L-29993, October 23, 1978. 85 SCRA
599, 606), the distinction of powers becomes important for purposes of
determining the liability of the municipality for the acts of its agents which
result in an injury to third persons.
Another statement of the test is given in City of Kokomo v. Loy, decided by
the Supreme Court of Indiana in 1916, thus:
"Municipal corporations exist in a dual capacity, and their
functions are twofold. In one they exercise the right
springing from sovereignty, and while in the performance
of the duties pertaining thereto, their acts are political and
governmental. Their officers and agents in such capacity,
though elected or appointed by them, are nevertheless
public functionaries performing a public service, and as
such they are officers, agents, and servants of the state.
In the other capacity the municipalities exercise a private,
proprietary or corporate right, arising from their existence
as legal persons and not as public agencies. Their officers
and agents in the performance of such functions act in
behalf of the municipalities in their corporate or individual
capacity, and not for the state or sovereign power." (112
N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations are suable
because their charters grant them the competence to sue and be sued.
Nevertheless, they are generally not liable for torts committed by them in the
discharge of governmental functions and can be held answerable only if it
can be shown that they were acting in a proprietary capacity. In permitting
such entities to be sued, the State merely gives the claimant the right to
show that the defendant was not acting in its governmental capacity when
the injury was committed or that the case comes under the exceptions
recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p.
44.)
In the case at bar, the driver of the dump truck of the municipality insists
that "he was on his way to the Naguilian river to get a load of sand and
gravel for the repair of San Fernando's municipal streets." (Rollo, p. 29.)
In the absence of any evidence to the contrary, the regularity of the
performance of official duty is presumed pursuant to Section 3(m) of Rule
131 of the Revised Rules of Court. Hence, We rule that the driver of the
dump truck was performing duties or tasks pertaining to his office. LexLib
We already stressed in the case of Palafox, et al. v. Province of Ilocos Norte,
the District Engineer, and the Provincial Treasurer (102 Phil 1186) that "the
construction or maintenance of roads in which the truck and the driver
worked at the time of the accident are admittedly governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at
the conclusion that the municipality cannot be held liable for the torts
committed by its regular employee, who was then engaged in the discharge
of governmental functions. Hence, the death of the passenger — tragic and
deplorable though it may be imposed on the municipality no duty to pay
monetary compensation.
All premises considered, the Court is convinced that the respondent judge's
dereliction in failing to resolve the issue of non-suability did not amount to
grave abuse of discretion. But said judge exceeded his jurisdiction when it
ruled on the issue of liability.
ACCORDINGLY, the petition is GRANTED and the decision of the
respondent court is hereby modified, absolving the petitioner municipality of
any liability in favor of private respondents.
SO ORDERED.
Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.
||| (Municipality of San Fernando, La Union v. Firme, G.R. No. 52179, [April 8,
1991], 273 PHIL 56-65)
EN BANC
[G.R. No. L-29025. October 4, 1971.]
Spouses MOISES P. PALISOC and BRIGIDA P.
PALISOC, plaintiffs-appellants, vs. ANTONIO C,
BRILLANTES and TEODOSIO V. VALENTON, owner
and President, respectively, of a school of arts and
trades, known under the name and style of "Manila
Technical Institute" (M.I.T.), VIRGILIO L. DAFFON and
SANTIAGO M. QUIBULUE, defendants-appellees.
Leovollo C . Agustin for plaintiffs-appellants.
Honorato S. Reyes for appellee Brillantes, et al., Villareal, Almacen, Navarra,
and Amares for appellee Daffon.
SYLLABUS
1. CIVIL LAW; QUASI-DELICT; LIABILITY OF SCHOOL HEADS AND
TEACHERS FOR TORTIOUS ACTS OF STUDENTS; RATIONALE. — The
rationale of such liability of school heads and teachers for the tortious acts
of their pupils and students, so long as they remain in their custody, is that
they stand, to a certain extent, as to their pupils and students, in loco
parentis and are called upon to "exercise reasonable supervision over the
conduct of the child" This is expressly provided for in Articles 349, 350 and
352 of the Civil Code. In the law of torts, the governing principle is that the
protective custody of the school heads and teachers is mandatorily
substituted for that of the parents, and hence, it becomes their obligation as
well as that of the school itself to provide proper supervision of the students'
activities during the whole time that they are at attendance in the school,
including recess time, as well as to take the necessary precautions to
protect the students in their custody from dangers and hazards that would
reasonably be anticipated, including injuries that some students themselves
may inflict willfully or through negligence on their fellow students.
2. ID.; ID.; ID.; PRESUMPTION OF NEGLIGENCE; BASIS. — The basis of
the presumption of negligence of Art. 1903 (now 2180)is some culpa in
vigilando that the parents, teachers, etc., are supposed to have incurred in
the exercise of their authority and where the parent places the child under
the effective authority of the teacher, the latter, and not the parent, should
be the one answerable for the torts committed while under his custody, for
the reason that the parent is not supposed to interfere with the discipline of
the school nor with the authority and supervision of the teacher while the
child is under instruction. The school itself, likewise, has to respond for the
fault or negligence of its school head and teachers under the same cited
article.
3. ID.; ID.; ID.; PHRASE "SO LONG AS STUDENTS REMAIN IN THEIR
CUSTODY," CONSTRUED. — The lower court therefore erred in law in
absolving defendants-school officials on the ground that they could be held
liable under Article 2180, Civil Code, only if the student who inflicted the
fatal fistblows on his classmate and victim "lived and boarded with his
teacher or the other defendants officials of the school." As stated above, the
phrase used in the cited article — "so long as (the students) remain in their
custody" means the protective and supervisory custody that the school and
its head and teachers exercise over the pupils and students for as long as
they are at attendance in the school, including recess time. There is nothing
in the law that requires that for such liability to attach, the pupil or student
who commits the tortious act must live an board in the school, as
erroneously held by the lower court, and the dicta in Mercado (as well as
in Exconde) on which it relied, must now be deemed to have been set aside
by the present decision.
4. ID.; ID.; ID.; OBSERVANCE OF DILIGENCE OF A GOOD FATHER OF A
FAMILY, VALID DEFENSE. — The unfortunate death resulting from the fight
between the protagonists-students could have been avoided, had said
defendants but complied with their duty of providing adequate supervision
over the activities of the students in the school premises to protect their
students from harm, whether at the hands of fellow students or other
parties. At any rate, the law holds them liable unless they relieve themselves
of such liability, in compliance with the last paragraph of Article 2180, Civil
Code, by "(proving) that they observed all the diligence of a good father of a
family to prevent damage." In the light of the factual findings of the lower
court's decision said defendants failed to prove such exemption from
liability.
5. ID.; DAMAGES, COMPENSATORY DAMAGES FOR DEATH CAUSED BY
CRIME OR QUASI DELICT, P12,000.00 AS SET BY PEOPLE VS. PANTOJA.
— Plaintiffs-appellees' contention that the award of P6,000.00 as indemnity
for the death of their son should be increased to P12,000.00 as set by the
Court in People vs. Pantoja (25 SCRA 468), and observed in all death
indemnity cases thereafter is well taken. The Court, in Pantoja, after noting
the decline in the purchasing power of the Philippine peso, had expressed
its "considered opinion that the amount of award of compensatory damages
for death caused by a crime or quasi-delict should now be P12,000.00." The
Court thereby adjusted the minimum amount of "compensatory damages for
death caused by a crime or quasi-delict" as per Article 2206, Civil Code,
from the old stated minimum of P3,000.00 to P12,000.00, which amount is
to be awarded "even though there may have been mitigating
circumstances" pursuant to the express provisions of said codal article.
6. ID.; ID.; EXEMPLARY DAMAGES; NOT GRANTED IN ABSENCE
OF GROSS NEGLIGENCE. — Decisive here is the touchstone provision of
Article 2231, Civil Code, that "In quasi-delicts, exemplary damages may be
granted if the defendant acted with gross negligence." No gross negligence
on the part of defendants was found by the trial court to warrant the
imposition of exemplary damages, as well as of interest and increased
attorney's fees, and the Court has not been shown in this appeal any
compelling reason to disturb such finding.
REYES, J.B.L., J., concurring:
CIVIL LAW; QUASI-DELICT; CUSTODIAL SUPERVISION OF SCHOOLS
OVER PUPILS; AUTHORITY EXISTS REGARDLESS OF STUDENT'S AGE.
— While in the case of parents and guardians, their authority and
supervision over the children and wards end by law upon the latter reaching
majority age, the authority and custodial supervision over pupils exist
regardless of the age of the latter. A student over twenty-one, by enrolling
and attending a school, places himself under the custodial supervision and
disciplinary authority of the school authorities, which is the basis of the
latter's correlative responsibility for his torts, committed while under such
authority. Of course, the teachers' control is not a plenary as when the
student is a minor; but that circumstance can only affect the degree of the
responsibility but cannot negate the existence thereof. It is only a factor to
be appreciated in determining whether or not the defendant has exercised
due diligence in endeavoring to prevent the injury, as prescribed in the last
paragraph of Article 2180.
MAKALINTAL, J., dissenting:
1. CIVIL LAW; QUASI-DELICT; TEACHERS ARE LIABLE FOR TORTIOUS
ACTS OF STUDENTS LIVING AND BOARDING WITH THEM. — I see no
reason to depart from the doctrine laid down by this Court in Mercado vs.
Court of Appeals, 108 Phil. 414, where the clause, "so long as they remain in
their custody" used in Article 2180 of the Civil Code was construed as
referring to a " situation where the pupil lives and boards with the teacher,
such that the (latter's) control, direction and influence on the pupil
supersedes those of the parents." I think it is highly unrealistic and
conducive to unjust results, considering the size of the enrollment in many of
our educational institutions, academic and non-academic, as well as the
temper, attitudes and often destructive activism of the students, to hold their
teachers and/or the administrative heads of the schools directly liable for
torts committed by them.
2. ID.; ID.; TORTIOUS ACTS OF CHILDREN; PARENTS LIABLE THEREFOR
ONLY AS TO MINORS LIVING IN THEIR COMPANY. — For parental
responsibility to arise the children must be minors who live in their company.
If, as stated also in the opinion of the majority, "the rationale of (the) liability
of school heads and teachers for the tortious acts of their pupils and
students, so long as they remain in their custody, is that they stand, to a
certain extent, as to their pupils and students, in loco parentis and are called
upon to exercise reasonable supervision over the conduct of the child," then
it stands to reason that (1) the clause "so long as they remain in their
custody" as used in reference to teachers and school heads should be
equated with the phrase "who live in their company" as used in reference to
parents; and (2) that just as parents are not responsible for damages caused
by their children who are no longer minors, so should teachers and school
heads be exempt from liability for the tortious acts of their students in the
same age category. I find no justification, either in the law itself or in justice
and equity, to make a substitute parent liable where the real parent would
be free from liability.
DECISION
TEEHANKEE, J p:
An appeal in forma pauperis on pure questions of law from a decision of the
Court of First Instance of Manila.
Plaintiffs-appellants as parents of their sixteen-year old son, Dominador
Palisoc, and a student in automotive mechanics at the Manila Technical
Institute, Quezon Boulevard, Manila, had filed on May 19, 1966, the action
below for damages arising from the death on March 10, 1966 of their son at
the hands of a fellow student, defendant Virgilio L. Daffon, at the laboratory
room of the said Institute.
Defendants, per the trial court's decisions are: "(T)he defendant Antonio C.
Brillantes, at the time when the incident which gave rise to his action
occurred was a member of the Board of Directors of the institute; 1 the
defendant Teodosio Valenton, the president thereof; the defendant Santiago
M. Quibulue, instructor of the class to which the deceased belonged; and
the defendant Virgilio L. Daffon, a fellow student of the deceased. At the
beginning the Manila Technical Institute was a single proprietorship, but
lately on August 2, 1962, it was duly incorporated."
The facts that led to the tragic death of plaintiffs' son were thus narrated by
the trial court: "(T)he deceased Dominador Palisoc and the defendant Virgilio
L. Daffon were classmates, and on the afternoon of March 10, 1966,
between two and three o'clock, they, together with another classmate
Desiderio Cruz were in the laboratory room located on the ground floor. At
that time the classes were in recess. Desiderio Cruz and Virgilio L. Daffon
were working on a machine while Dominador Palisoc was merely looking on
at them. Daffon made a remark to the effect that Palisoc was acting like a
foreman. Because of this remark Palisoc slapped slightly Daffon on the face.
Daffon, in retaliation, gave Palisoc a strong flat blow on the face, which was
followed by other fist blows on the stomach. Palisoc retreated apparently to
avoid the fist blows, but Daffon followed him and both exchanged blows
until Palisoc stumbled on an engine block which caused him to fall face
downward. Palisoc became pale and fainted. First aid was administered to
him but he was not revived, so he was immediately taken to a hospital. He
never regained consciousness; finally he died. The foregoing is the
substance of the testimony of Desiderio Cruz, the lone witness to the
incident."
The trial court expressly gave credence to this version of the incident, as
testified to by the lone eyewitness, Desiderio Cruz, a classmate of the
protagonists, as that of a disinterested witness who "has no motive or
reason to testify one way or another in favor of any party" and rejected the
self-exculpatory version of defendant Daffon denying that he had inflicted
any fist blows on the deceased.
With the postmortem findings of Dr. Angelo Singian of the Manila Police
Department who performed the autopsy re "Cause of death: shock due to
traumatic fracture of the ribs (6th and 7th, left, contusion of the pancreas
and stomach with intra-gastric hemorrhage and slight subarachnoid
hemorrhage on the brain," and his testimony that these internal injuries of
the deceased were caused "probably by strong fist blows," 2 the trial court
found defendant Daffon liable for the quasi delict under Article 2176 of the
Civil Code. 3 It held that "(T)he act, therefore, of the accused Daffon in
giving the deceased strong fistblows in the stomach which ruptured his
internal organs and caused his death falls within the purview of this article of
the Code." 4
The trial court, however, absolved from liability the three other defendants-
officials of the Manila Technical Institute, in this wise:
". . . Their liabilities are based on the provisions of Article
2180 of the New Civil Code which reads:
'Art. 2180. . . .
'Lastly, teachers or heads of establishments of arts and
trades shall be liable for damages caused by their pupils
and students and apprentices, so long as they remain in
their custody.'
"In the opinion of the Court, this article of the Code is not
applicable to the case at bar, since this contemplates the
situation where the control or influence of the teachers
and heads of school establishments over the conduct and
actions by the pupil supersedes those of the parents.
'CIVIL LAW: DAMAGES ART 2180. NEW CIVIL CODE
CONSTRUED: — The clause 'so long as they remain in
their custody' contained in Article 2180 of the new civil
code contemplated a situation where the pupil lives and
boards with the teacher, such that the control or influence
on the pupil supersedes those of the parents. In those
circumstances the control or influence over the conduct
and actions of the pupil as well as the responsibilities for
their sort would pass from the father and mother to the
teachers. (Ciriaco L. Mercado, Petitioner, vs. the Court of
Appeals, Manuel Quisumbing, Jr., et al., respondents,
G.R. No. L-14862, May 30, 1960).' 5
"There is no evidence that the accused Daffon lived and
boarded with his teacher or the other defendant officials
of the school. These defendants cannot therefore be
made responsible for the tort of the defendant Daffon."
Judgment was therefore rendered by the trial court as follows:
"1. Sentencing the defendant Virgilio L. Daffon to pay the
plaintiffs as heirs of the deceased Dominador Palisoc (a)
P6,000.00 for the death of Dominador Palisoc; (b)
 P3,375.00 for actual and compensatory expenses; (c)
P5,000.00 for moral damages; (d) P10,000.00 for loss of
earning power, considering that the deceased was only
between sixteen and seventeen years, and in good health
when he died, and (e) P2,000.00 for attorney's fee, plus
the costs of this action.
"2. Absolving the other defendants.
"3. Dismissing the defendants' counterclaim for lack of
merit."
Plaintiffs' appeal raises the principal legal question that under the factual
findings of the trial court, which are now beyond review, the trial court erred
in absolving the defendants-school officials instead of holding them jointly
and severally liable as tortfeasors, with defendant Daffon, for the damages
awarded them as a result of their son's death. The Court finds the appeal, in
the main, to be meritorious.
1. The lower court absolved defendants-school officials on the ground that
the provisions of Article 2180, Civil Code, which expressly hold "teachers or
heads of establishments of arts and trades . . . liable for damages caused by
their pupils and students and apprentices, so long as they remain in their
custody," are not applicable to the case at bar, since "there is no evidence
that the accused Daffon [who inflicted the fatal fistblows] 6 lived and
boarded with his teacher or the other defendants-officials of the school.
These defendants cannot therefore be made responsible for the tort of the
defendant Daffon."
The lower court based its legal conclusion expressly on the Court's dictum
in Mercado vs. Court of Appeals, 7 that " (I) t would seem that the clause 'so
long as they remain in their custody,' contemplates a situation where the
pupil lives and boards with the teacher, such that the control, direction and
influence on the pupil supersedes those of the parents. In these
circumstances the control or influence over the conduct and actions of the
pupil would pass from the father and mother to the teacher; and so would
the responsibility for the torts of the pupil. Such a situation does not appear
in the case at bar; the pupils appear to go to school during school hours and
go back to their homes with their parents after school is over." This dictum
had been made in rejecting therein petitioner-father's contention that his
minor son's school, Lourdes Catholic School at Kanlaon, Quezon City
[which was not a party to the case] should be held responsible, rather than
him as father, for the moral damages of P2,000.00 adjudged against him for
the physical injury inflicted by his son on a classmate. [A cut on the right
cheek with a piece of razor which cost only P50.00 by way of medical
expenses to treat and cure, since the wound left no scar.] The moral
damages award was after all set aside by the Court on the ground that none
of the specific cases provided in Article 2219, Civil Code, for awarding moral
damages had been established, petitioner's son being only nine years old
and not having been shown to have "acted with discernment" in inflicting
the injuries on his classmate.
The dictum in Mercado was based in turn on another dictum in the earlier
case of Exconde vs. Capuno, 8 where the only issue involved as expressly
stated in the decision, was whether the therein defendant-father could be
held civilly liable for damages resulting from a death caused in a motor
vehicle accident driven unauthorizedly and negligently by his minor son,
(which issue was resolved adversely against the father). Nevertheless, the
dictum in such earlier case that "It is true that under the law above-quoted,
'teachers or directors of arts and trades are liable for any damage caused by
their pupils or apprentices while they are under their custody, but this
provision only all applies to an institution of arts and trades and not to any
academic educational institution" was expressly cited and quoted
in Mercado.
2. The case at bar was instituted directly against the school officials and
squarely raises the issue of liability of teachers and heads of schools under
Article 2180, Civil Code, for damages caused by their pupils and students
against fellow students on the school premises. Here, the parents of the
student at fault, defendant Daffon, are not involved, since Daffon was
already of age at the time of the tragic incident. There is no question, either,
that the school involved is a non-academic school, 9 the Manila Technical
Institute being admittedly a technical vocational and industrial school.
The Court holds that under the cited codal article, defendants head and
teacher of the Manila Technical Institute (defendants Valenton and Quibulue,
respectively) are liable jointly and severally for damages to plaintiffs-parents
for the death of the latter's minor son at the hands of defendant Daffon at
the school's laboratory room. No liability attaches to defendant Brillantes as
a mere member of the school's board of directors. The school itself cannot
be held similarly liable, since it has not been properly impleaded as party
defendant. While plaintiffs sought to so implead it, by impleading improperly
defendant Brillantes, its former single proprietor, the lower court found that it
had been incorporated since August 2, 1962, and therefore the school itself,
as thus incorporated, should have been brought in as party defendant.
Plaintiffs failed to do so, notwithstanding that Brillantes and his co-
defendants in their reply to plaintiffs' request for admission had expressly
manifested and made of record that "defendant Antonio C. Brillantes is not
the registered owner/head of the 'Manila Technical Institute' which is now a
corporation and is not owned by any individual person." 10
3. The rationale of such liability of school heads and teachers for the tortious
acts of their pupils and students, so long as they remain in their custody, is
that they stand, to a certain extent, as to their pupils and students, in loco
parentis and are called upon to "exercise reasonable supervision over the
conduct of the child." 11 This is expressly provided for in Articles 349, 350
and 352 of the Civil Code. 12 In the law of torts, the governing principle is
that the protective custody of the school heads and teachers is mandatorily
substituted for that of the parents, and hence, it becomes their obligation as
well as that of the school itself to provide proper supervision of the students'
activities during the whole time that they are at attendance in the school,
including recess time, as well as to take the necessary precautions to
protect the students in their custody from dangers and hazards that would
reasonably be anticipated, including injuries that some student themselves
may inflict willfully or through negligence on their fellow students.
4. As tersely summarized by Mr. Justice J.B.L. Reyes in his dissenting
opinion in Exconde, "the basis of the presumption of negligence of Art. 1903
[now 2180] is some culpa in vigilando that the parents, teachers, etc. are
supposed to have incurred in the exercise of their authority" 13 and "where
the parent places the child under the effective authority of the teacher, the
latter, and not the parent, should be the one answerable for the torts
committed while under his custody, for the very reason that the parent is not
supposed to interfere with the discipline of the school nor with the authority
and supervision of the teacher while the child is under instruction " The
school itself, likewise, has to respond for the fault or negligence of its school
head and teachers under the same cited article. 14
5. The lower court therefore erred in law in absolving defendants-school
officials on the ground that they could be held liable under Article 2180, Civil
Code, only if the student who inflicted the fatal fistblows on his classmate
and victim "lived and boarded with his teacher or the other defendants
officials of the school." As stated above, the phrase used in the cited article
— "so long as (the students) remain in their custody" means the protective
and supervisory custody that the school and its heads and teachers
exercise over the pupils and students for as long as they are at attendance
in the school, including recess time. There is nothing in the law that requires
that for such liability to attach, the pupil or student who commits the tortious
act must live and board in the school, as erroneously held by the lower
court, and the dicta in Mercado (as well as in Exconde) on which it relied,
must now be deemed to have been set aside by the present decision.
6. Defendants Valenton and Quibulue as president and teacher-in-charge of
the school must therefore be held jointly and severally liable for the quasi-
delict of their co-defendant Daffon in the latter's having caused the death of
his classmate, the deceased Dominador Palisoc. The unfortunate death
resulting from the fight between the protagonists-students could have been
avoided, had said defendants but complied with their duty of providing
adequate supervision over the activities of the students in the school
premises to protect their students from harm, whether at the hands of fellow
students or other parties. At any rate, the law holds them liable unless they
relieve themselves of such liability, in compliance with the last paragraph of
Article 2180, Civil Code, by "(proving) that they observed all the diligence of
a good father of a family to prevent damage." In the light of the factual
findings of the lower court's decision, said defendants failed to prove such
exemption from liability.
7. Plaintiffs-appellees' contention that the award of P6,000.00 as indemnity
for the death of their son should be increased to P12,000.00 as set by the
Court in People vs. Pantoja, 15 and observed in all death indemnity cases
thereafter is well taken. The Court, in Pantoja, after noting the decline in the
purchasing power of the Philippine peso, had expressed its "considered
opinion that the amount of award of compensatory damages for death
caused by a crime or quasi-delict should now be P12,000.00." The Court
thereby adjusted the minimum amount of "compensatory damages for death
caused by a crime or quasi-delict" as per Article 2206, Civil Code, from the
old stated minimum of P3,000.00 to P12,000.00, which amount is to be
awarded "even though there may have been mitigating circumstances"
pursuant to the express provisions of said codal article.
8. Plaintiffs-appellees' other claims on appeal that the lower court should
have awarded exemplary damages and imposed legal interest on the total
damages awarded, besides increasing the award of attorney's fees all
concern matters that are left by law to the discretion of the trial court and
the Court has not been shown any error or abuse in the exercise of such
discretion on the part of the trial court 16 Decisive here is the touchstone
provision of Article 2231, Civil Code, that "In quasi-delicts, exemplary
damages may be granted if the defendant acted with gross negligence." No
gross negligence on the part of defendants was found by the trial court to
warrant the imposition of exemplary damages, as well as of interest and
increased attorney's fees, and the Court has not been shown in this appeal
any compelling reason to disturb such finding.
ACCORDINGLY, the judgment appealed from is modified so as to provide
as follows:
1. Sentencing the defendants Virgilio L. Daffon, Teodosio V. Valenton and
Santiago M. Quibulue jointly and severally to pay plaintiffs as heirs of the
deceased Dominador Palisoc (a) P12,000.00 for the death of Dominador
Palisoc; (b) P3,375.00 for actual and compensatory expenses; (c) P5,000.00
for moral damages; (d) P10,000.00 for less of earning power and (e) P2,000
00 for attorney's fee, plus the costs of this action in both instances; 2.
absolving defendant Antonio C. Brillantes from the complaint; and 3.
dismissing defendants' counterclaims.
Concepcion, C .J ., Villamor and Makasiar, JJ ., concur.
Dizon, J ., took no part.
Separate Opinions
REYES, J.B.L., J ., concurring:
I concur with the opinion of Mr. Justice Teehankee but would like to clarify
that the judgment of the dissenting opinion to the effect that the
responsibility of teachers and school officers under Article 2180 should be
limited to pupils who are minors (below the age of majority) is not in accord
with the plain text of the law. Article 2180 of the Civil Code of the Philippines
is to the following effect:
"The obligation imposed by article 2176 is demandable
not only for one's own acts or omissions, but also for
those of persons for whom one is responsible.
"The father and, in case of his death or incapacity the
mother, are responsible for the damages caused by the
minor children who live in their company.
"Guardians are liable for damages caused by the minors
or incapacitated persons who are under their authority
and live in their company.
"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.
"Employers shall be liable for the damages caused by
their employees and household helpers acting within the
scope of their assigned tasks, even though the former are
not engaged in any business or industry.
"The State is responsible in like manner when it acts
through a special agent; but not when the damage has
been caused by the official to whom the task done
properly pertains, in which case what is provided in article
2176 shall be applicable.
"Last, teachers or heads of establishments of arts and
trades shall be liable for damages caused by their pupils
and students or apprentices, so long as they remain in
their custody.
"The responsibility treated of in this article shall cease
when the persons herein mentioned prove that they
observe all the diligence of a good father of a family to
prevent damages.
Examination of the article shows that where the responsibility prescribed
therein is limited to illegal acts during minority, the article expressly so
provides, as in the case of the parents and of the guardians. It is natural to
expect that if the law had intended to similarly restrict the civil responsibility
of the other categories of persons enumerated in the article, it would have
expressly so stated. The fact that it has not done so indicates an intent that
the liability be not restricted to the case of persons under age. Further, it is
not without significance that the teachers and heads of scholarly
establishments are not grouped with parents and guardians but ranged with
owners and managers of enterprises, employers and the state, as to whom
no reason is discernible to imply that they should answer only for minors.
Giorgi, in his well-known "Teoria de las Obligaciones en el Derecho
Moderno", Volume 5, page 404, No. 272 (Sp. Ed.), after noting the split
among commentators on the point at issue, observes with considerable
cogency that —
"272. Ante esta variedad de opiniones, ninguna de las
cuales se funda en argumentos merecedores de seria
ponderacion, no es f cil tomar un partido. Esto no
obstante, debiendo manifestar nuestra opinion, nos
acercamos la de los que no estiman necesaria la menor
edad del discipulo o del aprendiz; porque si el
aforismo ubi voluit dixit, ubi noluit tacuity, no es siempre
argumento seguro para interpretar la le, es infalible cuanto
se refiere una misma disposicion relativa varios casos. Y
tal es el art. 1.153. Lo que haya establecido importa poco
si, elev ndones los principios de razon, puede dudarse de
la oportunidad de semajante diferencia; porque la
voluntad cierta del legislador prevalece in iure
condito cualquier otra consideracion. Por otra parte, si
bien se considera, no puede parecer extraño o absurdo el
suponer que un discipulo y un aprendiz, aunque mayores
de edad, acepten voluntariamente la entera vigilancia de
su preceptor mientras dura la educacion. Ni parece
dudoso desde el momento que los artesanos y los
 preceptores deben, al par de los padres, responder
civilmente de los daños comitidos por sus discipulos, aun
cuando estos estn faltos de discernimiento."
Similarly, Planiol-Ripert, in their "Droit Civil Pratique," Volume VI, No. 635
(Spanish version), say that —
"635. Personas de quin responde. — Si bien la
responsibilidad del maestro es originalmente una
estensi"n de la de los padres (1), el art. 1384 no especifica
que los alumnos y aprendices han de ser menores de
edad, por lo que la presuncion de culpa funcionar aun
cuando sean mayores (2); pero, la vigilancia no tendra que
ser ejercida en iguales terminos. Aun respecto a los
menores variar segun la edad, extremo que tendr que
tenerse en cuenta a los fines de apreciar si el maestro ha
podido impedir el acto nocivo o no.
I submit, finally, that while in the case of parents and guardians, their
authority and supervision over the children and wards end by law upon the
latter reaching majority age, the authority and custodial supervision over
pupils exist regardless of the age of the latter. A student over twenty-one, by
enrolling and attending a school, places himself under the custodial
supervision and disciplinary authority of the school authorities, which is the
basis of the latter's correlative responsibility for his torts, committed while
under such authority. Of course, the teachers' control is not as plenary as
when the student is a minor; but that circumstance can only affect the
degree of the responsibility but cannot negate the existence thereof. It is
only a factor to be appreciated in determining whether or not the defendant
has exercised due diligence in endeavoring to prevent the injury, as
prescribed in the last paragraph of Article 2180.
MAKALINTAL, J ., dissenting:
I vote to affirm the decision appealed from. I see no reason to depart from
the doctrine laid down by this Court in Mercado v. Court of Appeals, 108
Phil. 414, where the clause "so long as they remain in their custody" used in
Article 2180 of the Civil Code was construed as referring to a "situation
where the pupil lives and boards with the teacher, such that the (latter's)
control, direction and influence on the pupil supersedes those of the
parents." I think it is highly unrealistic and conducive to unjust results,
considering the size of the enrollment in many of our educational
institutions, academic and non-academic, as well as the temper, attitudes
and often destructive activism of the students, to hold their teachers and/or
the administrative heads of the schools directly liable for torts committed by
them. When even the school authorities find themselves besieged,
beleaguered and attacked, and unable to impose the traditional disciplinary
measures formerly recognized as available to them, such as suspension or
outright expulsion of the offending students, it flies in the face of logic and
reality to consider such students, merely from the fact of enrollment and
class attendance, as "in the custody" of the teachers or school heads within
the meaning of the statute, and to hold the latter liable unless they can
prove that they have exercised "all the diligence of a good father of the
family to prevent damage." Article 2180, if applied as appellants construe it,
would be bad law. It would demand responsibility without commensurate
authority, rendering teachers and school heads open to damage suits for
causes beyond their power to control. Present conditions being what they
are, I believe the restrictive interpretation of the aforesaid provision
enunciated in Mercado should be maintained.
With particular reference to the case at bar, one other factor constrains me
to dissent. The opinion of the majority states: "Here, the parents of the
student at fault, defendant Daffon, are not involved, since Daffon was
already of age at the time of the tragic incident." This statement is of course
in accordance with Article 2180, which says that "the father and, in case of
his death or incapacity, the mother, are responsible for the damages caused
by the minor children who live in their company." Note that for parental
responsibility to arise the children must be minors who live in their company.
If, as stated also in the opinion of the majority, "the rationale of (the) liability
of school heads and teachers for the tortious acts of their pupils and
students, so long as they remain in their custody, is that they stand, to a
certain extent, as to their pupils and students, in loco parentis and are called
upon to exercise reasonable supervision over the conduct of the child," then
it stands to reason that (1) the clause "so long as they remain in their
custody" as used in reference to teachers and school heads should be
equated with the phrase "who live in their company" as used in reference to
parents; and (2) that just as parents are not responsible for damages caused
by their children who are no longer minors, so should teachers and school
heads be exempt from liability for the tortious acts of their students in the
same age category. I find no justification, either in the law itself or in justice
and equity, to make a substitute parent liable where the real parent would
be free from liability.
Zaldivar, Castro and Fernando, JJ ., concur.
||| (Palisoc v. Brillantes, G.R. No. L-29025, [October 4, 1971], 148-B PHIL
1029-1046)
FIRST DIVISION
[G.R. No. 143363. February 6, 2002.]
ST. MARY'S ACADEMY, petitioner, vs. WILLIAM
CARPITANOS and LUCIA S. CARPITANOS, GUADA
DANIEL, JAMES DANIEL II, JAMES DANIEL, SR., and
VIVENCIO VILLANUEVA, respondents.
Padilla Law Office for petitioner.
Peter Y. Co for respondents Daniel and Villanueva.
Feliciano M. Maraon for respondent Carpitanos.
SYNOPSIS
Sherwin Carpitanos, son of respondents Carpitanos, died in an accident
caused by the detachment of the steering wheel guide of the jeep owned by
respondent Villanueva. The vehicle was then driven by James Daniel II, a
minor. The incident occurred during an enrollment drive conducted by
petitioner academy where Sherwin was a student. Sherwin's parents filed an
action for damages against petitioner and the other respondents. The trial
court ruled in favor of Sherwin's parents ordering petitioner to pay civil
indemnity for the loss of life of Sherwin, actual and moral damages, and
attorney's fees under Articles 218 and 219 of the Family Code, and declared
respondents Daniel subsidiarily liable. Respondent Villanueva was absolved
from any liability.
Under Articles 218 and 219 of the Family Code, for the school to be
principally and solidarily liable for the acts of its students, the latter's
negligence must be the proximate cause of the injury. In this case, there was
no evidence that petitioner allowed the minor to drive the jeep and that the
proximate cause of the accident was a mechanical defect in the vehicle,
thus, petitioner may not be held liable for the death of Sherwin. However, as
the registered owner of the vehicle, Villanueva was held primarily liable for
the death of Sherwin.
SYLLABUS
1. CIVIL LAW; FAMILY CODE; SPECIAL PARENTAL AUTHORITY OVER A
MINOR CHILD. — Under Article 218 of the Family Code, the following shall
have special parental authority over a minor child while under their
supervision, instruction or custody: (1) the school, its administrators and
teachers; or (2) the individual, entity or institution engaged in child care. This
special parental authority and responsibility applies to all authorized
activities, whether inside or outside the premises of the school, entity or
institution. Thus, such authority and responsibility applies to field trips,
excursions and other affairs of the pupils and students outside the school
premises whenever authorized by the school or its teachers.
2. ID.; ID.; ID.; PRINCIPAL AND SOLIDARY LIABILITY OF PERSONS
EXERCISING PARENTAL AUTHORITY. — Under Article 219 of the Family
Code, if the person under custody is a minor, those exercising special
parental authority are principally and solidarily liable for damages caused by
the acts or omissions of the unemancipated minor while under their
supervision, instruction, or custody.
3. ID.; ID.; ID.; ID.; REQUISITE. — However, for petitioner to be liable, there
must be a finding that the act or omission considered as negligent was the
proximate cause of the injury caused because the negligence must have a
causal connection to the accident.
4. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — In this case, the respondents failed
to show that the negligence of petitioner was the proximate cause of the
death of the victim. Respondents Daniel spouses and Villanueva admitted
that the immediate cause of the accident was not the negligence of
petitioner or the reckless driving of James Daniel II, but the detachment of
the steering wheel guide of the jeep. Further, there was no evidence that
petitioner school allowed the minor James Daniel II to drive the jeep of
respondent Vivencio Villanueva. It was Ched Villanueva, grandson of
respondent Vivencio Villanueva, who had possession and control of the
jeep. He was driving the vehicle and he allowed James Daniel II, a minor, to
drive the jeep at the time of the accident. Considering that the negligence of
the minor driver or the detachment of the steering wheel guide of the jeep
owned by respondent Villanueva was an event over which petitioner St.
Mary's Academy had no control, and which was the proximate cause of the
accident, petitioner may not be held liable for the death resulting from such
accident. Consequently, we find that petitioner likewise cannot be held liable
for moral damages in the amount of P500,000.00 awarded by the trial court
and affirmed by the Court of Appeals. Though incapable of pecuniary
computation, moral damages may be recovered if they are the proximate
result of the defendant's wrongful act or omission. In this case, the
proximate cause of the accident was not attributable to petitioner. For the
reason that petitioner was not directly liable for the accident, the decision of
the Court of Appeals ordering petitioner to pay death indemnity to
respondent Carpitanos must be deleted. Moreover, the grant of attorney's "On 20 February 1997, Branch 6 of the Regional Trial
fees as part of damages is the exception rather than the rule. The power of Court of Dipolog City rendered its decision the dispositive
the court to award attorney's fees under Article 2208 of the Civil Code portion of which reads as follows:
demands factual, legal and equitable justification. Thus, the grant of
attorney's fees against the petitioner is likewise deleted. aESICD "'WHEREFORE, PREMISES CONSIDERED, judgment is
hereby rendered in the following manner:
5. ID.; DAMAGES; REGISTERED OWNER OF VEHICLE PRIMARILY
RESPONSIBLE FOR INJURIES CAUSED TO THE PUBLIC OR TO THIRD 1. Defendant St. Mary's Academy of Dipolog City,
PERSONS WHILE VEHICLE WAS BEING DRIVEN ON THE HIGHWAYS OR is hereby ordered to pay plaintiffs William
STREETS. — We have held that the registered owner of any vehicle, even if Carpitanos and Luisa Carpitanos, the
not used for public service, would primarily be responsible to the public or following sums of money:
to third persons for injuries caused the latter while the vehicle was being a. FIFTY THOUSAND PESOS
driven on the highways or streets. Hence, with the overwhelming evidence (P50,000.00) indemnity for the
presented by petitioner and the respondent Daniel spouses that the loss of life of Sherwin S.
accident occurred because of the detachment of the steering wheel guide of Carpitanos;
the jeep, it is not the school, but the registered owner of the vehicle who
shall be held responsible for damages for the death of Sherwin Carpitanos. b. FORTY THOUSAND PESOS
(P40,000.00) actual damages
incurred by plaintiffs for burial and
related expenses;
DECISION
c. TEN THOUSAND PESOS (P10,000.00)
for attorney's fees;

PARDO, J p: d. FIVE HUNDRED THOUSAND PESOS

(P500,000.00) for moral damages;
The Case and to pay costs.

The case is an appeal via certiorari from the decision 1 of the Court of 2. Their liability being only subsidiary, defendants
Appeals as well as the resolution denying reconsideration, holding petitioner James Daniel, Sr. and Guada Daniel are
liable for damages arising from an accident that resulted in the death of a hereby ordered to pay herein plaintiffs the
student who had joined a campaign to visit the public schools in Dipolog amount of damages above-stated in the
City to solicit enrollment. event of insolvency of principal obligor St.
Mary's Academy of Dipolog City;
The Facts
3. Defendant James Daniel II, being a minor at the
The facts, as found by the Court of Appeals, are as follows:
time of the commission of the tort and
"Claiming damages for the death of their only son, who was under special parental authority
Sherwin Carpitanos, spouses William Carpitanos and of defendant St. Mary's Academy, is
Lucia Carpitanos filed on June 9, 1995 a case against ABSOLVED from paying the above-stated
James Daniel II and his parents, James Daniel Sr. and damages, same being adjudged against
Guada Daniel, the vehicle owner, Vivencio Villanueva and defendants St. Mary's Academy, and
St. Mary's Academy before the Regional Trial Court of subsidiarily, against his parents;
Dipolog City.
4. Defendant Vivencio Villanueva is hereby
ABSOLVED of any liability. His
counterclaim not being in order as earlier
 discussed in this decision, is hereby
DISMISSED.
IT IS SO ORDERED."' (Decision, pp. 32-33; Records, pp.
205-206)."
"From the records it appears that from 13 to 20 February
1995, defendant-appellant St. Mary's Academy of Dipolog
City conducted an enrollment drive for the school year
1995-1996. A facet of the enrollment campaign was the
visitation of schools from where prospective enrollees
were studying. As a student of St. Mary's Academy,
Sherwin Carpitanos was part of the campaigning group.
Accordingly, on the fateful day, Sherwin, along with other
high school students were riding in a Mitsubishi jeep
owned by defendant Vivencio Villanueva on their way to
Larayan Elementary School, Larayan, Dapitan City. The
jeep was driven by James Daniel II then 15 years old and
a student of the same school. Allegedly, the latter drove
the jeep in a reckless manner and as a result the jeep
turned turtle.
"Sherwin Carpitanos died as a result of the injuries he
sustained from the accident." 2
In due time, petitioner St. Mary's Academy appealed the decision to the
Court of Appeals. 3
On February 29, 2000, the Court of Appeals promulgated a decision
reducing the actual damages to P25,000.00 but otherwise affirming the
decision a quo, in toto. 4
On February 29, 2000, petitioner St. Mary's Academy filed a motion for
reconsideration of the decision. However, on May 22, 2000, the Court of
Appeals denied the motion. 5
Hence, this appeal. 6
The Issues
1) Whether the Court of Appeals erred in holding the
petitioner liable for damages for the death of
Sherwin Carpitanos.
2) Whether the Court of Appeals erred in affirming the
award of moral damages against the petitioner.
The Court's Ruling
We reverse the decision of the Court of Appeals.
The Court of Appeals held petitioner St. Mary's Academy liable for the death
of Sherwin Carpitanos under Articles 218 7 and 219 8 of the Family Code,
pointing out that petitioner was negligent in allowing a minor to drive and in
not having a teacher accompany the minor students in the jeep.
Under Article 218 of the Family Code, the following shall have special
parental authority over a minor child while under their supervision,
instruction or custody: (1) the school, its administrators and teachers; or (2)
the individual, entity or institution engaged in child care. This special
parental authority and responsibility applies to all authorized activities,
whether inside or outside the premises of the school, entity or institution.
Thus, such authority and responsibility applies to field trips, excursions and
other affairs of the pupils and students outside the school premises
whenever authorized by the school or its teachers. 9
Under Article 219 of the Family Code, if the person under custody is a
minor, those exercising special parental authority are principally and
solidarily liable for damages caused by the acts or omissions of the
unemancipated minor while under their supervision, instruction, or
custody. 10
However, for petitioner to be liable, there must be a finding that the act or
omission considered as negligent was the proximate cause of the injury
caused because the negligence, must have a causal connection to the
accident. 11
“In order that there may be a recovery for an injury,
however, it must be shown that the ‘injury for which
recovery is sought must be the legitimate consequence of
the wrong done; the connection between the negligence
and the injury must be a direct and natural sequence of
events, unbroken by intervening efficient causes.’ In other
words, the negligence must be the proximate cause of the
injury. For, ‘negligence, no matter in what it consists,
cannot create a right of action unless it is the proximate
cause of the injury complained of.’ And ‘the proximate
cause of an injury is that cause, which, in natural and
continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which
the result would not have occurred.”’ 12
In this case, the respondents failed to show that the negligence of petitioner
was the proximate cause of the death of the victim.
Respondents Daniel spouses and Villanueva admitted that the immediate
cause of the accident was not the negligence of petitioner or the reckless
driving of James Daniel II, but the detachment of the steering wheel guide of
the jeep.
In their comment to the petition, respondents Daniel spouses and Villanueva
admitted the documentary exhibits, establishing that the cause of the
accident was the detachment of the steering wheel guide of the jeep.
Hence, the cause of the accident was not the recklessness of James Daniel
II but the mechanical defect in the jeep of Vivencio Villanueva. Respondents,
including the spouses Carpitanos, parents of the deceased Sherwin
Carpitanos, did not dispute the report and testimony of the traffic
investigator who stated that the cause of the accident was the detachment
of the steering wheel guide that caused the jeep to turn turtle.
Significantly, respondents did not present any evidence to show that the
proximate cause of the accident was the negligence of the school
authorities, or the reckless driving of James Daniel II. Hence, the
respondents’ reliance on Article 219 of the Family Code that “those given
the authority and responsibility under the preceding Article shall be
principally and solidarily liable for damages caused by acts or omissions of
the unemancipated minor” was unfounded.
Further, there was no evidence that petitioner school allowed the minor
James Daniel II to drive the jeep of respondent Vivencio Villanueva. It was
Ched Villanueva, grandson of respondent Vivencio Villanueva, who had
possession and control of the jeep. He was driving the vehicle and he
allowed James Daniel II, a minor, to drive the jeep at the time of the
accident.
Hence, liability for the accident, whether caused by the negligence of the
minor driver or mechanical detachment of the steering wheel guide of the
jeep, must be pinned on the minor's parents primarily. The negligence of
petitioner St. Mary's Academy was only a remote cause of the accident.
Between the remote cause and the injury, there intervened the negligence of
the minor's parents or the detachment of the steering wheel guide of the
jeep.
"The proximate cause of an injury is that cause, which, in
natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury, and
without which the result would not have occurred." 13
Considering that the negligence of the minor driver or the detachment of the
steering wheel guide of the jeep owned by respondent Villanueva was an
event over which petitioner St. Mary's Academy had no control, and which
was the proximate cause of the accident, petitioner may not be held liable
for the death resulting from such accident.
Consequently, we find that petitioner likewise cannot be held liable for moral
damages in the amount of P500,000.00 awarded by the trial court and
affirmed by the Court of Appeals.
Though incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of the defendant's wrongful act or
omission. 14 In this case, the proximate cause of the accident was not
attributable to petitioner.
For the reason that petitioner was not directly liable for the accident, the
decision of the Court of Appeals ordering petitioner to pay death indemnity
to respondent Carpitanos must be deleted. Moreover, the grant of attorney's
fees as part of damages is the exception rather than the rule. 15 The power
of the court to award attorney's fees under Article 2208 of the Civil Code
demands factual, legal and equitable justification. 16 Thus, the grant of
attorney's fees against the petitioner is likewise deleted.
Incidentally, there was no question that the registered owner of the vehicle
was respondent Villanueva. He never denied and in fact admitted this fact.
We have held that the registered owner of any vehicle, even if not used for
public service, would primarily be responsible to the public or to third
persons for injuries caused the latter while the vehicle was being driven on
the highways or streets." 17 Hence, with the overwhelming evidence
presented by petitioner and the respondent Daniel spouses that the
accident occurred because of the detachment of the steering wheel guide of
the jeep, it is not the school, but the registered owner of the vehicle who
shall be held responsible for damages for the death of Sherwin Carpitanos.
The Fallo
WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the
Court of Appeals 18 and that of the trial court. 19 The Court remands the
case to the trial court for determination of the liability of defendants,
excluding petitioner St. Mary's Academy, Dipolog City. DaTHAc
No costs.
SO ORDERED.
Davide, Jr., C.J., Kapunan and Ynares-Santiago, JJ., concur.
||| (St. Mary's Academy v. Carpitanos, G.R. No. 143363, [February 6, 2002],
426 PHIL 878-887)
THIRD DIVISION
[G.R. No. 80718. January 29, 1988.]
FELISA P. DE ROY and VIRGILIO
RAMOS, petitioners, vs. COURT OF APPEALS and LUIS
BERNAL, SR., GLENIA BERNAL, LUIS BERNAL, JR.,
HEIRS OF MARISSA BERNAL, namely, GLICERIA
DELA CRUZ BERNAL and LUIS BERNAL,
SR., respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; APPEAL; PERIOD FOR
APPEALING OR FOR FILING A MOTION FOR RECONSIDERATION, NON-
EXTENDIBLE. — The rule laid down in Habaluyas Enterprises, Inc. v. Japzon,
[G.R. No. 70895, August 5, 1985, 138 SCRA 46], that the fifteen-day period
for appealing or for filing a motion for reconsideration cannot be extended.
2. ID.; ID.; ID.; GRACE PERIOD IN BOCAVA CASE, INAPPLICABLE TO THE
CASE AT BAR. — The one-month grace period from the promulgation on
May 30, 1986 of the Court's Resolution in the clarificatory Habaluyas case,
or up to June 30, 1986, within which the rule barring extensions of time to
file motions for new trial or reconsideration may still be allowed cannot be
invoked by the petitioners as their motion for extension of time was filed on
September 9, 1987, more than a year after the grace period on June 30,
1986.
RESOLUTION
CORTES, J p:
This special civil action for certiorari seeks to declare null and void two (2)
resolutions of the Special Division of the Court of Appeals in the Luis Bernal,
Sr., et al. v. Felisa Perdosa De Roy, et al., CA-G.R. CV No. 07286. The first
resolution promulgated on 30 September 1987 denied petitioner's motion
for extension of time to file a motion for reconsideration and directed entry
of judgment since the decision in said case had become final; and the
second Resolution dated 27 October 1987 denied petitioners' motion for
reconsideration for having been filed out of time.
At the outset, this Court could have denied the petition outright for not being
verified as required by Rule 65 section 1 of the Rules of Court. However,
even if the instant petition did not suffer from this defect, this Court, on
procedural and substantive grounds, would still resolve to deny it.
The facts of the case are undisputed. The firewall of a burned out building
owned by petitioners collapsed and destroyed the tailoring shop occupied
by the family of private respondents, resulting in injuries to private
respondents and the death of Marissa Bernal, a daughter. Private
respondents had been warned by petitioners to vacate their shop in view of
its proximity to the weakened wall but the former failed to do so. On the
basis of the foregoing facts, the Regional Trial Court. First Judicial Region,
Branch XXXVIII, presided by the Hon. Antonio M. Belen, rendered judgment
finding petitioners guilty of gross negligence and awarding damages to
private respondents. On appeal, the decision of the trial court was
affirmed in toto by the Court of Appeals in a decision promulgated on
August 17, 1987, a copy of which was received by petitioners on August 25,
1987. On September 9, 1987, the last day of the fifteen-day period to file an
appeal, petitioners filed a motion for extension of time to file a motion for
reconsideration, which was eventually denied by the appellate court in the
Resolution of September 30, 1987. Petitioners filed their motion for
reconsideration on September 24, 1987 but this was denied in the
Resolution of October 27, 1987.
This Court finds that the Court of Appeals did not commit a grave abuse of
discretion when it denied petitioners' motion for extension of time to file a
motion for reconsideration, directed entry of judgment and denied their
motion for reconsideration. It correctly applied the rule laid down
in Habaluyas Enterprises, Inc. v. Japzon, [G.R. No. 70895, August 5, 1985,
138 SCRA 46], that the fifteen-day period for appealing or for filing a motion
for reconsideration cannot be extended. In its Resolution denying the motion
for reconsideration, promulgated on May 30, 1986 (142 SCRA 208), this
Court en banc restated and clarified the rule, to wit:
Beginning one month after the promulgation of this
Resolution, the rule shall be strictly enforced that no
motion for extension of time to file a motion for
reconsideration may be filed with the Metropolitan or
Municipal Trial Courts, the Regional Trial Courts, and the
Intermediate Appellate Court. Such a motion may be filed
only in cases pending with the Supreme Court as the
court of last resort, which may in its sound discretion
either grant or deny the extension requested. (at p. 212)
Lacsamana v. Second Special Cases Division of the Intermediate Appellate
Court, [G.R. No. 73146-53, August 26, 1986, 143 SCRA 643], reiterated the
rule and went further to restate and clarify the modes and periods of appeal.
Bacaya v. Intermediate Appellate Court, [G.R. No. 74824, Sept. 16, 1985,
144 SCRA 161], stressed the prospective application of said rule, and
explained the operation of the grace period, to wit: LibLex
In other words, there is one-month grace period from the
promulgation on May 30, 1986 of the Court's Resolution
in the clarificatory Habaluyas case, or up to June 30,
1986, within which the rule barring extensions of time to
file motions for new trial or reconsideration is, as yet, not
strictly enforceable.
from its total or partial collapse, if it should be due to the lack of necessary
repairs."
Nor was there error in rejecting petitioners argument that private
respondents had the "last clear chance" to avoid the accident if only they
heeded the warning to vacate the tailoring shop and, therefore, petitioners
prior negligence should be disregarded, since the doctrine of "last clear
chance," which has been applied to vehicular accidents, is inapplicable to
this case.
WHEREFORE, in view of the foregoing, the Court Resolved to DENY the
instant petition for lack of merit.
Fernan, Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

Since petitioners herein filed their motion for extension on ||| (De Roy v. Court of Appeals, G.R. No. 80718 (Resolution), [January 29,
February 27, 1986, it is still within the grace period, which 1988], 241 PHIL 804-808)
expired on June 30, 1986, and may still be allowed.
This grace period was also applied in Mission v. Intermediate Appellate
Court [G.R. No. 73669, October 28, 1986, 145 SCRA 306]. FIRST DIVISION
In the instant case, however, petitioners' motion for extension of time was
filed on September 9, 1987, more than a year after the expiration of the [G.R. No. 74431. November 6, 1989.]
grace period on June 30, 1986. Hence, it is no longer within the coverage of
the grace period. Considering the length of time from the expiration of the
PURITA MIRANDA VESTIL and AGUSTIN
grace period to the promulgation of the decision of the Court of Appeals on
VESTIL, petitioners, vs. INTERMEDIATE APPELLATE
August 25, 1987, petitioners cannot seek refuge in the ignorance of their
COURT, DAVID UY and TERESITA UY,respondents.
counsel regarding said rule for their failure to file a motion for
reconsideration within the reglementary period. prLL
Petitioners contend that the rule enunciated in the Habaluyas case should Pablo P. Garcia for petitioners.
not be made to apply to the case at bar owing to the non-publication of
Roberto R. Palmares for private respondents.
the Habaluyas decision in the Official Gazette as of the time the subject
decision of the Court of Appeals was promulgated. Contrary to petitioners'
view, there is no law requiring the publication of Supreme Court decisions in
SYLLABUS
the Official Gazette before they can be binding and as a condition to their
becoming effective. It is the bounden duty of counsel as lawyer in active law
practice to keep abreast of decisions of the Supreme Court particularly 1. REMEDIAL LAW; EVIDENCE; WEIGHT AND SUFFICIENCY; DEATH
where issues have been clarified, consistently reiterated, and published in CERTIFICATE NOT CONCLUSIVE PROOF OF CAUSE OF DEATH BUT
the advance reports of Supreme Court decisions (G.R.s) and in such ONLY OF FACT OF DEATH. — The Court finds that the link between the
publications as the Supreme Court Reports Annotated (SCRA) and law dog bites and the certified cause of death has been satisfactorily
journals. established. We also reiterate our ruling in Sison v. Sun Life Assurance
Company of Canada, that the death certificate is not conclusive proof of the
This Court likewise finds that the Court of Appeals committed no grave cause of death but only of the fact of death. Indeed, the evidence of the
abuse of discretion in affirming the trial court's decision holding petitioner child's hydrophobia is sufficient to convince us that she died because she
liable under Article 2190 of the Civil Code, which provides that "the
proprietor of a building or structure is responsible for the damage resulting
was bitten by the dog even if the death certificate stated a different cause of
death.
2. CIVIL LAW; QUASI-DELICTS; ARTICLE 2183 OF CIVIL CODE;
POSSESSOR LIABLE EVEN IF ANIMAL SHOULD "ESCAPE OR BE LOST"
AND BE REMOVED FROM HIS CONTROL; THAT DOG WAS TAME AND
WAS MERELY PROVOKED BY CHILD INTO BITING HER, IMMATERIAL. —
Article 2183 of the Civil Code holds the possessor liable even if the animal
should "escape or be lost" and so be removed from his control. And it does
not matter either that as the petitioners also contend, the dog was tame and
was merely provoked by the child into biting her. The law does not speak
only of vicious animals but covers even tame ones as long as they cause
injury. As for the alleged provocation, the petitioners forget that Theness
was only three years old at the time she was attacked and can hardly be
faulted for whatever she might have done to the animal.
3. ID.; ID.; ID.; BASIS THEREOF. — According to Manresa, the obligation
imposed by Article 2183 of the Civil Code is not based on the negligence or
on the presumed lack of vigilance of the possessor or user of the animal
causing the damage. It is based on natural equity and on the principle of
social interest that he who possesses animals for his utility, pleasure or
service must answer for the damage which such animal may cause.
4. ID.; DAMAGES; ACTUAL DAMAGES; MEDICAL AND HOSPITALIZATION
EXPENSES, REDUCED. — We sustain the findings of the Court of Appeals
and approve the monetary awards except only as to the medical and
hospitalization expenses, which are reduced to P2,026.69, as prayed for in
the complaint. While there is no recompense that can bring back to the
private respondents the child they have lost, their pain should at least be
assuaged by the civil damages to which they are entitled.
DECISION
CRUZ, J p:
Little Theness Tan Uy was dead at the age of three. Her parents said she
died because she was bitten by a dog of the petitioners, but the latter
denied this, claiming they had nothing to do with the dog. The Uys sued the
Vestils, who were sustained by the trial court. On appeal, the decision of the
court a quowas reversed in favor of the Uys. The Vestils are now before vs.
They ask us to set aside the judgment of the respondent court and to
reinstate that of the trial court. prcd
On July 29, 1975, Theness was bitten by a dog while she was playing with a
child of the petitioners in the house of the late Vicente Miranda, the father of
Purita Vestil, at F. Ramos Street in Cebu City. She was rushed to the Cebu
General Hospital, where she was treated for "multiple lacerated wounds on
the forehead" 1 and administered an anti-rabies vaccine by Dr. Antonio
Tautjo. She was discharged after nine days but was re-admitted one week
later due to "vomiting of saliva." 2 The following day, on August 15, 1975,
the child died. The cause of death was certified as broncho-pneumonia. 3
Seven months later, the Uys sued for damages, alleging that the Vestils
were liable to them as the possessors of "Andoy," the dog that bit and
eventually killed their daughter. The Vestils rejected the charge, insisting that
the dog belonged to the deceased Vicente Miranda, that it was a tame
animal, and that in any case no one had witnessed it bite Theness. After
trial, Judge Jose R. Ramolete of the Court of First Instance of Cebu
sustained the defendants and dismissed the complaint. 4
The respondent court arrived at a different conclusion when the case was
appealed. 5 It found that the Vestils were in possession of the house and the
dog and so should be responsible under Article 2183 of the Civil Code for
the injuries caused by the dog. It also held that the child had died as a result
of the dog bites and not for causes independent thereof as submitted by the
appellees. Accordingly, the Vestils were ordered to pay the Uys damages in
the amount of P30,000.00 for the death of Theness, P12,000.00 for medical
and hospitalization expenses, and P2,000.00 as attorney's fees.
In the proceedings now before us, Purita Vestil insists that she is not the
owner of the house or of the dog left by her father as his estate has not yet
been partitioned and there are other heirs to the property. Pursuing the logic
of the Uys, she claims, even her sister living in Canada would be held
responsible for the acts of the dog simply because she is one of Miranda's
heirs. However, that is hardly the point. What must be determined is
the possession of the dog that admittedly was staying in the house in
question, regardless of the ownership of the dog or of the house.
Article 2183 reads as follows:
The possessor of an animal or whoever may make use of
the same is responsible for the damage which it may
cause, although it may escape or be lost. This
responsibility shall cease only in case the damage should
come from force majeure or from the fault of the person
who has suffered damage.
Thus, in Afialda v. Hisole, 6 a person hired as caretaker of a carabao gored
him to death and his heirs thereupon sued the owner of the animal for
damages. The complaint was dismissed on the ground that it was the
caretaker's duty to prevent the carabao from causing injury to any one,
including himself.
Purita Vestil's testimony that she was not in possession of Miranda's house
is hardly credible. She said that the occupants of the house left by her father
were related to him ("one way or the other") and maintained themselves out
of a common fund or by some kind of arrangement (on which, however, she
did not elaborate). 7 She mentioned as many as ten of such relatives who
had stayed in the house at one time or another although they did not appear
to be close kin. 8 She at least implied that they did not pay any rent,
presumably because of their relation with Vicente Miranda notwithstanding
that she herself did not seem to know them very well. Cdpr
There is contrary evidence that the occupants of the house were boarders
(or more of boarders than relatives) who paid the petitioners for providing
them with meals and accommodations. It also appears that Purita Vestil had
hired a maid, Dolores Jumao-as, who did the cooking and cleaning in the
said house for its occupants. 9 Her mother, Pacita, who was a nursemaid of
Purita herself, categorically declared that the petitioners were maintaining
boarders in the house where Theness was bitten by a dog. 10 Another
witness, Marcial Lao, testified that he was indeed a boarder and that the
Vestils were maintaining the house for business purposes. 11 And although
Purita denied paying the water bills for the house, the private respondents
submitted documentary evidence of her application for water connection
with the Cebu Water District, which strongly suggested that she was
administering the house in question. 12
While it is true that she is not really the owner of the house, which was still
part of Vicente Miranda's estate, there is no doubt that she and her husband
were its possessors at the time of the incident in question. She was the only
heir residing in Cebu City and the most logical person to take care of the
property, which was only six kilometers from her own house. 13 Moreover,
there is evidence showing that she and her family regularly went to the
house, once or twice weekly, according to at least one witness, 14 and used
it virtually as a second house. Interestingly, her own daughter was playing in
the house with Theness when the little girl was bitten by the dog. 15 The
dog itself remained in the house even after the death of Vicente Miranda in
1973 and until 1975, when the incident in question occurred. It is also
noteworthy that the petitioners offered to assist the Uys with their
hospitalization expenses although Purita said she knew them only
casually. 16
The petitioners also argue that even assuming that they were the
possessors of the dog that bit Theness, there was no clear showing that she
died as a result thereof. On the contrary, the death certificate 17 declared
that she died of broncho-pneumonia, which had nothing to do with the dog
bites for which she had been previously hospitalized.
The Court need not involve itself in an extended scientific discussion of the
causal connection between the dog bites and the certified cause of death
except to note that, first, Theness developed hydrophobia, a symptom of
rabies, as a result of the dog bites, and second, that asphyxia broncho-
pneumonia, which ultimately caused her death, was a complication of
rabies.
That Theness became afraid of water after she was bitten by the dog is
established by the following testimony of Dr. Tautjo: LLphil
COURT: I think there was mention of rabies in the report
in the second admission?
A: Now, the child was continuously vomiting just before I
referred to Dr. Co earlier in the morning and then
the father, because the child was asking for water,
the father tried to give the child water and this
child went under the bed, she did not like to drink
the water and there was fright in her eyeballs. For
this reason, because I was in danger there was
rabies, I called Dr. Co.
Q: In other words, the child had hydrophobia?
A: Yes, sir. 18
As for the link between rabies and broncho-pneumonia, the doctor had the
following to say under oath:
A: Now, as I said before, broncho-pneumonia can result
from physical, chemical and bacterial means . . . It
can be the result of infection, now, so if you have
any other disease which can lower your resistance
you can also get pneumonia.
xxx xxx xxx
Q: Would you say that a person who has rabies may die of
complication which is broncho-pneumonia?
A: Yes.
Q: For the record, I am manifesting that this book shown
the witness is known as CURRENT DIANOSIS &
TREATMENT, 1968 by Henry Brainerd, Sheldon
 Margen and Milton Chaton. Now, I invite your
attention, doctor, to page 751 of this book under
the title "Rabies." There is on this page,
"Prognosis" as a result of rabies and it says:
Once the symptoms have appeared death inevitably
occurs after 2-3 days as a result of cardiac or
respiratory failure or generalized paralysis.
After a positive diagnosis of rabies or after a bite by a
suspected animal if the animal cannot be
observed or if the bite is on the head, give rabies
vaccine (duck embryo). Do you believe in this
statement?
A: Yes.
Q: Would you say therefore that persons who have rabies
may die of respiratory failure which leave in the
form of broncho-pneumonia?
A: Broncho-pneumonia can be a complication of
rabies. 19
On the strength of the foregoing testimony, the Court finds that the link
between the dog bites and the certified cause of death has been
satisfactorily established. We also reiterate our ruling in Sison v. Sun Life
Assurance Company of Canada, 20 that the death certificate is not
conclusive proof of the cause of death but only of the fact of death. Indeed,
the evidence of the child's hydrophobia is sufficient to convince us that she
died because she was bitten by the dog even if the death certificate stated a
different cause of death.
The petitioner's contention that they could not be expected to exercise
remote control of the dog is not acceptable. In fact, Article 2183 of the Civil
Code holds the possessor liable even if the animal should "escape or be
lost" and so be removed from his control. And it does not matter either that
as the petitioners also contend, the dog was tame and was merely provoked
by the child into biting her. The law does not speak only of vicious animals
but covers even tame ones as long as they cause injury. As for the alleged
provocation, the petitioners forget that Theness was only three years old at
the time she was attacked and can hardly be faulted for whatever she might
have done to the animal. LexLib
It is worth observing that the above defenses of the petitioners are an
implied rejection of their original posture that there was no proof that it was
the dog in their father's house that bit Theness.
According to Manresa, the obligation imposed by Article 2183 of the Civil
Code is not based on the negligence or on the presumed lack of vigilance of
the possessor or user of the animal causing the damage. It is based on
natural equity and on the principle of social interest that he who possesses
animals for his utility, pleasure or service must answer for the damage which
such animal may cause. 21
We sustain the findings of the Court of Appeals and approve the monetary
awards except only as to the medical and hospitalization expenses, which
are reduced to P2,026.69, as prayed for in the complaint. While there is no
recompense that can bring back to the private respondents the child they
have lost, their pain should at least be assuaged by the civil damages to
which they are entitled.
WHEREFORE, the challenged decision is AFFIRMED as above modified.
The petition is DENIED, with costs against the petitioners. It is so ordered.
Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
||| (Vestil v. Intermediate Appellate Court, G.R. No. 74431, [November 6,
1989], 258-A PHIL 612-619)
SECOND DIVISION
[G.R. No. 137916. December 8, 2004.]
DEVELOPMENT BANK OF THE
PHILIPPINES, petitioner, vs. COURT OF APPEALS,
ELPIDIO O. CUCIO, SPOUSES JACINTO GOTANGCO
and CHARITY BANTUG, 1 respondents.
DECISION
CALLEJO, SR., J p:
This is a petition for review on certiorari of the Decision 2 of the Court of
Appeals (CA) in CA-G.R. CV No. 37873 which affirmed, with modification,
the Decision 3 of the Regional Trial Court (RTC) of Palayan City, Branch 40,
in Civil Case No. 0061-P.
The Spouses Jacinto Gotangco and Charity Bantug were the owners of
seven parcels of land located in Palayan City, with total area of 21,000
square meters, covered by Transfer Certificates of Title (TCT) Nos. NT-
166092 to NT-166098. The Spouses Gotangco were also the awardees of a
parcel of land, identified as Lot No. 168, NG-130 (Pls-378), located in
Canaderia, Palayan City, per Order of the Director of the Bureau of Lands
dated February 22, 1961. The Spouses Gotangco declared Lot No. 168 for
taxation purposes under Tax Declaration (TD) No. 0502 in 1980.
On August 22, 1980, the Spouses Gotangco secured a loan for their poultry
project in Palayan City from the Development Bank of the Philippines (DBP)
in the amount of P121,400.00. They then executed a real estate mortgage
over the parcels of land. 4
On December 16, 1981, the Spouses Gotangco executed a Deed of
Undertaking 5 wherein they obliged themselves to secure a sales patent in
their favor from the Bureau of Lands over Lot No. 168 covered by TD No.
0502 within two (2) years from the execution thereof. They also undertook to
deliver to the DBP the owner's duplicate of the certificate of title over the
property for the annotation of the real estate mortgage in favor of DBP at the
dorsal portion thereof. 6
On July 17, 1982, the Spouses Gotangco, as vendors, executed in favor of
Elpidio O. Cucio a contract to sell over the seven parcels of land mortgaged
to DBP for P50,000.00, payable in two installments. The parties agreed that
the said amount shall be paid directly to DBP and applied to the mortgage
indebtedness of the Spouses Gotangco and that, upon full payment of the
purchase price, the Spouses shall execute a deed of sale over the said
parcels of land in favor of Cucio. 7 The contract to sell was known to DBP.
Thereafter, Cucio made the following remittances to DBP in payment of the
purchase price of the seven parcels of land: (a) P16,000.00 per Official
Receipt (OR) No. 2418258 dated January 13, 1983; and (b) P5,000.00. The
DBP considered the remittances as deposits and issued OR No. 2792644
dated February 18, 1983 to Cucio for the total amount of P21,000.00. The
DBP informed Jacinto Gotangco, on February 18, 1983, of the said
remittances made by Cucio. 8It also requested the Spouses Gotangco to
turn over the owner's copy of the title over the property covered by TD No.
0502 so that it could effect the substitution of the seven (7) parcels of land
mortgaged by the Spouses Gotangco for the said lot.
Subsequently, the Spouses Gotangco were able to secure a sales patent
over the parcel of land covered by TD. No. 0502, on the basis of which TCT
No. NT-177647 was issued by the Register of Deeds on March 23, 1983.
Conformably to the request of DBP, the Spouses Gotangco turned over the
owner's duplicate of TCT No. NT-177647, and the mortgage executed in
favor of DBP was duly annotated at the back of the said title. DBP kept the
owner's copies of TCT Nos. NT-166092 to NT-166098 and TCT No. NT-
177647. SHIETa
On July 23, 1983, Jacinto Gotangco remitted the total amount of P57,097.36
to DBP in partial payment of his loan account for which DBP issued OR Nos.
324501 to 324504. 9 In 1984, Cucio paid the balance of the purchase price
of the seven parcels of land to DBP.
In the meantime, the Spouses Gotangco applied for a restructuring of their
loan with the DBP which was, thereafter, approved. In a Letter dated
October 14, 1983, the DBP informed Cucio of the approval of the
restructuring of the loan of the Spouses Gotangco and requested him to
complete the downpayment of the purchase price of the seven (7) parcels of
land so that the appropriate substitution of the property covered by TCT No.
NT-177647, in lieu of the seven (7) other properties issued by the said
Spouses as collateral for their loan, could be effected, and the appropriate
deed of absolute sale over TCT Nos. NT-166092 to NT-166098 could then
be executed by the said Spouses in favor of Cucio. 10 As such, Cucio paid
the balance of the purchase price of the said lots to DBP on October 1,
1984. 11
On July 3, 1988, the poultry farm of the Spouses Gotangco and the
improvements thereon were gutted by fire.
On December 6, 1988, the DBP Pool of Accredited Insurance Companies
informed the DBP that it had offered to settle the claim of the Spouses
Gotangco for the proceeds of the insurance on their poultry farm for
P167,149.14. 12 The Spouses apparently did not respond.
On February 20, 1989, the DBP wrote the Spouses Gotangco demanding
payment of the balance of their loan in the amount of P408,026.96 within ten
(10) days from notice thereof. However, the Spouses failed to respond or
pay their account with the DBP.
By September 30, 1989, the outstanding account of the Spouses Gotangco
on the DBP or the principal of their loan account amounted to
P246,183.74. 13The DBP then wrote the Spouses Gotangco reminding them
that their loan would mature on June 30, 1991.
Cucio then filed a complaint against the Spouses Gotangco and the DBP
with the RTC of Palayan City for injunction and damages. Cucio
alleged, inter alia, that despite his payment of the full purchase price of the
seven (7) parcels of land covered by TCT Nos. NT-166092 to NT-166098
and his demands for the turnover of the owner's duplicates of the said title
to the Spouses Gotangco, the DBP refused to do so. He further alleged that
the DBP even demanded the payment of the interest on the loan account of
the Spouses Gotangco. Furthermore, the Spouses Gotangco refused to
execute a deed of absolute sale of the said parcels of land in his favor.
Cucio prayed that, after due proceedings, judgment be rendered in his favor,
thus:
WHEREFORE, it is respectfully prayed that a Writ of
Preliminary Mandatory Injunction be issued ordering
defendants Jacinto Gotangco and Charity Bantug to
execute the final Deed of Sale over TCT Nos. NT-166092,
NT-166093, NT-166094, NT-166095, NT-166096, NT-
166097 and NT-166098 and to submit additional
collaterals to the Development Bank of the Philippines
(DBP) and the DBP to release the owner's copies of said
titles from its possession and deliver them to plaintiff.
After hearing, making the preliminary injunction permanent
and ordering the defendants, jointly and severally, to pay
plaintiff moral damages, the amount of which is left to the
sound discretion of the Honorable Court; actual damages
of P50,000.00; attorney's fee of P30,000.00 and the cost
of the suit.
Plaintiff prays for other remedies under the premises. 14
The Spouses Gotangco filed their answer 15 with counterclaim, alleging that
they could not be faulted for their failure to execute a deed of sale in favor of
Cucio over the said parcels of land because the latter did not notify them
that he had already made the complete payment of the P50,000.00
purchase price thereof to DBP. According to the Spouses Gotangco,
considering that the DBP had given its implied consent to the contract to
sell over the subject parcels of land, it was the DBP's obligation to release
the titles after complete payment was made, following the submission to it
of TCT No. NT-177647, the substitute collateral for their loan.
In their cross-claim against the DBP, the Spouses Gotangco alleged the
following:
24. That on account of non-approval of loan and non-
release of collaterals/securities by the DBP, the
defendants Gotangcos were unnecessarily
dragged into litigation by the plaintiff where the
DBP alone should have been sued in the first
place, for all these, the DBP alone should suffer if
ever the Spouses Gotangco will be adjudged
liable to the plaintiff; for all the damages. 16
The Spouses Gotangco prayed that, after due proceedings, judgment be
rendered in their favor, thus:
WHEREFORE, facts and premises considered, it is most
respectfully prayed that JUDGMENT BE RENDERED:
1. DISMISSING THE COMPLAINT for lack of
cause of action and other grounds stated
in the Special and Affirmative Defenses;
2. ON COUNTERCLAIM, condemning the plaintiff
to pay moral damages of P100,000.00,
attorney's fees of P25,000.00, more or
less, and litigation expenses of
P10,000.00;
3. By way of cross-claim, ordering the other
defendant DBP to pay whatever amount
the defendants Gotangcos may suffer in
the event they may be adjudged liable to
the plaintiff. TEcCHD
GRANTING UNTO THE DEFENDANTS SPOUSES
GOTANGCO reliefs and other remedies just and proper
under the premises and the law. 17
In its answer, 18 the DBP admitted that it charged Cucio interest on the
Spouses Gotangco's loan; however, it denied that it consented to the
transaction between the Spouses Gotangco relative to the seven (7) parcels
of land claimed by Cucio. In its answer to the cross-claim, 19 the DBP,
likewise, admitted receiving the P50,000.00 purchase price of the seven
parcels of land from Cucio but only as deposit, and agreeing verbally to the
release of the properties, but only after the Spouses Gotangco shall have
fulfilled the conditions set forth in the real estate mortgage. It further alleged
that the Spouses Gotangco failed to comply with the said conditions, and
that their account remained dormant; hence, it refused to release the
owner's duplicate copies of the titles of the properties to the Spouses
Gotangco.
While the case was pending, the DBP informed the Spouses Gotangco in a
Letter dated February 20, 1990 20 that it was going to have the mortgage
foreclosed for their failure to settle their account. Jacinto Gotangco arrived
at the Cabanatuan branch office of the DBP to ascertain the balance of his
bank account but received no satisfactory answer. But the DBP sent a
letter 21 to the Spouses Gotangco on May 24, 1990, warning them anew
that it would institute foreclosure proceedings for their failure to fulfill their
loan obligations which already amounted to P737,474.33 as of April 30,
1990. On June 8, 1990, the Spouses Gotangco wrote the DBP requesting
for an updated statement of their account and the application of their
payments, inclusive of the proceeds of their insurance claims. 22

On the same date, the DBP filed an application for the extrajudicial
foreclosure of the real estate mortgage executed in its favor by the Spouses
Gotangco. 23 Appended to the application was a statement of account of
the Spouses. On June 7, 1990, Deputy Sheriff Rubentito Elonia issued a
Notice of Sale set on June 28, 1990 to satisfy the obligation of the Spouses
Gotangco to the DBP. 24
The Spouses Gotangco wrote DBP anew, on June 14, 1990, protesting the
foreclosure, claiming that they owed DBP only the amount of P246,183.74
as of October 31, 1988. 25 However, the DBP was undaunted.
The Spouses Gotangco forthwith filed a petition before the trial court for a
writ of preliminary injunction 26 to enjoin the public auction, alleging that the
extrajudicial foreclosure of the real estate in favor of the DBP would render
the decision of the court on the merits moot and academic. 27
The DBP opposed the motion, contending that the balance of the account of
the Spouses Gotangco as of April 30, 1990 was P737,474.33, exclusive of
interests and expenses. 28
The trial court issued a Temporary Restraining Order dated June 26, 1990.
After due hearing, the trial court issued an Order on October 4, 1990,
granting the petition of the Spouses Gotangco for a writ of preliminary
injunction on a bond of P50,000.00 pending the resolution of the matters
raised in the main case. 29 A writ of preliminary injunction was issued by the
trial court after the Spouses Gotangco posted a bond of P50,000.00.
Consequently, the writ was issued on November 12, 1990. 30
The trial court issued a subpoena duces tecum to the cashier of the DBP in
Cabanatuan City for the production of the Spouses Gotangco's bank
records reflecting the balance of their account. However, the cashier failed
to comply. 31 During the trial, Jacinto Gotangco testified that he suffered
mental anguish and serious anxieties because of the threatened extrajudicial
foreclosure of the real estate mortgage in favor of DBP. Charity Gotangco
failed to testify. The Spouses also adduced in evidence the statement of
their account from the DBP. 32
On February 8, 1992, Jacinto Gotangco died intestate and was survived by
his wife Charity Bantug Gotangco and their children, Jojina Ann Gotangco,
Jaime Gotangco and Jacinto B. Gotangco, Jr. 33
On April 14, 1992, the RTC rendered judgment as follows:
WHEREFORE, judgment is hereby rendered:
(1) Ordering DBP to release the owner's duplicate
certificates of TCT Nos. NT-166092 to NT-166098 to the
Gotangcos;
(2) Declaring the owner's duplicate certificate TCT No. NT-
177647 in the name of the Gotangcos as a replacement
thereof as their collateral to their restructured loan with
DBP;
(3) Ordering the Gotangcos to, thereafter, execute a deed
of absolute sale covering the properties described in TCT
Nos. NT-166092 to NT-166098 in favor of Cucio;
(4) Declaring the writ of preliminary injunction issued on
November 12, 1990, enjoining DBP from foreclosing the
properties of the Gotangcos covered by TCT No. NT-
166092 to NT-166098 and TCT No. NT-177647 and from
the scheduled auction sale thereof permanent;
(5) Ordering DBP to pay the Gotangcos the sum of
P250,000.00 as moral damages; and
(6) Ordering DBP to pay costs. 34
The trial court declared that the DBP was legally bound to release the
Spouses Gotangco's owner's duplicate of the certificates of title over the
seven (7) parcels of land; the latter, in turn, could execute a deed of sale
over the property covered by TCT No. NT-177647 in favor of Cucio. The trial
court further ruled that the DBP prematurely sought the extrajudicial
foreclosure of the mortgaged properties considering that as of September
30, 1989, the outstanding loan balance of the Spouses Gotangco was
P246,183.74 with maturity date set on June 30, 1991; and yet the DBP
foreclosed the mortgage extrajudicially for the amount of P737,474.33. It
declared that the extrajudicial foreclosure of the mortgage was evidently
made in bad faith and meant to harass the Spouses Gotangco during the
pendency of the case. As such, according to the trial court, the DBP was
liable for moral damages to the said Spouses.
On appeal by the DBP, the CA affirmed the decision, but reduced the award
of moral damages to P50,000.00. The fallo of the decision of the CA reads:
WHEREFORE, premises considered, the decision of the
Regional Trial Court of Palayan City, Nueva Ecija, Branch
40, in Civil Case No. 0061-P is AFFIRMED with
modifications. Appellant DBP is hereby ordered to release
the owner's duplicate certificates of TCT Nos. NT-166092
to NT-166098 to the Gotangcos and the Gotangco
spouses to execute the Deed of Sale in favor of Elpidio O.
 Cucio who shall cause the annotation of the mortgage in
favor of DBP at the back of the new certificates of title in
his name. Appellant DBP is further ordered to pay the
amount of P50,000.00 as moral damages to the
Gotangcos. No pronouncement as to costs. 35
The appellate court modified its decision on motion of the DBP, as follows:
WHEREFORE, premises considered; the decision of the
Regional Trial Court of Palayan City, Nueva Ecija, Branch
40, in Civil Case No. 0061-P, is AFFIRMED with
modifications. Appellant DBP is hereby ordered to release
the owner's duplicate certificates of TCT Nos. NT-166092
to 166098 to the Gotangcos and the Gotangco spouses to
execute the Deed of Sale in favor of Elpidio O. Cucio who
shall cause the annotation of the mortgage in favor of
DBP at the back of the new certificates of title in his
name. Thereafter, pursuant to the subsisting mortgage
agreements, DBP shall be entitled to the possession of the
new certificates of title until the mortgage indebtedness is
fully satisfied. Appellant DBP is further ordered to pay the
amount of P50,000.00 as moral damages to the
Gotangcos. No pronouncement as to costs. 36
The Present Petition
The DBP, now the petitioner, filed the instant petition raising as errors the
following:
1. THE PERMANENT INJUNCTION ISSUED BY THE
TRIAL COURT AND AFFIRMED BY THE RESPONDENT
COURT OF APPEALS EFFECTIVELY NULLIFIES DBP'S
MORTGAGE LIEN OVER THE PROPERTIES AND WILL
CONTRAVENE THE MANDATORY PROVISIONS OF P.D.
NO. 385. cEITCA
2. THERE IS NEITHER FACTUAL NOR LEGAL BASIS FOR
THE GRANT OF MORAL DAMAGES IN FAVOR OF THE
GOTANGCOS AS AGAINST PETITIONER DBP. 37
Prefatorily, the issue of whether or not the petitioner caused the extrajudicial
foreclosure of the real estate mortgage to harass the respondents, the
Spouses Gotangco, despite the pendency of the case before the trial court,
is one of fact. Under Rule 45 of the Rules of Civil Procedure, only questions
of law may be raised in this Court on petition for review on certiorari.
However, the Court may delve into and resolve questions of facts if grave
abuse is shown or such findings are contrary to the evidence on record or
are not supported by preponderant evidence. 38
The petitioner asserts that it had the right to enforce its mortgage lien over
the property notwithstanding the transfer of ownership over the same to a
third party. It contends that it had the right to institute foreclosure
proceedings, considering that the respondents Spouses Gotangco failed to
comply with the terms of the real estate mortgage executed in favor of DBP.
The petitioner argues that, with the permanent writ of preliminary injunction
issued by the trial court against the petitioner as affirmed by the respondent
court, the petitioner, is forever barred from foreclosing the properties
mortgaged in the event the loan obligation is never paid, in contravention
with the provisions of Presidential Decree (P.D.) No. 385. 39 It posits that it
cannot be held liable for moral damages for exercising its right under the
real estate mortgage and the law. The petitioner further argues that, even if
the respondents Spouses Gotangco suffered mental anguish as a result of
the foreclosure, the same qualifies as damnum absque injuria. Besides, the
foreclosure did not push through because of the trial court's injunction
order; hence, there was no damage done to the respondents Spouses
Gotangco.
There is merit in petitioner's contention.
The petitioner and the CA, however, misconstrued the width and breadth of
the permanent injunction issued by the RTC and affirmed by the CA, as well
as the purpose of the trial court in issuing the said writ.
It bears stressing that an injunction order must be as definite, clear and
precise as possible and, when practicable, it should inform the defendant of
the act he is refrained from doing, without calling on him for inferences or
conclusions about which persons might well differ. A permanent injunction
should not be more comprehensive or restrictive than justified by the
pleadings, evidence and usages of equity. 40 Such must be tailored to each
case; they should not infringe upon a conduct that does not produce the
harm sought to be avoided. 41 An injunction should be limited to the
requirements of the case. 42An injunctive order should never be broader
than is necessary to secure [to] the injured party, without injustice to the
adversary, relief warranted by the circumstances of the particular case. The
order should be adequately particularized, especially where some activities
may be permissible and proper. 43
Obviously, the trial court issued a permanent injunction to enjoin the
petitioner from pursuing its application for the extrajudicial foreclosure of the
real estate mortgage on May 24, 1990 and the sale at public auction of the
property covered by the said mortgage, on its finding that the petitioner
failed to prove how much was the balance of the account of the
respondents Spouses Gotangco to the petitioner as of said date during the
trial. The RTC did not perpetually foreclose the right of the petitioner to file,
under any and all circumstances, another application for the extrajudicial
foreclosure of the said mortgage for failure of the respondents spouses to
pay the correct balance of their account secured by the said mortgage.
Otherwise, it would have deprived the petitioner of its right to foreclose the
real estate mortgage, to cause the sale of the property at public auction and
collect the balance of the account of the respondents spouses as provided
for under the Real Estate Mortgage and the New Civil Code. 44 It would
have given the Spouses carte blanche not to pay the balance of their
account to the petitioner without the mortgage being foreclosed by the
latter. The trial court would have deprived the petitioner of its lien over the
property without due process of law.
It must be noted that the petitioner had a mortgage lien over the parcels of
land covered by the real estate mortgage. It is a right in rem, a lien on the
property. 45 Like an attachment lien, it is a vested interest, an actual and
substantial security, affording specific security for the satisfaction of the
debt put in suit, which constitutes a cloud on the legal title. 46 The lien
subsists until the destruction thereof by sale of the property. 47
Patently, the trial court issued the writ of preliminary injunction not so much
because of the failure of the respondents Spouses Gotangco to pay at least
20% of their account as provided for in Section 1 of P.D. No. 385, but
because of the then still unresolved issue of whether the petitioner was
obliged to turn over the owner's duplicate copies of TCT Nos. NT-166092 to
NT-166098 to the respondents Spouses Gotangco even after the latter had
substituted the property covered by TCT No. NT-177647 as security for their
loan. This is indubitable from the Order of the trial court dated October 4,
1990 granting the petition of the respondents Spouses Gotangco for the
issuance of a writ of preliminary injunction:
The right of the Gotangcos over the subject properties
sought to be protected at this stage of the proceedings in
the case filed against them by Elpidio O. Cucio consists
not so much against the lack of legal and factual basis on
the part of the DBP in foreclosing their properties because
their arrearages on their account with it fall short of the
requirement under Sec. 1 of PD 385, but more on the
liability of the DBP to release the owner's duplicate
certificates of TCT Nos. NT-166092 to NT-166098 in view
of their having already substituted them with TCT No. NT-
177647 covering the parcel of land under Tax Declaration
No. 0502 (Exh. 5, Injunction, record, p. 106). In fact, said
exhibit speaks of Mayor Cucio's purchase of the
properties mortgaged by the Gotangcos with the DBP.
This is precisely the cause of action of Mayor Cucio
against the Gotangcos who, in turn, filed a cross-claim
against the DBP.
What actually is left for the determination of the Court now
during the hearing on the merits of the main case is
whether or not Mayor Cucio has completed the payment
of the agreed price on the mortgaged properties of the
Gotangcos with the DBP so that the DBP will finally be
ordered to release the owner's duplicate certificates of
TCT No. NT-166092 to NT-166098 and for the Gotangcos
to execute the final deed of sale thereon in the event that
DBP fails (1) to prove that it did not give its consent or
express conformity to the contract to sell executed
between Mayor Cucio and the Gotangcos; and (2) to
prove that the Gotangcos failed to comply with the
alleged conditions for the release of the properties
(record, pp. 39-40).
Pending resolution on the matters raised in the main case,
to allow foreclosure of the properties by the DBP at this
time would, indeed, render the main case nugatory and
ineffectual. 48
Indeed, the trial court made it clear that it granted the petition of the
respondents Spouses Gotangco for the issuance of a writ of preliminary
injunction "pending resolution on the matters raised in the main
case." 49 The Spouses Gotangco, in fact, declared in their motion for a writ
of preliminary injunction that they filed the said motion to prevent the issues
in the main case from becoming moot and academic. HAICET
The trial court had already resolved the matter in its decision when it ruled
that the petitioner was obliged to turn over the owner's duplicate certificates
of said titles over the seven parcels of land to the respondents Spouses
Gotangco to enable the latter to execute a deed of sale over the said
property in favor of Cucio. In a real sense, the writ of preliminary injunction
issued by the RTC had become functus officio. There was no longer a valid
justification for the issuance of a permanent injunction to perpetually enjoin
the petitioner from foreclosing the real estate mortgage.
In affirming the decision of the RTC, permanently enjoining the petitioner
from foreclosing the real estate mortgage in its favor, the CA ruled that since
the trial court failed to determine the exact amount of the balance of the
account of the respondents Spouses Gotangco due to the petitioner's
refusal to produce before the trial court the records showing the balance of
the account of the respondents spouses, it cannot be determined whether
the latter failed to pay the twenty percent (20%) of their total outstanding
obligation as envisaged in Section 1 of P.D. No. 385. 50
We do not agree with the CA. For one thing, no less than the respondents
Spouses Gotangco adduced in evidence the statement of account issued by
the petitioner showing the balance of their account. 51
For another, the trial court itself decided that it issued its order granting the
petition of the respondents Spouses Gotangco not so much because of the
latter's failure to pay at least 20% of their total outstanding obligation to the
DBP, but because the extrajudicial foreclosure of the real estate mortgage
would render moot and academic the issues raised by the parties in the
case. One of these issues was whether the petitioner was obliged to turn
over the owner's duplicate copies of TCT Nos. NT-166092 to NT-166098 to
the respondents spouses to enable them to execute a deed of absolute sale
over the said lots covered by the said titles to the petitioner. The failure of
the cashier of the Cabanatuan branch of the DBP to produce the DBP
records showing the precise balance of the account of the respondents
spouses is not and should not be a justification to perpetually deprive the
petitioner of its right to foreclose the mortgage.
On the issue of moral damages, we agree with the trial court and the CA that
the initiation of extrajudicial foreclosure by the petitioner of the real estate
mortgage pendente lite was premature; hence, inappropriate. Although the
Spouses Gotangco failed to heed the petitioner's repeated demands for the
updating of their account and the payment of the balance of the loan, it
behooved the petitioner to tarry until the trial court had decided, with finality,
the case on its merits.
Nevertheless, we find no sufficient basis for the award of moral damages in
favor of the respondents spouses based on Article 19 of the New Civil Code
as a result of petitioner's application for foreclosure of real estate mortgage.
For one thing, Charity Bantug Gotangco did not testify. There is no factual
basis for the award of moral damages in her favor.
Abuse of right under Article 19 of the New Civil Code, on which the RTC
anchored its award for damages and attorney's fees, provides:
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.
The elements of abuse of rights are the following: (a) the existence of a legal
right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of
prejudicing or injuring another. Malice or bad faith is at the core of said
provision. 52 Good faith is presumed and he who alleges bad faith has the
duty to prove the same. 53 Good faith refers to the state of the mind which
is manifested by the acts of the individual concerned. It consists of the
intention to abstain from taking an unconscionable and unscrupulous
advantage of another. Bad faith does not simply connote bad judgment or
simple negligence, dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of known duty due to some motives
or interest or ill-will that partakes of the nature of fraud. 54 Malice connotes
ill-will or spite and speaks not in response to duty. It implies an intention to
do ulterior and unjustifiable harm. Malice is bad faith or bad motive. 55
The Spouses Gotangco failed to prove malice on the part of the petitioner.
There was, for sure, a divergence of opinion between the petitioner, on the
one hand, and the Spouses Gotangco, on the other, relative to the issue of
whether Cucio's payments were mere deposits or partial payments for the
lot covered by TCT No. NT-177647, and whether the respondents Spouses
Gotangco had agreed to the offer of the pool of insurers to pay the amount
of P167,149.14 as indemnity for the loss of their poultry farm. However, the
bare fact that the petitioner filed its application of the extrajudicial
foreclosure of the mortgage, notwithstanding those differences, cannot
thereby give rise to the conclusion that the petitioner did so with malice, to
harass the Spouses Gotangco. The records show that, time and again, the
petitioner had sent notices to the respondents spouses and demanded the
updating of their account and the payment of the balance thereof, but the
respondents spouses failed to comply. In the meantime, interests and
penalties on the loan considerably accrued. Under the terms of the real
estate mortgage and its charter, the petitioner had the right to foreclose the
said mortgage extrajudicially. Hence, the petitioner was constrained to file
its application for the extrajudicial foreclosure of the mortgage for the
Spouses Gotangco's past due obligation. Instead of settling their account,
the Spouses filed their petition for writ of preliminary injunction. Because of
the preliminary injunction issued by the trial court, the foreclosure was
aborted. Under the circumstances, it cannot be gainsaid that the petitioner
acted in bad faith or with malice in seeking the extrajudicial foreclosure of
the mortgage in its favor.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED.
The assailed Decision of the Court of Appeals is AFFIRMED WITH
MODIFICATION. The permanent injunction issued by the Regional Trial
Court, as affirmed by the Court of Appeals; and the award for moral
damages in favor of the Spouses Jacinto Gotangco and Charity Bantug are
DELETED. No costs. aCHDAE
SO ORDERED.
Puno, Tinga and Chico-Nazario, JJ ., concur.
Austria-Martinez, J ., took no part.
||| (Development Bank of the Phils. v. Court of Appeals, G.R. No. 137916,
[December 8, 2004], 487 PHIL 9-31)
THIRD DIVISION
[G.R. No. 119107. March 18, 2005.]
JOSE V. LAGON, petitioner, vs. HONORABLE COURT
OF APPEALS and MENANDRO V. LAPUZ, respondents.
DECISION
CORONA, J p:
On June 23, 1982, petitioner Jose Lagon purchased from the estate of Bai
Tonina Sepi, through an intestate court, 1 two parcels of land located at
Tacurong, Sultan Kudarat. A few months after the sale, private respondent
Menandro Lapuz filed a complaint for torts and damages against petitioner
before the Regional Trial Court (RTC) of Sultan Kudarat.
In the complaint, private respondent, as then plaintiff, claimed that he
entered into a contract of lease with the late Bai Tonina Sepi Mengelen
Guiabar over three parcels of land (the "property") in Sultan Kudarat,
Maguindanao beginning 1964. One of the provisions agreed upon was for
private respondent to put up commercial buildings which would, in turn, be
leased to new tenants. The rentals to be paid by those tenants would
answer for the rent private respondent was obligated to pay Bai Tonina Sepi
for the lease of the land. In 1974, the lease contract ended but since the
construction of the commercial buildings had yet to be completed, the lease
contract was allegedly renewed.
When Bai Tonina Sepi died, private respondent started remitting his rent to
the court-appointed administrator of her estate. But when the administrator
advised him to stop collecting rentals from the tenants of the buildings he
constructed, he discovered that petitioner, representing himself as the new
owner of the property, had been collecting rentals from the tenants. He thus
filed a complaint against the latter, accusing petitioner of inducing the heirs
of Bai Tonina Sepi to sell the property to him, thereby violating his leasehold
rights over it.
In his answer to the complaint, petitioner denied that he induced the heirs of
Bai Tonina to sell the property to him, contending that the heirs were in dire
need of money to pay off the obligations of the deceased. He also denied
interfering with private respondent's leasehold rights as there was no lease
contract covering the property when he purchased it; that his personal
investigation and inquiry revealed no claims or encumbrances on the subject
lots.
Petitioner claimed that before he bought the property, he went to Atty.
Benjamin Fajardo, the lawyer who allegedly notarized the lease contract
between private respondent and Bai Tonina Sepi, to verify if the parties
indeed renewed the lease contract after it expired in 1974. Petitioner averred
that Atty. Fajardo showed him four copies of the lease renewal but these
were all unsigned. To refute the existence of a lease contract, petitioner
presented in court a certification from the Office of the Clerk of Court
confirming that no record of any lease contract notarized by Atty. Fajardo
had been entered into their files. Petitioner added that he only learned of the
alleged lease contract when he was informed that private respondent was
collecting rent from the tenants of the building.
Finding the complaint for tortuous interference to be unwarranted, petitioner
filed his counterclaim and prayed for the payment of actual and moral
damages.
On July 29, 1986, the court a quo found for private respondent (plaintiff
below):
ACCORDINGLY, judgment is hereby rendered in favor of
the plaintiff:
1. Declaring the "Contract of Lease" executed by Bai
Tonina Sepi Mangelen Guiabar in favor of the
plaintiff on November 6, 1974 (Exh. "A" and "A-1")
over Lot No. 6395, Pls-73. Lot No. 6396. Pls.-73.
Lot No. 6399. 3ls-73, and Lot No. 9777-A. CSD-
11-000076-D (Lot No. 3-A. 40124), all situated
along Ledesma St., Tacurong, Sultan Kudarat,
which document was notarized by Atty. Benjamin
S. Fajardo, Sr. and entered into his notarial
register as Doc. No. 619. Page No. 24. Book No.
II. Series of 1974, to be authentic and genuine and
as such valid and binding for a period of ten (10)
years specified thereon from November 1, 1974
up to October 31, 1984;
2. Declaring the plaintiff as the lawful owner of the
commercial buildings found on the aforesaid lots
and he is entitled to their possession and the
collection (of rentals) of the said commercial
buildings within the period covered by this
"Contract of Lease" in his favor;
3. Ordering the defendant to pay to the plaintiff the
following:
a) Rentals of the commercial buildings on the lots
covered by the "Contract of Lease" in
favor of the plaintiff for the period from
October 1, 1978 up to October 31, 1984,
including accrued interests in the total
amount of Five Hundred Six Thousand
Eight Hundred Five Pesos and Fifty Six
Centavos (P506, 850.56), the same to
continue to bear interest at the legal rate
of 12% per annum until the whole amount
is fully paid by the defendant to the
plaintiff; jur2005cda
b) Moral damages in the amount of One Million
Sixty Two Thousand Five Hundred Pesos
(P1,062,500.00);
c) Actual or compensatory damages in the
amount of Three Hundred Twelve
Thousand Five Hundred Pesos
(P312,500.00);
d) Exemplary or corrective damages in the
amount of One Hundred Eighty Thousand
Five Hundred Pesos (P187,500.00)
e) Temperate or moderate damages in the amount
of Sixty Two Thousand Five Hundred
Pesos (P62,500.00);
f) Nominal damages in the amount of Sixty Two
Thousand Five Hundred Pesos
(P62,500.00);
g) Attorney's fees in the amount of One Hundred
Twenty Five Thousand Pesos
(P125,000.00);
h) Expenses of litigation in the amount of Sixty
Two Thousand Five Hundred Pesos,
(P62,500.00);
i) Interest on the moral damages, actual or
compensatory damages temperate or
moderate damages, nominal damages,
attorney's fees and expenses of litigation
in the amounts as specified hereinabove
from May 24, 1982 up to June 27, 1986,
in the total amount of Nine Hundred
Thousand Pesos (P900,000.00); all of
which will continue to bear interests at a
legal rate of 12% per annum until the
whole amounts are fully paid by the
defendants to the plaintiffs;
4. For failure of the defendant to deposit with this Court all
the rentals he had collected from the thirteen (13)
tenants or occupants of the commercial buildings
in question, the plaintiff is hereby restored to the
possession of his commercial buildings for a
period of seventy-three (73) months which is the
equivalent of the total period for which he was
prevented from collecting the rentals from the
tenants or occupants of his commercial buildings
from October 1, 1978 up to October 31, 1984, and
for this purpose a Writ of Preliminary Injunction is
hereby issued, but the plaintiff is likewise ordered
to pay to the defendant the monthly rental of
Seven Hundred Pesos (P700.00) every end of the
month for the entire period of seventy three (73)
months. This portion of the judgment should be
considered as a mere alternative should the
defendant fail to pay the amount of Five Hundred
Five Pesos and Fifty Six Centavos (P506,805.56)
hereinabove specified;
5. Dismissing the counterclaim interposed by the
defendant for lack of merit;
6. With costs against the defendant. 2
Petitioner appealed the judgment to the Court of Appeals. 3 In a decision
dated January 31, 1995, 4 the appellate court modified the assailed
judgment of the trial court as follows:
 a) The award for moral damages, compensatory damages,
exemplary damages, temperate or moderate
damages, and nominal damages as well as
expenses of litigation in the amount of P62,500.00
and interests under paragraph 3-a(a), (b), (c), (d),
(e), (f), (g), (h), and (i) are deleted;
b) The award for attorney's fees is reduced to P30,000.00;
c) Paragraphs 1, 2, 5 and 6 are AFFIRMED;
d) Additionally, the defendant is hereby ordered to pay to
the plaintiff by way of actual damages the sum of
P178,425.00 representing the amount of rentals
he collected from the period of October 1978 to
August 1983, and minus the amount of
P42,700.00 representing rentals due the
defendant computed at P700.00 per month for the
period from August 1978 to August 1983, with
interest thereon at the rate until the same is fully
paid;
e) Paragraph 4 is deleted. 5
Before the appellate court, petitioner disclaimed knowledge of any lease
contract between the late Bai Tonina Sepi and private respondent. On the
other hand, private respondent insisted that it was impossible for petitioner
not to know about the contract since the latter was aware that he was
collecting rentals from the tenants of the building. While the appellate court
disbelieved the contentions of both parties, it nevertheless held that, for
petitioner to become liable for damages, he must have known of the lease
contract and must have also acted with malice or bad faith when he bought
the subject parcels of land.
Via this petition for review, petitioner cites the following reasons why the
Court should rule in his favor:
1. The Honorable Court of Appeals seriously erred in
holding that petitioner is liable for interference of
contractual relation under Article 1314 of the New
Civil Code;
2. The Honorable Court of Appeals erred in not holding
that private respondent is precluded from
recovering, if at all, because of laches;
3. The Honorable Court of Appeals erred in holding
petitioner liable for actual damages and attorney's
fees, and;
4. The Honorable Court of Appeals erred in dismissing
petitioner's counterclaims. 6
Article 1314 of the Civil Code provides that any third person who induces
another to violate his contract shall be liable for damages to the other
contracting party. The tort recognized in that provision is known as
interference with contractual relations. 7 The interference is penalized
because it violates the property rights of a party in a contract to reap the
benefits that should result therefrom. 8
The core issue here is whether the purchase by petitioner of the subject
property, during the supposed existence of private respondent's lease
contract with the late Bai Tonina Sepi, constituted tortuous interference for
which petitioner should be held liable for damages.
The Court, in the case of So Ping Bun v. Court of Appeals, 9 laid down the
elements of tortuous interference with contractual relations: (a) existence of
a valid contract; (b) knowledge on the part of the third person of the
existence of the contract and (c) interference of the third person without
legal justification or excuse. In that case, petitioner So Ping Bun occupied
the premises which the corporation of his grandfather was leasing from
private respondent, without the knowledge and permission of the
corporation. The corporation, prevented from using the premises for its
business, sued So Ping Bun for tortuous interference.
As regards the first element, the existence of a valid contract must be duly
established. To prove this, private respondent presented in court a notarized
copy of the purported lease renewal. 10 While the contract appeared as duly
notarized, the notarization thereof, however, only proved its due execution
and delivery but not the veracity of its contents. Nonetheless, after
undergoing the rigid scrutiny of petitioner's counsel and after the trial court
declared it to be valid and subsisting, the notarized copy of the lease
contract presented in court appeared to be incontestable proof that private
respondent and the late Bai Tonina Sepi actually renewed their lease
contract. Settled is the rule that until overcome by clear, strong and
convincing evidence, a notarized document continues to be prima
facie evidence of the facts that gave rise to its execution and delivery. 11
The second element, on the other hand, requires that there be knowledge
on the part of the interferer that the contract exists. Knowledge of the
subsistence of the contract is an essential element to state a cause of action
for tortuous interference. 12 A defendant in such a case cannot be made
liable for interfering with a contract he is unaware of. 13 While it is not
necessary to prove actual knowledge, he must nonetheless be aware of the
facts which, if followed by a reasonable inquiry, will lead to a complete
disclosure of the contractual relations and rights of the parties in the
contract. 14
In this case, petitioner claims that he had no knowledge of the lease
contract. His sellers (the heirs of Bai Tonina Sepi) likewise allegedly did not
inform him of any existing lease contract.
After a careful perusal of the records, we find the contention of petitioner
meritorious. He conducted his own personal investigation and inquiry, and
unearthed no suspicious circumstance that would have made a cautious
man probe deeper and watch out for any conflicting claim over the property.
An examination of the entire property's title bore no indication of the
leasehold interest of private respondent. Even the registry of property had
no record of the same. 15
Assuming ex gratia argumenti that petitioner knew of the contract, such
knowledge alone was not sufficient to make him liable for tortuous
interference. Which brings us to the third element. According to our ruling
in So Ping Bun, petitioner may be held liable only when there was no legal
justification or excuse for his action 16 or when his conduct was stirred by a
wrongful motive. To sustain a case for tortuous interference, the defendant
must have acted with malice 17 or must have been driven by purely impious
reasons to injure the plaintiff. In other words, his act of interference cannot
be justified. 18
Furthermore, the records do not support the allegation of private respondent
that petitioner induced the heirs of Bai Tonina Sepi to sell the property to
him. The word "induce" refers to situations where a person causes another
to choose one course of conduct by persuasion or intimidation. 19 The
records show that the decision of the heirs of the late Bai Tonina Sepi to sell
the property was completely of their own volition and that petitioner did
absolutely nothing to influence their judgment. Private respondent himself
did not proffer any evidence to support his claim. In short, even assuming
that private respondent was able to prove the renewal of his lease contract
with Bai Tonina Sepi, the fact was that he was unable to prove malice or bad
faith on the part of petitioner in purchasing the property. Therefore, the claim
of tortuous interference was never established.
In So Ping Bun, the Court discussed whether interference can be justified at
all if the interferer acts for the sole purpose of furthering a personal financial
interest, but without malice or bad faith. As the Court explained it:
. . ., as a general rule, justification for interfering with the
business relations of another exists where the actor's
motive is to benefit himself. Such justification does not
exist where the actor's motive is to cause harm to the
other. Added to this, some authorities believe that it is not
necessary that the interferer's interest outweigh that of the
party whose rights are invaded, and that an individual acts
under an economic interest that is substantial, not
merely de minimis, such that wrongful and malicious
motives are negatived, for he acts in self-protection.
Moreover, justification for protecting one's financial
position should not be made to depend on a comparison
of his economic interest in the subject matter with that of
the others. It is sufficient if the impetus of his conduct lies
in a proper business interest rather than in wrongful
motives. 20
The foregoing disquisition applies squarely to the case at bar. In our view,
petitioner's purchase of the subject property was merely an advancement of
his financial or economic interests, absent any proof that he was enthused
by improper motives. In the very early case of Gilchrist v. Cuddy, 21 the
Court declared that a person is not a malicious interferer if his conduct is
impelled by a proper business interest. In other words, a financial or profit
motivation will not necessarily make a person an officious interferer liable for
damages as long as there is no malice or bad faith involved.
In sum, we rule that, inasmuch as not all three elements to hold petitioner
liable for tortuous interference are present, petitioner cannot be made to
answer for private respondent's losses.
This case is one of damnun absque injuria or damage without injury. "Injury"
is the legal invasion of a legal right while "damage" is the hurt, loss or harm
which results from the injury. 22 In BPI Express Card Corporation v. Court of
Appeals, 23 the Court turned down the claim for damages of a cardholder
whose credit card had been cancelled by petitioner corporation after several
defaults in payment. We held there that there can be damage without injury
where the loss or harm is not the result of a violation of a legal duty. In that
instance, the consequences must be borne by the injured person alone
since the law affords no remedy for damages resulting from an act which
does not amount to legal injury or wrong. 24 Indeed, lack of malice in the
conduct complained of precludes recovery of damages. 25
With respect to the attorney's fees awarded by the appellate court to private
respondent, we rule that it cannot be recovered under the
circumstances. According to Article 2208 of the Civil Code, attorney's fees
may be awarded only when it has been stipulated upon or under the
instances provided therein. 26 Likewise, being in the concept of actual
damages, the award for attorney's fees must have clear, factual and legal
bases 27 which, in this case, do not exist.
Regarding the dismissal of petitioner's counterclaim for actual and moral
damages, the appellate court affirmed the assailed order of the trial court
because it found no basis to grant the amount of damages prayed for by
petitioner. We find no reason to reverse the trial court and the Court of
Appeals. Actual damages are those awarded in satisfaction of, or in
recompense for, loss or injury sustained. To be recoverable, they must not
only be capable of proof but must actually be proved with a reasonable
degree of certainty. 28 Petitioner was unable to prove that he suffered loss
or injury, hence, his claim for actual damages must fail. Moreover,
petitioner's prayer for moral damages was not warranted as moral damages
should result from the wrongful act of a person. The worries and anxieties
suffered by a party hailed to court litigation are not compensable. 29
With the foregoing discussion, we no longer deem it necessary to delve into
the issue of laches.
WHEREFORE, premises considered, the petition is hereby GRANTED. The
assailed decision of the Court of Appeals is hereby REVERSED and SET
ASIDE.
No costs.
SO ORDERED.
Panganiban, Sandoval-Gutierrez, Carpio Morales and Garcia, JJ., concur.
||| (Lagon v. Court of Appeals, G.R. No. 119107, [March 18, 2005], 493 PHIL
739-751)
SECOND DIVISION
[G.R. No. 130547. October 3, 2000.]
LEAH ALESNA REYES, ROSE NAHDJA, JOHNNY, and
minors LLOYD and KRISTINE, all surnamed REYES,
represented by their mother, LEAH ALESNA
REYES, petitioners, vs. SISTERS OF MERCY
HOSPITAL, SISTER ROSE PALACIO, DR. MARVIE
BLANES, and DR. MARLYN RICO,respondents.
Abbas Abundiente & Associates Law Offices for petitioner.
Fernan Mercado Cordero Dela Torre & Bael for private respondent.
Arsenio C. Pascual, Jr. for respondents Sisters of Mercy, Sis R. Palacio & Dr.
M. Blanes.
SYNOPSIS
Petitioners, wife and children of the deceased patient, Jorge Reyes,
appealed from the decision of the Court of Appeals and the trial court which
dismissed their complaint for damages for medical practice filed against the
doctors who attended Jorge Reyes.
The trial court and the Court of Appeals required expert opinion on the
alleged breach by respondents of the standard of care required under the
circumstances. Expert witnesses, however, testified that due care had been
exercised and the service or treatment rendered followed the usual
procedure of those skilled in that particular practice.
Petitioners claimed that expert testimony was not necessary, rather the
doctrine of res ipsa loquitur should have been applied in determining the
doctors' failure to observe due care which is immediately apparent to a
layman. Jorge Reyes was brought to the hospital merely experiencing fever
and chills for five days, but he was fully conscious, coherent and ambulant,
when he went to the hospital. Due to their acts of negligence in their
treatment of Jorge Reyes, the latter died after only ten hours from the time
of his admission.
The Supreme Court ruled that expert testimony was essential in determining
the reasonable level of care required under the circumstances in the present
case. According to expert testimony, there was no doctors' negligence in
the treatment of Jorge Reyes because the doctors who treated him
observed the due care required under the circumstances. The Widal test is
normally used when a case of typhoid fever is suspected and chloromycetin
was the drug of choice. The burden of proving that Jorge Reyes was
suffering from any other illness rested with the petitioners, but they failed to
present expert opinion on this. Finally, the standard of care and degree of
diligence contemplated from physicians is simply the reasonable average
merit among the ordinarily good physicians.
SYLLABUS
1. CRIMINAL LAW; DAMAGES; NEGLIGENCE; MEDICAL MALPRACTICE,
WHEN ACTIONABLE; ELEMENTS THEREOF. — Petitioner's action is for
medical malpractice. This is a particular form of negligence which consists
in the failure of a physician or surgeon to apply to his practice of medicine
that degree of care and skill which is ordinarily employed by the profession
generally, under similar conditions, and in like surrounding circumstances. In
order to successfully pursue such a claim, a patient must prove that the
physician or surgeon either failed to do something which a reasonably
prudent physician or surgeon would have done, or that he or she did
something that a reasonably prudent physician or surgeon would not have
done, and that the failure or action caused injury to the patient. There are
thus four elements involved in medical negligence cases, namely; duty,
breach, injury, and proximate causation. CIcTAE
2. ID.; ID.; ID.; ID.; EXPERT TESTIMONY IS ESSENTIAL TO DETERMINE
CAUSE OF INJURIES; CASE AT BAR. — In the present case, there is no
doubt that a physician-patient relationship existed between respondent
doctors and Jorge Reyes. Respondents were thus duty-bound to use at
least the same level of care that any reasonably competent doctor would
use to treat a condition under the same circumstances. It is breach of this
duty which constitutes actionable malpractice. As to this aspect of medical
malpractice, the determination of the reasonable level of care and the
breach thereof, expert testimony is essential. Inasmuch as the causes of the
injuries involved in malpractice actions are determinable only in the light of
scientific knowledge, it has been recognized that expert testimony is usually
necessary to support the conclusion as to causation.
3. ID.; ID.; ID.; ID.; ID.; WHEN EXPERT TESTIMONY MAY BE DISPENSED
WITH; CASE AT BAR. — There is a case when expert testimony may be
dispensed with, and that is under the doctrine of res ipsa
loquitur. Petitioners asserted in the Court of Appeals that the doctrine of res
ipsa loquitur applies to the present case because Jorge Reyes was merely
experiencing fever and chills for five days and was fully conscious, coherent,
and ambulant when he went to the hospital. Yet he died after only ten hours
from the time of his admission. . . . While it is true that the patient died just a
few hours after professional medical assistance was rendered, there is really
nothing unusual or extraordinary about his death. Prior to his admission, the
patient already had recurring fevers and chills for five days unrelieved by the
analgesic, antipyretic, and antibiotics given him by his wife. This shows that
he had been suffering from a serious illness and professional medical help
came too late for him. Respondents alleged failure to observe due care was
not immediately apparent to a layman so as to justify application of res ipsa
loquitur. The question required expert opinion on the alleged breach by
respondent of the standard of care required by the circumstances.
4. ID.; ID.; ID.; ID.; STANDARD OF CARE AND DILIGENCE
CONTEMPLATED FOR DOCTORS. — The practice of medicine is a
profession engaged in only by qualified individuals. It is a right earned
through years of education, training, and by first obtaining a license from the
state through professional board examinations. Such license may, at any
time and for cause, be revoked by the government. In addition to state
regulation, the conduct of doctors is also strictly governed by the
Hippocratic Oath, an ancient code of discipline and ethical rules which
doctors have imposed upon themselves in recognition and acceptance of
their great responsibility to society. Given these safeguards, there is no need
to expressly require of doctors the observance of "extraordinary" diligence.
As it is now, the practice of medicine is already conditioned upon the
highest degree of diligence. And, as we have already noted, the standard
contemplated for doctors is simply the reasonable average merit among
ordinarily good physicians. That is reasonable diligence for doctors or, as
the Court of Appeals called it, the reasonable "skill and competence . . . that
a physician in the same or similar locality . . . should apply."
5. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — Indeed, the standard contemplated
is not what is actually the average merit among all known practitioners from
the best to the worst and from the most to the least experienced, but the
reasonable average merit among the ordinarily good physicians. Here, Dr.
Marlyn Rico did not depart from the reasonable standard recommended by
the experts as she in fact observed the due care required under the
circumstances. Though the Widal test is not conclusive, it remains a
standard diagnostic test for typhoid fever and, in the present case, greater
accuracy through repeated testing was rendered unobtainable by the early
death of the patient. The results of the Widal test and the patient's history of
fever with chills for five days, taken with the fact that typhoid fever was then
prevalent as indicated by the fact that the clinic had been getting about 15
to 20 typhoid cases a month, were sufficient to give upon any doctor of
reasonable skill the impression that Jorge Reyes had typhoid fever. Dr. Rico
was also justified in recommending the administration of the drug
chloromycetin, the drug of choice for typhoid fever. The burden of proving
that Jorge Reyes was suffering from any other illness rested with the
petitioners. As they failed to present expert opinion on this, preponderant
evidence to support their contention is clearly absent.
DECISION
MENDOZA, J p:
This is a petition for review of the decision 1 of the Court of Appeals in CA-
G.R. CV No. 36551 affirming the decision of the Regional Trial Court, Branch
IX, Cebu City which dismissed a complaint for damages filed by petitioners
against respondents.
The facts are as follows:
Petitioner Leah Alesna Reyes is the wife of the late Jorge Reyes. The other
petitioners, namely, Rose Nahdja, Johnny, Lloyd, and Kristine, all surnamed
Reyes, were their children. Five days before his death on January 8, 1987,
Jorge had been suffering from a recurring fever with chills. After he failed to
get relief from some home medication he was taking, which consisted of
analgesic, antipyretic, and antibiotics, he decided to see the doctor.
On January 8, 1987, he was taken to the Mercy Community Clinic by his
wife. He was attended to by respondent Dr. Marlyn Rico, resident physician
and admitting physician on duty, who gave Jorge a physical examination
and took his medical history. She noted that at the time of his admission,
Jorge was conscious, ambulatory, oriented, coherent, and with respiratory
distress. 2 Typhoid fever was then prevalent in the locality, as the clinic had
been getting from 15 to 20 cases of typhoid per month. 3 Suspecting that
Jorge could be suffering from this disease, Dr. Rico ordered a Widal Test, a
standard test for typhoid fever, to be performed on Jorge. Blood count,
routine urinalysis, stool examination, and malarial smear were also
made. 4 After about an hour, the medical technician submitted the results of
the test from which Dr. Rico concluded that Jorge was positive for typhoid
fever. As her shift was only up to 5:00 p.m., Dr. Rico indorsed Jorge to
respondent Dr. Marvie Blanes.
Dr. Marvie Blanes attended to Jorge at around six in the evening. She also
took Jorge's history and gave him a physical examination. Like Dr. Rico, her
impression was that Jorge had typhoid fever. Antibiotics being the accepted
treatment for typhoid fever, she ordered that a compatibility test with the
antibiotic chloromycetin be done on Jorge. Said test was administered by
nurse Josephine Pagente who also gave the patient a dose of triglobe. As
she did not observe any adverse reaction by the patient to chloromycetin,
Dr. Blanes ordered the first five hundred milligrams of said antibiotic to be
administered on Jorge at around 9:00 p.m. A second dose was administered
on Jorge about three hours later just before midnight.
At around 1:00 a.m. of January 9, 1987, Dr. Blanes was called as Jorge's
temperature rose to 41°C. The patient also experienced chills and exhibited
respiratory distress, nausea, vomiting, and convulsions. Dr. Blanes put him
under oxygen, used a suction machine, and administered hydrocortisone,
temporarily easing the patient's convulsions. When he regained
consciousness, the patient was asked by Dr. Blanes whether he had a
previous heart ailment or had suffered from chest pains in the past. Jorge
replied he did not. 5 After about 15 minutes, however, Jorge again started to
vomit, showed restlessness, and his convulsions returned. Dr. Blanes re-
applied the emergency measures taken before and, in addition, valium was
administered. Jorge, however, did not respond to the treatment and slipped
into cyanosis, a bluish or purplish discoloration of the skin or mucous
membrane due to deficient oxygenation of the blood. At around 2:00 a.m.,
Jorge died. He was forty years old. The cause of his death was "Ventricular
Arrythemia Secondary to Hyperpyrexia and typhoid fever."
On June 3, 1987, petitioners filed before the Regional Trial Court of Cebu
City a complaint 6 for damages against respondents Sisters of Mercy, Sister
Rose Palacio, Dr. Marvie Blanes, Dr. Marlyn Rico, and nurse Josephine
Pagente. On September 24, 1987, petitioners amended their complaint to
implead respondent Mercy Community Clinic as additional defendant and to
drop the name of Josephine Pagente as defendant since she was no longer
connected with respondent hospital. Their principal contention was that
Jorge did not die of typhoid fever. 7 Instead, his death was due to the
wrongful administration of chloromycetin. They contended that had
respondent doctors exercised due care and diligence, they would not have
recommended and rushed the performance of the Widal Test, hastily
concluded that Jorge was suffering from typhoid fever, and administered
chloromycetin without first conducting sufficient tests on the patient's
compatibility with said drug. They charged respondent clinic and its
directress, Sister Rose Palacio, with negligence in failing to provide
adequate facilities and in hiring negligent doctors and nurses. 8
Respondents denied the charges. During the pre-trial conference, the
parties agreed to limit the issues on the following: (1) whether the death of
Jorge Reyes was due to or caused by the negligence, carelessness,
imprudence, and lack of skill or foresight on the part of defendants; (2)
whether respondent Mercy Community Clinic was negligent in the hiring of
its employees; and (3) whether either party was entitled to damages. The
case was then heard by the trial court during which, in addition to the
testimonies of the parties, the testimonies of doctors as expert witnesses
were presented.
Petitioners offered the testimony of Dr. Apolinar Vacalares, Chief Pathologist
at the Northern Mindanao Training Hospital, Cagayan de Oro City. On
January 9, 1987, Dr. Vacalares performed an autopsy on Jorge Reyes to
determine the cause of his death. However, he did not open the skull to
examine the brain. His findings 9 showed that the gastro-intestinal tract was
normal and without any ulceration or enlargement of the nodules. Dr.
Vacalares testified that Jorge did not die of typhoid fever. He also stated
that he had not seen a patient die of typhoid fever within five days from the
onset of the disease.
For their part, respondents offered the testimonies of Dr. Peter Gotiong and
Dr. Ibarra Panopio. Dr. Gotiong is a diplomate in internal medicine whose
expertise is microbiology and infectious diseases. He is also a consultant at
the Cebu City Medical Center and an associate professor of medicine at the
South Western University College of Medicine in Cebu City. He had treated
over a thousand cases of typhoid patients. According to Dr. Gotiong, the
patient's history and positive Widal Test results ratio of 1:320 would make
him suspect that the patient had typhoid fever. As to Dr. Vacalares'
observation regarding the absence of ulceration in Jorge's gastro-intestinal
tract, Dr. Gotiong said that such hyperplasia in the intestines of a typhoid
victim may be microscopic. He noted that since the toxic effect of typhoid
fever may lead to meningitis, Dr. Vacalares' autopsy should have included
an examination of the brain. 10
The other doctor presented was Dr. Ibarra Panopio, a member of the
American Board of Pathology, examiner of the Philippine Board of Pathology
from 1978 to 1991, fellow of the Philippine Society of Pathologist, associate
professor of the Cebu Institute of Medicine, and chief pathologist of the
Andres Soriano Jr. Memorial Hospital in Toledo City. Dr. Panopio stated that
although he was partial to the use of the culture test for its greater reliability
in the diagnosis of typhoid fever, the Widal Test may also be used. Like Dr.
Gotiong, he agreed that the 1:320 ratio in Jorge's case was already the
maximum by which a conclusion of typhoid fever may be made. No
additional information may be deduced from a higher dilution. 11 He said
that Dr. Vacalares' autopsy on Jorge was incomplete and thus inconclusive.
On September 12, 1991, the trial court rendered its decision absolving
respondents from the charges of negligence and dismissing petitioners'
action for damages. The trial court likewise dismissed respondents'
counterclaim, holding that, in seeking damages from respondents,
petitioners were impelled by the honest belief that Jorge's death was due to
the latter's negligence.
Petitioners brought the matter to the Court of Appeals. On July 31, 1997, the
Court of Appeals affirmed the decision of the trial court.
Hence this petition.
Petitioners raise the following assignment of errors:
I. THE HONORABLE COURT OF APPEALS COMMITTED
A REVERSIBLE ERROR WHEN IT RULED THAT
THE DOCTRINE OF RES IPSA LOQUITUR IS NOT
APPLICABLE IN THE INSTANT CASE.
II. THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT MADE AN
UNFOUNDED ASSUMPTION THAT THE LEVEL
OF MEDICAL PRACTICE IS LOWER IN ILIGAN
CITY.
III. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED WHEN IT RULED FOR A LESSER
STANDARD OF CARE AND DEGREE OF
DILIGENCE FOR MEDICAL PRACTICE IN ILIGAN
CITY WHEN IT APPRECIATE[D] NO DOCTOR'S
NEGLIGENCE IN THE TREATMENT OF JORGE
REYES.
Petitioner's action is for medical malpractice. This is a particular form of
negligence which consists in the failure of a physician or surgeon to apply to
his practice of medicine that degree of care and skill which is ordinarily
employed by the profession generally, under similar conditions, and in like
surrounding circumstances. 12 In order to successfully pursue such a claim,
a patient must prove that the physician or surgeon either failed to do
something which a reasonably prudent physician or surgeon would have
done, or that he or she did something that a reasonably prudent physician
or surgeon would not have done, and that the failure or action caused injury
to the patient. 13 There are thus four elements involved in medical
negligence cases, namely: duty, breach, injury, and proximate causation.
In the present case, there is no doubt that a physician-patient relationship
existed between respondent doctors and Jorge Reyes. Respondents were
thus duty-bound to use at least the same level of care that any reasonably
competent doctor would use to treat a condition under the same
circumstances. It is breach of this duty which constitutes actionable
malpractice. 14 As to this aspect of medical malpractice, the determination
of the reasonable level of care and the breach thereof, expert testimony is
essential. Inasmuch as the causes of the injuries involved in malpractice
actions are determinable only in the light of scientific knowledge, it has been
recognized that expert testimony is usually necessary to support the
conclusion as to causation. 15
Res Ipsa Loquitur
There is a case when expert testimony may be dispensed with, and that is
under the doctrine of res ipsa loquitur. As held in Ramos v. Court of
Appeals: 16
Although generally, expert medical testimony is relied
upon in malpractice suits to prove that a physician has
done a negligent act or that he has deviated from the
standard medical procedure, when the doctrine of res ipsa
loquitur is availed by the plaintiff, the need for expert
medical testimony is dispensed with because the injury
itself provides the proof of negligence. The reason is that
the general rule on the necessity of expert testimony
applies only to such matters clearly within the domain of
medical science, and not to matters that are within the
common knowledge of mankind which may be testified to
by anyone familiar with the facts. Ordinarily, only
physicians and surgeons of skill and experience are
competent to testify as to whether a patient has been
treated or operated upon with a reasonable degree of skill
and care. However, testimony as to the statements and
acts of physicians and surgeons, external appearances,
and manifest conditions which are observable by any one
may be given by non-expert witnesses. Hence, in cases
where the res ipsa loquitur is applicable, the court is
permitted to find a physician negligent upon proper proof
of injury to the patient, without the aid of expert testimony,
where the court from its fund of common knowledge can
determine the proper standard of care. Where common
knowledge and experience teach that a resulting injury
would not have occurred to the patient if due care had
been exercised, an inference of negligence may be drawn
giving rise to an application of the doctrine of res ipsa
loquitur without medical evidence, which is ordinarily
required to show not only what occurred but how and why
it occurred. When the doctrine is appropriate, all that the
patient must do is prove a nexus between the particular
act or omission complained of and the injury sustained
while under the custody and management of the
defendant without need to produce expert medical
testimony to establish the standard of care. Resort to res
ipsa loquitur is allowed because there is no other way,
under usual and ordinary conditions, by which the patient
can obtain redress for injury suffered by him.
Thus, courts of other jurisdictions have applied the
doctrine in the following situations: leaving of a foreign
object in the body of the patient after an operation,
injuries sustained on a healthy part of the body which was
not under, or in the area, of treatment, removal of the
wrong part of the body when another part was intended,
knocking out a tooth while a patient's jaw was under
anesthetic for the removal of his tonsils, and loss of an
eye while the patient was under the influence of
anesthetic, during or following an operation for
appendicitis, among others. 17
Petitioners asserted in the Court of Appeals that the doctrine of res ipsa
loquitur applies to the present case because Jorge Reyes was merely
experiencing fever and chills for five days and was fully conscious, coherent,
and ambulant when he went to the hospital. Yet, he died after only ten hours
from the time of his admission.
This contention was rejected by the appellate court.
Petitioners now contend that all requisites for the application of res ipsa
loquitur were present, namely: (1) the accident was of a kind which does not
ordinarily occur unless someone is negligent; (2) the instrumentality or
agency which caused the injury was under the exclusive control of the
person in charge; and (3) the injury suffered must not have been due to any
voluntary action or contribution of the person injured. 18
The contention is without merit. We agree with the ruling of the Court of
Appeals. In the Ramos case, the question was whether a surgeon, an
anesthesiologist, and a hospital should be made liable for the comatose
condition of a patient scheduled for cholecystectomy. 19 In that case, the
patient was given anesthesia prior to her operation. Noting that the patient
was neurologically sound at the time of her operation, the Court applied the
doctrine of res ipsa loquitur as mental brain damage does not normally
occur in a gallbladder operation in the absence of negligence of the
anesthesiologist. Taking judicial notice that anesthesia procedures had
become so common that even an ordinary person could tell if it was
administered properly, we allowed the testimony of a witness who was not
an expert. In this case, while it is true that the patient died just a few hours
after professional medical assistance was rendered, there is really nothing
unusual or extraordinary about his death. Prior to his admission, the patient
already had recurring fevers and chills for five days unrelieved by the
analgesic, antipyretic, and antibiotics given him by his wife. This shows that
he had been suffering from a serious illness and professional medical help
came too late for him.
Respondents alleged failure to observe due care was not immediately
apparent to a layman so as to justify application of res ipsa loquitur. The
question required expert opinion on the alleged breach by respondents of
the standard of care required by the circumstances. Furthermore, on the
issue of the correctness of her diagnosis, no presumption of negligence can
be applied to Dr. Marlyn Rico. As held in Ramos:
 . . . Res ipsa loquitur is not a rigid or ordinary doctrine to ATTY. PASCUAL:
be perfunctorily used but a rule to be cautiously applied,
depending upon the circumstances of each case. It is Q Why? Have you not testified earlier that you have never
generally restricted to situations in malpractice cases seen a patient who died of typhoid fever?
where a layman is able to say, as a matter of common A In autopsy. But, that was when I was a resident
knowledge and observation, that the consequences of physician yet.
professional care were not as such as would ordinarily
have followed if due care had been exercised. A Q But you have not performed an autopsy of a patient who
distinction must be made between the failure to secure died of typhoid fever?
results, and the occurrence of something more unusual
A I have not seen one.
and not ordinarily found if the service or treatment
rendered followed the usual procedure of those skilled in Q And you testified that you have never seen a patient
that particular practice. It must be conceded that the who died of typhoid fever within five days?
doctrine of res ipsa loquitur can have no application in a
suit against a physician or a surgeon which involves the A I have not seen one.
merits of a diagnosis or of a scientific treatment. The Q How many typhoid fever cases had you seen while you
physician or surgeon is not required at his peril to explain were in the general practice of medicine?
why any particular diagnosis was not correct, or why any
particular scientific treatment did not produce the desired A In our case we had no widal test that time so we cannot
result. 20 consider that the typhoid fever is like this and like
that. And the widal test does not specify the time
Specific Acts of Negligence of the typhoid fever.
We turn to the question whether petitioners have established specific acts of
Q The question is: how many typhoid fever cases had you
negligence allegedly committed by respondent doctors.
seen in your general practice regardless of the
Petitioners contend that: (1) Dr. Marlyn Rico hastily and erroneously relied cases now you practice?
upon the Widal test, diagnosed Jorge's illness as typhoid fever, and
A I had only seen three cases.
immediately prescribed the administration of the antibiotic
chloromycetin; 21 and (2) Dr. Marvie Blanes erred in ordering the Q And that was way back in 1964?
administration of the second dose of 500 milligrams of chloromycetin barely
three hours after the first was given. 22 Petitioners presented the testimony A Way back after my training in UP.
of Dr. Apolinar Vacalares, Chief Pathologist of the Northern Mindanao
Q Clinically?
Training Hospital, Cagayan de Oro City, who performed an autopsy on the
body of Jorge Reyes. Dr. Vacalares testified that, based on his findings A Way back before my training.
during the autopsy, Jorge Reyes did not die of typhoid fever but of shock
undetermined, which could be due to allergic reaction or chloromycetin He is thus not qualified to prove that Dr. Marlyn Rico erred in her
overdose. We are not persuaded. diagnosis. Both lower courts were therefore correct in discarding his
testimony, which is really inadmissible.
First. While petitioners presented Dr. Apolinar Vacalares as an expert
In Ramos, the defendants presented the testimony of a pulmonologist to
witness, we do not find him to be so as he is not a specialist on infectious
prove that brain injury was due to oxygen deprivation after the patient had
diseases like typhoid fever. Furthermore, although he may have had
bronchospasms 24 triggered by her allergic response to a drug, 25 and not
extensive experience in performing autopsies, he admitted that he had yet
due to faulty intubation by the anesthesiologist. As the issue was whether
to do one on the body of a typhoid victim at the time he conducted the
the intubation was properly performed by an anesthesiologist, we rejected
postmortem on Jorge Reyes. It is also plain from his testimony that he has
the opinion of the pulmonologist on the ground that he was not: (1) an
treated only about three cases of typhoid fever. Thus, he testified that: 23
anesthesiologist who could enlighten the court about anesthesia practice,
procedure, and their complications; nor (2) an allergologist who could
properly advance expert opinion on allergic mediated processes; nor (3) a
pharmacologist who could explain the pharmacologic and toxic effects of
the drug allegedly responsible for the bronchospasms.
Second. On the other hand, the two doctors presented by respondents
clearly were experts on the subject. They vouched for the correctness of Dr.
Marlyn Rico's diagnosis. Dr. Peter Gotiong, a diplomate whose
specialization is infectious diseases and microbiology and an associate
professor at the Southwestern University College of Medicine and the Gullas
College of Medicine, testified that he has already treated over a thousand
cases of typhoid fever. 26 According to him, when a case of typhoid fever is
suspected, the Widal test is normally used, 27 and if the 1:320 results of the
Widal test on Jorge Reyes had been presented to him along with the
patient's history, his impression would also be that the patient was suffering
from typhoid fever. 28 As to the treatment of the disease, he stated that
chloromycetin was the drug of choice. 29 He also explained that despite the
measures taken by respondent doctors and the intravenous administration
of two doses of chloromycetin, complications of the disease could not be
discounted. His testimony is as follows: 30
ATTY. PASCUAL:
Q If with that count with the test of positive for 1 is to 320,
what treatment if any would be given?
A If those are the findings that would be presented to me,
the first thing I would consider would be typhoid
fever.
Q And presently what are the treatments commonly
used?
A Drug of choice of chloramphenical.
Q Doctor, if given the same patient and after you have
administered chloramphenical about 3 1/2 hours
later, the patient associated with chills,
temperature — 41°C, what could possibly come
to your mind?c
A Well, when it is change in the clinical finding, you have
to think of complication.
Q And what will you consider on the complication of
typhoid? TCaEIc
As regards Dr. Vacalares' finding during the autopsy that the deceased's
gastro-intestinal tract was normal, Dr. Rico explained that, while
A One must first understand that typhoid fever is toxemia.
The problem is complications are caused by
toxins produced by the bacteria . . . whether you
have suffered complications to think of — heart
toxic myocardities; then you can consider a toxic
meningitis and other complications and
perforations and bleeding in the ilium.
Q Even that 40-year old married patient who received
medication of chloromycetin of 500 milligrams
intravenous, after the skin test, and received a
second dose of chloromycetin of 500 milligrams,
3 hours later, the patient developed chills . . . rise
in temperature to 41°C, and then about 40
minutes later the temperature rose to 100°F,
cardiac rate of 150 per minute who appeared to
be coherent, restless, nauseating, with seizures:
what significance could you attach to these
clinical changes?
A I would then think of toxemia, which was toxic
meningitis and probably a toxic meningitis
because of the high cardiac rate.
Q Even if the same patient who, after having given
intramuscular valium, became conscious and
coherent about 20 minutes later, have seizure and
cyanosis and rolling of eyeballs and vomiting . . .
and death: what significance would you attach to
this development?
A We are probably dealing with typhoid to meningitis.
Q In such case, Doctor, what finding if any could you
expect on the post-mortem examination?
A No, the finding would be more on the meninges or
covering of the brain.
Q And in order to see those changes would it require
opening the skull?
A Yes.
 hyperplasia 31in the payer's patches or layers of the small intestines is
present in typhoid fever, the same may not always be grossly visible and
a microscope was needed to see the texture of the cells. 32
Respondents also presented the testimony of Dr. Ibarra T. Panopio who is a
member of the Philippine and American Board of Pathology, an examiner of
the Philippine Board of Pathology, and chief pathologist at the Metro Cebu
Community Hospital, Perpetual Succor Hospital, and the Andres Soriano Jr.
Memorial Medical Center. He stated that, as a clinical pathologist, he
recognized that the Widal test is used for typhoid patients, although he did
not encourage its use because a single test would only give a presumption
necessitating that the test be repeated, becoming more conclusive at the
second and third weeks of the disease. 33 He corroborated Dr. Gotiong's
testimony that the danger with typhoid fever is really the possible
complications which could develop like perforation, hemorrhage, as well as
liver and cerebral complications. 34 As regards the 1:320 results of the
Widal test on Jorge Reyes, Dr. Panopio stated that no additional information
could be obtained from a higher ratio. 35 He also agreed with Dr. Gotiong
that hyperplasia in the payer's patches may be microscopic. 36
Indeed, the standard contemplated is not what is actually the average merit
among all known practitioners from the best to the worst and from the most
to the least experienced, but the reasonable average merit among the
ordinarily good physicians. 37 Here, Dr. Marlyn Rico did not depart from the
reasonable standard recommended by the experts as she in fact observed
the due care required under the circumstances. Though the Widal test is not
conclusive, it remains a standard diagnostic test for typhoid fever and, in the
present case, greater accuracy through repeated testing was rendered
unobtainable by the early death of the patient. The results of the Widal test
and the patient's history of fever with chills for five days, taken with the fact
that typhoid fever was then prevalent as indicated by the fact that the clinic
had been getting about 15 to 20 typhoid cases a month, were sufficient to
give upon any doctor of reasonable skill the impression that Jorge Reyes
had typhoid fever.
Dr. Rico was also justified in recommending the administration of the drug
chloromycetin, the drug of choice for typhoid fever. The burden of proving
that Jorge Reyes was suffering from any other illness rested with the
petitioners. As they failed to present expert opinion on this, preponderant
evidence to support their contention is clearly absent.
Third. Petitioners contend that respondent Dr. Marvie Blanes, who took over
from Dr. Rico, was negligent in ordering the intravenous administration of
two doses of 500 milligrams of chloromycetin at an interval of less than
three hours. Petitioners claim that Jorge Reyes died of anaphylactic
shock 38 or possibly from overdose as the second dose should have been
administered five to six hours after the first, per instruction of Dr. Marlyn
Rico. As held by the Court of Appeals, however:
That chloromycetin was likewise a proper prescription is
best established by medical authority. Wilson, et. al.,
in Harrison's Principle of Internal Medicine, 12th ed. write
that chloramphenicol (which is the generic of
chloromycetin) is the drug of choice for typhoid fever and
that no drug has yet proven better in promoting a
favorable clinical response. "Chlorampenicol
(Chloromycetin) is specifically indicated for bacterial
meningitis, typhoid fever, rickettsial infections,
bacteriodes infections, etc." (PIMS Annual, 1994, p.
211) The dosage likewise including the first administration
of five hundred milligrams (500 mg.) at around nine o'clock
in the evening and the second dose at around 11:30 the
same night was still within medically acceptable limits,
since the recommended dose of chloromycetin is one (1)
gram every six (6) hours. (cf. Pediatric Drug Handbook, 1st
Ed., Philippine Pediatric Society, Committee on
Therapeutics and Toxicology, 1996). The intravenous
route is likewise correct. (Mansser, O'Nick, Pharmacology
and Therapeutics) Even if the test was not administered by
the physician-on-duty, the evidence introduced that it was
Dra. Blanes who interpreted the results remain
uncontroverted. (Decision, pp 16-17) Once more, this
Court rejects any claim of professional negligence in this
regard.
xxx xxx xxx
As regards anaphylactic shock, the usual way of guarding
against it prior to the administration of a drug, is the skin
test of which, however, it has been observed: "Skin
testing with haptenic drugs is generally not reliable.
Certain drugs cause nonspecific histamine release,
producing a weal-and-flare reaction in normal individuals.
Immunologic activation of mast cells requires a polyvalent
allergen, so a negative skin test to a univalent haptenic
drug does not rule out anaphylactic sensitivity to that
drug." (Terr, "Anaphylaxis and Urticaria" in Basic and
Clinical Immunology, p. 349) What all this means legally is
that even if the deceased suffered from an anaphylactic
shock, this, of itself, would not yet establish the
negligence of the appellee-physicians for all that the law
requires of them is that they perform the standard tests
 and perform standard procedures. The law cannot require WHEREFORE, the instant petition is DENIED and the decision of the Court
them to predict every possible reaction to all drugs of Appeals is AFFIRMED.
administered. The onus probandi was on the appellants to
establish, before the trial court, that the appellee- SO ORDERED.
physicians ignored standard medical procedure, Bellosillo, Quisumbing, Buena and De Leon, Jr., JJ., concur.
prescribed and administered medication with
recklessness and exhibited an absence of the ||| (Reyes v. Sisters of Mercy Hospital, G.R. No. 130547, [October 3, 2000],
competence and skills expected of general practitioners 396 PHIL 87-107)
similarly situated. 39
Fourth. Petitioners correctly observe that the medical profession is one
which, like the business of a common carrier, is affected with public interest. FIRST DIVISION
Moreover, they assert that since the law imposes upon common carriers the
duty of observing extraordinary diligence in the vigilance over the goods and
for the safety of the passengers, 40 physicians and surgeons should have [G.R. No. 126297. January 31, 2007.]
the same duty toward their patients. 41 They also contend that the Court of
Appeals erred when it allegedly assumed that the level of medical practice is PROFESSIONAL SERVICES, INC., petitioner, vs.
lower in Iligan City, thereby reducing the standard of care and degree of NATIVIDAD and ENRIQUE AGANA, respondents.
diligence required from physicians and surgeons in Iligan City.
The standard of extraordinary diligence is peculiar to common carriers. The
[G.R. No. 126467. January 31, 2007.]
Civil Code provides:
Art. 1733. Common carriers, from the nature of their NATIVIDAD (Substituted by her children MARCELINO
business and for reasons of public policy, are bound to AGANA III, ENRIQUE AGANA, JR., EMMA AGANA
observe extraordinary diligence in the vigilance over the ANDAYA, JESUS AGANA, and RAYMUND AGANA) and
goods and for the safety of the passengers transported by
ENRIQUE AGANA, petitioners, vs. JUAN
them, according to the circumstances of each case. . . .
FUENTES, respondents.
The practice of medicine is a profession engaged in only by qualified
individuals. It is a right earned through years of education, training, and by
first obtaining a license from the state through professional board [G.R. No. 127590. January 31, 2007.]
examinations. Such license may, at any time and for cause, be revoked by
the government. In addition to state regulation, the conduct of doctors is MIGUEL AMPIL, petitioner, vs. NATIVIDAD AGANA and
also strictly governed by the Hippocratic Oath, an ancient code of discipline ENRIQUE AGANA, respondents.
and ethical rules which doctors have imposed upon themselves in
recognition and acceptance of their great responsibility to society. Given
these safeguards, there is no need to expressly require of doctors the
observance of "extraordinary" diligence. As it is now, the practice of DECISION
medicine is already conditioned upon the highest degree of diligence. And,
as we have already noted, the standard contemplated for doctors is simply
the reasonable average merit among ordinarily good physicians. That is
reasonable diligence for doctors or, as the Court of Appeals called it, the SANDOVAL-GUTIERREZ, J p:
reasonable "skill and competence . . . that a physician in the same or similar
locality . . . should apply." Hospitals, having undertaken one of mankind's most important and
delicate endeavors, must assume the grave responsibility of pursuing it with
appropriate care. The care and service dispensed through this high trust,
however technical, complex and esoteric its character may be, must meet
standards of responsibility commensurate with the undertaking to preserve
and protect the health, and indeed, the very lives of those placed in the
hospital's keeping. 1
Assailed in these three consolidated petitions for review
on certiorari is the Court of Appeals' Decision 2 dated September 6, 1996 in
CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with
modification the Decision 3 dated March 17, 1993 of the Regional Trial
Court (RTC), Branch 96, Quezon City in Civil Case No. Q-43322 and
nullifying its Order dated September 21, 1993.
The facts, as culled from the records, are:
On April 4, 1984, Natividad Agana was rushed to the Medical City
General Hospital (Medical City Hospital) because of difficulty of bowel
movement and bloody anal discharge. After a series of medical
examinations, Dr. Miguel Ampil, petitioner in G.R. No. 127590, diagnosed
her to be suffering from "cancer of the sigmoid."
On April 11, 1984, Dr. Ampil, assisted by the medical staff 4 of the
Medical City Hospital, performed an anterior resection surgery on Natividad.
He found that the malignancy in her sigmoid area had spread on her left
ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil
obtained the consent of Natividad's husband, Enrique Agana, to permit Dr.
Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy on
her.
After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took
over, completed the operation and closed the incision. CAcEaS
However, the operation appeared to be flawed. In the corresponding
Record of Operation dated April 11, 1984, the attending nurses entered
these remarks:
"sponge count lacking 2
"announced to surgeon searched (sic) done
but to no avail continue
for closure."
On April 24, 1984, Natividad was released from the hospital. Her
hospital and medical bills, including the doctors' fees, amounted to
P60,000.00.
After a couple of days, Natividad complained of excruciating pain in
her anal region. She consulted both Dr. Ampil and Dr. Fuentes about it. They
told her that the pain was the natural consequence of the surgery. Dr. Ampil
then recommended that she consult an oncologist to examine the
cancerous nodes which were not removed during the operation.
On May 9, 1984, Natividad, accompanied by her husband, went to
the United States to seek further treatment. After four months of
consultations and laboratory examinations, Natividad was told she was free
of cancer. Hence, she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines, still
suffering from pains. Two weeks thereafter, her daughter found a piece of
gauze protruding from her vagina. Upon being informed about it, Dr. Ampil
proceeded to her house where he managed to extract by hand a piece of
gauze measuring 1.5 inches in width. He then assured her that the pains
would soon vanish.
Dr. Ampil's assurance did not come true. Instead, the pains
intensified, prompting Natividad to seek treatment at the Polymedic General
Hospital. While confined there, Dr. Ramon Gutierrez detected the presence
of another foreign object in her vagina — a foul-smelling gauze measuring
1.5 inches in width which badly infected her vaginal vault. A recto-vaginal
fistula had formed in her reproductive organs which forced stool to excrete
through the vagina. Another surgical operation was needed to remedy the
damage. Thus, in October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with the
RTC, Branch 96, Quezon City a complaint for damages against the
Professional Services, Inc. (PSI), owner of the Medical City Hospital, Dr.
Ampil, and Dr. Fuentes, docketed as Civil Case No. Q-43322. They alleged
that the latter are liable for negligence for leaving two pieces of gauze
inside Natividad's body and malpractice for concealing their acts of
negligence. DECcAS
Meanwhile, Enrique Agana also filed with the Professional
Regulation Commission (PRC) an administrative complaint for gross
negligence and malpractice against Dr. Ampil and Dr. Fuentes, docketed as
Administrative Case No. 1690. The PRC Board of Medicine heard the case
only with respect to Dr. Fuentes because it failed to acquire jurisdiction over
Dr. Ampil who was then in the United States.
On February 16, 1986, pending the outcome of the above cases,
Natividad died and was duly substituted by her above-named children (the
Aganas).
On March 17, 1993, the RTC rendered its Decision in favor of the
Aganas, finding PSI, Dr. Ampil and Dr. Fuentes liable for negligence and
malpractice, the decretal part of which reads:
 WHEREFORE, judgment is hereby rendered for
the plaintiffs ordering the defendants PROFESSIONAL
SERVICES, INC., DR. MIGUEL AMPIL and DR. JUAN
FUENTES to pay to the plaintiffs, jointly and severally,
except in respect of the award for exemplary damages
and the interest thereon which are the liabilities of
defendants Dr. Ampil and Dr. Fuentes only, as follows:
1. As actual damages, the following amounts:
a. The equivalent in Philippine Currency of the
total of US$19,900.00 at the rate of
P21.60-US$1.00, as reimbursement of
actual expenses incurred in the United
States of America;
b. The sum of P4,800.00 as travel taxes of
plaintiffs and their physician daughter;
c. The total sum of P45,802.50, representing the
cost of hospitalization at Polymedic
Hospital, medical fees, and cost of the
saline solution;
2. As moral damages, the sum of P2,000,000.00;
3. As exemplary damages, the sum of P300,000.00;
4. As attorney's fees, the sum of P250,000.00;
5. Legal interest on items 1 (a), (b), and (c); 2; and 3
hereinabove, from date of filing of the complaint
until full payment; and
6. Costs of suit.
SO ORDERED.
Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to
the Court of Appeals, docketed as CA-G.R. CV No. 42062.
Incidentally, on April 3, 1993, the Aganas filed with the RTC a
motion for a partial execution of its Decision, which was granted in an Order
dated May 11, 1993. Thereafter, the sheriff levied upon certain properties of
Dr. Ampil and sold them for P451,275.00 and delivered the amount to the
Aganas.
Following their receipt of the money, the Aganas entered into an
agreement with PSI and Dr. Fuentes to indefinitely suspend any further
execution of the RTC Decision. However, not long thereafter, the Aganas
again filed a motion for an alias writ of execution against the properties of
PSI and Dr. Fuentes. On September 21, 1993, the RTC granted the motion
and issued the corresponding writ, prompting Dr. Fuentes to file with the
Court of Appeals a petition for certiorari and prohibition, with prayer for
preliminary injunction, docketed as CA-G.R. SP No. 32198. During its
pendency, the Court of Appeals issued a Resolution 5 dated October 29,
1993 granting Dr. Fuentes' prayer for injunctive relief. HEDSCc
On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with
CA-G.R. CV No. 42062.
Meanwhile, on January 23, 1995, the PRC Board of Medicine
rendered its Decision 6 in Administrative Case No. 1690 dismissing the case
against Dr. Fuentes. The Board held that the prosecution failed to show that
Dr. Fuentes was the one who left the two pieces of gauze inside Natividad's
body; and that he concealed such fact from Natividad.
On September 6, 1996, the Court of Appeals rendered its Decision
jointly disposing of CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198, thus:
WHEREFORE, except for the modification that
the case against defendant-appellant Dr. Juan Fuentes is
hereby DISMISSED, and with the pronouncement that
defendant-appellant Dr. Miguel Ampil is liable to
reimburse defendant-appellant Professional Services,
Inc., whatever amount the latter will pay or had paid to the
plaintiffs-appellees, the decision appealed from is
hereby AFFIRMED and the instant appeal DISMISSED.
Concomitant with the above, the petition
for certiorari and prohibition filed by herein defendant-
appellant Dr. Juan Fuentes in CA-G.R. SP No. 32198 is
hereby GRANTED and the challenged order of the
respondent judge dated September 21, 1993, as well as
the alias writ of execution issued pursuant thereto are
hereby NULLIFIED and SET ASIDE. The bond posted by
the petitioner in connection with the writ of preliminary
injunction issued by this Court on November 29, 1993 is
hereby cancelled.
Costs against defendants-appellants Dr. Miguel
Ampil and Professional Services, Inc.
SO ORDERED.
 Only Dr. Ampil filed a motion for reconsideration, but it was denied
in a Resolution 7 dated December 19, 1996.
Hence, the instant consolidated petitions.
In G.R. No. 126297, PSI alleged in its petition that the Court of
Appeals erred in holding that: (1) it is estopped from raising the defense that
Dr. Ampil is not its employee; (2) it is solidarily liable with Dr. Ampil; and (3) it
is not entitled to its counterclaim against the Aganas. PSI contends that Dr.
Ampil is not its employee, but a mere consultant or independent contractor.
As such, he alone should answer for his negligence. CSDTac
In G.R. No. 126467, the Aganas maintain that the Court of Appeals
erred in finding that Dr. Fuentes is not guilty of negligence or medical
malpractice, invoking the doctrine of res ipsa loquitur. They contend that the
pieces of gauze are prima facie proofs that the operating surgeons have
been negligent.
Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of
Appeals erred in finding him liable for negligence and
malpractice sans evidence that he left the two pieces of gauze in Natividad's
vagina. He pointed to other probable causes, such as: (1) it was Dr. Fuentes
who used gauzes in performing the hysterectomy; (2) the attending nurses'
failure to properly count the gauzes used during surgery; and (3) the medical
intervention of the American doctors who examined Natividad in the United
States of America.
For our resolution are these three vital issues: first, whether the
Court of Appeals erred in holding Dr. Ampil liable for negligence and
malpractice; second, whether the Court of Appeals erred in absolving Dr.
Fuentes of any liability; and third, whether PSI may be held solidarily liable
for the negligence of Dr. Ampil.
I — G.R. No. 127590
Whether the Court of Appeals Erred in Holding Dr. Ampil
Liable for Negligence and Malpractice.
Dr. Ampil, in an attempt to absolve himself, gears the Court's
attention to other possible causes of Natividad's detriment. He argues that
the Court should not discount either of the following possibilities: first, Dr.
Fuentes left the gauzes in Natividad's body after performing
hysterectomy; second, the attending nurses erred in counting the gauzes;
and third, the American doctors were the ones who placed the gauzes in
Natividad's body.
Dr. Ampil's arguments are purely conjectural and without basis.
Records show that he did not present any evidence to prove that the
American doctors were the ones who put or left the gauzes in Natividad's
body. Neither did he submit evidence to rebut the correctness of the record
of operation, particularly the number of gauzes used. As to the alleged
negligence of Dr. Fuentes, we are mindful that Dr. Ampil examined his (Dr.
Fuentes') work and found it in order.
The glaring truth is that all the major circumstances, taken together,
as specified by the Court of Appeals, directly point to Dr. Ampil as the
negligent party, thus:
First, it is not disputed that the surgeons used
gauzes as sponges to control the bleeding of the patient
during the surgical operation. EHTCAa
Second, immediately after the operation, the
nurses who assisted in the surgery noted in their report
that the ‘sponge count (was) lacking 2'; that such
anomaly was 'announced to surgeon' and that a
'search was done but to no avail' prompting Dr. Ampil
to 'continue for closure' . . . .
Third, after the operation, two (2) gauzes were
extracted from the same spot of the body of Mrs. Agana
where the surgery was performed.
An operation requiring the placing of sponges in the incision is not
complete until the sponges are properly removed, and it is settled that the
leaving of sponges or other foreign substances in the wound after the
incision has been closed is at least prima facie negligence by the operating
surgeon. 8 To put it simply, such act is considered so inconsistent with due
care as to raise an inference of negligence. There are even legions of
authorities to the effect that such act is negligence per se. 9
Of course, the Court is not blind to the reality that there are times
when danger to a patient's life precludes a surgeon from further searching
missing sponges or foreign objects left in the body. But this does not leave
him free from any obligation. Even if it has been shown that a surgeon was
required by the urgent necessities of the case to leave a sponge in his
patient's abdomen, because of the dangers attendant upon delay, still, it is
his legal duty to so inform his patient within a reasonable time
thereafter by advising her of what he had been compelled to do. This is
in order that she might seek relief from the effects of the foreign object left in
her body as her condition might permit. The ruling in Smith v. Zeagler 10 is
explicit, thus:
 The removal of all sponges used is part of a
surgical operation, and when a physician or surgeon fails
to remove a sponge he has placed in his patient's body
that should be removed as part of the operation, he
thereby leaves his operation uncompleted and creates a
new condition which imposes upon him the legal duty
of calling the new condition to his patient's attention,
and endeavoring with the means he has at hand to
minimize and avoid untoward results likely to ensue
therefrom.
Here, Dr. Ampil did not inform Natividad about the missing two
pieces of gauze. Worse, he even misled her that the pain she was
experiencing was the ordinary consequence of her operation. Had he
been more candid, Natividad could have taken the immediate and
appropriate medical remedy to remove the gauzes from her body. To our
mind, what was initially an act of negligence by Dr. Ampil has ripened into a
deliberate wrongful act of deceiving his patient.
This is a clear case of medical malpractice or more appropriately,
medical negligence. To successfully pursue this kind of case, a patient must
only prove that a health care provider either failed to do something which a
reasonably prudent health care provider would have done, or that he did
something that a reasonably prudent provider would not have done; and
that failure or action caused injury to the patient. 11 Simply put, the
elements are duty, breach, injury and proximate causation. Dr. Ampil, as
the lead surgeon, had the duty to remove all foreign objects, such as
gauzes, from Natividad's body before closure of the incision. When he failed
to do so, it was his duty to inform Natividad about it. Dr. Ampil breached
both duties. Such breach caused injury to Natividad, necessitating her
further examination by American doctors and another surgery. That Dr.
Ampil's negligence is the proximate cause 12 of Natividad's injury could be
traced from his act of closing the incision despite the information given
by the attending nurses that two pieces of gauze were still missing.
That they were later on extracted from Natividad's vagina established the
causal link between Dr. Ampil's negligence and the injury. And what further
aggravated such injury was his deliberate concealment of the missing
gauzes from the knowledge of Natividad and her family. cEaCAH
II — G.R. No. 126467
Whether the Court of Appeals Erred in Absolving
Dr. Fuentes of any Liability
The Aganas assailed the dismissal by the trial court of the case
against Dr. Fuentes on the ground that it is contrary to the doctrine of res
ipsa loquitur. According to them, the fact that the two pieces of gauze were
left inside Natividad's body is a prima facie evidence of Dr. Fuentes'
negligence.
We are not convinced.
Literally, res ipsa loquitur means "the thing speaks for itself." It is the
rule that the fact of the occurrence of an injury, taken with the surrounding
circumstances, may permit an inference or raise a presumption of
negligence, or make out a plaintiff's prima facie case, and present a
question of fact for defendant to meet with an explanation. 13 Stated
differently, where the thing which caused the injury, without the fault of the
injured, is under the exclusive control of the defendant and the injury is such
that it should not have occurred if he, having such control used proper
care, it affords reasonable evidence, in the absence of explanation that
the injury arose from the defendant's want of care, and the burden of proof
is shifted to him to establish that he has observed due care and
diligence. 14
From the foregoing statements of the rule, the requisites for the
applicability of the doctrine of res ipsa loquitur are: (1) the occurrence of an
injury; (2) the thing which caused the injury was under the control and
management of the defendant; (3) the occurrence was such that in the
ordinary course of things, would not have happened if those who had
control or management used proper care; and (4) the absence of
explanation by the defendant. Of the foregoing requisites, the most
instrumental is the "control and management of the thing which caused
the injury." 15
We find the element of "control and management of the thing which
caused the injury" to be wanting. Hence, the doctrine of res ipsa loquitur will
not lie.
It was duly established that Dr. Ampil was the lead surgeon during
the operation of Natividad. He requested the assistance of Dr. Fuentes only
to perform hysterectomy when he (Dr. Ampil) found that the malignancy in
her sigmoid area had spread to her left ovary. Dr. Fuentes performed the
surgery and thereafter reported and showed his work to Dr. Ampil. The
latter examined it and finding everything to be in order, allowed Dr.
Fuentes to leave the operating room. Dr. Ampil then resumed operating
on Natividad. He was about to finish the procedure when the attending
nurses informed him that two pieces of gauze were missing. A "diligent
search" was conducted, but the misplaced gauzes were not found. Dr.
Ampil then directed that the incision be closed. During this entire period,
Dr. Fuentes was no longer in the operating room and had, in fact, left the
hospital. HTSaEC
 Under the "Captain of the Ship" rule, the operating surgeon is the
person in complete charge of the surgery room and all personnel connected
with the operation. Their duty is to obey his orders. 16 As stated before, Dr.
Ampil was the lead surgeon. In other words, he was the "Captain of the
Ship." That he discharged such role is evident from his following
conduct: (1) calling Dr. Fuentes to perform a hysterectomy; (2) examining
the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes'
permission to leave; and (4) ordering the closure of the incision. To our
mind, it was this act of ordering the closure of the incision
notwithstanding that two pieces of gauze remained unaccounted for,
that caused injury to Natividad's body. Clearly, the control and
management of the thing which caused the injury was in the hands of Dr.
Ampil, not Dr. Fuentes.
In this jurisdiction, res ipsa loquitur is not a rule of substantive law,
hence, does not per se create or constitute an independent or separate
ground of liability, being a mere evidentiary rule. 17 In other words, mere
invocation and application of the doctrine does not dispense with the
requirement of proof of negligence. Here, the negligence was proven to
have been committed by Dr. Ampil and not by Dr. Fuentes.
III — G.R. No. 126297
Whether PSI Is Liable for the Negligence of Dr. Ampil
The third issue necessitates a glimpse at the historical development
of hospitals and the resulting theories concerning their liability for the
negligence of physicians.
Until the mid-nineteenth century, hospitals were generally charitable
institutions, providing medical services to the lowest classes of society,
without regard for a patient's ability to pay. 18 Those who could afford
medical treatment were usually treated at home by their
doctors. 19 However, the days of house calls and philanthropic health care
are over. The modern health care industry continues to distance itself from
its charitable past and has experienced a significant conversion from a not-
for-profit health care to for-profit hospital businesses. Consequently,
significant changes in health law have accompanied the business-related
changes in the hospital industry. One important legal change is an increase
in hospital liability for medical malpractice. Many courts now allow claims for
hospital vicarious liability under the theories of respondeat superior,
apparent authority, ostensible authority, or agency by estoppel. 20
In this jurisdiction, the statute governing liability for negligent acts is
Article 2176 of the Civil Code, which reads:
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. cHAaEC
A derivative of this provision is Article 2180, the rule governing
vicarious liability under the doctrine of respondeat superior, thus:
ART. 2180. The obligation imposed by Article
2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is
responsible.
xxx xxx 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.
Employers shall be liable for the damages caused
by their employees and household helpers acting within
the scope of their assigned tasks even though the former
are not engaged in any business or industry.
xxx xxx xxx
The responsibility treated of in this article shall
cease when the persons herein mentioned prove that they
observed all the diligence of a good father of a family to
prevent damage.
A prominent civilist commented that professionals engaged by an
employer, such as physicians, dentists, and pharmacists, are not
"employees" under this article because the manner in which they perform
their work is not within the control of the latter (employer). In other words,
professionals are considered personally liable for the fault or
negligence they commit in the discharge of their duties, and their
employer cannot be held liable for such fault or negligence. In the
context of the present case, "a hospital cannot be held liable for the fault or
negligence of a physician or surgeon in the treatment or operation of
patients." 21
The foregoing view is grounded on the traditional notion that the
professional status and the very nature of the physician's calling preclude
him from being classed as an agent or employee of a hospital, whenever he
acts in a professional capacity. 22 It has been said that medical practice
strictly involves highly developed and specialized knowledge, 23 such that
physicians are generally free to exercise their own skill and judgment in
rendering medical services sans interference. 24 Hence, when a doctor
practices medicine in a hospital setting, the hospital and its employees are
deemed to subserve him in his ministrations to the patient and his actions
are of his own responsibility. 25
The case of Schloendorff v. Society of New York Hospital 26 was
then considered an authority for this view. The "Schloendorff doctrine"
regards a physician, even if employed by a hospital, as an independent
contractor because of the skill he exercises and the lack of control exerted
over his work. Under this doctrine, hospitals are exempt from the application
of the respondeat superior principle for fault or negligence committed by
physicians in the discharge of their profession.
However, the efficacy of the foregoing doctrine has weakened with
the significant developments in medical care. Courts came to realize that
modern hospitals are increasingly taking active role in supplying and
regulating medical care to patients. No longer were a hospital's functions
limited to furnishing room, food, facilities for treatment and operation, and
attendants for its patients. Thus, in Bing v. Thunig, 27 the New York Court of
Appeals deviated from the Schloendorff doctrine, noting that modern
hospitals actually do far more than provide facilities for treatment. Rather,
they regularly employ, on a salaried basis, a large staff of physicians,
interns, nurses, administrative and manual workers. They charge patients for
medical care and treatment, even collecting for such services through legal
action, if necessary. The court then concluded that there is no reason to
exempt hospitals from the universal rule of respondeat superior.
In our shores, the nature of the relationship between the hospital
and the physicians is rendered inconsequential in view of our categorical
pronouncement in Ramos v. Court of Appeals 28 that for purposes of
apportioning responsibility in medical negligence cases, an employer-
employee relationship in effect exists between hospitals and their
attending and visiting physicians. This Court held:
"We now discuss the responsibility of the hospital
in this particular incident. The unique practice (among
private hospitals) of filling up specialist staff with attending
and visiting "consultants," who are allegedly not hospital
employees, presents problems in apportioning
responsibility for negligence in medical malpractice cases.
However, the difficulty is more apparent than real. HIACac
In the first place, hospitals exercise significant
control in the hiring and firing of consultants and in the
conduct of their work within the hospital premises.
Doctors who apply for 'consultant' slots, visiting or
attending, are required to submit proof of completion
of residency, their educational qualifications,
generally, evidence of accreditation by the appropriate
board (diplomate), evidence of fellowship in most
cases, and references. These requirements are
carefully scrutinized by members of the hospital
administration or by a review committee set up by the
hospital who either accept or reject the application. . .
.
After a physician is accepted, either as a
visiting or attending consultant, he is normally
required to attend clinico-pathological conferences,
conduct bedside rounds for clerks, interns and
residents, moderate grand rounds and patient audits
and perform other tasks and responsibilities, for the
privilege of being able to maintain a clinic in the
hospital, and/or for the privilege of admitting patients
into the hospital. In addition to these, the physician's
performance as a specialist is generally evaluated by a
peer review committee on the basis of mortality and
morbidity statistics, and feedback from patients, nurses,
interns and residents. A consultant remiss in his duties, or
a consultant who regularly falls short of the minimum
standards acceptable to the hospital or its peer review
committee, is normally politely terminated. caTESD
In other words, private hospitals, hire, fire and
exercise real control over their attending and visiting
'consultant' staff. While 'consultants' are not,
technically employees, . . . , the control exercised, the
hiring, and the right to terminate consultants all fulfill
the important hallmarks of an employer-employee
relationship, with the exception of the payment of
wages. In assessing whether such a relationship in fact
exists, the control test is determining. Accordingly, on the
basis of the foregoing, we rule that for the purpose of
allocating responsibility in medical negligence cases,
an employer-employee relationship in effect exists
between hospitals and their attending and visiting
physicians."
 But the Ramos pronouncement is not our only basis in sustaining
PSI's liability. Its liability is also anchored upon the agency principle
of apparent authority or agency by estoppel and the doctrine
of corporate negligence which have gained acceptance in the
determination of a hospital's liability for negligent acts of health
professionals. The present case serves as a perfect platform to test the
applicability of these doctrines, thus, enriching our jurisprudence. TaISEH
Apparent authority, or what is sometimes referred to as the "holding
out" theory, or doctrine of ostensible agency or agency by
estoppel, 29 has its origin from the law of agency. It imposes liability, not as
the result of the reality of a contractual relationship, but rather because of
the actions of a principal or an employer in somehow misleading the public
into believing that the relationship or the authority exists. 30 The concept is
essentially one of estoppel and has been explained in this manner:
"The principal is bound by the acts of his agent
with the apparent authority which he knowingly permits
the agent to assume, or which he holds the agent out to
the public as possessing. The question in every case is
whether the principal has by his voluntary act placed the
agent in such a situation that a person of ordinary
prudence, conversant with business usages and the
nature of the particular business, is justified in presuming
that such agent has authority to perform the particular act
in question. 31
The applicability of apparent authority in the field of hospital liability
was upheld long time ago in Irving v. Doctor Hospital of Lake Worth,
Inc. 32There, it was explicitly stated that "there does not appear to be any
rational basis for excluding the concept of apparent authority from the
field of hospital liability." Thus, in cases where it can be shown that a
hospital, by its actions, has held out a particular physician as its agent
and/or employee and that a patient has accepted treatment from that
physician in the reasonable belief that it is being rendered in behalf of the
hospital, then the hospital will be liable for the physician's negligence.
Our jurisdiction recognizes the concept of an agency by implication
or estoppel. Article 1869 of the Civil Code reads:
ART. 1869. Agency may be express, or implied
from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency, knowing that
another person is acting on his behalf without authority.
In this case, PSI publicly displays in the lobby of the Medical City
Hospital the names and specializations of the physicians associated or
accredited by it, including those of Dr. Ampil and Dr. Fuentes. We concur
with the Court of Appeals' conclusion that it "is now estopped from
passing all the blame to the physicians whose names it proudly
paraded in the public directory leading the public to believe that it
vouched for their skill and competence." Indeed, PSI's act is tantamount
to holding out to the public that Medical City Hospital, through its
accredited physicians, offers quality health care services. By accrediting
Dr. Ampil and Dr. Fuentes and publicly advertising their qualifications, the
hospital created the impression that they were its agents, authorized to
perform medical or surgical services for its patients. As expected, these
patients, Natividad being one of them, accepted the services on the
reasonable belief that such were being rendered by the hospital or its
employees, agents, or servants. The trial court correctly pointed out:
. . . regardless of the education and status in
life of the patient, he ought not be burdened with the
defense of absence of employer-employee
relationship between the hospital and the independent
physician whose name and competence are certainly
certified to the general public by the hospital's act of
listing him and his specialty in its lobby directory, as in
the case herein. The high costs of today's medical and
health care should at least exact on the hospital
greater, if not broader, legal responsibility for the
conduct of treatment and surgery within its facility by
its accredited physician or surgeon, regardless of
whether he is independent or employed." 33
The wisdom of the foregoing ratiocination is easy to discern.
Corporate entities, like PSI, are capable of acting only through other
individuals, such as physicians. If these accredited physicians do their job
well, the hospital succeeds in its mission of offering quality medical services
and thus profits financially. Logically, where negligence mars the quality of
its services, the hospital should not be allowed to escape liability for the acts
of its ostensible agents. DCSTAH
We now proceed to the doctrine of corporate
negligence or corporate responsibility.
One allegation in the complaint in Civil Case No. Q-43332 for
negligence and malpractice is that PSI as owner, operator and manager of
Medical City Hospital, "did not perform the necessary supervision nor
exercise diligent efforts in the supervision of Drs. Ampil and Fuentes
and its nursing staff, resident doctors, and medical interns who
assisted Drs. Ampil and Fuentes in the performance of their duties as
surgeons." 34 Premised on the doctrine of corporate negligence, the trial
court held that PSI is directly liable for such breach of duty.
We agree with the trial court.
Recent years have seen the doctrine of corporate negligence as the
judicial answer to the problem of allocating hospital's liability for the
negligent acts of health practitioners, absent facts to support the application
of respondeat superior or apparent authority. Its formulation proceeds from
the judiciary's acknowledgment that in these modern times, the duty of
providing quality medical service is no longer the sole prerogative and
responsibility of the physician. The modern hospitals have changed
structure. Hospitals now tend to organize a highly professional medical staff
whose competence and performance need to be monitored by the hospitals
commensurate with their inherent responsibility to provide quality medical
care. 35
The doctrine has its genesis in Darling v. Charleston Community
Hospital. 36 There, the Supreme Court of Illinois held that "the jury could
have found a hospital negligent, inter alia, in failing to have a sufficient
number of trained nurses attending the patient; failing to require a
consultation with or examination by members of the hospital staff; and
failing to review the treatment rendered to the patient.". . . On the basis
of Darling, other jurisdictions held that a hospital's corporate negligence
extends to permitting a physician known to be incompetent to practice
at the hospital. 37 With the passage of time, more duties were expected
from hospitals, among them: (1) the use of reasonable care in the
maintenance of safe and adequate facilities and equipment; (2) the
selection and retention of competent physicians; (3) the overseeing or
supervision of all persons who practice medicine within its walls;
and (4) the formulation, adoption and enforcement of adequate rules and
policies that ensure quality care for its patients. 38 Thus, in Tucson Medical
Center, Inc. v. Misevich, 39 it was held that a hospital, following the doctrine
of corporate responsibility, has the duty to see that it meets the standards of
responsibilities for the care of patients. Such duty includes the proper
supervision of the members of its medical staff. And in Bost v.
Riley, 40 the court concluded that a patient who enters a hospital does so
with the reasonable expectation that it will attempt to cure him. The
hospital accordingly has the duty to make a reasonable effort to
monitor and oversee the treatment prescribed and administered by the
physicians practicing in its premises.
In the present case, it was duly established that PSI operates the
Medical City Hospital for the purpose and under the concept of providing
comprehensive medical services to the public. Accordingly, it has the duty
to exercise reasonable care to protect from harm all patients admitted
into its facility for medical treatment. Unfortunately, PSI failed to perform
such duty. The findings of the trial court are convincing, thus:
. . . PSI's liability is traceable to its failure to
conduct an investigation of the matter reported in the
nota bene of the count nurse. Such failure established
PSI's part in the dark conspiracy of silence and
concealment about the gauzes. Ethical considerations,
if not also legal, dictated the holding of an immediate
inquiry into the events, if not for the benefit of the patient
to whom the duty is primarily owed, then in the interest of
arriving at the truth. The Court cannot accept that the
medical and the healing professions, through their
members like defendant surgeons, and their institutions
like PSI's hospital facility, can callously turn their backs on
and disregard even a mere probability of mistake or
negligence by refusing or failing to investigate a report of
such seriousness as the one in Natividad's case. ECaScD
It is worthy to note that Dr. Ampil and Dr. Fuentes operated on
Natividad with the assistance of the Medical City Hospital's staff, composed
of resident doctors, nurses, and interns. As such, it is reasonable to
conclude that PSI, as the operator of the hospital,
has actualor constructive knowledge of the procedures carried
out, particularly the report of the attending nurses that the two pieces
of gauze were missing. In Fridena v. Evans, 41 it was held that a
corporation is bound by the knowledge acquired by or notice given to its
agents or officers within the scope of their authority and in reference to a
matter to which their authority extends. This means that the knowledge of
any of the staff of Medical City Hospital constitutes knowledge of PSI. Now,
the failure of PSI, despite the attending nurses' report, to investigate and
inform Natividad regarding the missing gauzes amounts to callous
negligence. Not only did PSI breach its duties to oversee or supervise all
persons who practice medicine within its walls, it also failed to take an
active step in fixing the negligence committed. This renders PSI, not only
vicariously liable for the negligence of Dr. Ampil under Article 2180 of the
Civil Code, but also directly liable for its own negligence under Article 2176.
In Fridena, the Supreme Court of Arizona held:
. . . In recent years, however, the duty of care
owed to the patient by the hospital has expanded. The
emerging trend is to hold the hospital responsible
where the hospital has failed to monitor and review
medical services being provided within its walls.
 See Kahn Hospital Malpractice Prevention, 27 De Paul
Rev. 23 (1977).
Among the cases indicative of the 'emerging
trend' is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d
335 (1972). In Purcell, the hospital argued that it could not
be held liable for the malpractice of a medical practitioner
because he was an independent contractor within the
hospital. The Court of Appeals pointed out that the
hospital had created a professional staff whose
competence and performance was to be monitored
and reviewed by the governing body of the hospital,
and the court held that a hospital would be negligent
where it had knowledge or reason to believe that a
doctor using the facilities was employing a method of
treatment or care which fell below the recognized
standard of care.
Subsequent to the Purcell decision, the
Arizona Court of Appeals held that a hospital has
certain inherent responsibilities regarding the quality
of medical care furnished to patients within its walls
and it must meet the standards of responsibility
commensurate with this undertaking. Beeck v. Tucson
General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153
(1972). This court has confirmed the rulings of the Court of
Appeals that a hospital has the duty of supervising the
competence of the doctors on its staff. . . . .
xxx xxx xxx
In the amended complaint, the plaintiffs did plead
that the operation was performed at the hospital with its
knowledge, aid, and assistance, and that the negligence
of the defendants was the proximate cause of the
patient's injuries. We find that such general allegations
of negligence, along with the evidence produced at
the trial of this case, are sufficient to support the
hospital's liability based on the theory of negligent
supervision."
Anent the corollary issue of whether PSI is solidarily liable with Dr.
Ampil for damages, let it be emphasized that PSI, apart from a general
denial of its responsibility, failed to adduce evidence showing that it
exercised the diligence of a good father of a family in the accreditation and
supervision of the latter. In neglecting to offer such proof, PSI failed to
discharge its burden under the last paragraph of Article 2180 cited earlier,
and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover,
as we have discussed, PSI is also directly liable to the Aganas.
One final word. Once a physician undertakes the treatment and care
of a patient, the law imposes on him certain obligations. In order to escape
liability, he must possess that reasonable degree of learning, skill and
experience required by his profession. At the same time, he must apply
reasonable care and diligence in the exercise of his skill and the application
of his knowledge, and exert his best judgment. aEACcS
WHEREFORE, we DENY all the petitions and AFFIRM the
challenged Decision of the Court of Appeals in CA-G.R. CV No. 42062 and
CA-G.R. SP No. 32198.
Costs against petitioners PSI and Dr. Miguel Ampil.
SO ORDERED.
Puno, C.J., Corona and Azcuna, JJ., concur.
Garcia, J., took no part.
||| (Professional Services, Inc. v. Natividad, G.R. Nos. 126297, 126467 &
127590, [January 31, 2007], 542 PHIL 464-496)
SECOND DIVISION
[G.R. No. 118141. September 5, 1997.]
LEONILA GARCIA-RUEDA, petitioner,vs.WILFRED L.
PASCASIO, RAUL R. ARNAU, ABELARDO L.
APORTADERA, JR.,Honorable CONRADO M.
VASQUEZ, all of the Office of the Ombudsman; JESUS
F. GUERRERO, PORFIRIO MACARAEG, and
GREGORIO A. ARIZALA, all of the Office of the City
Prosecutor, Manila, respondents.
Acosta, Rueda-Acosta & Associates for petitioner.
The Solicitor General for respondents.
SYNOPSIS
This is a special civil action case under Rule 65 of the Rules of Court filed by
petitioner Leonila Rueda against public respondent Office of the
Ombudsman for its failure to uphold the existence of probable cause to hold
public respondents City Prosecutors liable for violation of Section 3(e)
of R.A. No. 3019. The records reveal that Florencio V. Rueda, husband of
herein petitioner, underwent surgical operation at the UST Hospital for the
removal of a stone blocking his ureter. He was attended by a surgeon, Dr.
Domingo Antonio, Jr. and an anaesthesiologist, Dr. Erlinda Balatbat-Reyes.
However, six hours after the surgery, Florencio died of complications of
unknown cause. Petitioner sought the help of the NBI to conduct an autopsy
on her husband's body and its finding was that Florencio's death was due to
lack of care by the attending physician in administering anaesthesia. A
formal complaint for Homicide through Reckless Imprudence was then filed
before the Manila City Prosecutors Office. In said office, petitioner's case
was transferred from one prosecutor to another who came out with
contradictory recommendations. When the case was transferred to Senior
State Prosecutor Arizala, the latter resolved to exonerate Dr. Reyes from any
wrongdoing. Aggrieved petitioner filed graft charges against Prosecutors
Guerrero, Macaraeg and Arizala for manifest partiality in favor of Dr. Reyes
in the Office of the Ombudsman. The Ombudsman, however, dismissed the
complaint for lack of evidence. cda
The Supreme Court ruled that in exercising his discretion under the
circumstances, the Ombudsman acted within his power and authority in
dismissing the complaint against the prosecutors, and the Court will not
interfere with the same. Being the proper investigating authority, the
Ombudsman should have inquired into the successive transfer of the case
from one prosecutor to another which could hardly qualify as "standard
operating procedure." The instant petition is dismissed without prejudice to
the filing of an appeal by the petitioner with the Secretary of Justice.
SYLLABUS
1. CONSTITUTIONAL LAW; 1987 CONSTITUTION; OMBUDSMAN;
POWERS AND FUNCTIONS THEREOF. — Preliminarily, the powers and
functions of the Ombudsman have generally been categorized into the
following: investigatory powers, prosecutory power, public assistance
function, authority to inquire and obtain information, and function to adopt,
institute and implement preventive measures. As protector of the people,
the Office of the Ombudsman has the power, function and duty "to act
promptly on complaints filed in any form or manner against public officials"
and "to investigate any act or omission of any public official when such act
or omission appears to be illegal, unjust, improper or inefficient." dctai
2. ID.;ID.;GRAVE ABUSE OF DISCRETION; CONSTRUED. — In this regard,
"grave abuse of discretion" has been defined as "where a power is
exercised in an arbitrary or despotic manner by reason of passion or
personal hostility so patent and gross as to amount to evasion of positive
duty or virtual refusal to perform a duty enjoined by, or in contemplation of
law.
3. REMEDIAL LAW; CRIMINAL PROCEDURE; PROBABLE CAUSE;
DEFINED AND EXPLAINED IN THE CASE AT BAR. — Probable cause has
been defined as "the existence of such fact and circumstances as would
excite the belief, in a reasonable mind, acting on the facts within the
knowledge of the prosecution, that the person charged was guilty of the
crime for which he was prosecuted." "Probable cause is a reasonable
ground of presumption that a matter is, or may be, well founded, such a
state of facts in the mind of the prosecutor as would lead a person of
ordinary caution and prudence to believe, or entertain an honest or strong
suspicion, that a thing is so." The term does not mean actual and positive
cause nor does it import absolute certainty. It is merely based on opinion
and reasonable belief. Thus, a finding of probable cause does not require an
inquiry into whether there is sufficient evidence to procure a conviction. It is
enough that it is believed that the act or omission complained of constitutes
the offense charged. Precisely, there is a trial for the reception of evidence
of the prosecution in support of the charge. SEcAIC
4. CRIMINAL LAW; CRIMINAL NEGLIGENCE; FOUR ELEMENTS INVOLVED
IN MEDICAL NEGLIGENCE CASES. — "In its simplest terms, the type of
lawsuit which has been called medical malpractice or, more appropriately,
medical negligence, is that type of claim which a victim has available to him
or her to redress a wrong committed by a medical professional which has
caused bodily harm. In order to successfully pursue such a claim, a patient
must prove that a health care provider, in most cases a physician, either
failed to do something which a reasonably prudent health care provider
would have done, or that he or she did something that a reasonably prudent
provider would not have done; and that that failure or action caused injury to
the patient." Hence, there are four elements involved in medical negligence
cases: duty, breach, injury and proximate causation.
5. ID.; SECTION 3(E) OF THE ANTI-GRAFT AND CORRUPT PRACTICES
ACT; FACTS REQUIRED. — The City Prosecutors were charged with
violating Section 3(e) of R.A. No. 3019 which requires the following facts: "1.
The accused is a public officer discharging administrative or official
functions or private persons charged in conspiracy with them; 2. The public
officer committed the prohibited act during the performance of his official
duty or in relation to his public position; 3. The public officer acted with
manifest partiality, evident bad faith or gross, inexcusable negligence; and 4.
His action caused undue injury to the Government or any private party, or
gave any party any unwarranted benefit, advantage or preference to such
parties." dctai
DECISION
ROMERO, J p:
May this Court review the findings of the Office of the Ombudsman? The
general rule has been enunciated in Ocampo v. Ombudsman 1 which
states: LLjur
"In the exercise of its investigative power, this Court has
consistently held that courts will not interfere with the
discretion of the fiscal or the Ombudsman to determine
the specificity and adequacy of the averments of the
offense charged. He may dismiss the complaint forthwith
if he finds it to be insufficient in form and substance or if
he otherwise finds no ground to continue with the inquiry;
or he may proceed with the investigation of the complaint
if, in his view, it is in due and proper form."
Does the instant case warrant a departure from the foregoing general rule?
When a patient dies soon after surgery under circumstances which indicate
that the attending surgeon and anaesthesiologist may have been guilty of
negligence but upon their being charged, a series of nine prosecutors toss
the responsibility of conducting a preliminary investigation to each other
with contradictory recommendations, "ping-pong" style, perhaps the
distraught widow is not to be blamed if she finally decides to accuse the
City Prosecutors at the end of the line for partiality under the Anti-Graft and
Corrupt Practices Act. Nor may she be entirely faulted for finally filing a
petition before this Court against the Ombudsman for grave abuse of
discretion in dismissing her complaint against said City Prosecutors on the
ground of lack of evidence. Much as we sympathize with the bereaved
widow, however, this Court is of the opinion that the general rule still finds
application in instant case. In other words, the respondent Ombudsman did
not commit grave abuse of discretion in deciding against filing the necessary
information against public respondents of the Office of the City Prosecutor.
The following facts are borne out by the records.
Florencio V. Rueda, husband of petitioner Leonila Garcia-Rueda, underwent
surgical operation at the UST Hospital for the removal of a stone blocking
his ureter. He was attended by Dr. Domingo Antonio, Jr. who was the
surgeon, while Dr. Erlinda Balatbat-Reyes was the anaesthesiologist. Six
hours after the surgery, however, Florencio died of complications of
"unknown cause," according to officials of the UST Hospital. 2
Not satisfied with the findings of the hospital, petitioner requested the
National Bureau of Investigation (NBI) to conduct an autopsy on her
husband's body. Consequently, the NBI ruled that Florencio's death was
due to lack of care by the attending physician in administering anaesthesia.
Pursuant to its findings, the NBI recommended that Dr. Domingo Antonio
and Dr. Erlinda Balatbat-Reyes be charged for Homicide through Reckless
Imprudence before the Office of the City Prosecutor.
During the preliminary investigation, what transpired was a confounding
series of events which we shall try to disentangle. The case was initially
assigned to Prosecutor Antonio M. Israel, who had to inhibit himself
because he was related to the counsel of one of the doctors. As a result, the
case was re-raffled to Prosecutor Norberto G. Leono who was, however,
disqualified on motion of the petitioner since he disregarded prevailing laws
and jurisprudence regarding preliminary investigation. The case was then
referred to Prosecutor Ramon O. Carisma, who issued a resolution
recommending that only Dr. Reyes be held criminally liable and that the
complaint against Dr. Antonio be dismissed.
The case took another perplexing turn when Assistant City Prosecutor
Josefina Santos Sioson, in the "interest of justice and peace of mind of the
parties," recommended that the case be re-raffled on the ground that
Prosecutor Carisma was partial to the petitioner. Thus, the case was
transferred to Prosecutor Leoncia R. Dimagiba, where a volte face occurred
again with the endorsement that the complaint against Dr. Reyes be
dismissed and instead, a corresponding information be filed against Dr.
Antonio. Petitioner filed a motion for reconsideration, questioning the
findings of Prosecutor Dimagiba.
Pending the resolution of petitioner's motion for reconsideration regarding
Prosecutor Dimagiba's resolution, the investigative "pingpong" continued
when the case was again assigned to another prosecutor, Eudoxia T.
Gualberto, who recommended that Dr. Reyes be included in the criminal
information of Homicide through Reckless Imprudence. While the
recommendation of Prosecutor Gualberto was pending, the case was
transferred to Senior State Prosecutor Gregorio A. Arizala, who resolved to
exonerate Dr. Reyes from any wrongdoing, a resolution which was approved
by both City Prosecutor Porfirio G. Macaraeg and City Prosecutor Jesus F.
Guerrero.
Aggrieved, petitioner filed graft charges specifically for violation of Section
3(e) of Republic Act No. 3019 3 against Prosecutors Guerrero, Macaraeg,
and Arizala for manifest partiality in favor of Dr. Reyes before the Office of
the Ombudsman. However, on July 11, 1994, the Ombudsman issued the
assailed resolution dismissing the complaint for lack of evidence.
In fine, petitioner assails the exercise of the discretionary power of the
Ombudsman to review the recommendations of the government
prosecutors and to approve and disapprove the same. Petitioner faults the
Ombudsman for, allegedly in grave abuse of discretion, refusing to find that
there exists probable cause to hold public respondent City Prosecutors
liable for violation of Section 3(e) of R.A. No. 3019.
Preliminarily, the powers and functions of the Ombudsman have generally
been categorized into the following: investigatory powers, prosecutory
power, public assistance function, authority to inquire and obtain
information, and function to adopt, institute and implement preventive
measures. 4
As protector of the people, the Office of the Ombudsman has the power,
function and duty "to act promptly on complaints filed in any form or manner
against public officials" and "to investigate any act or omission of any public
official when such act or omission appears to be illegal, unjust, improper or
inefficient." 5
While the Ombudsman has the full discretion to determine whether or not a
criminal case should be filed, this Court is not precluded from reviewing the
Ombudsman's action when there is an abuse of discretion, in which case
Rule 65 of the Rules of Court may exceptionally be invoked pursuant
to Section I, Article VIII of the 1987 Constitution. 6
In this regard, "grave abuse of discretion" has been defined as "where a
power is exercised in an arbitrary or despotic manner by reason of passion
or personal hostility so patent and gross as to amount to evasion of positive
duty or virtual refusal to perform a duty enjoined by, or in contemplation of
law. 7
From a procedural standpoint, it is certainly odd why the successive
transfers from one prosecutor to another were not sufficiently explained in
the Resolution of the Ombudsman. Being the proper investigating authority
with respect to misfeasance, non-feasance and malfeasance of public
officials, the Ombudsman should have been more vigilant and assiduous in
determining the reasons behind the "buck passing" to ensure that no
irregularity took place.
Whether such transfers were due to any outside pressure or ulterior motive
is a matter of evidence. One would have expected the Ombudsman,
however, to inquire into what could hardly qualify as "standard operating
procedure," given the surrounding circumstances of the case.
While it is true that a preliminary investigation is essentially inquisitorial, and
is often the only means to discover who may be charged with a crime, its
function is merely to determine the existence of probable cause. 8 Probable
cause has been defined as "the existence of such fact and circumstances as
would excite the belief, in a reasonable mind, acting on the facts within the
knowledge of the prosecution, that the person charged was guilty of the
crime for which he was prosecuted." 9
"Probable cause is a reasonable ground of presumption that a matter is, or
may be, well founded, such a state of facts in the mind of the prosecutor as
would lead a person of ordinary caution and prudence to believe, or
entertain an honest or strong suspicion, that a thing is so." The term does
not mean actual and positive cause nor does it import absolute certainty. It
is merely based on opinion and reasonable belief. Thus, a finding of
probable cause does not require an inquiry into whether there is sufficient
evidence to procure a conviction. It is enough that it is believed that the act
or omission complained of constitutes the offense charged. Precisely, there
is a trial for the reception of evidence of the prosecution in support of the
charge. 10
In the instant case, no less than the NBI pronounced after conducting an
autopsy that there was indeed negligence on the part of the attending
physicians in administering the anaesthesia. 11 The fact of want of
competence or diligence is evidentiary in nature, the veracity of which can
best be passed upon after a full-blown trial for it is virtually impossible to
ascertain the merits of a medical negligence case without extensive
investigation, research, evaluation and consultations with medical experts.
Clearly, the City Prosecutors are not in a competent position to pass
judgment on such a technical matter, especially when there are conflicting
evidence and findings. The bases of a party's accusation and defenses are
better ventilated at the trial proper than at the preliminary investigation.
A word on medical malpractice or negligence cases.
"In its simplest terms, the type of lawsuit which has been
called medical malpractice or, more appropriately,
medical negligence, is that type of claim which a victim
has available to him or her to redress a wrong committed
by a medical professional which has caused bodily harm.
In order to successfully pursue such a claim, a patient
must prove that a health care provider, in most cases a
 physician, either failed to do something which a
reasonably prudent health care provider would have done,
or that he or she did something that a reasonably prudent
provider would not have done; and that failure or action
caused injury to the patient." 12
Hence, there are four elements involved in medical negligence cases: duty,
breach, injury and proximate causation.
Evidently, when the victim employed the services of Dr. Antonio and Dr.
Reyes, a physician-patient relationship was created. In accepting the case,
Dr. Antonio and Dr. Reyes in effect represented that, having the needed
training and skill possessed by physicians and surgeons practicing in the
same field, they will employ such training, care and skill in the treatment of
their patients. 13 They have a duty to use at least the same level of care that
any other reasonably competent doctor would use to treat a condition under
the same circumstances. The breach of these professional duties of skill and
care, or their improper performance, by a physician surgeon whereby the
patient is injured in body or in health, constitutes actionable
malpractice. 14Consequently, in the event that any injury results to the
patient from want of due care or skill during the operation, the surgeons may
be held answerable in damages for negligence. 15
Moreover, in malpractice or negligence cases involving the administration of
anaesthesia, the necessity of expert testimony and the availability of the
charge of res ipsa loquitur to the plaintiff, have been applied in actions
against anaesthesiologists to hold the defendant liable for the death or injury
of a patient under excessive or improper anaesthesia. 16 Essentially, it
requires two-pronged evidence: evidence as to the recognized standards of
the medical community in the particular kind of case, and a showing that the
physician in question negligently departed from this standard in his
treatment. 17
Another element in medical negligence cases is causation which is divided
into two inquiries: whether the doctor's actions in fact caused the harm to
the patient and whether these were the proximate cause of the patient's
injury. 18 Indeed here, a causal connection is discernible from the
occurrence of the victim's death after the negligent act of the
anaesthesiologist in administering the anesthesia, a fact which, if confirmed,
should warrant the filing of the appropriate criminal case. To be sure, the
allegation of negligence is not entirely baseless. Moreover, the NBI deduced
that the attending surgeons did not conduct the necessary interview of the
patient prior to the operation. It appears that the cause of the death of the
victim could have been averted had the proper drug been applied to cope
with the symptoms of malignant hyperthermia. Also, we cannot ignore the
fact that an antidote was readily available to counteract whatever
deleterious effect the anaesthesia might produce. 19 Why these
precautionary measures were disregarded must be sufficiently explained.
The City Prosecutors were charged with violating Section 3(e) of the Anti-
Graft and Corrupt Practices Act which requires the following facts:
"1. The accused is a public officer discharging
administrative or official functions or private persons
charged in conspiracy with them;
2. The public officer committed the prohibited act during
the performance of his official duty or in relation to his
public position;
3. The public officer acted with manifest partiality, evident
bad faith or gross, inexcusable negligence; and
4. His action caused undue injury to the Government or
any private party, or gave any party any unwarranted
benefit, advantage or preference to such parties." 20
Why did the complainant, petitioner in instant case, elect to charge
respondents under the above law?
While a party who feels himself aggrieved is at liberty to choose the
appropriate "weapon from the armory," it is with no little surprise that this
Court views the choice made by the complainant widow.
To our mind, the better and more logical remedy under the circumstances
would have been to appeal the resolution of the City Prosecutors dismissing
the criminal complaint to the Secretary of Justice under the Department of
Justice's Order No. 223, 21 otherwise known as the "1993 Revised Rules on
Appeals From Resolutions in Preliminary Investigations/Reinvestigations," as
amended by Department Order No. 359, Section 1 of which provides:
"Section 1. What May Be Appealed.— Only resolutions of
the Chief State Prosecutor/Regional State
Prosecutor/Provincial or City Prosecutor dismissing a
criminal complaint may be the subject of an appeal to the
Secretary of Justice except as otherwise provided in
Section 4 hereof."
What action may the Secretary of Justice take on the appeal? Section 9 of
Order No. 223 states: "The Secretary of Justice may reverse, affirm or
modify the appealed resolution." On the other hand, "He may motu
propio or on motion of the appellee, dismiss outright the appeal on specified
grounds." 22
In exercising his discretion under the circumstances, the Ombudsman acted
within his power and authority in dismissing the complaint against the
Prosecutors and this Court will not interfere with the same. cdlex
WHEREFORE, in view of the foregoing, the instant petition is DISMISSED,
without prejudice to the filing of an appeal by the petitioner with the
Secretary of Justice assailing the dismissal of her criminal complaint by the
respondent City Prosecutors. No costs.
SO ORDERED.
Regalado, Puno, Mendoza and Torres, Jr.,JJ ., concur.
||| (Garcia-Rueda v. Pascasio, G.R. No. 118141, [September 5, 1997], 344
PHIL 323-335)
FIRST DIVISION
[G.R. No. 124354. December 29, 1999.]
ROGELIO E. RAMOS and ERLINDA RAMOS, in their
own behalf and as natural guardians of the minors,
ROMMEL RAMOS, ROY RODERICK RAMOS and RON
RAYMOND RAMOS, petitioners, vs. COURT OF
APPEALS, DELOS SANTOS MEDICAL CENTER, DR.
ORLINO HOSAKA and DRA. PERFECTA
GUTIERREZ, respondents.
Luis C. A. Sillano for petitioners.
Antonio H. Abad & Associates for respondents Doctors.
Tanjuatco, Sta. Maria, Tanjuatco for respondent DLSMC.
SYNOPSIS
In the morning of June 17, 1985, Erlinda Ramos was brought into the
operating room of the Delos Santos Medical Center for a cholecystectomy.
She was then a robust woman, normal as any other except for occasional
complaints of discomfort due to pains allegedly caused by the presence of
stones in her gall bladder. At around 3:00 p.m. of that day, Erlinda was taken
to the Intensive Care unit of the hospital, comatose. On January 8, 1986,
Erlinda's husband filed a civil case for damages against said hospital and
Drs. Orlino Hosaka and Perfecta Gutierrez. The Regional Trial Court ruled in
favor of the plaintiffs. The Court of Appeals, however, reversed the decision
of the lower court and ordered the dismissal of the complaint. Hence, this
petition.
The doctrine of res ipsa loquitur is a recognition of the postulate that, as a
matter of common knowledge and experience, the very nature of certain
types of occurrences may justify an inference of negligence on the part of
the person who controls the instrumentality causing the injury in the
absence of some explanation by the defendant who is charged with
negligence. The damage sustained by Erlinda in her brain prior to a
scheduled gall bladder operation presents a case for the application of res
ipsa loquitur. aACHDS
Brain damage, which Erlinda sustained is an injury which does not normally
occur in the process of a gall bladder operation. In fact, this kind of situation
does not happen in the absence of negligence of someone in the
administration of anesthesia and in the use of endotracheal tube. Moreover,
the instruments used in the administration of anesthesia, including the
endotracheal tube, were all under the exclusive control of private
respondents, who are the physicians-in-charge.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; MOTION FOR
RECONSIDERATION; NO DELAY OF FILING IN CASE AT BAR. — It is
elementary that when a party is represented by counsel, all notices should
be sent to the party's lawyer at his given address. With a few exceptions,
notice to a litigant without notice to his counsel on record is no notice at all.
In the present case, since a copy of the decision of the appellate court was
not sent to the counsel on record of petitioner, there can be no sufficient
notice to speak of. Hence, the delay in the filing of the motion for
reconsideration cannot be taken against petitioner. Moreover, since the
Court of Appeals already issued a second Resolution, dated 29 March 1996,
which superseded the earlier resolution issued on 25 July 1995, and denied
the motion for reconsideration of petitioner, we believe that the receipt of
the former should be considered in determining the timeliness of the filing of
the present petition. Based on this, the petition before us was submitted on
time.
2. CIVIL LAW; DOCTRINE OF RES IPSA LOQUITUR; ELUCIDATED. — Res
ipsa loquitur is a Latin phrase which literally means "the thing or the
transaction speaks for itself." The phrase "res ipsa loquitur" is a maxim for
the rule that the fact of the occurrence of an injury, taken with the
surrounding circumstances, may permit an inference or raise a presumption
of negligence, or make out a plaintiffs prima facie case, and present a
question of fact for defendant to meet with an explanation. Where the thing
which caused the injury complained of is shown to be under the
management of the defendant or his servants and the accident is such as in
ordinary course of things does not happen if those who have its
management or control use proper care, it affords reasonable evidence, in
the absence of explanation by the defendant, that the accident arose from
or was caused by the defendant's want of care. The doctrine of res ipsa
loquitur is simply a recognition of the postulate that, as a matter of common
knowledge and experience, the very nature of certain types of occurrences
may justify an inference of negligence on the part of the person who controls
the instrumentality causing the injury in the absence of some explanation by
the defendant who is charged with negligence. It is grounded in the superior
logic of ordinary human experience and on the basis of such experience or
common knowledge, negligence may be deduced from the mere occurrence
of the accident itself. Hence, res ipsa loquitur is applied in conjunction with
the doctrine of common knowledge. However, much has been said that res
ipsa loquitur is not a rule of substantive law and, as such, does not create or
constitute an independent or separate ground of liability. Instead, it is
considered as merely evidentiary or in the nature of a procedural rule. It is
regarded as a mode of proof, or a mere procedural convenience since it
furnishes a substitute for, and relieves a plaintiff of, the burden of producing
specific proof of negligence. In other words, mere invocation and application
of the doctrine does not dispense with the requirement of proof of
negligence. It is simply a step in the process of such proof, permitting the
plaintiff to present along with the proof of the accident, enough of the
attending circumstances to invoke the doctrine, creating an inference or
presumption of negligence, and to thereby place on the defendant the
burden of going forward with the proof. Still, before resort to the doctrine
may be allowed, the following requisites must be satisfactorily shown: 1. The
accident is of a kind which ordinarily does not occur in the absence of
someone's negligence; 2. It is caused by an instrumentality within the
exclusive control of the defendant or defendants; and 3. The possibility of
contributing conduct which would make the plaintiff responsible is
eliminated. In the above requisites, the fundamental element is the "control
of the instrumentality" which caused the damage. Such element of control
must be shown to be within the dominion of the defendant. In order to have
the benefit of the rule, a plaintiff, in addition to proving injury or damage,
must show a situation where it is applicable, and must establish that the
essential elements of the doctrine were present in a particular
incident. TaHDAS
3. ID.; ID.; APPLICATION IN MEDICAL MALPRACTICE. — Medical
malpractice cases do not escape the application of this doctrine. Thus, res
ipsa loquiturhas been applied when the circumstances attendant upon the
harm are themselves of such a character as to justify an inference of
negligence as the cause of that harm. The application of res ipsa loquitur in
medical negligence cases presents a question of law since it is a judicial
function to determine whether a certain set of circumstances does, as a
matter of law, permit a given inference. Although generally, expert medical
testimony is relied upon in malpractice suits to prove that a physician has
done a negligent act or that he has deviated from the standard medical
procedure, when the doctrine of res ipsa loquitur is availed by the plaintiff,
the need for expert medical testimony is dispensed with because the injury
itself provides the proof of negligence. The reason is that the general rule on
the necessity of expert testimony applies only to such matters clearly within
the domain of medical science, and not to matters that are within the
common knowledge of mankind which may be testified to by anyone
familiar with the facts. Ordinarily, only physicians and surgeons of skill and
experience are competent to testify as to whether a patient has been treated
or operated upon with a reasonable degree of skill and care. However,
testimony as to the statements and acts of physicians and surgeons,
external appearances, and manifest conditions which are observable by any
one may be given by non-expert witnesses. Hence, in cases where the res
ipsa loquitur is applicable, the court is permitted to find a physician
negligent upon proper proof of injury to the patient, without the aid of expert
testimony, where the court from its fund of common knowledge can
determine the proper standard of care. Where common knowledge and
experience teach that a resulting injury would not have occurred to the
patient if due care had been exercised, an inference of negligence may be
drawn giving rise to an application of the doctrine of res ipsa loquitur without
medical evidence, which is ordinarily required to show not only what
occurred but how and why it occurred. When the doctrine is appropriate, all
that the patient must do is prove a nexus between the particular act or
omission complained of and the injury sustained while under the custody
and management of the defendant without need to produce expert medical
testimony to establish the standard of care. Resort to res ipsa loquitur is
allowed because there is no other way, under usual and ordinary conditions,
by which the patient can obtain redress for injury suffered by him. Thus,
courts of other jurisdictions have applied the doctrine in the following
situations: leaving of a foreign object in the body of the patient after an
operation, injuries sustained on a healthy part of the body which was not
under, or in the area, of treatment, removal of the wrong part of the body
when another part was intended, knocking out a tooth while a patient's jaw
was under anesthetic for the removal of his tonsils, and loss of an eye while
the patient plaintiff was under the influence of anesthetic, during or following
an operation for appendicitis, among others. Nevertheless, despite the fact
that the scope of res ipsa loquitur has been measurably enlarged, it does not
automatically apply to all cases of medical negligence as to mechanically
shift the burden of proof to the defendant to show that he is not guilty of the
ascribed negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to
be perfunctorily used but a rule to be cautiously applied, depending upon
the circumstances of each case. It is generally restricted to situations in
malpractice cases where a layman is able to say, as a matter of common
knowledge and observation, that the consequences of professional care
were not as such as would ordinarily have followed if due care had been
exercised. A distinction must be made between the failure to secure results,
and the occurrence of something more unusual and not ordinarily found if
the service or treatment rendered followed the usual procedure of those
skilled in that particular practice. It must be conceded that the doctrine
of res ipsa loquitur can have no application in a suit against a physician or
surgeon which involves the merits of a diagnosis or of a scientific treatment.
The physician or surgeon is not required at his peril to explain why any
particular diagnosis was not correct, or why any particular scientific
treatment did not produce the desired result. Thus, res ipsa loquitur is not
available in a malpractice suit if the only showing is that the desired result of
an operation or treatment was not accomplished. The real question,
therefore, is whether or not in the process of the operation any extraordinary
incident or unusual event outside of the routine performance occurred which
is beyond the regular scope of customary professional activity in such
operations, which, if unexplained would themselves reasonably speak to the
average man as the negligent cause or causes of the untoward
consequence. If there was such extraneous interventions, the doctrine of res
ipsa loquitur may be utilized and the defendant is called upon to explain the
matter, by evidence of exculpation, if he could.
4. ID.; ID.; APPLICABLE IN CASE AT BAR. — We find the doctrine of res
ipsa loquitur appropriate in the case at bar. . . . Brain damage, which Erlinda
sustained, is an injury which does not normally occur in the process of a gall
bladder operation. In fact, this kind of situation does not happen in the
absence of negligence of someone in the administration of anesthesia and in
the use of endotracheal tube. Normally, a person being put under
anesthesia is not rendered decerebrate as a consequence of administering
such anesthesia if the proper procedure was followed. Furthermore, the
instruments used in the administration of anesthesia, including the
endotracheal tube, were all under the exclusive control of private
respondents, who are the physicians-in-charge. CaTSEA
5. ID.; ID.; CONTRIBUTORY NEGLIGENCE. — Petitioner Erlinda could not
have been guilty of contributory negligence because she was under the
influence of anesthetics which rendered her unconscious. Considering that a
sound and unaffected member of the body (the brain) is injured or destroyed
while the patient is unconscious and under the immediate and exclusive
control of the physicians, we hold that a practical administration of justice
dictates the application of res ipsa loquitur. Upon these facts and under
these circumstances the Court would be able to say, as a matter of common
knowledge and observation, if negligence attended the management and
care of the patient. Moreover, the liability of the physicians and the hospital
in this case is not predicated upon an alleged failure to secure the desired
results of an operation nor on an alleged lack of skill in the diagnosis or
treatment as in fact no operation or treatment was ever performed on
Erlinda. Thus, upon all these initial determination a case is made out for the
application of the doctrine of res ipsa loquitur.
6. REMEDIAL LAW; EVIDENCE; WITNESS; COMPETENCE; UPHELD IN
CASE AT BAR. — Although witness Cruz is not an anesthesiologist, she can
very well testify upon matters on which she is capable of observing such as,
the statements and acts of the physician and surgeon, external
appearances, and manifest conditions which are observable by any one.
This is precisely allowed under the doctrine of res ipsa loquitur where the
testimony of expert witnesses is not required. It is the accepted rule that
expert testimony is not necessary for the proof of negligence in non-
technical matters or those of which an ordinary person may be expected to
have knowledge, or where the lack of skill or want of care is so obvious as
to render expert testimony unnecessary.
7. ID.; ID.; RULES OF ADMISSIBILITY; TESTIMONIAL EVIDENCE; OPINION
OF EXPERT WITNESS; NOT ADMITTED IN CASE AT BAR. — The provision
in the rules of evidence regarding expert witnesses states: Sec. 49. Opinion
of expert witness. — The opinion of a witness on a matter requiring special
knowledge, skill, experience or training which he is shown to possess, may
be received in evidence. Generally, to qualify as an expert witness, one must
have acquired special knowledge of the subject matter about which he or
she is to testify, either by the study of recognized authorities on the subject
or by practical experience. Clearly, Dr. Jamora does not qualify as an expert
witness based on the above standard since he lacks the necessary
knowledge, skill, and training in the field of anesthesiology.
8. CIVIL LAW; DAMAGES; EXCEPTIONAL NEGLIGENCE AND
PROFESSIONAL IRRESPONSIBILITY IN THE MEDICAL FIELD IN CASE AT
BAR. — Respondent Dra. Gutierrez' act of seeing her patient for the first
time only an hour before the scheduled operative procedure was therefore,
an act of exceptional negligence and professional irresponsibility. The
measures cautioning prudence and vigilance in dealing with human lives lie
at the core of the physician's centuries-old Hippocratic Oath. Her failure to
follow this medical procedure is, therefore, a clear indicia of her negligence.
9. ID.; ID.; ID. — As the so-called "captain of the ship," it is the surgeon's
responsibility to see to it that those under him perform their task in the
proper manner. Respondent Dr. Hosaka's negligence can be found in his
failure to exercise the proper authority (as the "captain" of the operative
team) in not determining if his anesthesiologist observed proper anesthesia
protocols. In fact, no evidence on record exists to show that respondent Dr.
Hosaka verified if respondent Dra. Gutierrez properly intubated the patient.
Furthermore, it does not escape us that respondent Dr. Hosaka had
scheduled another procedure in a different hospital at the same time as
Erlinda's cholecystectomy, and was in fact over three hours late for the
latter's operation. Because of this, he had little or no time to confer with his
anesthesiologist regarding the anesthesia delivery. This indicates that he
was remiss in his professional duties towards his patient. Thus, he shares
equal responsibility for the events which resulted in Erlinda's condition.
10. ID.; TORTS; PROXIMATE CAUSE; ELUCIDATED. — Proximate cause
has been defined as that which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces injury, and without
which the result would not have occurred. An injury or damage is
proximately caused by an act or a failure to act, whenever it appears from
the evidence in the case, that the act or omission played a substantial part
in bringing about or actually causing the injury or damage; and that the
injury or damage was either a direct result or a reasonably probable
consequence of the act or omission. It is the dominant, moving or producing
cause. Applying the above definition in relation to the evidence at hand,
faulty intubation is undeniably the proximate cause which triggered the
chain of events leading to Erlinda's brain damage and, ultimately, her
comatosed condition.
11 ID.; EXTRA-CONTRACTUAL OBLIGATIONS; QUASI-DELICTS;
EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN HOSPITALS
AND CONSULTANTS FOR THE PURPOSE OF ALLOCATING
RESPONSIBILITY IN MEDICAL NEGLIGENCE CASES. — Hospitals exercise
significant control in the hiring and firing of consultants and in the conduct
of their work within the hospital premises. Doctors who apply for
"consultant" slots, visiting or attending, are required to submit proof of
completion of residency, their educational qualifications; generally, evidence
of accreditation by the appropriate board (diplomate), evidence of fellowship
in most cases, and references. These requirements are carefully scrutinized
by members of the hospital administration or by a review committee set up
by the hospital who either accept or reject the application. This is
particularly true with respondent hospital. After a physician is accepted,
either as a visiting or attending consultant, he is normally required to attend
clinico-pathological conferences, conduct bedside rounds for clerks, interns
and residents, moderate grand rounds and patient audits and perform other
tasks and responsibilities, for the privilege of being able to maintain a clinic
in the hospital, and/or for the privilege of admitting patients into the hospital.
In addition to these, the physician's performance as a specialist is generally
evaluated by a peer review committee on the basis of mortality and
morbidity statistics, and feedback from patients, nurses, interns and
residents. A consultant remiss in his duties, or a consultant who regularly
falls short of the minimum standards acceptable to the hospital or its peer
review committee, is normally politely terminated. In other words, private
hospitals, hire, fire and exercise real control over their attending and visiting
"consultant" staff. While "consultants" are not, technically employees, a
point which respondent hospital asserts in denying all responsibility for the
patient's condition, the control exercised, the hiring, and the right to
terminate consultants all fulfill the important hallmarks of an employer-
employee relationship, with the exception of the payment of wages. In
assessing whether such a relationship in fact exists, the control test is
determining. Accordingly, on the basis of the foregoing, we rule that for the
purpose of allocating responsibility in medical negligence cases, an
employer-employee relationship in effect exists between hospitals and their
attending and visiting physicians. DCTSEA
12. ID.; ID.; ID.; EMPLOYERS LIABLE FOR THE DAMAGES CAUSED BY
THEIR EMPLOYEES. — The basis for holding an employer solidarily
responsible for the negligence of its employee is found in Article 2180 of the
Civil Code which considers a person accountable not only for his own acts
but also for those of others based on the former's responsibility under a
relationship of patria potestas. Such responsibility ceases when the persons
or entity concerned prove that they have observed the diligence of a good
father of the family to prevent damage. In other words, while the burden of
proving negligence rests on the plaintiffs, once negligence is shown, the
burden shifts to the respondents (parent, guardian, teacher or employer)
who should prove that they observed the diligence of a good father of a
family to prevent damage. In the instant case, respondent hospital, apart
from a general denial of its responsibility over respondent physicians, failed
to adduce evidence showing that it exercised the diligence of a good father
of a family in the hiring and supervision of the latter. It failed to adduce
evidence with regard to the degree of supervision which it exercised over its
physicians. In neglecting to offer such proof, or proof of a similar nature,
respondent hospital thereby failed to discharge its burden under the last
paragraph of Article 2180. Having failed to do this, respondent hospital is
consequently solidarily responsible with its physicians for Erlinda's
condition.
13. ID.; DAMAGES; ACTUAL AND TEMPERATE DAMAGES; PROPER IN
CASE AT BAR. — The amount of actual damages recoverable in suits
arising from negligence should at least reflect the correct minimum cost of
proper care, not the cost of the care the family is usually compelled to
undertake at home to avoid bankruptcy. However, the provisions of the Civil
Code on actual or compensatory damages present us with some difficulties.
Well-settled is the rule that actual damages which may be claimed by the
plaintiff are those suffered by him as he has duly proved. Our rules on actual
or compensatory damages generally assume that at the time of litigation,
the injury suffered as a consequence of an act of negligence has been
completed and that the cost can be liquidated. However, these provisions
neglect to take into account those situations, as in this case, where the
resulting injury might be continuing and possible future complications
directly arising from the injury, while certain to occur, are difficult to predict.
In these cases, the amount of damages which should be awarded, if they
are to adequately and correctly respond to the injury caused, should be one
which compensates for pecuniary loss incurred and proved, up to the time
of trial; and one which would meet pecuniary loss certain to be suffered but
which could not, from the nature of the case, be made with certainty. In
other words, temperate damages can and should be awarded on top of
actual or compensatory damages in instances where the injury is chronic
and continuing. And because of the unique nature of such cases, no
incompatibility arises when both actual and temperate damages are
provided for. The reason is that these damages cover two distinct phases.
As it would not be equitable — and certainly not in the best interests of the
administration of justice — for the victim in such cases to constantly come
before the courts and invoke their aid in seeking adjustments to the
compensatory damages previously awarded — temperate damages are
appropriate. The amount given as temperate damages, though to a certain
extent speculative, should take into account the cost of proper care. In the
instant case, petitioners were able to provide only homebased nursing care
for a comatose patient who has remained in that condition for over a
decade. Having premised our award for compensatory damages on the
amount provided by petitioners at the onset of litigation, it would be now
much more in step with the interests of justice if the value awarded for
temperate damages would allow petitioners to provide optimal care for their
loved one in a facility which generally specializes in such care. They should
not be compelled by dire circumstances to provide substandard care at
home without the aid of professionals, for anything less would be grossly
inadequate.
14. ID.; ID.; PROPER MORAL DAMAGES. — The actual physical, emotional
and financial cost of the care of petitioner would be virtually impossible to
quantify. Even the temperate damages herein awarded would be inadequate
if petitioner's condition remains unchanged for the next ten years. We
recognized that the victim's actual injury would not even scratch the surface
of the resulting moral damage because it would be highly speculative to
estimate the amount of emotional and moral pain, psychological damage
and injury suffered by the victim or those actually affected by the victim's
condition. The husband and the children, all petitioners in this case, will
have to live with the day to day uncertainty of the patient's illness, knowing
any hope of recovery is close to nil. They have fashioned their daily lives
around the nursing care of petitioner, altering their long term goals to take
into account their life with a comatose patient. They, not the respondents,
are charged with the moral responsibility of the care of the victim. The
family's moral injury and suffering in this case is clearly a real one. For the
foregoing reasons, an award of P2,000,000.00 in moral damages would be
appropriate.
15. ID.; ID.; EXEMPLARY DAMAGES AND ATTORNEY'S FEES. — By way of
example, exemplary damages in the amount of P100,000.00 are hereby
awarded. Considering the length and nature of the instant suit we are of the
opinion that attorney's fees valued at P100,000.00 are likewise proper. Our
courts face unique difficulty in adjudicating medical negligence cases
because physicians are not insurers of life and, they rarely set out to
intentionally cause injury or death to their patients. However, intent is
immaterial in negligence cases because where negligence exists and is
proven, the same automatically gives the injured a right to reparation for the
damage caused. Established medical procedures and practices, though in
constant flux are devised for the purpose of preventing complications. A
physician's experience with his patients would sometimes tempt him to
deviate from established community practices, and he may end a
distinguished career using unorthodox methods without incident. However,
when failure to follow established procedure results in the evil precisely
sought to be averted by observance of the procedure and a nexus is made
between the deviation and the injury or damage, the physician would
necessarily be called to account for it. In the case at bar, the failure to
observe pre-operative assessment protocol which would have influenced
the intubation in a salutary way was fatal to private respondents'
case. TCacIA
DECISION
KAPUNAN, J p:
The Hippocratic Oath mandates physicians to give primordial consideration
to the health and welfare of their patients. If a doctor fails to live up to this
precept, he is made accountable for his acts. A mistake, through gross
negligence or incompetence or plain human error, may spell the difference
between life and death. In this sense, the doctor plays God on his patient's
fate. 1
In the case at bar, the Court is called upon to rule whether a surgeon, an
anesthesiologist and a hospital should be made liable for the unfortunate
comatose condition of a patient scheduled for cholecystectomy. 2
Petitioners seek the reversal of the decision 3 of the Court of Appeals, dated
29 May 1995, which overturned the decision 4 of the Regional Trial Court,
dated 30 January 1992, finding private respondents liable for damages
arising from negligence in the performance of their professional duties
towards petitioner Erlinda Ramos resulting in her comatose condition. cdrep
The antecedent facts as summarized by the trial court are reproduced
hereunder:
Plaintiff Erlinda Ramos was, until the afternoon of June 17,
1985, a 47-year old (Exh. "A") robust woman (TSN,
October 19, 1989, p. 10). Except for occasional
complaints of discomfort due to pains allegedly caused by
the presence of a stone in her gall bladder (TSN, January
13, 1988, pp. 4-5), she was as normal as any other
woman. Married to Rogelio E. Ramos, an executive of
Philippine Long Distance Telephone Company, she has
three children whose names are Rommel Ramos, Roy
Roderick Ramos and Ron Raymond Ramos (TSN,
October 19, 1989, pp. 5-6).
Because the discomforts somehow interfered with her
normal ways, she sought professional advice. She was
advised to undergo an operation for the removal of a
stone in her gall bladder (TSN, January 13, 1988, p. 5).
She underwent a series of examinations which included
blood and urine tests (Exhs. "A" and "C") which indicated
she was fit for surgery.
Through the intercession of a mutual friend, Dr. Buenviaje
(TSN, January 13, 1988, p. 7), she and her husband
Rogelio met for the first time Dr. Orlino Hozaka (should be
Hosaka; see TSN, February 20, 1990, p. 3), one of the
defendants in this case, on June 10, 1985. They agreed
that their date at the operating table at the DLSMC
(another defendant), would be on June 17, 1985 at 9:00
A.M.. Dr. Hosaka decided that she should undergo a
"cholecystectomy" operation after examining the
documents (findings from the Capitol Medical Center, FEU
Hospital and DLSMC) presented to him. Rogelio E.
Ramos, however, asked Dr. Hosaka to look for a good
anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that
he will get a good anesthesiologist. Dr. Hosaka charged a
fee of P16,000.00, which was to include the
anesthesiologist's fee and which was to be paid after the
operation (TSN, October 19, 1989, pp. 14-15, 22-23, 31-
33; TSN, February 27, 1990, p. 13; and TSN, November 9,
1989, pp. 3-4, 10, 17).
A day before the scheduled date of operation, she was
admitted at one of the rooms of the DLSMC, located
along E. Rodriguez Avenue, Quezon City (TSN, October
19, 1989, p. 11).
At around 7:30 A.M. of June 17, 1985 and while still in her
room, she was prepared for the operation by the hospital
staff. Her sister-in-law, Herminda Cruz, who was the Dean
of the College of Nursing at the Capitol Medical Center,
was also there for moral support. She reiterated her
previous request for Herminda to be with her even during
the operation. After praying, she was given injections. Her
hands were held by Herminda as they went down from her
room to the operating room (TSN, January 13, 1988, pp.
9-11). Her husband, Rogelio, was also with her (TSN,
October 19, 1989, p. 18). At the operating room,
Herminda saw about two or three nurses and Dr. Perfecta
Gutierrez, the other defendant, who was to administer
anesthesia. Although not a member of the hospital staff,
Herminda introduced herself as Dean of the College of
Nursing at the Capitol Medical Center who was to provide
moral support to the patient, to them. Herminda was
allowed to stay inside the operating room.
At around 9:30 A.M., Dr. Gutierrez reached a nearby
phone to look for Dr. Hosaka who was not yet in (TSN,
January 13, 1988, pp. 11-12). Dr. Gutierrez thereafter
informed Herminda Cruz about the prospect of a delay in
the arrival of Dr. Hosaka. Herminda then went back to the
patient who asked, "Mindy, wala pa ba ang Doctor"? The
former replied, "Huwag kang mag-alaala, darating na iyon"
(ibid.).
Thereafter, Herminda went out of the operating room and
informed the patient's husband, Rogelio, that the doctor
was not yet around (id., p. 13). When she returned to the
operating room, the patient told her, "Mindy, inip na inip
na ako, ikuha mo ako ng ibang Doctor." So, she went out
again and told Rogelio about what the patient said (id., p.
15). Thereafter, she returned to the operating room.
At around 10:00 A.M., Rogelio E. Ramos was "already
dying [and] waiting for the arrival of the doctor" even as he
did his best to find somebody who will allow him to pull
out his wife from the operating room (TSN, October 19,
1989, pp. 19-20). He also thought of the feeling of his
wife, who was inside the operating room waiting for the
doctor to arrive (ibid.). At almost 12:00 noon, he met Dr.
Garcia who remarked that he (Dr. Garcia) was also tired of
waiting for Dr. Hosaka to arrive (id., p. 21). While talking to
Dr. Garcia at around 12:10 P.M., he came to know that Dr.
Hosaka arrived as a nurse remarked, "Nandiyan na si Dr.
Hosaka, dumating na raw." Upon hearing those words, he
went down to the lobby and waited for the operation to be
completed (id., pp. 16, 29-30).
At about 12:15 P.M., Herminda Cruz, who was inside the
operating room with the patient, heard somebody say that
"Dr. Hosaka is already here." She then saw people inside
the operating room "moving, doing this and that, [and]
preparing the patient for the operation" (TSN, January 13,
1988, p. 16). As she held the hand of Erlinda Ramos, she
then saw Dr. Gutierrez intubating the hapless patient. She
thereafter heard Dr. Gutierrez say, "ang hirap ma-intubate
nito, mali yata ang pagkakapasok. O lumalaki ang tiyan"
(id., p. 17). Because of the remarks of Dra. Gutierrez, she
focused her attention on what Dr. Gutierrez was doing.
She thereafter noticed bluish discoloration of the nailbeds
of the left hand of the hapless Erlinda even as Dr. Hosaka
approached her. She then heard Dr. Hosaka issue an
order for someone to call Dr. Calderon, another
anesthesiologist (id., p. 19). After Dr. Calderon arrived at
the operating room, she saw this anesthesiologist trying to
intubate the patient. The patient's nailbed became bluish
and the patient was placed in a trendelenburg position —
a position where the head of the patient is placed in a
position lower than her feet which is an indication that
there is a decrease of blood supply to the patient's brain
(Id., pp. 19-20). Immediately thereafter, she went out of
the operating room, and she told Rogelio E. Ramos "that
something wrong was . . . happening" (Ibid.). Dr. Calderon
was then able to intubate the patient (TSN, July 25, 1991,
p. 9). prLL
Meanwhile, Rogelio, who was outside the operating room,
saw a respiratory machine being rushed towards the door
of the operating room. He also saw several doctors
rushing towards the operating room. When informed by
Herminda Cruz that something wrong was happening, he
told her (Herminda) to be back with the patient inside the
operating room (TSN, October 19, 1989, pp. 25-28).
Herminda Cruz immediately rushed back, and saw that
the patient was still in trendelenburg position (TSN,
January 13, 1988, p. 20). At almost 3:00 P.M. of that
fateful day, she saw the patient taken to the Intensive
Care Unit (ICU).
About two days thereafter, Rogelio E. Ramos was able to
talk to Dr. Hosaka. The latter informed the former that
something went wrong during the intubation. Reacting to
what was told to him, Rogelio reminded the doctor that
the condition of his wife would not have happened, had
he (Dr. Hosaka) looked for a good anesthesiologist (TSN,
October 19, 1989, p. 31).
Doctors Gutierrez and Hosaka were also asked by the
hospital to explain what happened to the patient. The
doctors explained that the patient had bronchospasm
(TSN, November 15, 1990, pp. 26-27).
Erlinda Ramos stayed at the ICU for a month. About four
months thereafter or on November 15, 1985, the patient
was released from the hospital.
During the whole period of her confinement, she incurred
hospital bills amounting to P93,542.25 which is the
subject of a promissory note and affidavit of undertaking
executed by Rogelio E. Ramos in favor of DLSMC. Since
that fateful afternoon of June 17, 1985, she has been in a
comatose condition. She cannot do anything. She cannot
move any part of her body. She cannot see or hear. She is
living on mechanical means. She suffered brain damage
as a result of the absence of oxygen in her brain for four
to five minutes (TSN, November 9, 1989, pp. 21-22). After
being discharged from the hospital, she has been staying
in their residence, still needing constant medical attention,
with her husband Rogelio incurring a monthly expense
ranging from P8,000.00 to P10,000.00 (TSN, October 19,
1989, pp. 32-34). She was also diagnosed to be suffering
 from "diffuse cerebral parenchymal damage" (Exh. "G";
see also TSN, December 21, 1989, p. 6). 5
Thus, on 8 January 1986, petitioners filed a civil case 6 for damages with the
Regional Trial Court of Quezon City against herein private respondents
alleging negligence in the management and care of Erlinda Ramos.
During the trial, both parties presented evidence as to the possible cause of
Erlinda's injury. Plaintiff presented the testimonies of Dean Herminda Cruz
and Dr. Mariano Gavino to prove that the damage sustained by Erlinda was
due to lack of oxygen in her brain caused by the faulty management of her
airway by private respondents during the anesthesia phase. On the other
hand, private respondents primarily relied on the expert testimony of Dr.
Eduardo Jamora, a pulmonologist, to the effect that the cause of brain
damage was Erlinda's allergic reaction to the anesthetic agent, Thiopental
Sodium (Pentothal).
After considering the evidence from both sides, the Regional Trial Court
rendered judgment in favor of petitioners, to wit:
After evaluating the evidence as shown in the finding of
facts set forth earlier, and applying the aforecited
provisions of law and jurisprudence to the case at bar, this
Court finds and so holds that defendants are liable to
plaintiffs for damages. The defendants were guilty of, at
the very least, negligence in the performance of their duty
to plaintiff-patient Erlinda Ramos.
On the part of Dr. Perfecta Gutierrez, this Court finds that
she omitted to exercise reasonable care in not only
intubating the patient, but also in not repeating the
administration of atropine (TSN, August 20, 1991, pp. 5-
10), without due regard to the fact that the patient was
inside the operating room for almost three (3) hours. For
after she committed a mistake in intubating [the] patient,
the patient's nailbed became bluish and the patient,
thereafter, was placed in trendelenburg position, because
of the decrease of blood supply to the patient's brain. The
evidence further shows that the hapless patient suffered
brain damage because of the absence of oxygen in her
(patient's) brain for approximately four to five minutes
which, in turn, caused the patient to become comatose.
On the part of Dr. Orlino Hosaka, this Court finds that he
is liable for the acts of Dr. Perfecta Gutierrez whom he had
chosen to administer anesthesia on the patient as part of
his obligation to provide the patient a 'good
anesthesiologist', and for arriving for the scheduled
operation almost three (3) hours late. cdphil
On the part of DLSMC (the hospital), this Court finds that
it is liable for the acts of negligence of the doctors in their
'practice of medicine' in the operating room. Moreover,
the hospital is liable for failing through its responsible
officials, to cancel the scheduled operation after Dr.
Hosaka inexcusably failed to arrive on time.
In having held thus, this Court rejects the defense raised
by defendants that they have acted with due care and
prudence in rendering medical services to plaintiff-patient.
For if the patient was properly intubated as claimed by
them, the patient would not have become comatose. And,
the fact that another anesthesiologist was called to try to
intubate the patient after her (the patient's) nailbed turned
bluish, belie their claim. Furthermore, the defendants
should have rescheduled the operation to a later date.
This, they should have done, if defendants acted with due
care and prudence as the patient's case was an elective,
not an emergency case.
xxx xxx xxx
WHEREFORE, and in view of the foregoing, judgment is
rendered in favor of the plaintiffs and against the
defendants. Accordingly, the latter are ordered to pay,
jointly and severally, the former the following sums of
money, to wit:
1) the sum of P8,000.00 as actual monthly
expenses for the plaintiff Erlinda Ramos
reckoned from November 15, 1985 or in
the total sum of P632,000.00 as of April
15, 1992, subject to its being updated;
2) the sum of P100,000.00 as reasonable
attorney's fees;
3) the sum of P800,000.00 by way of moral
damages and the further sum of
P200,000.00 by way of exemplary
damages; and,
4) the costs of the suit.
SO ORDERED. 7
Private respondents seasonably interposed an appeal to the Court of
Appeals. The appellate court rendered a Decision, dated 29 May 1995,
reversing the findings of the trial court. The decretal portion of the decision
of the appellate court reads:
WHEREFORE, for the foregoing premises the appealed
decision is hereby REVERSED, and the complaint below
against the appellants is hereby ordered DISMISSED. The
counterclaim of appellant De Los Santos Medical Center
is GRANTED but only insofar as appellees are hereby
ordered to pay the unpaid hospital bills amounting to
P93,542.25, plus legal interest for justice must be
tempered with mercy.
SO ORDERED. 8
The decision of the Court of Appeals was received on 9 June 1995 by
petitioner Rogelio Ramos who was mistakenly addressed as "Atty. Rogelio
Ramos." No copy of the decision, however, was sent nor received by the
Coronel Law Office, then counsel on record of petitioners. Rogelio referred
the decision of the appellate court to a new lawyer, Atty. Ligsay, only on 20
June 1995, or four (4) days before the expiration of the reglementary period
for filing a motion for reconsideration. On the same day, Atty. Ligsay, filed
with the appellate court a motion for extension of time to file a motion for
reconsideration. The motion for reconsideration was submitted on 4 July
1995. However, the appellate court denied the motion for extension of time
in its Resolution dated 25 July 1995. 9 Meanwhile, petitioners engaged the
services of another counsel, Atty. Sillano, to replace Atty. Ligsay. Atty.
Sillano filed on 7 August 1995 a motion to admit the motion for
reconsideration contending that the period to file the appropriate pleading
on the assailed decision had not yet commenced to run as the Division Clerk
of Court of the Court of Appeals had not yet served a copy thereof to the
counsel on record. Despite this explanation, the appellate court still denied
the motion to admit the motion for reconsideration of petitioners in its
Resolution, dated 29 March 1996, primarily on the ground that the fifteen-
day (15) period for filing a motion for reconsideration had already expired, to
wit:
We said in our Resolution on July 25, 1995, that the filing
of a Motion for Reconsideration cannot be extended;
precisely, the Motion for Extension (Rollo, p. 12) was
denied. It is, on the other hand, admitted in the latter
Motion that plaintiffs/appellees received a copy of the
decision as early as June 9, 1995. Computation wise, the
period to file a Motion for Reconsideration expired on
June 24. The Motion for Reconsideration, in turn, was
received by the Court of Appeals already on July 4,
necessarily, the 15-day period already passed. For that
alone, the latter should be denied.
Even assuming admissibility of the Motion for
Reconsideration, but after considering the
Comment/Opposition, the former, for lack of merit, is
hereby DENIED.
SO ORDERED. 10
A copy of the above resolution was received by Atty. Sillano on 11 April
1996. The next day, or on 12 April 1996, Atty. Sillano filed before this Court
a motion for extension of time to file the present petition for certiorari under
Rule 45. The Court granted the motion for extension of time and gave
petitioners additional thirty (30) days after the expiration of the fifteen-day
(15) period counted from the receipt of the resolution of the Court of
Appeals within which to submit the petition. The due date fell on 27 May
1996. The petition was filed on 9 May 1996, well within the extended period
given by the Court.
Petitioners assail the decision of the Court of Appeals on the following
grounds:
I
IN PUTTING MUCH RELIANCE ON THE TESTIMONIES
OF RESPONDENTS DRA. GUTIERREZ, DRA. CALDERON
AND DR. JAMORA;
II
IN FINDING THAT THE NEGLIGENCE OF THE
RESPONDENTS DID NOT CAUSE THE UNFORTUNATE
COMATOSE CONDITION OF PETITIONER ERLINDA
RAMOS;
III
IN NOT APPLYING THE DOCTRINE OF RES IPSA
LOQUITUR. 11
Before we discuss the merits of the case, we shall first dispose of the
procedural issue on the timeliness of the petition in relation to the motion for
reconsideration filed by petitioners with the Court of Appeals. In their
Comment, 12 private respondents contend that the petition should not be
given due course since the motion for reconsideration of the petitioners on
the decision of the Court of Appeals was validly dismissed by the appellate
court for having been filed beyond the reglementary period. We do not
agree. cdphil
A careful review of the records reveals that the reason behind the delay in
filing the motion for reconsideration is attributable to the fact that the
decision of the Court of Appeals was not sent to then counsel on record of
petitioners, the Coronel Law Office. In fact, a copy of the decision of the
appellate court was instead sent to and received by petitioner Rogelio
Ramos on 9 June 1995 wherein he was mistakenly addressed as Atty.
Rogelio Ramos. Based on the other communications received by petitioner
Rogelio Ramos, the appellate court apparently mistook him for the counsel
on record. Thus, no copy of the decision of the appellate court was
furnished to the counsel on record. Petitioner, not being a lawyer and
unaware of the prescriptive period for filing a motion for reconsideration,
referred the same to a legal counsel only on 20 June 1995.
It is elementary that when a party is represented by counsel, all notices
should be sent to the party's lawyer at his given address. With a few
exceptions, notice to a litigant without notice to his counsel on record is no
notice at all. In the present case, since a copy of the decision of the
appellate court was not sent to the counsel on record of petitioner, there
can be no sufficient notice to speak of. Hence, the delay in the filing of the
motion for reconsideration cannot be taken against petitioner. Moreover,
since the Court of Appeals already issued a second Resolution, dated 29
March 1996, which superseded the earlier resolution issued on 25 July
1995, and denied the motion for reconsideration of petitioner, we believe
that the receipt of the former should be considered in determining the
timeliness of the filing of the present petition. Based on this, the petition
before us was submitted on time.
After resolving the foregoing procedural issue, we shall now look into the
merits of the case. For a more logical presentation of the discussion we shall
first consider the issue on the applicability of the doctrine of res ipsa
loquitur to the instant case. Thereafter, the first two assigned errors shall be
tackled in relation to the res ipsa loquitur doctrine.
Res ipsa loquitur is a Latin phrase which literally means "the thing or the
transaction speaks for itself." The phrase "res ipsa loquitur" is a maxim for
the rule that the fact of the occurrence of an injury, taken with the
surrounding circumstances, may permit an inference or raise a presumption
of negligence, or make out a plaintiff's prima facie case, and present a
question of fact for defendant to meet with an explanation. 13 Where the
thing which caused the injury complained of is shown to be under the
management of the defendant or his servants and the accident is such as in
ordinary course of things does not happen if those who have its
management or control use proper care, it affords reasonable evidence, in
the absence of explanation by the defendant, that the accident arose from
or was caused by the defendant's want of care. 14
The doctrine of res ipsa loquitur is simply a recognition of the postulate that,
as a matter of common knowledge and experience, the very nature of
certain types of occurrences may justify an inference of negligence on the
part of the person who controls the instrumentality causing the injury in the
absence of some explanation by the defendant who is charged with
negligence. 15 It is grounded in the superior logic of ordinary human
experience and on the basis of such experience or common knowledge,
negligence may be deduced from the mere occurrence of the accident
itself. 16 Hence, res ipsa loquitur is applied in conjunction with the doctrine
of common knowledge.
However, much has been said the res ipsa loquitur is not a ruled of
substantive law and, as such, does not create or constitute an independent
or separate ground of liability. 17 Instead, it is considered as merely
evidentiary or in the nature of a procedural rule. 18 It is regarded as a mode
of proof, of a mere procedural convenience since it furnishes a substitute
for, and relieves a plaintiff of, the burden of producing specific proof of
negligence. 19 In other words, mere invocation and application of the
doctrine does not dispense with the requirement of proof of negligence. It is
simply a step in the process of such proof, permitting the plaintiff to present
along with the proof of the accident, enough of the attending circumstances
to invoke the doctrine, creating an inference or presumption of negligence,
and to thereby place on the defendant the burden of going forward with the
proof. 20 Still, before resort to the doctrine may be allowed, the following
requisites must be satisfactorily shown:
1. The accident is of a kind which ordinarily does not
occur in the absence of someone's negligence;
2. It is caused by an instrumentality within the exclusive
control of the defendant or defendants; and
3. The possibility of contributing conduct which would
make the plaintiff responsible is eliminated. 21
In the above requisites, the fundamental element is the "control of the
instrumentality" which caused the damage. 22 Such element of control must
be shown to be within the dominion of the defendant. In order to have the
benefit of the rule, a plaintiff, in addition to proving injury or damage, must
show a situation where it is applicable, and must establish that the essential
elements of the doctrine were present in a particular incident. 23
Medical malpractice 24 cases do not escape the application of this doctrine.
Thus, res ipsa loquitur has been applied when the circumstances attendant
upon the harm are themselves of such a character as to justify an inference
of negligence as the cause of that harm. 25 The application of res ipsa
loquitur in medical negligence cases presents a question of law since it is a
judicial function to determine whether a certain set of circumstances does,
as a matter of law, permit a given inference. 26
Although generally, expert medical testimony is relied upon in malpractice
suits to prove that a physician has done a negligent act or that he has
deviated from the standard medical procedure, when the doctrine of res ipsa
loquitur is availed by the plaintiff, the need for expert medical testimony is
dispensed with because the injury itself provides the proof of
negligence. 27 The reason is that the general rule on the necessity of expert
testimony applies only to such matters clearly within the domain of medical
science, and not to matters that are within the common knowledge of
mankind which may be testified to by anyone familiar with the
facts. 28 Ordinarily, only physicians and surgeons of skill and experience are
competent to testify as to whether a patient has been treated or operated
upon with a reasonable degree of skill and care. However, testimony as to
the statements and acts of physicians and surgeons, external appearances,
and manifest conditions which are observable by any one may be given by
non-expert witnesses. 29 Hence, in cases where the res ipsa loquitur is
applicable, the court is permitted to find a physician negligent upon proper
proof of injury to the patient, without the aid of expert testimony, where the
court from its fund of common knowledge can determine the proper
standard of care. 30 Where common knowledge and experience teach that
a resulting injury would not have occurred to the patient if due care had
been exercised, an inference of negligence may be drawn giving rise to an
application of the doctrine of res ipsa loquitur without medical evidence,
which is ordinarily required to show not only what occurred but how and
why it occurred. 31 When the doctrine is appropriate, all that the patient
must do is prove a nexus between the particular act or omission complained
of and the injury sustained while under the custody and management of the
defendant without need to produce expert medical testimony to establish
the standard of care. Resort to res ipsa loquitur is allowed because there is
no other way, under usual and ordinary conditions, by which the patient can
obtain redress for injury suffered by him.
Thus, courts of other jurisdictions have applied the doctrine in the following
situations: leaving of a foreign object in the body of the patient after an
operation, 32 injuries sustained on a healthy part of the body which was not
under, or in the area, of treatment, 33 removal of the wrong part of the body
when another part was intended, 34 knocking out a tooth while a patient's
jaw was under anesthetic for the removal of his tonsils, 35 and loss of an
eye while the patient plaintiff was under the influence of anesthetic, during
or following an operation for appendicitis, 36 among others.
Nevertheless, despite the fact that the scope of res ipsa loquitur has been
measurably enlarged, it does not automatically apply to all cases of medical
negligence as to mechanically shift the burden of proof to the defendant to
show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not
a rigid or ordinary doctrine to be perfunctorily used but a rule to be
cautiously applied, depending upon the circumstances of each case. It is
generally restricted to situations in malpractice cases where a layman is able
to say, as a matter of common knowledge and observation, that the
consequences of professional care were not as such as would ordinarily
have followed if due care had been exercised. 37 A distinction must be
made between the failure to secure results, and the occurrence of
something more unusual and not ordinarily found if the service or treatment
rendered followed the usual procedure of those skilled in that particular
practice. It must be conceded that the doctrine of res ipsa loquitur can have
no application in a suit against a physician or surgeon which involves the
merits of a diagnosis or of a scientific treatment. 38 The physician or
surgeon is not required at his peril to explain why any particular diagnosis
was not correct, or why any particular scientific treatment did not produce
the desired result. 39 Thus, res ipsa loquitur is not available in a malpractice
suit if the only showing is that the desired result of an operation or treatment
was not accomplished. 40 The real question, therefore, is whether or not in
the process of the operation any extraordinary incident or unusual event
outside of the routine performance occurred which is beyond the regular
scope of customary professional activity in such operations, which, if
unexplained would themselves reasonably speak to the average man as the
negligent cause or causes of the untoward consequence. 41 If there was
such extraneous interventions, the doctrine or res ipsa loquitur may be
utilized and the defendant is called upon to explain the matter, by evidence
of exculpation, if he could. 42
We find the doctrine of res ipsa loquitur appropriate in the case bar. As will
hereinafter be explained, the damage sustained by Erlinda in her brain prior
to a scheduled gall bladder operation presents a case for the application
of res ipsa loquitur. LLjur
A case strikingly similar to the one before us is Voss vs. Bridwell, 43 where
the Kansas Supreme Court in applying the res ipsa loquitur stated:
The plaintiff herein submitted himself for a mastoid
operation and delivered his person over to the care,
custody and control of his physician who had complete
 and exclusive control over him, but the operation was
never performed. At the time of submission he was
neurologically sound and physically fit in mind and body,
but he suffered irreparable damage and injury rendering
him decerebrate and totally incapacitated. The injury was
one which does not ordinarily occur in the process of a
mastoid operation or in the absence of negligence in the
administration of an anesthetic, and in the use and
employment of an endoctracheal tube. Ordinarily a person
being put under anesthesia is not rendered decerebrate
as a consequence of administering such anesthesia in the
absence of negligence. Upon these facts and under these
circumstances a layman would be able to say, as a matter
of common knowledge and observation, that the
consequences of professional treatment were not as such
as would ordinarily have followed if due care had been
exercised.
Here the plaintiff could not have been guilty of
contributory negligence because he was under the
influence of anesthetics and unconscious, and the
circumstances are such that the true explanation of event
is more accessible to the defendants than to the plaintiff
for they had the exclusive control of the instrumentalities
of anesthesia.
Upon all the facts, conditions and circumstances alleged
in Count II it is held that a cause of action is stated under
the doctrine of res ipsa loquitur. 44
Indeed, the principles enunciated in the aforequoted case apply with equal
force here. In the present case, Erlinda submitted herself
for cholecystectomy and expected a routine general surgery to be
performed on her gall bladder. On that fateful day she delivered her person
over to the care, custody and control of private respondents who exercised
complete and exclusive control over her. At the time of submission, Erlinda
was neurologically sound and, except for a few minor discomforts, was
likewise physically fit in mind and body. However, during the administration
of anesthesia and prior to the performance of cholecystectomy she suffered
irreparable damage to her brain. Thus, without undergoing surgery, she went
out of the operating room already decerebrate and totally incapacitated.
Obviously, brain damage, which Erlinda sustained, is an injury which does
not normally occur in the process of a gall bladder operation. In fact, this
kind of situation does not happen in the absence of negligence of someone
in the administration of anesthesia and in the use of endotracheal tube.
Normally, a person being put under anesthesia is not rendered decerebrate
as a consequence of administering such anesthesia if the proper procedure
was followed. Furthermore, the instruments used in the administration of
anesthesia, including the endotracheal tube, were all under the exclusive
control of private respondents, who are the physicians-in-charge. Likewise,
petitioner Erlinda could not have been guilty of contributory negligence
because she was under the influence of anesthetics which rendered her
unconscious.
Considering that a sound and unaffected member of the body (the brain) is
injured or destroyed while the patient is unconscious and under the
immediate and exclusive control of the physicians, we hold that a practical
administration of justice dictates the application of res ipsa loquitur. Upon
these facts and under these circumstances the Court would be able to say,
as a matter of common knowledge and observation, if negligence attended
the management and care of the patient. Moreover, the liability of the
physicians and the hospital in this case is not predicated upon an alleged
failure to secure the desired results of an operation nor on an alleged lack of
skill in the diagnosis or treatment as in fact no operation or treatment was
ever performed on Erlinda. Thus, upon all these initial determination a case
is made out for the application of the doctrine of res ipsa loquitur.
Nonetheless, in holding that res ipsa loquitur is available to the present case
we are not saying that the doctrine is applicable in any and all cases where
injury occurs to a patient while under anesthesia, or to any and all
anesthesia cases. Each case must be viewed in its own light and scrutinized
in order to be within the res ipsa loquitur coverage.
Having in mind the applicability of the res ipsa loquitur doctrine and the
presumption of negligence allowed therein, the Court now comes to the
issue of whether the Court of Appeals erred in finding that private
respondents were not negligent in the care of Erlinda during the anesthesia
phase of the operation and, if in the affirmative, whether the alleged
negligence was the proximate cause of Erlinda's comatose condition.
Corollary thereto, we shall also determine if the Court of Appeals erred in
relying on the testimonies of the witnesses for the private respondents.
In sustaining the position of private respondents, the Court of Appeals relied
on the testimonies of Dra. Gutierrez, Dra. Calderon and Dr. Jamora. In giving
weight to the testimony of Dra. Gutierrez, the Court of Appeals rationalized
that she was candid enough to admit that she experienced some difficulty in
the endotracheal intubation 45 of the patient and thus, cannot be said to be
covering her negligence with falsehood. The appellate court likewise opined
that private respondents were able to show that the brain damage sustained
by Erlinda was not caused by the alleged faulty intubation but was due to
the allergic reaction of the patient to the drug Thiopental Sodium (Pentothal),
a short-acting barbiturate, as testified on by their expert witness, Dr.
Jamora. On the other hand, the appellate court rejected the testimony of all of a sudden I heard some remarks coming from
Dean Herminda Cruz offered in favor of petitioners that the cause of the Dra. Perfecta Gutierrez herself. She was saying
brain injury was traceable to the wrongful insertion of the tube since the "Ang hirap ma-intubate nito, mali yata ang
latter, being a nurse, was allegedly not knowledgeable in the process of pagkakapasok. O lumalaki ang tiyan."
intubation. In so holding, the appellate court returned a verdict in favor of
respondents physicians and hospital and absolved them of any liability xxx xxx xxx
towards Erlinda and her family. ATTY. PAJARES:
We disagree with the findings of the Court of Appeals. We hold that private Q: From whom did you hear those words "lumalaki ang
respondents were unable to disprove the presumption of negligence on their tiyan"?
part in the care of Erlinda and their negligence was the proximate cause of
her piteous condition. A: From Dra. Perfecta Gutierrez.

In the instant case, the records are helpful in furnishing not only the logical xxx xxx xxx
scientific evidence of the pathogenesis of the injury but also in providing the
Q. After hearing the phrase "lumalaki ang tiyan," what did
Court the legal nexus upon which liability is based. As will be shown
you notice on the person of the patient?
hereinafter, private respondents' own testimonies which are reflected in the
transcript of stenographic notes are replete of signposts indicative of their A: I notice (sic) some bluish discoloration on the nailbeds
negligence in the care and management of Erlinda. of the left hand where I was at.
With regard to Dra. Gutierrez, we find her negligent in the care of Erlinda Q: Where was Dr. Orlino Ho[s]aka then at that particular
during the anesthesia phase. As borne by the records, respondent Dra. time?
Gutierrez failed to properly intubate the patient. This fact was attested to by
Prof. Herminda Cruz, Dean of the Capitol Medical Center School of Nursing A: I saw him approaching the patient during that time.
and petitioner's sister-in-law, who was in the operating room right beside
Q: When he approached the patient, what did he do, if
the patient when the tragic event occurred. Witness Cruz testified to this
any?
effect:
A: He made an order to call on the anesthesiologist in the
ATTY. PAJARES: cdasia
person of Dr. Calderon.
Q: In particular, what did Dra. Perfecta Gutierrez do, if any
Q: Did Dr. Calderon, upon being called, arrive inside the
on the patient?
operating room?
A: In particular, I could see that she was intubating the
A: Yes sir.
patient.
Q: What did [s]he do, if any?
Q: Do you know what happened to that intubation
process administered by Dra. Gutierrez? A: [S]he tried to intubate the patient.
ATTY. ALCERA: Q: What happened to the patient?
She will be incompetent Your Honor. A: When Dr. Calderon try (sic) to intubate the patient, after
a while the patient's nailbed became bluish and I
COURT:
saw the patient was placed in trendelenburg
Witness may answer if she knows. position.

A: As I have said, I was with the patient, I was beside the xxx xxx xxx
stretcher holding the left hand of the patient and
 Q: Do you know the reason why the patient was placed in
that trendelenburg position?
A: As far as I know, when a patient is in that position,
there is a decrease of blood supply to the
brain. 46
xxx xxx xxx
The appellate court, however, disbelieved Dean Cruz's testimony in the trial
court by declaring that:
A perusal of the standard nursing curriculum in our
country will show that intubation is not taught as part of
nursing procedures and techniques. Indeed, we take
judicial notice of the fact that nurses do not, and cannot,
intubate. Even on the assumption that she is fully capable
of determining whether or not a patient is properly
intubated, witness Herminda Cruz, admittedly, did not
peep into the throat of the patient. (TSN, July 25, 1991, p.
13). More importantly, there is no evidence that she ever
auscultated the patient or that she conducted any type of
examination to check if the endotracheal tube was in its
proper place, and to determine the condition of the heart,
lungs, and other organs. Thus, witness Cruz's categorical
statements that appellant Dra. Gutierrez failed to intubate
the appellee Erlinda Ramos and that it was Dra. Calderon
who succeeded in doing so clearly suffer from lack of
sufficient factual bases. 47
In other words, what the Court of Appeals is trying to impress is that being a
nurse, and considered a layman in the process of intubation, witness Cruz is
not competent to testify on whether or not the intubation as a success.
We do not agree with the above reasoning of the appellate court. Although
witness Cruz is not an anesthesiologist, she can very well testify upon
matters on which she is capable of observing such as, the statements and
acts of the physician and surgeon, external appearances, and manifest
conditions which are observable by any one. 48 This is precisely allowed
under the doctrine of res ipsa loquitur where the testimony of expert
witnesses is not required. It is the accepted rule that expert testimony is not
necessary for the proof of negligence in non-technical matters or those of
which an ordinary person may be expected to have knowledge, or where the
lack of skill or want of care is so obvious as to render expert testimony
unnecessary. 49 We take judicial notice of the fact that anesthesia
procedures have become so common, that even an ordinary person can tell
if it was administered properly. As such, it would not be too difficult to tell if
the tube was properly inserted. This kind of observation, we believe, does
not require a medical degree to be acceptable.
At any rate, without doubt, petitioner's witness, an experienced clinical
nurse whose long experience and scholarship led to her appointment as
Dean of the Capitol Medical Center School of Nursing, was fully capable of
determining whether or not the intubation was a success. She had extensive
clinical experience starting as a staff nurse in Chicago, Illinois; staff nurse
and clinical instructor in a teaching hospital, the FEU-NRMF; Dean of the
Laguna College of Nursing in San Pablo City; and then Dean of the Capitol
Medical Center School of Nursing. 50 Reviewing witness Cruz' statements,
we find that the same were delivered in a straightforward manner, with the
kind of detail, clarity, consistency and spontaneity which would have been
difficult to fabricate. With her clinical background as a nurse, the Court is
satisfied that she was able to demonstrate through her testimony what truly
transpired on that fateful day.
Most of all, her testimony was affirmed by no less than respondent Dra.
Gutierrez who admitted that she experienced difficulty in inserting the tube
into Erlinda's trachea, to wit:
ATTY. LIGSAY:
Q: In this particular case, Doctora, while you were
intubating at your first attempt (sic), you did not
immediately see the trachea?
DRA. GUTIERREZ:
A: Yes sir.
Q: Did you pull away the tube immediately?
A: You do not pull the . . .
Q: Did you or did you not?
A: I did not pull the tube.
Q: When you said "mahirap yata ito," what were you
referring to?
A: "Mahirap yata itong i-intubate," that was the patient.
Q: So, you found some difficulty in inserting the tube?
A: Yes, because of (sic) my first attempt, I did not see right
away. 51
Curiously in the case at bar, respondent Dra. Gutierrez made the haphazard
defense that she encountered hardship in the insertion of the tube in the
trachea of Erlinda because it was positioned more anteriorly (slightly
deviated from the normal anatomy of a person) 52 making it harder to locate
and, since Erlinda is obese and has a short neck and protruding teeth, it
made intubation even more difficult. cdphil
The argument does not convince us. If this was indeed observed, private
respondents adduced no evidence demonstrating that they proceeded to
make a thorough assessment of Erlinda's airway, prior to the induction of
anesthesia, even if this would mean postponing the procedure. From their
testimonies, it appears that the observation was made only as an
afterthought, as a means of defense.
The pre-operative evaluation of a patient prior to the administration of
anesthesia is universally observed to lessen the possibility of anesthetic
accidents. Pre-operative evaluation and preparation for anesthesia begins
when the anesthesiologist reviews the patient's medical records and visits
with the patient, traditionally, the day before elective surgery. 53 It includes
taking the patient's medical history, review of current drug therapy, physical
examination and interpretation of laboratory data. 54 The physical
examination performed by the anesthesiologist is directed primarily toward
the central nervous system, cardiovascular system, lungs and upper
airway. 55 A thorough analysis of the patient's airway normally involves
investigating the following: cervical spine mobility, temporomandibular
mobility, prominent central incisors, diseased or artificial teeth, ability to
visualize uvula and the thyromental distance. 56Thus, physical
characteristics of the patient's upper airway that could make tracheal
intubation difficult should be studied. 57 Where the need arises, as when
initial assessment indicates possible problems (such as the alleged short
neck and protruding teeth of Erlinda) a thorough examination of the patient's
airway would go a long way towards decreasing patient morbidity and
mortality.
In the case at bar, respondent Dra. Gutierrez admitted that she saw Erlinda
for the first time on the day of the operation itself, on 17 June 1985. Before
this date, no prior consultations with, or pre-operative evaluation of Erlinda
was done by her. Until the day of the operation, respondent Dra. Gutierrez
was unaware of the physiological make-up and needs of Erlinda. She was
likewise not properly informed of the possible difficulties she would face
during the administration of anesthesia to Erlinda. Respondent Dra.
Gutierrez' act of seeing her patient for the first time only an hour before the
scheduled operative procedure was therefore, an act of exceptional
negligence and professional irresponsibility. The measures cautioning
prudence and vigilance in dealing with human lives lie at the core of the
physician's centuries-old Hippocratic Oath. Her failure to follow this medical
procedure is, therefore, a clear indicia of her negligence.
Respondent Dra. Gutierrez, however, attempts to gloss over this omission
by playing around with the trial court's ignorance of clinical procedure,
hoping that she could get away with it. Respondent Dra. Gutierrez tried to
muddle the difference between an elective surgery and an emergency
surgery just so her failure to perform the required pre-operative evaluation
would escape unnoticed. In her testimony she asserted:
ATTY. LIGSAY:
Q: Would you agree, Doctor, that it is good medical
practice to see the patient a day before so you
can introduce yourself to establish good doctor-
patient relationship and gain the trust and
confidence of the patient?
DRA. GUTIERREZ:
A: As I said in my previous statement, it depends on the
operative procedure of the anesthesiologist and in
my case, with elective cases and normal cardio-
pulmonary clearance like that, I usually don't do it
except on emergency and on cases that have an
abnormalities (sic). 58
However, the exact opposite is true. In an emergency procedure, there is
hardly enough time available for the fastidious demands of pre-operative
procedure so that an anesthesiologist is able to see the patient only a few
minutes before surgery, if at all. Elective procedures, on the other hand, are
operative procedures that can wait for days, weeks or even months. Hence,
in these cases, the anesthesiologist possesses the luxury of time to make a
proper assessment, including the time to be at the patient's bedside to do a
proper interview and clinical evaluation. There is ample time to explain the
method of anesthesia, the drugs to be used, and their possible hazards for
purposes of informed consent. Usually, the pre-operative assessment is
conducted at least one day before the intended surgery, when the patient is
relaxed and cooperative.
Erlinda's case was elective and this was known to respondent Dra.
Gutierrez. Thus, she had all the time to make a thorough evaluation of
Erlinda's case prior to the operation and prepare her for anesthesia.
However, she never saw the patient at the bedside. She herself admitted
that she had seen petitioner only in the operating room, and only on the
actual date of the cholecystectomy. She negligently failed to take advantage
of this important opportunity. As such, her attempt to exculpate herself must
fail.
Having established that respondent Dra. Gutierrez failed to perform pre-
operative evaluation of the patient which, in turn, resulted to a wrongful
intubation, we now determine if the faulty intubation is truly the proximate
cause of Erlinda's comatose condition.
Private respondents repeatedly hammered the view that the cerebral anoxia
which led to Erlinda's coma was due to bronchospasm 59 mediated by her
allergic response to the drug, Thiopental Sodium, introduced into her
system. Towards this end, they presented Dr. Jamora, a Fellow of the
Philippine College of Physicians and Diplomate of the Philippine Specialty
Board of Internal Medicine, who advanced private respondents' theory that
the oxygen deprivation which led to anoxic encephalopathy, 60 was due to
an unpredictable drug reaction to the short-acting barbiturate. We find the
theory of private respondents unacceptable.
First of all, Dr. Jamora cannot be considered an authority in the field of
anesthesiology simply because he is not an anesthesiologist. Since Dr.
Jamora is a pulmonologist, he could not have been capable of properly
enlightening the court about anesthesia practice and procedure and their
complications. Dr. Jamora is likewise not an allergologist and could not
therefore properly advance expert opinion on allergic-mediated processes.
Moreover, he is not a pharmacologist and, as such, could not have been
capable, as an expert would, of explaining to the court the pharmacologic
and toxic effects of the supposed culprit, Thiopental Sodium (Pentothal).
The inappropriateness and absurdity of accepting Dr. Jamora's testimony as
an expert witness in the anesthetic practice of Pentothal administration is
further supported by his own admission that he formulated his opinions on
the drug not from the practical experience gained by a specialist or expert in
the administration and use of Sodium Pentothal on patients, but only from
reading certain references, to wit: dctai
ATTY. LIGSAY:
Q: In your line of expertise on pulmonology, did you have
any occasion to use pentothal as a method of
management?
DR. JAMORA:
A: We do it in conjunction with the anesthesiologist when
they have to intubate our patient.
Q: But not in particular when you practice pulmonology?
A: No.
Q: In other words, your knowledge about pentothal is
based only on what you have read from books
and not by your own personal application of the
medicine pentothal?
A: Based on my personal experience also on pentothal.
Q: How many times have you used pentothal?
A: They used it on me. I went into bronchospasm during
my appendectomy.
Q: And because they have used it on you and on account
of your own personal experience you feel that you
can testify on pentothal here with medical
authority?
A: No. That is why I used references to support my
claims. 61
An anesthetic accident caused by a rare drug-induced bronchospasm
properly falls within the fields of anesthesia, internal medicine-allergy, and
clinical pharmacology. The resulting anoxic encephalopathy belongs to the
field of neurology. While admittedly, many bronchospastic-mediated
pulmonary diseases are within the expertise of pulmonary medicine, Dr.
Jamora's field, the anesthetic drug-induced, allergic mediated
bronchospasm alleged in this case is within the disciplines of
anesthesiology, allergology and pharmacology. On the basis of the
foregoing transcript, in which the pulmonologist himself admitted that he
could not testify about the drug with medical authority, it is clear that the
appellate court erred in giving weight to Dr. Jamora's testimony as an expert
in the administration of Thiopental Sodium.
The provision in the rules of evidence 62 regarding expert witnesses states:
SECTION 49. Opinion of expert witness. — The opinion of
a witness on a matter requiring special knowledge, skill,
experience or training which he is shown to possess, may
be received in evidence.
Generally, to qualify as an expert witness, one must have acquired special
knowledge of the subject matter about which he or she is to testify, either by
the study of recognized authorities on the subject or by practical
experience. 63 Clearly, Dr. Jamora does not qualify as an expert witness
based on the above standard since he lacks the necessary knowledge, skill,
and training in the field of anesthesiology. Oddly, apart from submitting
testimony from a specialist in the wrong field, private respondents'
intentionally avoided providing testimony by competent and independent
experts in the proper areas.
Moreover, private respondents' theory, that Thiopental Sodium may have
produced Erlinda's coma by triggering an allergic mediated response, has
no support in evidence. No evidence of stridor, skin reactions, or wheezing
— some of the more common accompanying signs of an allergic reaction —
appears on record. No laboratory data were ever presented to the court.
In any case, private respondents themselves admit that Thiopental induced,
allergic-mediated bronchospasm happens only very rarely. If courts were to
accept private respondents' hypothesis without supporting medical proof,
and against the weight of available evidence, then every anesthetic accident
would be an act of God. Evidently, the Thiopental-allergy theory vigorously
asserted by private respondents was a mere afterthought. Such an
explanation was advanced in order to absolve them of any and all
responsibility for the patient's condition.
In view of the evidence at hand, we are inclined to believe petitioners' stand
that it was the faulty intubation which was the proximate cause of Erlinda's
comatose condition.
Proximate cause has been defined as that which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces injury, and
without which the result would not have occurred. 64 An injury or damage is
proximately caused by an act or a failure to act, whenever it appears from
the evidence in the case, that the act or omission played a substantial part
in bringing about or actually causing the injury or damage; and that the
injury or damage was either a direct result or a reasonably probable
consequence of the act or omission. 65 It is the dominant, moving or
producing cause.
Applying the above definition in relation to the evidence at hand, faulty
intubation is undeniably the proximate cause which triggered the chain of
events leading to Erlinda's brain damage and, ultimately, her comatosed
condition.
Private respondents themselves admitted in their testimony that the first
intubation was a failure. This fact was likewise observed by witness Cruz
when she heard respondent Dra. Gutierrez remarked, "Ang hirap ma-
intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan." Thereafter,
witness Cruz noticed abdominal distention on the body of Erlinda. The
development of abdominal distention, together with respiratory
embarrassment indicates that the endotracheal tube entered the esophagus
instead of the respiratory tree. In other words, instead of the intended
endotracheal intubation what actually took place was an esophageal
intubation. During intubation, such distention indicates that air has entered
the gastrointestinal tract through the esophagus instead of the lungs
through the trachea. Entry into the esophagus would certainly cause some
delay in oxygen delivery into the lungs as the tube which carries oxygen is in
the wrong place. That abdominal distention had been observed during the
first intubation suggests that the length of time utilized in inserting the
endotracheal tube (up to the time the tube was withdrawn for the second
attempt) was fairly significant. Due to the delay in the delivery of oxygen in
her lungs Erlinda showed signs of cyanosis. 66 As stated in the testimony of
Dr. Hosaka, the lack of oxygen became apparent only after he noticed that
the nailbeds of Erlinda were already blue. 67 However, private respondents
contend that a second intubation was executed on Erlinda and this one was
successfully done. We do not think so. No evidence exists on record,
beyond private respondents' bare claims, which supports the contention
that the second intubation was successful. Assuming that the endotracheal
tube finally found its way into the proper orifice of the trachea, the same
gave no guarantee of oxygen delivery, the hallmark of a successful
intubation. In fact, cyanosis was again observed immediately after the
second intubation. Proceeding from this event (cyanosis), it could not be
claimed, as private respondents insist, that the second intubation was
accomplished. Even granting that the tube was successfully inserted during
the second attempt, it, was obviously too late. As aptly explained by the trial
court, Erlinda already suffered brain damage as a result of the inadequate
oxygenation of her brain for about four to five minutes. 68
The above conclusion is not without basis. Scientific studies point out that
intubation problems are responsible for one-third (1/3) of deaths and serious
injuries associated with anesthesia. 69 Nevertheless, ninety-eight percent
(98%) or the vast majority of difficult intubations may be anticipated by
performing a thorough evaluation of the patient's airway prior to the
operation. 70 As stated beforehand, respondent Dra. Gutierrez failed to
observe the proper pre-operative protocol which could have prevented this
unfortunate incident. Had appropriate diligence and reasonable care been
used in the pre-operative evaluation, respondent physician could have been
much more prepared to meet the contingency brought about by the
perceived anatomic variations in the patient's neck and oral area, defects
which would have been easily overcome by a prior knowledge of those
variations together with a change in technique. 71 In other words, an
experienced anesthesiologist, adequately alerted by a thorough pre-
operative evaluation, would have had little difficulty going around the short
neck and protruding teeth. 72 Having failed to observe common medical
standards in pre-operative management and intubation, respondent Dra.
Gutierrez' negligence resulted in cerebral anoxia and eventual coma of
Erlinda. cda
We now determine the responsibility of respondent Dr. Orlino Hosaka as the
head of the surgical team. As the so-called "captain of the ship," 73 it is the
surgeon's responsibility to see to it that those under him perform their task
in the proper manner. Respondent Dr. Hosaka's negligence can be found in
his failure to exercise the proper authority (as the "captain" of the operative
team) in not determining if his anesthesiologist observed proper anesthesia
protocols. In fact, no evidence on record exists to show that respondent Dr.
Hosaka verified if respondent Dra. Gutierrez properly intubated the patient.
Furthermore, it does not escape us that respondent Dr. Hosaka had
scheduled another procedure in a different hospital at the same time as
Erlinda's cholecystectomy, and was in fact over three hours late for the
latter's operation. Because of this, he had little or no time to confer with his
anesthesiologist regarding the anesthesia delivery. This indicates that he
was remiss in his professional duties towards his patient. Thus, he shares
equal responsibility for the events which resulted in Erlinda's condition.
We now discuss the responsibility of the hospital in this particular incident.
The unique practice (among private hospitals) of filling up specialist staff
with attending and visiting "consultants," 74 who are allegedly not hospital
employees, presents problems in apportioning responsibility for negligence
in medical malpractice cases. However, the difficulty is only more apparent
than real.
In the first place, hospitals exercise significant control in the hiring and firing
of consultants and in the conduct of their work within the hospital premises.
Doctors who apply for "consultant" slots, visiting or attending, are required
to submit proof of completion of residency, their educational qualifications;
generally, evidence of accreditation by the appropriate board (diplomate),
evidence of fellowship in most cases, and references. These requirements
are carefully scrutinized by members of the hospital administration or by a
review committee set up by the hospital who either accept or reject the
application. 75 This is particularly true with respondent hospital.
After a physician is accepted, either as a visiting or attending consultant, he
is normally required to attend clinico-pathological conferences, conduct
bedside rounds for clerks, interns and residents, moderate grand rounds
and patient audits and perform other tasks and responsibilities, for the
privilege of being able to maintain a clinic in the hospital, and/or for the
privilege of admitting patients into the hospital. In addition to these, the
physician's performance as a specialist is generally evaluated by a peer
review committee on the basis of mortality and morbidity statistics, and
feedback from patients, nurses, interns and residents. A consultant remiss in
his duties, or a consultant who regularly falls short of the minimum
standards acceptable to the hospital or its peer review committee, is
normally politely terminated.
In other words, private hospitals, hire, fire and exercise real control over their
attending and visiting "consultant" staff. While "consultants" are not,
technically employees, a point which respondent hospital asserts in denying
all responsibility for the patient's condition, the control exercised, the hiring,
and the right to terminate consultants all fulfill the important hallmarks of an
employer-employee relationship, with the exception of the payment of
wages. In assessing whether such a relationship in fact exists, the control
test is determining. Accordingly, on the basis of the foregoing, we rule that
for the purpose of allocating responsibility in medical negligence cases, an
employer-employee relationship in effect exists between hospitals and their
attending and visiting physicians. This being the case, the question now
arises as to whether or not respondent hospital is solidarily liable with
respondent doctors for petitioner's condition. 76
The basis for holding an employer solidarily responsible for the negligence
of its employee is found in Article 2180 of the Civil Code which considers a
person accountable not only for his own acts but also for those of others
based on the former's responsibility under a relationship of patria
potestas. 77Such responsibility ceases when the persons or entity
concerned prove that they have observed the diligence of a good father of
the family to prevent damage. 78 In other words, while the burden of proving
negligence rests on the plaintiffs, once negligence is shown, the burden
shifts to the respondents (parent, guardian, teacher or employer) who should
prove that they observed the diligence of a good father of a family to prevent
damage.
In the instant case, respondent hospital, apart from a general denial of its
responsibility over respondent physicians, failed to adduce evidence
showing that it exercised the diligence of a good father of a family in the
hiring and supervision of the latter. It failed to adduce evidence with regard
to the degree of supervision which it exercised over its physicians. In
neglecting to offer such proof, or proof of a similar nature, respondent
hospital thereby failed to discharge its burden under the last paragraph
of Article 2180. Having failed to do this, respondent hospital is consequently
solidarily responsible with its physicians for Erlinda's condition.
Based on the foregoing, we hold that the Court of Appeals erred in
accepting and relying on the testimonies of the witnesses for the private
respondents. Indeed, as shown by the above discussions, private
respondents were unable to rebut the presumption of negligence. Upon
these disquisitions we hold that private respondents are solidarily liable for
damages under Article 2176 79 of the Civil Code.
We now come to the amount of damages due petitioners. The trial court
awarded a total of P632,000.00 pesos (should be P616,000.00) in
compensatory damages to the plaintiff, "subject to its being updated"
covering the period from 15 November 1985 up to 15 April 1992, based on
monthly expenses for the care of the patient estimated at P8,000.00.
At current levels, the P8000/monthly amount established by the trial court at
the time of its decision would be grossly inadequate to cover the actual
costs of home-based care for a comatose individual. The calculated amount
was not even arrived at by looking at the actual cost of proper hospice care
for the patient. What it reflected were the actual expenses incurred and
proved by the petitioners after they were forced to bring home the patient to
avoid mounting hospital bills.
And yet ideally, a comatose patient should remain in a hospital or be
transferred to a hospice specializing in the care of the chronically ill for the
purpose of providing a proper milieu adequate to meet minimum standards
of care. In the instant case for instance, Erlinda has to be constantly turned
from side to side to prevent bedsores and hypostatic pneumonia. Feeding is
done by nasogastric tube. Food preparation should be normally made by a
dietitian to provide her with the correct daily caloric requirements and
vitamin supplements. Furthermore, she has to be seen on a regular basis by
a physical therapist to avoid muscle atrophy, and by a pulmonary therapist
to prevent the accumulation of secretions which can lead to respiratory
complications.
Given these considerations, the amount of actual damages recoverable in
suits arising from negligence should at least reflect the correct minimum
cost of proper care, not the cost of the care the family is usually compelled
to undertake at home to avoid bankruptcy. However, the provisions of the
Civil Code on actual or compensatory damages present us with some
difficulties.
Well-settled is the rule that actual damages which may be claimed by the
plaintiff are those suffered by him as he has duly proved. The Civil Code
provides:
ARTICLE 2199. Except as provided by law or by
stipulation, one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has
duly proved. Such compensation is referred to as actual
or compensatory damages.
Our rules on actual or compensatory damages generally assume that at the
time of litigation, the injury suffered as a consequence of an act of
negligence has been completed and that the cost can be liquidated.
However, these provisions neglect to take into account those situations, as
in this case, where the resulting injury might be continuing and possible
future complications directly arising from the injury, while certain to occur,
are difficult to predict. LexLib
In these cases, the amount of damages which should be awarded, if they
are to adequately and correctly respond to the injury caused, should be one
which compensates for pecuniary loss incurred and proved, up to the time
of trial; and one which would meet pecuniary loss certain to be suffered but
which could not, from the nature of the case, be made with certainty. 80 In
other words, temperate damages can and should be awarded on top of
actual or compensatory damages in instances where the injury is chronic
and continuing. And because of the unique nature of such cases, no
incompatibility arises when both actual and temperate damages are
provided for. The reason is that these damages cover two distinct phases.
As it would not be equitable — and certainly not in the best interests of the
administration of justice — for the victim in such cases to constantly come
before the courts and invoke their aid in seeking adjustments to the
compensatory damages previously awarded — temperate damages are
appropriate. The amount given as temperate damages, though to a certain
extent speculative, should take into account the cost of proper care.
In the instant case, petitioners were able to provide only home-based
nursing care for a comatose patient who has remained in that condition for
over a decade. Having premised our award for compensatory damages on
the amount provided by petitioners at the onset of litigation, it would be now
much more in step with the interests of justice if the value awarded for
temperate damages would allow petitioners to provide optimal care for their
loved one in a facility which generally specializes in such care. They should
not be compelled by dire circumstances to provide substandard care at
home without the aid of professionals, for anything less would be grossly
inadequate. Under the circumstances, an award of P1,500,000.00 in
temperate damages would therefore be reasonable. 81
In Valenzuela vs. Court of Appeals, 82 this Court was confronted with a
situation where the injury suffered by the plaintiff would have led to
expenses which were difficult to estimate because while they would have
been a direct result of the injury (amputation), and were certain to be
incurred by the plaintiff, they were likely to arise only in the future. We
awarded P1,000,000.00 in moral damages in that case.
Describing the nature of the injury, the Court therein stated:
As a result of the accident, Ma. Lourdes Valenzuela
underwent a traumatic amputation of her left lower
extremity at the distal left thigh just above the knee.
Because of this, Valenzuela will forever be deprived of the
 full ambulatory functions of her left extremity, even with
the use of state of the art prosthetic technology. Well
beyond the period of hospitalization (which was paid for
by Li), she will be required to undergo adjustments in her
prosthetic devise due to the shrinkage of the stump from
the process of healing.
These adjustments entail costs, prosthetic replacements
and months of physical and occupational rehabilitation
and therapy. During her lifetime, the prosthetic devise will
have to be replaced and readjusted to changes in the size
of her lower limb effected by the biological changes of
middle-age, menopause and aging. Assuming she
reaches menopause, for example, the prosthetic will have
to be adjusted to respond to the changes in bone
resulting from a precipitate decrease in calcium levels
observed in the bones of all post-menopausal women. In
other words, the damage done to her would not only be
permanent and lasting, it would also be permanently
changing and adjusting to the physiologic changes which
her body would normally undergo through the years. The
replacements, changes, and adjustments will require
corresponding adjustive physical and occupational
therapy. All of these adjustments, it has been
documented, are painful.
xxx xxx xxx
A prosthetic devise, however technologically advanced,
will only allow a reasonable amount of functional
restoration of the motor functions of the lower limb. The
sensory functions are forever lost. The resultant anxiety,
sleeplessness, psychological injury, mental and physical
pain are inestimable. 83
The injury suffered by Erlinda as a consequence of private respondents'
negligence is certainly much more serious than the amputation in
the Valenzuela case.
Petitioner Erlinda Ramos was in her mid-forties when the incident occurred.
She has been in a comatose state for over fourteen years now. The burden
of care has so far been heroically shouldered by her husband and children,
who, in the intervening years have been deprived of the love of a wife and a
mother. cdrep
Meanwhile, the actual physical, emotional and financial cost of the care of
petitioner would be virtually impossible to quantify. Even the temperate
damages herein awarded would be inadequate if petitioner's condition
remains unchanged for the next ten years.
We recognized, in Valenzuela that a discussion of the victim's actual injury
would not even scratch the surface of the resulting moral damage because it
would be highly speculative to estimate the amount of emotional and moral
pain, psychological damage and injury suffered by the victim or those
actually affected by the victim's condition. 84 The husband and the children,
all petitioners in this case, will have to live with the day to day uncertainty of
the patient's illness, knowing any hope of recovery is close to nil. They have
fashioned their daily lives around the nursing care of petitioner, altering their
long term goals to take into account their life with a comatose patient. They,
not the respondents, are charged with the moral responsibility of the care of
the victim. The family's moral injury and suffering in this case is clearly a real
one. For the foregoing reasons, an award of P2,000,000.00 in moral
damages would be appropriate.
Finally, by way of example, exemplary damages in the amount of
P100,000.00 are hereby awarded. Considering the length and nature of the
instant suit we are of the opinion that attorney's fees valued at P100,000.00
are likewise proper.
Our courts face unique difficulty in adjudicating medical negligence cases
because physicians are not insurers of life and, they rarely set out to
intentionally cause injury or death to their patients. However, intent is
immaterial in negligence cases because where negligence exists and is
proven, the same automatically gives the injured a right to reparation for the
damage caused.
Established medical procedures and practices, though in constant flux are
devised for the purpose of preventing complications. A physician's
experience with his patients would sometimes tempt him to deviate from
established community practices, and he may end a distinguished career
using unorthodox methods without incident. However, when failure to follow
established procedure results in the evil precisely sought to be averted by
observance of the procedure and a nexus is made between the deviation
and the injury or damage, the physician would necessarily be called to
account for it. In the case at bar, the failure to observe pre-operative
assessment protocol which would have influenced the intubation in a
salutary way was fatal to private respondents' case.
WHEREFORE, the decision and resolution of the appellate court appealed
from are hereby modified so as to award in favor of petitioners, and
solidarily against private respondents the following: 1) P1,352,000.00 as
actual damages computed as of the date of promulgation of this decision
plus a monthly payment of P8,000.00 up to the time that petitioner Erlinda
Ramos expires or miraculously survives; 2) P2,000,000.00 as moral
damages, 3) P1,500,000.00 as temperate damages; 4) P100,000.00 each as
exemplary damages and attorney's fees; and, 5) the costs of the suit.
SO ORDERED. llcd
Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.
||| (Ramos v. Court of Appeals, G.R. No. 124354, [December 29, 1999], 378
PHIL 1198-1247)
FIRST DIVISION
[G.R. No. 124354. April 11, 2002.]
ROGELIO E. RAMOS and ERLINDA RAMOS, in their
own behalf and as natural guardians of the minors,
ROMMEL RAMOS, ROY RODERICK RAMOS, and RON
RAYMOND RAMOS, petitioners, vs. COURT OF
APPEALS, DE LOS SANTOS MEDICAL CENTER, DR.
ORLINO HOSAKA and DR. PERFECTA
GUTIERREZ, respondents.
Luis C.A. Sillano for petitioners.
Walter Young & Associates for Movant-Intervenors.
Brian Keith F. Hosaka, Miguelito Ocampo, Emmanuel Ypil, & Ret. Justice
Hector Hofilena for respondent Dr. O. Hosaka.
Macarius Gaslutera & Philip De Clara and Tanjuatco Sta. Maria Tanjuatco for
respondent Delos Santos Medical Center.
Antonio H. Abad & Associates for respondents-doctors.
Gana Law Offices collaborating counsel for respondent Dra. Perfecta
Gutierrez.
SYNOPSIS
Petitioners Rogelio Ramos and Erlinda Ramos filed with the
Regional Trial Court of Quezon City a civil case for damages against
private respondents De los Santos Medical Center (DLSMC), Dr. Orlino
Hosaka and Dr. Perfecta Gutierrez. After due trial, the court a
quo rendered judgment in favor of petitioners. Essentially, the trial court
found that private respondents were negligent in the performance of
their duties to petitioner Erlinda Ramos. On appeal by private
respondents, the Court of Appeals reversed the trial court's decision
and directed petitioners to pay their "unpaid medical bills" to private
respondents. Petitioners filed with the Court a petition for review
on certiorari. The Court held private respondents civilly liable for
petitioner Erlinda Ramos' comatose condition after she delivered herself
to them for their professional care and management. Hence, the present
motion for reconsideration. Subsequent to the promulgation of the
Decision, the Court was informed by petitioner Rogelio Ramos that
petitioner Erlinda died on August 3, 1999. aIcSED
The Supreme Court found no sufficient reason to modify its
ruling holding private respondents Dr. Orlino Hosaka and Dr. Perfecta
Reyes civilly liable for the comatose condition of petitioner Erlinda
Ramos. According to the Court, the injury incurred by Erlinda does not
normally happen absent any negligence in the administration of
anesthesia and in the use of an endotracheal tube. The Court ruled that
although there is indeed a trend in American jurisprudence to do away
with the Captain-of-the-Ship doctrine, it does not mean that this Court
will ipso facto follow said trend. Due regard for the peculiar factual
circumstances obtaining in this case justify the application of the
Captain-of-the-Ship doctrine. From the facts on record it can be
logically inferred that Dr. Hosaka exercised a certain degree of, at the
very least, supervision over the procedure then being performed on
Erlinda by Dr. Gutierrez. The Court, however, absolved respondent
Delos Santos Medical Center from liability. According to the Court, there
is no employer-employee relationship between DLSMC and Drs.
Gutierrez and Hosaka which would hold DLSMC solidarily liable for the
injury suffered by petitioner Erlinda under Article 2180 of the Civil Code.
The contract between the consultant in respondent hospital and his
patient is separate and distinct from the contract between respondent
hospital and said patient. The first has for its object the rendition of
medical services by the consultant to the patient, while the second
concerns the provision by the hospital of facilities and services by its
staff such as nurses and laboratory personnel necessary for the proper
treatment of the patient. Further, no evidence was adduced to show that
the injury suffered by petitioner Erlinda was due to a failure on the part
of respondent DLSMC to provide for hospital facilities and staff
necessary for her treatment.
SYLLABUS
1. CIVIL LAW; DAMAGES; MEDICAL NEGLIGENCE; DOCTRINE OF RES
IPSA LOQUITOR; APPLICABLE IN CASE AT BAR; INJURY INCURRED BY
DECEASE PATIENT DOES NOT NORMALLY HAPPEN ABSENT ANY
NEGLIGENCE IN THE ADMINISTRATION OF ANESTHESIA AND IN THE
USE OF AN ENDOTRACHEAL TUBE. — The injury incurred by petitioner
Erlinda does not normally happen absent any negligence in the
administration of anesthesia and in the use of an endotracheal tube. As was
noted in our Decision, the instruments used in the administration of
anesthesia, including the endotracheal tube, were all under the exclusive
control of private respondents Dr. Gutierrez and Dr. Hosaka. In Voss vs.
Bridwell, which involved a patient who suffered brain damage due to the
wrongful administration of anesthesia, and even before the scheduled
mastoid operation could be performed, the Kansas Supreme Court applied
the doctrine of res ipso loquitur, reasoning that the injury to the patient
therein was one which does not ordinarily take place in the absence of
negligence in the administration of an anesthetic, and in the use and
employment of an endotracheal tube. The court went on to say that
"[o]rdinarily a person being put under anesthesia is not rendered
decerebrate as a consequence of administering such anesthesia in the
absence of negligence. Upon these facts and under these circumstances, a
layman would be able to say, as a matter of common knowledge and
observation, that the consequences of professional treatment were not as
such as would ordinarily have followed if due care had been exercised."
Considering the application of the doctrine of res ipsa loquitur, the testimony
of Cruz was properly given credence in the case at bar.
2. ID.; ID.; ID.; DUE REGARD FOR THE PECULIAR FACTUAL
CIRCUMSTANCES OBTAINING IN CASE AT BAR JUSTIFY THE
APPLICATION OF THE "CAPTAIN-OF-THE-SHIP-DOCTRINE"; IT CAN BE
LOGICALLY INFERRED FROM THE FACTS ON RECORD THAT
RESPONDENT SURGEON EXERCISED A CERTAIN DEGREE, AT THE VERY
LEAST, SUPERVISION OVER PROCEDURE THEN BEING PERFORMED ON
THE PATIENT. — That there is a trend in American jurisprudence to do away
with the Captain-of-the-Ship doctrine does not mean that this Court will ipso
facto follow said trend. Due regard for the peculiar factual circumstances
obtaining in this case justify the application of the Captain-of-the-Ship
doctrine. From the facts on record it can be logically inferred that Dr.
Hosaka exercised a certain degree of, at the very least, supervision over the
procedure then being performed on Erlinda. First, it was Dr. Hosaka who
recommended to petitioners the services of Dr. Gutierrez. In effect, he
represented to petitioners that Dr. Gutierrez possessed the necessary
competence and skills. Drs. Hosaka and Gutierrez had worked together
since 1977. Whenever Dr. Hosaka performed a surgery, he would always
engage the services of Dr. Gutierrez to administer the anesthesia on his
patient. Second, Dr. Hosaka himself admitted that he was the attending
physician of Erlinda. Thus, when Erlinda showed signs of cyanosis, it was
Dr. Hosaka who gave instructions to call for another anesthesiologist and
cardiologist to help resuscitate Erlinda. Third, it is conceded that in
performing their responsibilities to the patient, Drs. Hosaka and Gutierrez
worked as a team. Their work cannot be placed in separate watertight
compartments because their duties intersect with each other.
3. ID.; ID.; ID.; WHILE THE SURGEON AND THE ANESTHESIOLOGIST
DOES NOT EXERCISE CONTROL OVER THE OTHER, THEY WERE
CERTAINLY NOT COMPLETELY INDEPENDENT OF EACH OTHER SO AS
TO ABSOLVE ONE FROM THE NEGLIGENT ACTS OF THE OTHER
PHYSICIAN. — While the professional services of Dr. Hosaka and Dr.
Gutierrez were secured primarily for their performance of acts within their
respective fields of expertise for the treatment of petitioner Erlinda, and that
one does not exercise control over the other, they were certainly not
completely independent of each other so as to absolve one from the
negligent acts of the other physician. That they were working as a medical
team is evident from the fact that Dr. Hosaka was keeping an eye on the
intubation of the patient by Dr. Gutierrez, and while doing so, he observed
that the patient's nails had become dusky and had to call Dr. Gutierrez's
attention thereto. The Court also notes that the counsel for Dr. Hosaka
admitted that in practice, the anesthesiologist would also have to observe
the surgeon's acts during the surgical process and call the attention of the
surgeon whenever necessary in the course of the treatment. The duties of
Dr. Hosaka and those of Dr. Gutierrez in the treatment of petitioner Erlinda
are therefore not as clear-cut as respondents claim them to be. On the
contrary, it is quite apparent that they have a common responsibility to treat
the patient, which responsibility necessitates that they call each other's
attention to the condition of the patient while the other physician is
performing the necessary medical procedures. CIAcSa
4. ID.; ID.; ID.; THE SURGEON'S IRRESPONSIBLE CONDUCT OF
ARRIVING VERY LATE FOR THE SCHEDULED OPERATION IS VIOLATIVE
NOT ONLY OF HIS DUTY AS PHYSICIAN BUT ALSO OF ARTICLE 19 OF
THE CIVIL CODE WHICH REQUIRES A PERSON, IN THE PERFORMANCE
OF HIS DUTIES, TO ACT WITH JUSTICE AND GIVE EVERYONE HIS DUE.
— It is equally important to point out that Dr. Hosaka was remiss in his duty
of attending to petitioner Erlinda promptly, for he arrived more than three (3)
hours late for the scheduled operation. The cholecystectomy was set for
June 17, 1985 at 9:00 a.m., but he arrived at DLSMC only at around 12:10
p.m. In reckless disregard for his patient's well being, Dr. Hosaka scheduled
two procedures on the same day, just thirty minutes apart from each other,
at different hospitals. Thus, when the first procedure (protoscopy) at the Sta.
Teresita Hospital did not proceed on time, Erlinda was kept in a state of
uncertainty at the DLSMC. The unreasonable delay in petitioner Erlinda's
scheduled operation subjected her to continued starvation and
consequently, to the risk of acidosis, or the condition of decreased alkalinity
of the blood and tissues, marked by sickly sweet breath, headache, nausea
and vomiting, and visual disturbances. The long period that Dr. Hosaka
made Erlinda wait for him certainly aggravated the anxiety that she must
have been feeling at the time. It could be safely said that her anxiety
adversely affected the administration of anesthesia on her. As explained by
Dr. Camagay, the patient's anxiety usually causes the outpouring of
adrenaline which in turn results in high blood pressure or disturbances in the
heart rhythm. Dr. Hosaka cannot now claim that he was entirely blameless
of what happened to Erlinda. His conduct clearly constituted a breach of his
professional duties to Erlinda: Dr. Hosaka's irresponsible conduct of arriving
very late for the scheduled operation of petitioner Erlinda is violative, not
only of his duty as a physician "to serve the interest of his patients with the
greatest solicitude, giving them always his best talent and skill," but also of
Article 19 of the Civil Code which requires a person, in the performance of
his duties, to act with justice and give everyone his due.
5. ID.; ID.; ID.; NO EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS
BETWEEN THE HOSPITAL AND THE TWO PHYSICIANS IN CASE AT BAR
WHICH WOULD HOLD THE FORMER SOLIDARILY LIABLE FOR THE
INJURY SUFFERED BY THE PATIENT UNDER ARTICLE 2180 OF THE CIVIL
CODE. — There is no employer-employee relationship between DLSMC and
Drs. Gutierrez and Hosaka which would hold DLSMC solidarily liable for the
injury suffered by petitioner Erlinda under Article 2180 of the Civil Code. As
explained by respondent hospital, that the admission of a physician to
membership in DLSMC's medical staff as active or visiting consultant is first
decided upon by the Credentials Committee thereof, which is composed of
the heads of the various specialty departments such as the Department of
Obstetrics and Gynecology, Pediatrics, Surgery with the department head of
the particular specialty applied for as chairman. The Credentials Committee
then recommends to DLSMC's Medical Director or Hospital Administrator
the acceptance or rejection of the applicant physician, and said director or
administrator validates the committee's recommendation. Similarly, in cases
where a disciplinary action is lodged against a consultant, the same is
initiated by the department to whom the consultant concerned belongs and
filed with the Ethics Committee consisting of the department specialty
heads. The medical director/hospital administrator merely acts as ex-
oficio member of said committee. Neither is there any showing that it is
DLSMC which pays any of its consultants for medical services rendered by
the latter to their respective patients. Moreover, the contract between the
consultant in respondent hospital and his patient is separate and distinct
from the contract between respondent hospital and said patient. The first
has for its object the rendition of medical services by the consultant to the
patient, while the second concerns the provision by the hospital of facilities
and services by its staff such as nurses and laboratory personnel necessary
for the proper treatment of the patient. Further, no evidence was adduced to
show that the injury suffered by petitioner Erlinda was due to a failure on the
part of respondent DLSMC to provide for hospital facilities and staff
necessary for her treatment. For these reasons, we reverse the finding of
liability on the part of DLSMC for the injury suffered by petitioner Erlinda.
RESOLUTION
KAPUNAN, J p:
Private respondents De Los Santos Medical Center, Dr. Orlino Hosaka and
Dr. Perfecta Gutierrez move for a reconsideration of the Decision, dated
December 29, 1999, of this Court holding them civilly liable for petitioner
Erlinda Ramos' comatose condition after she delivered herself to them for
their professional care and management. EICDSA
For better understanding of the issues raised in private respondents'
respective motions, we will briefly restate the facts of the case as follows:
Sometime in 1985, petitioner Erlinda Ramos, after seeking professional
medical help, was advised to undergo an operation for the removal of a
stone in her gall bladder (cholecystectomy). She was referred to Dr. Hosaka,
a surgeon, who agreed to perform the operation on her. The operation was
scheduled for June 17, 1985 at 9:00 in the morning at private respondent De
Los Santos Medical Center (DLSMC). Since neither petitioner Erlinda nor her
husband, petitioner Rogelio, knew of any anesthesiologist, Dr. Hosaka
recommended to them the services of Dr. Gutierrez.
Petitioner Erlinda was admitted to the DLSMC the day before the scheduled
operation. By 7:30 in the morning of the following day, petitioner Erlinda was
already being prepared for operation. Upon the request of petitioner Erlinda,
her sister-in-law, Herminda Cruz, who was then Dean of the College of
Nursing at the Capitol Medical Center, was allowed to accompany her inside
the operating room.
At around 9:30 in the morning, Dr. Hosaka had not yet arrived so Dr.
Gutierrez tried to get in touch with him by phone. Thereafter, Dr. Gutierrez
informed Cruz that the operation might be delayed due to the late arrival of
Dr. Hosaka. In the meantime, the patient, petitioner Erlinda said to Cruz, respondents the following: 1) P1,352,000.00 as actual
"Mindy, inip na inip na ako, ikuha mo ako ng ibang Doctor." damages computed as of the date of promulgation of this
decision plus a monthly payment of P8,000.00 up to the
By 10:00 in the morning, when Dr. Hosaka was still not around, petitioner time that petitioner Erlinda Ramos expires or miraculously
Rogelio already wanted to pull out his wife from the operating room. He met survives; 2) P2,000,000.00 as moral damages, 3)
Dr. Garcia, who remarked that he was also tired of waiting for Dr. Hosaka. P1,500,000.00 as temperate damages; 4) P100,000.00
Dr. Hosaka finally arrived at the hospital at around 12:10 in the afternoon, or each exemplary damages and attorney's fees; and 5) the
more than three (3) hours after the scheduled operation. costs of the suit. 2
Cruz, who was then still inside the operating room, heard about Dr. In his Motion for Reconsideration, private respondent Dr. Hosaka submits
Hosaka's arrival. While she held the hand of Erlinda, Cruz saw Dr. Gutierrez the following as grounds therefor:
trying to intubate the patient. Cruz heard Dr. Gutierrez utter: "ang hirap ma-
intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan." Cruz I
noticed a bluish discoloration of Erlinda's nailbeds on her left hand. She
(Cruz) then heard Dr. Hosaka instruct someone to call Dr. Calderon, another THE HONORABLE SUPREME COURT COMMITTED
anesthesiologist. When he arrived, Dr. Calderon attempted to intubate the REVERSIBLE ERROR WHEN IT HELD RESPONDENT DR.
patient. The nailbeds of the patient remained bluish, thus, she was placed in HOSAKA LIABLE ON THE BASIS OF THE "CAPTAIN-OF-
a trendelenburg position — a position where the head of the patient is THE-SHIP" DOCTRINE.
placed in a position lower than her feet. At this point, Cruz went out of the II
operating room to express her concern to petitioner Rogelio that Erlinda's
operation was not going well. THE HONORABLE SUPREME COURT ERRED IN
HOLDING RESPONDENT DR. HOSAKA LIABLE DESPITE
Cruz quickly rushed back to the operating room and saw that the patient THE FACT THAT NO NEGLIGENCE CAN BE
was still in trendelenburg position. At almost 3:00 in the afternoon, she saw ATTRIBUTABLE TO HIM.
Erlinda being wheeled to the Intensive Care Unit (ICU). The doctors
explained to petitioner Rogelio that his wife had bronchospasm. Erlinda III
stayed in the ICU for a month. She was released from the hospital only four
ASSUMING WITHOUT ADMITTING THAT RESPONDENT
months later or on November 15, 1985. Since the ill-fated operation, Erlinda
DR. HOSAKA IS LIABLE, THE HONORABLE SUPREME
remained in comatose condition until she died on August 3, 1999. 1
COURT ERRED IN AWARDING DAMAGES THAT WERE
Petitioners filed with the Regional Trial Court of Quezon City a civil case for CLEARLY EXCESSIVE AND WITHOUT LEGAL BASIS. 3
damages against private respondents. After due trial, the court a
Private respondent Dr. Gutierrez, for her part, avers that:
quo rendered judgment in favor of petitioners. Essentially, the trial court
found that private respondents were negligent in the performance of their A. THE HONORABLE SUPREME COURT MAY HAVE
duties to Erlinda. On appeal by private respondents, the Court of Appeals INADVERTENTLY OVERLOOKED THE FACT THAT THE
reversed the trial court's decision and directed petitioners to pay their COURT OF APPEAL'S DECISION DATED 29 MAY 1995
"unpaid medical bills" to private respondents. HAD ALREADY BECOME FINAL AND EXECUTORY AS
OF 25 JUNE 1995, THEREBY DEPRIVING THIS
Petitioners filed with this Court a petition for review on certiorari. The private
HONORABLE COURT OF JURISDICTION OVER THE
respondents were then required to submit their respective comments
INSTANT PETITION;
thereon. On December 29, 1999, this Court promulgated the decision which
private respondents now seek to be reconsidered. The dispositive portion of B. THE HONORABLE SUPREME COURT MAY HAVE
said Decision states: INADVERTENTLY OVERLOOKED SEVERAL MATERIAL
FACTUAL CIRCUMSTANCES WHICH, IF PROPERLY
WHEREFORE, the decision and resolution of the appellate
CONSIDERED, WOULD INDUBITABLY LEAD TO NO
court appealed from are hereby modified so as to award
OTHER CONCLUSION BUT THAT PRIVATE
in favor of petitioners, and solidarily against private
 RESPONDENT DOCTORS WERE NOT GUILTY OF ANY THE HONORABLE SUPREME COURT ERRED IN
NEGLIGENCE IN RESPECT OF THE INSTANT CASE; FINDING THAT AN EMPLOYER-EMPLOYEE
[RELATIONSHIP] EXISTS BETWEEN RESPONDENT DE
B.1 RESPONDENT DOCTOR PERFECTA LOS SANTOS MEDICAL CENTER AND DRS. ORLINO
GUTIERREZ HAS SUFFICIENTLY HOSAKA AND PERFECTA GUTIERREZ
DISCHARGED THE BURDEN OF
EVIDENCE BY SUBSTANTIAL PROOF OF III
HER COMPLIANCE WITH THE
STANDARDS OF DUE CARE EXPECTED THE HONORABLE SUPREME COURT ERRED IN
IN HER RESPECTIVE FIELD OF MEDICAL FINDING THAT RESPONDENT DE LOS SANTOS
SPECIALIZATION. MEDICAL CENTER IS SOLIDARILY LIABLE WITH
RESPONDENT DOCTORS
B.2 RESPONDENT DOCTOR PERFECTA
GUTIERREZ HAS SUFFICIENTLY
DISCHARGED THE BURDEN OF IV
EVIDENCE BY SUBSTANTIAL PROOF OF
HER HAVING SUCCESSFULLY THE HONORABLE SUPREME COURT ERRED IN
INTUBATED PATIENT ERLINDA RAMOS. INCREASING THE AWARD OF DAMAGES IN FAVOR OF
PETITIONERS. 5
C. THE SUPREME COURT MAY HAVE INADVERTENTLY
PLACED TOO MUCH RELIANCE ON THE TESTIMONY In the Resolution of February 21, 2000, this Court denied the motions for
OF PETITIONER'S WITNESS HERMINDA CRUZ, DESPITE reconsideration of private respondents Drs. Hosaka and Gutierrez. They
THE EXISTENCE OF SEVERAL FACTUAL then filed their respective second motions for reconsideration. The
CIRCUMSTANCES WHICH RENDERS DOUBT ON HER Philippine College of Surgeons filed its Petition-in-Intervention contending in
CREDIBILITY; the main that this Court erred in holding private respondent Dr. Hosaka
liable under the captain-of-the-ship doctrine. According to the intervenor,
D. THE SUPREME COURT MAY HAVE INADVERTENTLY said doctrine had long been abandoned in the United States in recognition
DISREGARDED THE EXPERT TESTIMONY OF DR. of the developments in modern medical and hospital practice. 6 The Court
JAMORA AND DRA. CALDERON; noted these pleadings in the Resolution of July 17, 2000. 7
E. THE HONORABLE SUPREME COURT MAY HAVE On March 19, 2001, the Court heard the oral arguments of the parties,
INADVERTENTLY AWARDED DAMAGES TO including the intervenor. Also present during the hearing were the amicii
PETITIONERS DESPITE THE FACT THAT THERE WAS curiae: Dr. Felipe A. Estrella, Jr., Consultant of the Philippine Charity
NO NEGLIGENCE ON THE PART OF RESPONDENT Sweepstakes, former Director of the Philippine General Hospital and former
DOCTOR. 4 Secretary of Health; Dr. Iluminada T. Camagay, President of the Philippine
Private respondent De Los Santos Medical Center likewise moves for Society of Anesthesiologists, Inc. and Professor and Vice-Chair for
reconsideration on the following grounds: Research, Department of Anesthesiology, College of Medicine-Philippine
General Hospital, University of the Philippines; and Dr. Lydia M. Egay,
I Professor and Vice-Chair for Academics, Department of Anesthesiology,
College of Medicine-Philippine General Hospital, University of the
THE HONORABLE COURT ERRED IN GIVING DUE
Philippines.
COURSE TO THE INSTANT PETITION AS THE DECISION
OF THE HONORABLE COURT OF APPEALS HAD The Court enumerated the issues to be resolved in this case as follows:
ALREADY BECOME FINAL AND EXECUTORY
1. WHETHER OR NOT DR. ORLINO HOSAKA (SURGEON)
II IS LIABLE FOR NEGLIGENCE;
 2. WHETHER OR NOT DR. PERFECTA GUTIERREZ
(ANESTHESIOLOGIST) IS LIABLE FOR
NEGLIGENCE; AND
3. WHETHER OR NOT THE HOSPITAL (DELOS SANTOS
MEDICAL CENTER) IS LIABLE FOR ANY ACT OF
NEGLIGENCE COMMITTED BY THEIR VISITING
CONSULTANT SURGEON AND
ANESTHESIOLOGIST. 8
We shall first resolve the issue pertaining to private respondent Dr.
Gutierrez. She maintains that the Court erred in finding her negligent and in
holding that it was the faulty intubation which was the proximate cause of
Erlinda's comatose condition. The following objective facts allegedly negate
a finding of negligence on her part: 1) That the outcome of the procedure
was a comatose patient and not a dead one; 2) That the patient had a
cardiac arrest; and 3) That the patient was revived from that cardiac
arrest. 9 In effect, Dr. Gutierrez insists that, contrary to the finding of this
Court, the intubation she performed on Erlinda was successful.
Unfortunately, Dr. Gutierrez' claim of lack of negligence on her part is belied
by the records of the case. It has been sufficiently established that she failed
to exercise the standards of care in the administration of anesthesia on a
patient. Dr. Egay enlightened the Court on what these standards are:
. . . What are the standards of care that an
anesthesiologist should do before we administer
anesthesia? The initial step is the preparation of the
patient for surgery and this is a pre-operative evaluation
because the anesthesiologist is responsible for
determining the medical status of the patient, developing
the anesthesia plan and acquainting the patient or the
responsible adult particularly if we are referring with the
patient or to adult patient who may not have, who may
have some mental handicaps of the proposed plans. We
do pre-operative evaluation because this provides for an
opportunity for us to establish identification and personal
acquaintance with the patient. It also makes us have an
opportunity to alleviate anxiety, explain techniques and
risks to the patient, given the patient the choice and
establishing consent to proceed with the plan. And lastly,
once this has been agreed upon by all parties concerned
the ordering of pre-operative medications. And following
this line at the end of the evaluation we usually come up
on writing, documentation is very important as far as
when we train an anesthesiologist we always emphasize
this because we need records for our protection, well,
records. And it entails having brief summary of patient
history and physical findings pertinent to anesthesia, plan,
organize as a problem list, the plan anesthesia technique,
the plan post operative, pain management if appropriate,
special issues for this particular patient. There are needs
for special care after surgery and if it so it must be written
down there and a request must be made known to proper
authorities that such and such care is necessary. And the
request for medical evaluation if there is an indication.
When we ask for a cardio-pulmonary clearance it is not in
fact to tell them if this patient is going to be fit for
anesthesia, the decision to give anesthesia rests on the
anesthesiologist. What we ask them is actually to give us
the functional capacity of certain systems which may be
affected by the anesthetic agent or the technique that we
are going to use. But the burden of responsibility in terms
of selection of agent and how to administer it rest on the
anesthesiologist. 10
The conduct of a preanesthetic/preoperative evaluation prior to an
operation, whether elective or emergency, cannot be dispensed
with. 11 Such evaluation is necessary for the formulation of a plan of
anesthesia care suited to the needs of the patient concerned.
Pre-evaluation for anesthesia involves taking the patient's medical history,
reviewing his current drug therapy, conducting physical examination,
interpreting laboratory data, and determining the appropriate prescription of
preoperative medications as necessary to the conduct of anesthesia. 12
Physical examination of the patient entails not only evaluating the patient's
central nervous system, cardiovascular system and lungs but also the upper
airway. Examination of the upper airway would in turn include an analysis of
the patient's cervical spine mobility, temporomandibular mobility, prominent
central incisors, deceased or artificial teeth, ability to visualize uvula and the
thyromental distance. 13
Nonetheless, Dr. Gutierrez omitted to perform a thorough preoperative
evaluation on Erlinda. As she herself admitted, she saw Erlinda for the first
time on the day of the operation itself, one hour before the scheduled
operation. She auscultated 14 the patient's heart and lungs and checked the
latter's blood pressure to determine if Erlinda was indeed fit for
operation. 15 However, she did not proceed to examine the patient's airway.
Had she been able to check petitioner Erlinda's airway prior to the
operation, Dr. Gutierrez would most probably not have experienced difficulty
in intubating the former, and thus the resultant injury could have been CHIEF JUSTICE:
avoided. As we have stated in our Decision:
Meaning to say, the patient became comatose
In the case at bar, respondent Dra. Gutierrez admitted after some intervention, professional acts have
that she saw Erlinda for the first time on the day of the been done by Dr. Gutierrez?
operation itself, on 17 June 1985. Before this date, no
prior consultations with, or pre-operative evaluation of ATTY. GANA:
Erlinda was done by her. Until the day of the operation, Yes, Your Honor.
respondent Dra. Gutierrez was unaware of the
physiological make-up and needs of Erlinda. She was CHIEF JUSTICE:
likewise not properly informed of the possible difficulties
In other words, the comatose status was a
she would face during the administration of anesthesia to
consequence of some acts performed by Dr.
Erlinda. Respondent Dra. Gutierrez' act of seeing her
Gutierrez?
patient for the first time only an hour before the scheduled
operative procedure was, therefore, an act of exceptional ATTY. GANA:
negligence and professional irresponsibility. The measures
cautioning prudence and vigilance in dealing with human It was a consequence of the well, (interrupted)
lives lie at the core of the physician's centuries-old CHIEF JUSTICE:
Hippocratic Oath. Her failure to follow this medical
procedure is, therefore, a clear indicia of her An acts performed by her, is that not correct?
negligence. 16
ATTY. GANA:
Further, there is no cogent reason for the Court to reverse its finding that it
was the faulty intubation on Erlinda that caused her comatose condition. Yes, Your Honor.
There is no question that Erlinda became comatose after Dr. Gutierrez CHIEF JUSTICE:
performed a medical procedure on her. Even the counsel of Dr. Gutierrez
admitted to this fact during the oral arguments: Thank you. 17

CHIEF JUSTICE: What is left to be determined therefore is whether Erlinda's hapless

condition was due to any fault or negligence on the part of Dr. Gutierrez
Mr. Counsel, you started your argument saying while she (Erlinda) was under the latter's care. Dr. Gutierrez maintains that
that this involves a comatose patient? the bronchospasm and cardiac arrest resulting in the patient's comatose
ATTY. GANA: condition was brought about by the anaphylactic reaction of the patient to
Thiopental Sodium (pentothal). 18 In the Decision, we explained why we
Yes, Your Honor. found Dr. Gutierrez' theory unacceptable. In the first place, Dr. Eduardo
Jamora, the witness who was presented to support her (Dr. Gutierrez)
CHIEF JUSTICE: theory, was a pulmonologist. Thus, he could not be considered an authority
How do you mean by that, a comatose, a on anesthesia practice and procedure and their complications. 19
comatose after any other acts were done by Dr. Secondly, there was no evidence on record to support the theory that
Gutierrez or comatose before any act was done Erlinda developed an allergic reaction to pentothal. Dr. Camagay
by her? enlightened the Court as to the manifestations of an allergic reaction in this
ATTY. GANA: wise:

No, we meant comatose as a final outcome of the DR. CAMAGAY:

procedure.
 All right, let us qualify an allergic reaction. In
medical terminology an allergic reaction is
something which is not usual response and it is
further qualified by the release of a hormone
called histamine and histamine has an effect on all
the organs of the body generally release because
the substance that entered the body reacts with
the particular cell, the mass cell, and the mass cell
secretes this histamine. In a way it is some form
of response to take away that which is not mine,
which is not part of the body. So, histamine has
multiple effects on the body. So, one of the
effects as you will see you will have redness, if
you have an allergy you will have tearing of the
eyes, you will have swelling, very crucial swelling
sometimes of the larynges which is your voice box
main airway, that swelling may be enough to
obstruct the entry of air to the trachea and you
could also have contraction, constriction of the
smaller airways beyond the trachea, you see you
have the trachea this way, we brought some
visual aids but unfortunately we do not have a
projector. And then you have the smaller airways,
the bronchi and then eventually into the mass of
the lungs you have the bronchus. The difference is
that these tubes have also in their walls muscles
and this particular kind of muscles is smooth
muscle so, when histamine is released they close
up like this and that phenomenon is known as
bronco spasm. However, the effects of histamine
also on blood vessels are different. They dilate
blood vessel open up and the patient or whoever
has this histamine release has hypertension or low
blood pressure to a point that the patient may
have decrease blood supply to the brain and may
collapse so, you may have people who have
this. 20
These symptoms of an allergic reaction were not shown to have been extant
in Erlinda's case. As we held in our Decision, "no evidence of stridor, skin
reactions, or wheezing – some of the more common accompanying signs of
an allergic reaction – appears on record. No laboratory data were ever
presented to the court." 21
Dr. Gutierrez, however, insists that she successfully intubated Erlinda as
evidenced by the fact that she was revived after suffering from cardiac
arrest. Dr. Gutierrez faults the Court for giving credence to the testimony of
Cruz on the matter of the administration of anesthesia when she (Cruz),
being a nurse, was allegedly not qualified to testify thereon. Rather, Dr.
Gutierrez invites the Court's attention to her synopsis on what transpired
during Erlinda's intubation:
12:15 p.m. Patient was inducted with sodium pentothal
2.5% (250 mg) given by slow IV. 02 was
started by mask. After pentothal injection
this was followed by IV injection of
Norcuron 4 mg. After 2 minutes 02 was
given by positive pressure for about one
minute. Intubation with endotracheal tube
7.5 m. in diameter was done with slight
difficulty (short neck & slightly prominent
upper teeth) chest was examined for breath
sounds & checked if equal on both sides.
The tube was then anchored to the mouth
by plaster & cuff inflated. Ethrane 2% with
02 4 liters was given. Blood pressure was
checked 120/80 & heart rate regular and
normal 90/min.
12:25 p.m. After 10 minutes patient was cyanotic. Ethrane
was discontinued & 02 given alone.
Cyanosis disappeared. Blood pressure and
heart beats stable.
12:30 p.m. Cyanosis again reappeared this time with
sibilant and sonorous rales all over the
chest. D_5%_H2O & 1 ampule of
aminophyline by fast drip was started. Still
the cyanosis was persistent. Patient was
connected to a cardiac monitor. Another
ampule of of [sic] aminophyline was given
and solu cortef was given.
12:40 p.m. There was cardiac arrest. Extra cardiac
massage and intercardiac injection of
adrenalin was given & heart beat
reappeared in less than one minute. Sodium
bicarbonate & another dose of solu cortef
was given by IV. Cyanosis slowly
disappeared & 02 continuously given &
 assisted positive pressure. Laboratory
exams done (see results in chart).
Patient was transferred to ICU for further management. 22
From the foregoing, it can be allegedly seen that there was no withdrawal
(extubation) of the tube. And the fact that the cyanosis allegedly
disappeared after pure oxygen was supplied through the tube proved that it
was properly placed.
The Court has reservations on giving evidentiary weight to the entries
purportedly contained in Dr. Gutierrez' synopsis. It is significant to note that
the said record prepared by Dr. Gutierrez was made only after Erlinda was
taken out of the operating room. The standard practice in anesthesia is that
every single act that the anesthesiologist performs must be recorded. In Dr.
Gutierrez' case, she could not account for at least ten (10) minutes of what
happened during the administration of anesthesia on Erlinda. The following
exchange between Dr. Estrella, one of the amicii curiae, and Dr. Gutierrez is
instructive:
DR. ESTRELLA
You mentioned that there were two (2) attempts in the
intubation period?
DR. GUTIERREZ
Yes.
Q There were two attempts. In the first attempt was the
tube inserted or was the laryngoscope only
inserted, which was inserted?
A All the laryngoscope.
Q All the laryngoscope. But if I remember right
somewhere in the re-direct, a certain lawyer, you
were asked that you did a first attempt and the
question was – did you withdraw the tube? And
you said – you never withdrew the tube, is that
right?
A Yes.
Q Yes. And so if you never withdrew the tube then there
was no, there was no insertion of the tube during
that first attempt. Now, the other thing that we
have to settle here is – when cyanosis occurred, is
it recorded in the anesthesia record when the
cyanosis, in your recording when did the cyanosis
occur?
A (sic)
Q Is it a standard practice of anesthesia that whatever you
do during that period or from the time of induction
to the time that you probably get the patient out of
the operating room that every single action that
you do is so recorded in your anesthesia record?
A I was not able to record everything I did not have time
anymore because I did that after the, when the
patient was about to leave the operating room.
When there was second cyanosis already that
was the (interrupted)
Q When was the first cyanosis?
A The first cyanosis when I was (interrupted)
Q What time, more or less?
A I think it was 12:15 or 12:16.
Q Well, if the record will show you started induction at
12:15?
A Yes, Your Honor.
Q And the first medication you gave was what?
A The first medication, no, first the patient was
oxygenated for around one to two minutes.
Q Yes, so, that is about 12:13?
A Yes, and then, I asked the resident physician to start
giving the pentothal very slowly and that was
around one minute.
Q So, that is about 12:13 no, 12:15, 12:17?
A Yes, and then, after one minute another oxygenation
was given and after (interrupted)
Q 12:18?
A Yes, and then after giving the oxygen we start the
menorcure which is a relaxant. After that relaxant
(interrupted)
Q After that relaxant, how long do you wait before you do
any manipulation?
A Usually you wait for two minutes or three minutes.
Q So, if our estimate of the time is accurate we are now
more or less 12:19, is that right?
A May be.
Q 12:19. And at that time, what would have been done to
this patient?
A After that time you examine the, if there is relaxation of
the jaw which you push it downwards and when I
saw that the patient was relax because that
monorcure is a relaxant, you cannot intubate the
patient or insert the laryngoscope if it is not
keeping him relax. So, my first attempt when I put
the laryngoscope on I saw the trachea was deeply
interiorly. So, what I did ask "mahirap ata ito ah."
So, I removed the laryngoscope and oxygenated
again the patient.
Q So, more or less you attempted to do an intubation after
the first attempt as you claimed that it was only
the laryngoscope that was inserted.
A Yes.
Q And in the second attempt you inserted the
laryngoscope and now possible intubation?
A Yes.
Q And at that point, you made a remark, what remark did
you make?
A I said "mahirap ata ito" when the first attempt I did not
see the trachea right away. That was when I
(interrupted)
Q That was the first attempt?
A Yes.
Q What about the second attempt?
A On the second attempt I was able to intubate right away
within two to three seconds.
Q At what point, for purposes of discussion without
accepting it, at what point did you make the
comment "na mahirap ata to intubate, mali ata
ang pinasukan"?
A I did not say "mali ata ang pinasukan" I never said that.
Q Well, just for the information of the group here the
remarks I am making is based on the documents
that were forwarded to me by the Supreme Court.
That is why for purposes of discussion I am trying
to clarify this for the sake of enlightenment. So, at
what point did you ever make that comment?
A Which one, sir?
Q The "mahirap intubate ito" assuming that you
(interrupted)
A Iyon lang, that is what I only said "mahirap intubate
(interrupted)
Q At what point?
A When the first attempt when I inserted the laryngoscope
for the first time.
Q So, when you claim that at the first attempt you inserted
the laryngoscope, right?
A Yes.
Q But in one of the recordings somewhere at the,
somewhere in the transcript of records that when
the lawyer of the other party try to inquire from
you during the first attempt that was the time
when "mayroon ba kayong hinugot sa tube, I do
not remember the page now, but it seems to me it
is there. So, that it was on the second attempt
that (interrupted)
A I was able to intubate.
Q And this is more or less about what time 12:21?
A May be, I cannot remember the time, Sir.
Q Okay, assuming that this was done at 12:21 and looking
at the anesthesia records from 12:20 to 12:30
there was no recording of the vital signs. And can
 we presume that at this stage there was already
some problems in handling the patient?
A Not yet.
Q But why are there no recordings in the anesthesia
record?
A I did not have time.
Q Ah, you did not have time, why did you not have time?
A Because it was so fast, I really (at this juncture the
witness is laughing)
Q No, I am just asking. Remember I am not here not to pin
point on anybody I am here just to more or less
clarify certainty more or less on the record.
A Yes, Sir.
Q And so it seems that there were no recording during
that span of ten (10) minutes. From 12:20 to
12:30, and going over your narration, it seems to
me that the cyanosis appeared ten (10) minutes
after induction, is that right?
A Yes.
Q And that is after induction 12:15 that is 12:25 that was
the first cyanosis?
A Yes.
Q And that the 12:25 is after the 12:20?
A We cannot (interrupted)
Q Huwag ho kayong makuwan, we are just trying to
enlighten, I am just going over the record ano,
kung mali ito kuwan eh di ano. So, ganoon po
ano, that it seems to me that there is no recording
from 12:20 to 12:30, so, I am just wondering why
there were no recordings during the period and
then of course the second cyanosis, after the first
cyanosis. I think that was the time Dr. Hosaka
came in?
A No, the first cyanosis (interrupted). 23
We cannot thus give full credence to Dr. Gutierrez' synopsis in light of her
admission that it does not fully reflect the events that transpired during the
administration of anesthesia on Erlinda. As pointed out by Dr. Estrella, there
was a ten-minute gap in Dr. Gutierrez' synopsis, i.e., the vital signs of
Erlinda were not recorded during that time. The absence of these data is
particularly significant because, as found by the trial court, it was the
absence of oxygen supply for four (4) to five (5) minutes that caused
Erlinda's comatose condition.
On the other hand, the Court has no reason to disbelieve the testimony of
Cruz. As we stated in the Decision, she is competent to testify on matters
which she is capable of observing such as, the statements and acts of the
physician and surgeon, external appearances and manifest conditions which
are observable by any one. 24 Cruz, Erlinda's sister-in-law, was with her
inside the operating room. Moreover, being a nurse and Dean of the Capitol
Medical Center School of Nursing at that, she is not entirely ignorant of
anesthetic procedure. Cruz narrated that she heard Dr. Gutierrez
remark, "Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki
ang tiyan." She observed that the nailbeds of Erlinda became bluish and
thereafter Erlinda was placed in trendelenburg position. 25 Cruz further
averred that she noticed that the abdomen of Erlinda became distended. 26
The cyanosis (bluish discoloration of the skin or mucous membranes caused
by lack of oxygen or abnormal hemoglobin in the blood) and enlargement of
the stomach of Erlinda indicate that the endotracheal tube was improperly
inserted into the esophagus instead of the trachea. Consequently, oxygen
was delivered not to the lungs but to the gastrointestinal tract. This
conclusion is supported by the fact that Erlinda was placed in trendelenburg
position. This indicates that there was a decrease of blood supply to the
patient's brain. The brain was thus temporarily deprived of oxygen supply
causing Erlinda to go into coma.
The injury incurred by petitioner Erlinda does not normally happen absent
any negligence in the administration of anesthesia and in the use of an
endotracheal tube. As was noted in our Decision, the instruments used in
the administration of anesthesia, including the endotracheal tube, were all
under the exclusive control of private respondents Dr. Gutierrez and Dr.
Hosaka. 27 In Voss vs. Bridwell, 28 which involved a patient who suffered
brain damage due to the wrongful administration of anesthesia, and even
before the scheduled mastoid operation could be performed, the Kansas
Supreme Court applied the doctrine of res ipsa loquitur, reasoning that the
injury to the patient therein was one which does not ordinarily take place in
the absence of negligence in the administration of an anesthetic, and in the
use and employment of an endotracheal tube. The court went on to say that
"[o]rdinarily a person being put under anesthesia is not rendered
decerebrate as a consequence of administering such anesthesia in the
absence of negligence. Upon these facts and under these circumstances, a
layman would be able to say, as a matter of common knowledge and
observation, that the consequences of professional treatment were not as
such as would ordinarily have followed if due care had been
exercised. 29 Considering the application of the doctrine of res ipsa loquitur,
the testimony of Cruz was properly given credence in the case at bar.
For his part, Dr. Hosaka mainly contends that the Court erred in finding him
negligent as a surgeon by applying the Captain-of-the-Ship doctrine. 30 Dr.
Hosaka argues that the trend in United States jurisprudence has been to
reject said doctrine in light of the developments in medical practice. He
points out that anesthesiology and surgery are two distinct and specialized
fields in medicine and as a surgeon, he is not deemed to have control over
the acts of Dr. Gutierrez. As anesthesiologist, Dr. Gutierrez is a specialist in
her field and has acquired skills and knowledge in the course of her training
which Dr. Hosaka, as a surgeon, does not possess. 31 He states further that
current American jurisprudence on the matter recognizes that the trend
towards specialization in medicine has created situations where surgeons
do not always have the right to control all personnel within the operating
room, 32especially a fellow specialist. 33
Dr. Hosaka cites the case of Thomas v. Raleigh General Hospital, 34 which
involved a suit filed by a patient who lost his voice due to the wrongful
insertion of the endotracheal tube preparatory to the administration of
anesthesia in connection with the laparotomy to be conducted on him. The
patient sued both the anesthesiologist and the surgeon for the injury
suffered by him. The Supreme Court of Appeals of West Virginia held that
the surgeon could not be held liable for the loss of the patient's voice,
considering that the surgeon did not have a hand in the intubation of the
patient. The court rejected the application of the "Captain-of-the-Ship
Doctrine," citing the fact that the field of medicine has become specialized
such that surgeons can no longer be deemed as having control over the
other personnel in the operating room. It held that "[a]n assignment of
liability based on actual control more realistically reflects the actual
relationship which exists in a modern operating room." 35 Hence, only the
anesthesiologist who inserted the endotracheal tube into the patient's throat
was held liable for the injury suffered by the latter.
This contention fails to persuade.
That there is a trend in American jurisprudence to do away with the Captain-
of-the-Ship doctrine does not mean that this Court will ipso facto follow said
trend. Due regard for the peculiar factual circumstances obtaining in this
case justify the application of the Captain-of-the-Ship doctrine. From the
facts on record it can be logically inferred that Dr. Hosaka exercised a
certain degree of, at the very least, supervision over the procedure then
being performed on Erlinda.
First, it was Dr. Hosaka who recommended to petitioners the services of Dr.
Gutierrez. In effect, he represented to petitioners that Dr. Gutierrez
possessed the necessary competence and skills. Drs. Hosaka and Gutierrez
had worked together since 1977. Whenever Dr. Hosaka performed a
surgery, he would always engage the services of Dr. Gutierrez to administer
the anesthesia on his patient. 36
Second, Dr. Hosaka himself admitted that he was the attending physician of
Erlinda. Thus, when Erlinda showed signs of cyanosis, it was Dr. Hosaka
who gave instructions to call for another anesthesiologist and cardiologist to
help resuscitate Erlinda. 37
Third, it is conceded that in performing their responsibilities to the patient,
Drs. Hosaka and Gutierrez worked as a team. Their work cannot be placed
in separate watertight compartments because their duties intersect with
each other. 38
While the professional services of Dr. Hosaka and Dr. Gutierrez were
secured primarily for their performance of acts within their respective fields
of expertise for the treatment of petitioner Erlinda, and that one does not
exercise control over the other, they were certainly not completely
independent of each other so as to absolve one from the negligent acts of
the other physician.
That they were working as a medical team is evident from the fact that Dr.
Hosaka was keeping an eye on the intubation of the patient by Dr. Gutierrez,
and while doing so, he observed that the patient's nails had become dusky
and had to call Dr. Gutierrez's attention thereto. The Court also notes that
the counsel for Dr. Hosaka admitted that in practice, the anesthesiologist
would also have to observe the surgeon's acts during the surgical process
and calls the attention of the surgeon whenever necessary 39 in the course
of the treatment. The duties of Dr. Hosaka and those of Dr. Gutierrez in the
treatment of petitioner Erlinda are therefore not as clear-cut as respondents
claim them to be. On the contrary, it is quite apparent that they have a
common responsibility to treat the patient, which responsibility necessitates
that they call each other's attention to the condition of the patient while the
other physician is performing the necessary medical procedures.
It is equally important to point out that Dr. Hosaka was remiss in his duty of
attending to petitioner Erlinda promptly, for he arrived more than three (3)
hours late for the scheduled operation. The cholecystectomy was set for
June 17, 1985 at 9:00 a.m., but he arrived at DLSMC only at around 12:10
p.m. In reckless disregard for his patient's well being, Dr. Hosaka scheduled
two procedures on the same day, just thirty minutes apart from each other, CHIEF JUSTICE:
at different hospitals. Thus, when the first procedure (protoscopy) at the Sta.
Teresita Hospital did not proceed on time, Erlinda was kept in a state of In other words, I understand that in this particular
uncertainty at the DLSMC. case that was the case, three hours waiting and the
patient was already on the operating table (interrupted)
The unreasonable delay in petitioner Erlinda's scheduled operation
subjected her to continued starvation and consequently, to the risk of DR. CAMAGAY:
acidosis, 40 or the condition of decreased alkalinity of the blood and tissues, Yes.
marked by sickly sweet breath, headache, nausea and vomiting, and visual
disturbances. 41The long period that Dr. Hosaka made Erlinda wait for him CHIEF JUSTICE:
certainly aggravated the anxiety that she must have been feeling at the time.
Would you therefore conclude that the surgeon
It could be safely said that her anxiety adversely affected the administration
contributed to the aggravation of the anxiety of the
of anesthesia on her. As explained by Dr. Camagay, the patient's anxiety
patient?
usually causes the outpouring of adrenaline which in turn results in high
blood pressure or disturbances in the heart rhythm: DR. CAMAGAY:
DR. CAMAGAY: That this operation did not take place as
scheduled is already a source of anxiety and most
. . . Pre-operative medication has three main functions:
operating tables are very narrow and that patients are
One is to alleviate anxiety. Second is to dry up the
usually at risk of falling on the floor so there are restraints
secretions and Third is to relieve pain. Now, it is very
that are placed on them and they are never, never left
important to alleviate anxiety because anxiety is
alone in the operating room by themselves specially if
associated with the outpouring of certain substances
they are already pre-medicated because they may not be
formed in the body called adrenalin. When a patient is
aware of some of their movement that they make which
anxious there is an outpouring of adrenalin which would
would contribute to their injury.
have adverse effect on the patient. One of it is high blood
pressure, the other is that he opens himself to
disturbances in the heart rhythm, which would have
adverse implications. So, we would like to alleviate CHIEF JUSTICE:
patient's anxiety mainly because he will not be in control In other words due diligence would require a
of his body there could be adverse results to surgery and surgeon to come on time?
he will be opened up; a knife is going to open up his body.
. . . 42 DR. CAMAGAY:
Dr. Hosaka cannot now claim that he was entirely blameless of what I think it is not even due diligence it is courtesy.
happened to Erlinda. His conduct clearly constituted a breach of his
professional duties to Erlinda: CHIEF JUSTICE:

CHIEF JUSTICE: Courtesy.

Two other points. The first, Doctor, you were DR. CAMAGAY:
talking about anxiety, would you consider a patient's stay And care.
on the operating table for three hours sufficient enough to
aggravate or magnify his or her anxiety? CHIEF JUSTICE:

DR. CAMAGAY: Duty as a matter of fact?

Yes. DR. CAMAGAY:

 Yes, Your Honor. 43
Dr. Hosaka's irresponsible conduct of arriving very late for the scheduled
operation of petitioner Erlinda is violative, not only of his duty as a physician
"to serve the interest of his patients with the greatest solicitude, giving them
always his best talent and skill," 44 but also of Article 19 of the Civil Code
which requires a person, in the performance of his duties, to act with justice
and give everyone his due. EaCDAT
Anent private respondent DLSMC's liability for the resulting injury to
petitioner Erlinda, we held that respondent hospital is solidarily liable with
respondent doctors therefor under Article 2180 of the Civil Code 45 since
there exists an employer-employee relationship between private respondent
DLSMC and Drs. Gutierrez and Hosaka:
In other words, private hospitals, hire, fire and exercise
real control over their attending and visiting "consultant"
staff. While "consultants" are not, technically employees, .
. . the control exercised, the hiring and the right to
terminate consultants all fulfill the important hallmarks of
an employer-employee relationship, with the exception of
the payment of wages. In assessing whether such a
relationship in fact exists, the control test is determining . .
. .46
DLSMC however contends that applying the four-fold test in determining
whether such a relationship exists between it and the respondent doctors,
the inescapable conclusion is that DLSMC cannot be considered an
employer of the respondent doctors.
It has been consistently held that in determining whether an employer-
employee relationship exists between the parties, the following elements
must be present: (1) selection and engagement of services; (2) payment of
wages; (3) the power to hire and fire; and (4) the power to control not only
the end to be achieved, but the means to be used in reaching such an
end. 47
DLSMC maintains that first, a hospital does not hire or engage the services
of a consultant, but rather, accredits the latter and grants him or her the
privilege of maintaining a clinic and/or admitting patients in the hospital
upon a showing by the consultant that he or she possesses the necessary
qualifications, such as accreditation by the appropriate board (diplomate),
evidence of fellowship and references. 48 Second, it is not the hospital but
the patient who pays the consultant's fee for services rendered by the
latter. 49 Third, a hospital does not dismiss a consultant; instead, the latter
may lose his or her accreditation or privileges granted by the
hospital. 50 Lastly, DLSMC argues that when a doctor refers a patient for
admission in a hospital, it is the doctor who prescribes the treatment to be
given to said patient. The hospital's obligation is limited to providing the
patient with the preferred room accommodation, the nutritional diet and
medications prescribed by the doctor, the equipment and facilities
necessary for the treatment of the patient, as well as the services of the
hospital staff who perform the ministerial tasks of ensuring that the doctor's
orders are carried out strictly. 51
After a careful consideration of the arguments raised by DLSMC, the Court
finds that respondent hospital's position on this issue is meritorious. There is
no employer-employee relationship between DLSMC and Drs. Gutierrez and
Hosaka which would hold DLSMC solidarily liable for the injury suffered by
petitioner Erlinda under Article 2180 of the Civil Code.
As explained by respondent hospital, that the admission of a physician to
membership in DLSMC's medical staff as active or visiting consultant is first
decided upon by the Credentials Committee thereof, which is composed of
the heads of the various specialty departments such as the Department of
Obstetrics and Gynecology, Pediatrics, Surgery with the department head of
the particular specialty applied for as chairman. The Credentials Committee
then recommends to DLSMC's Medical Director or Hospital Administrator
the acceptance or rejection of the applicant physician, and said director or
administrator validates the committee's recommendation. 52 Similarly, in
cases where a disciplinary action is lodged against a consultant, the same is
initiated by the department to whom the consultant concerned belongs and
filed with the Ethics Committee consisting of the department specialty
heads. The medical director/hospital administrator merely acts as ex-
officio member of said committee. IESTcD
Neither is there any showing that it is DLSMC which pays any of its
consultants for medical services rendered by the latter to their respective
patients. Moreover, the contract between the consultant in respondent
hospital and his patient is separate and distinct from the contract between
respondent hospital and said patient. The first has for its object the rendition
of medical services by the consultant to the patient, while the second
concerns the provision by the hospital of facilities and services by its staff
such as nurses and laboratory personnel necessary for the proper treatment
of the patient.
Further, no evidence was adduced to show that the injury suffered by
petitioner Erlinda was due to a failure on the part of respondent DLSMC to
provide for hospital facilities and staff necessary for her treatment.
For these reasons, we reverse the finding of liability on the part of DLSMC
for the injury suffered by petitioner Erlinda.
Finally, the Court also deems it necessary to modify the award of damages
to petitioners in view of the supervening event of petitioner Erlinda's death.
In the assailed Decision, the Court awarded actual damages of One Million
Three Hundred Fifty-Two Thousand Pesos (P1,352,000.00) to cover the
expenses for petitioner Erlinda's treatment and care from the date of
promulgation of the Decision up to the time the patient expires or
survives. 53 In addition thereto, the Court awarded temperate damages of
One Million Five Hundred Thousand Pesos (P1,500,000.00) in view of the
chronic and continuing nature of petitioner Erlinda's injury and the certainty
of further pecuniary loss by petitioners as a result of said injury, the amount
of which, however, could not be made with certainty at the time of the
promulgation of the decision. The Court justified such award in this
manner: TCcDaE
Our rules on actual or compensatory damages generally
assume that at the time of litigation, the injury suffered as
a consequence of an act of negligence has been
completed and that the cost can be liquidated. However,
these provisions neglect to take into account those
situations, as in this case, where the resulting injury might
be continuing and possible future complications directly
arising from the injury, while certain to occur, are difficult
to predict.
In these cases, the amount of damages which should be
awarded, if they are to adequately and correctly respond
to the injury caused, should be one which compensates
for pecuniary loss incurred and proved, up to the time of
trial; and one which would meet pecuniary loss certain to
be suffered but which could not, from the nature of the
case, be made with certainty. In other words, temperate
damages can and should be awarded on top of actual or
compensatory damages in instances where the injury is
chronic and continuing. And because of the unique nature
of such cases, no incompatibility arises when both actual
and temperate damages are provided for. The reason is
that these damages cover two distinct phases.
As it would not be equitable — and certainly not in the
best interests of the administration of justice — for the
victim in such cases to constantly come before the courts
and invoke their aid in seeking adjustments to the
compensatory damages previously awarded — temperate
damages are appropriate. The amount given as temperate
damages, though to a certain extent speculative, should
take into account the cost of proper care.
In the instant case, petitioners were able to provide only
home-based nursing care for a comatose patient who has
remained in that condition for over a decade. Having
premised our award for compensatory damages on the
amount provided by petitioners at the onset of litigation, it
would be now much more in step with the interests of
justice if the value awarded for temperate damages would
allow petitioners to provide optimal care for their loved
one in a facility which generally specializes in such care.
They should not be compelled by dire circumstances to
provide substandard care at home without the aid of
professionals, for anything less would be grossly
inadequate. Under the circumstances, an award of
P1,500,000.00 in temperate damages would therefore be
reasonable. 54
However, subsequent to the promulgation of the Decision, the Court was
informed by petitioner Rogelio that petitioner Erlinda died on August 3,
1999. 55In view of this supervening event, the award of temperate damages
in addition to the actual or compensatory damages would no longer be
justified since the actual damages awarded in the Decision are sufficient to
cover the medical expenses incurred by petitioners for the patient. Hence,
only the amounts representing actual, moral and exemplary damages,
attorney's fees and costs of suit should be awarded to petitioners. HScCEa
WHEREFORE, the assailed Decision is hereby modified as follows:
(1) Private respondent De Los Santos Medical Center is hereby absolved
from liability arising from the injury suffered by petitioner Erlinda Ramos on
June 17, 1985;
(2) Private respondents Dr. Orlino Hosaka and Dr. Perfecta Gutierrez are
hereby declared to be solidarily liable for the injury suffered by petitioner
Erlinda on June 17, 1985 and are ordered to pay petitioners —
(a) P1,352,000.00 as actual damages;
(b) P2,000,000.00 as moral damages;
(c) P100,000.00 as exemplary damages;
(d) P100,000.00 as attorney's fees; and
(e) the costs of the suit. EcICSA
SO ORDERED.
Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.
||| (Ramos v. Court of Appeals, G.R. No. 124354 (Resolution), [April 11, On August 18, 1993, Angelica was admitted to SLMC. However,
2002], 430 PHIL 275-314) she died on September 1, 1993, just eleven (11) days after the
(intravenous) administration of the first cycle of the chemotherapy
regimen. Because SLMC refused to release a death certificate without
full payment of their hospital bill, respondents brought the cadaver of
EN BANC Angelica to the Philippine National Police (PNP) Crime Laboratory at
Camp Crame for post-mortem examination. The Medico-Legal Report
issued by said institution indicated the cause of death as "Hypovolemic
[G.R. No. 165279. June 7, 2011.]
shock secondary to multiple organ hemorrhages and Disseminated
Intravascular Coagulation." 5
DR. RUBI LI, petitioner, vs. SPOUSES REYNALDO and
LINA SOLIMAN, as parents/heirs of deceased Angelica On the other hand, the Certificate of Death 6 issued by SLMC
Soliman, respondents. stated the cause of death as follows:

Immediate cause : a. Osteosarcoma, Status Post AKA

DECISION Antecedent cause : b. (above knee amputation)
Underlying cause : c. Status Post Chemotherapy

VILLARAMA, JR., J p: On February 21, 1994, respondents filed a damage

suit 7 against petitioner, Dr. Leo Marbella, Mr. Jose Ledesma, a certain
Challenged in this petition for review on certiorari is the Dr. Arriete and SLMC. Respondents charged them with negligence and
Decision 1 dated June 15, 2004 as well as the Resolution 2 dated disregard of Angelica's safety, health and welfare by their careless
September 1, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. administration of the chemotherapy drugs, their failure to observe the
58013 which modified the Decision 3 dated September 5, 1997 of the essential precautions in detecting early the symptoms of fatal blood
Regional Trial Court of Legazpi City, Branch 8 in Civil Case No. 8904. platelet decrease and stopping early on the chemotherapy, which
bleeding led to hypovolemic shock that caused Angelica's untimely
The factual antecedents:
demise. Further, it was specifically averred that petitioner assured the
On July 7, 1993, respondents' 11 year old daughter, Angelica respondents that Angelica would recover in view of 95% chance of
Soliman, underwent a biopsy of the mass located in her lower extremity healing with chemotherapy ("Magiging normal na ang anak nyo basta
at the St. Luke's Medical Center (SLMC). Results showed that Angelica ma-chemo. 95% ang healing")and when asked regarding the side
was suffering from osteosarcoma, osteoblastic type, 4 a high-grade effects, petitioner mentioned only slight vomiting, hair loss and
(highly malignant) cancer of the bone which usually afflicts teenage weakness ("Magsusuka ng kaunti. Malulugas ang buhok. Manghihina").
children. Following this diagnosis and as primary intervention, Angelica's Respondents thus claimed that they would not have given their consent
right leg was amputated by Dr. Jaime Tamayo in order to remove the to chemotherapy had petitioner not falsely assured them of its side
tumor. As adjuvant treatment to eliminate any remaining cancer cells, effects.
and hence minimize the chances of recurrence and prevent the disease
In her answer, 8 petitioner denied having been negligent in administering the
from spreading to other parts of the patient's body (metastasis),
chemotherapy drugs to Angelica and asserted that she had fully explained
chemotherapy was suggested by Dr. Tamayo. Dr. Tamayo referred
to respondents how the chemotherapy will affect not only the cancer cells
Angelica to another doctor at SLMC, herein petitioner Dr. Rubi Li, a
but also the patient's normal body parts, including the lowering of white and
medical oncologist.
red blood cells and platelets. She claimed that what happened to Angelica
can be attributed to malignant tumor cells possibly left behind after surgery.
Few as they may be, these have the capacity to compete for nutrients such
that the body becomes so weak structurally (cachexia) and functionally in
the form of lower resistance of the body to combat infection. Such infection
becomes uncontrollable and triggers a chain of events (sepsis or septicemia)
that may lead to bleeding in the form of Disseminated Intravascular
Coagulation (DIC), as what the autopsy report showed in the case of
Angelica.
Since the medical records of Angelica were not produced in court, the trial
and appellate courts had to rely on testimonial evidence, principally the
declarations of petitioner and respondents themselves. The following
chronology of events was gathered:
On July 23, 1993, petitioner saw the respondents at the hospital after
Angelica's surgery and discussed with them Angelica's condition. Petitioner
told respondents that Angelica should be given two to three weeks to
recover from the operation before starting chemotherapy. Respondents
were apprehensive due to financial constraints as Reynaldo earns only from
P70,000.00 to P150,000.00 a year from his jewelry and watch repairing
business. 9Petitioner, however, assured them not to worry about her
professional fee and told them to just save up for the medicines to be used.
Petitioner claimed that she explained to respondents that even when a
tumor is removed, there are still small lesions undetectable to the naked
eye, and that adjuvant chemotherapy is needed to clean out the small
lesions in order to lessen the chance of the cancer to recur. She did not give
the respondents any assurance that chemotherapy will cure Angelica's
cancer. During these consultations with respondents, she explained the
following side effects of chemotherapy treatment to respondents: (1) falling
hair; (2) nausea and vomiting; (3) loss of appetite; (4) low count of white
blood cells [WBC], red blood cells [RBC] and platelets; (5) possible sterility
due to the effects on Angelica's ovary; (6) damage to the heart and kidneys;
and (7) darkening of the skin especially when exposed to sunlight. She
actually talked with respondents four times, once at the hospital after the
surgery, twice at her clinic and the fourth time when Angelica's mother
called her through long distance. 10 This was disputed by respondents who
countered that petitioner gave them assurance that there is 95% chance of
healing for Angelica if she undergoes chemotherapy and that the only side
effects were nausea, vomiting and hair loss. 11 Those were the only side-
effects of chemotherapy treatment mentioned by petitioner. 12
On July 27, 1993, SLMC discharged Angelica, with instruction from
petitioner that she be readmitted after two or three weeks for the
chemotherapy.
On August 18, 1993, respondents brought Angelica to SLMC for
chemotherapy, bringing with them the results of the laboratory tests
requested by petitioner: Angelica's chest x-ray, ultrasound of the liver,
creatinine and complete liver function tests. 13 Petitioner proceeded with
the chemotherapy by first administering hydration fluids to Angelica. 14
The following day, August 19, petitioner began administering three
chemotherapy drugs — Cisplatin, 15 Doxorubicin 16 and Cosmegen 17 —
intravenously. Petitioner was supposedly assisted by her trainees Dr. Leo
Marbella 18 and Dr. Grace Arriete. 19 In his testimony, Dr. Marbella denied
having any participation in administering the said chemotherapy drugs. 20
On the second day of chemotherapy, August 20, respondents noticed
reddish discoloration on Angelica's face. 21 They asked petitioner about it,
but she merely quipped, "Wala yan. Epekto ng gamot." 22 Petitioner recalled
noticing the skin rashes on the nose and cheek area of Angelica. At that
moment, she entertained the possibility that Angelica also had systemic
lupus and consulted Dr. Victoria Abesamis on the matter. 23
On the third day of chemotherapy, August 21, Angelica had difficulty
breathing and was thus provided with oxygen inhalation apparatus. This
time, the reddish discoloration on Angelica's face had extended to her neck,
but petitioner dismissed it again as merely the effect of
medicines. 24 Petitioner testified that she did not see any discoloration on
Angelica's face, nor did she notice any difficulty in the child's breathing. She
claimed that Angelica merely complained of nausea and was given ice
chips. 25
On August 22, 1993, at around ten o'clock in the morning, upon seeing that
their child could not anymore bear the pain, respondents pleaded with
petitioner to stop the chemotherapy. Petitioner supposedly replied: "Dapat
15 Cosmegen pa iyan. Okay, let's observe. If pwede na, bigyan uli ng
chemo." At this point, respondents asked petitioner's permission to bring
their child home. Later in the evening, Angelica passed black stool and
reddish urine. 26Petitioner countered that there was no record of blackening
of stools but only an episode of loose bowel movement (LBM). Petitioner
also testified that what Angelica complained of was carpo-pedal spasm, not
convulsion or epileptic attack, as respondents call it (petitioner described it
in the vernacular as "naninigas ang kamay at paa"). She then requested for a
serum calcium determination and stopped the chemotherapy. When
Angelica was given calcium gluconate, the spasm and numbness
subsided. 27
The following day, August 23, petitioner yielded to respondents' request to
take Angelica home. But prior to discharging Angelica, petitioner requested
for a repeat serum calcium determination and explained to respondents that
the chemotherapy will be temporarily stopped while she observes Angelica's
muscle twitching and serum calcium level. Take-home medicines were also
prescribed for Angelica, with instructions to respondents that the serum
calcium test will have to be repeated after seven days. Petitioner told
respondents that she will see Angelica again after two weeks, but
respondents can see her anytime if any immediate problem arises. 28
However, Angelica remained in confinement because while still in the
premises of SLMC, her "convulsions" returned and she also had LBM.
Angelica was given oxygen and administration of calcium continued. 29
The next day, August 24, respondents claimed that Angelica still suffered
from convulsions. They also noticed that she had a fever and had difficulty
breathing. 30 Petitioner insisted it was carpo-pedal spasm, not convulsions.
She verified that at around 4:50 that afternoon, Angelica developed difficulty
in breathing and had fever. She then requested for an electrocardiogram
analysis, and infused calcium gluconate on the patient at a "stat dose." She
further ordered that Angelica be given Bactrim, 31 a synthetic antibacterial
combination drug, 32 to combat any infection on the child's body. 33
By August 26, Angelica was bleeding through the mouth. Respondents also
saw blood on her anus and urine. When Lina asked petitioner what was
happening to her daughter, petitioner replied, "Bagsak ang platelets ng anak
mo." Four units of platelet concentrates were then transfused to Angelica.
Petitioner prescribed Solucortef. Considering that Angelica's fever was high
and her white blood cell count was low, petitioner prescribed Leucomax.
About four to eight bags of blood, consisting of packed red blood cells,
fresh whole blood, or platelet concentrate, were transfused to Angelica. For
two days (August 27 to 28), Angelica continued bleeding, but petitioner
claimed it was lesser in amount and in frequency. Petitioner also denied that
there were gadgets attached to Angelica at that time. 34
On August 29, Angelica developed ulcers in her mouth, which petitioner said
were blood clots that should not be removed. Respondents claimed that
Angelica passed about half a liter of blood through her anus at around seven
o'clock that evening, which petitioner likewise denied.
On August 30, Angelica continued bleeding. She was restless as
endotracheal and nasogastric tubes were inserted into her weakened body.
An aspiration of the nasogastric tube inserted to Angelica also revealed a
bloody content. Angelica was given more platelet concentrate and fresh
whole blood, which petitioner claimed improved her condition. Petitioner
told Angelica not to remove the endotracheal tube because this may induce
further bleeding. 35 She was also transferred to the intensive care unit to
avoid infection.
The next day, respondents claimed that Angelica became hysterical,
vomited blood and her body turned black. Part of Angelica's skin was also
noted to be shredding by just rubbing cotton on it. Angelica was so restless
she removed those gadgets attached to her, saying "Ayaw ko na"; there
were tears in her eyes and she kept turning her head. Observing her
daughter to be at the point of death, Lina asked for a doctor but the latter
could not answer her anymore. 36 At this time, the attending physician was
Dr. Marbella who was shaking his head saying that Angelica's platelets were
down and respondents should pray for their daughter. Reynaldo claimed
that he was introduced to a pediatrician who took over his daughter's case,
Dr. Abesamis who also told him to pray for his daughter. Angelica continued
to have difficulty in her breathing and blood was being suctioned from her
stomach. A nurse was posted inside Angelica's room to assist her breathing
and at one point they had to revive Angelica by pumping her chest.
Thereafter, Reynaldo claimed that Angelica already experienced difficulty in
urinating and her bowel consisted of blood-like fluid. Angelica requested for
an electric fan as she was in pain. Hospital staff attempted to take blood
samples from Angelica but were unsuccessful because they could not even
locate her vein. Angelica asked for a fruit but when it was given to her, she
only smelled it. At this time, Reynaldo claimed he could not find either
petitioner or Dr. Marbella. That night, Angelica became hysterical and
started removing those gadgets attached to her. At three o'clock in the
morning of September 1, a priest came and they prayed before Angelica
expired. Petitioner finally came back and supposedly told respondents that
there was "malfunction" or bogged-down machine. 37
By petitioner's own account, Angelica was merely irritable that day (August
31). Petitioner noted though that Angelica's skin was indeed sloughing
off. 38She stressed that at 9:30 in the evening, Angelica pulled out her
endotracheal tube. 39 On September 1, exactly two weeks after being
admitted at SLMC for chemotherapy, Angelica died. 40 The cause of death,
according to petitioner, was septicemia, or overwhelming infection, which
caused Angelica's other organs to fail. 41 Petitioner attributed this to the
patient's poor defense mechanism brought about by the cancer itself. 42
While he was seeking the release of Angelica's cadaver from SLMC,
Reynaldo claimed that petitioner acted arrogantly and called him names. He
was asked to sign a promissory note as he did not have cash to pay the
hospital bill. 43
Respondents also presented as witnesses Dr. Jesusa Nieves-Vergara,
Medico-Legal Officer of the PNP-Crime Laboratory who conducted the
autopsy on Angelica's cadaver, and Dr. Melinda Vergara Balmaceda who is
a Medical Specialist employed at the Department of Health (DOH)
Operations and Management Services.
Testifying on the findings stated in her medico-legal report, Dr. Vergara
noted the following: (1) there were fluids recovered from the abdominal
cavity, which is not normal, and was due to hemorrhagic shock secondary
to bleeding; (2) there was hemorrhage at the left side of the heart; (3)
bleeding at the upper portion of and areas adjacent to, the esophagus; (4)
lungs were heavy with bleeding at the back and lower portion, due to
accumulation of fluids; (4) yellowish discoloration of the liver; (5) kidneys
showed appearance of facial shock on account of hemorrhages; and (6)
reddishness on external surface of the spleen. All these were the end result
of "hypovolemic shock secondary to multiple organ hemorrhages and
disseminated intravascular coagulation." Dr. Vergara opined that this can be
attributed to the chemical agents in the drugs given to the victim, which
caused platelet reduction resulting to bleeding sufficient to cause the
victim's death. The time lapse for the production of DIC in the case of
Angelica (from the time of diagnosis of sarcoma) was too short, considering
the survival rate of about 3 years. The witness conceded that the victim will
also die of osteosarcoma even with amputation or chemotherapy, but in this
case Angelica's death was not caused by osteosarcoma. Dr. Vergara
admitted that she is not a pathologist but her statements were based on the
opinion of an oncologist whom she had interviewed. This oncologist
supposedly said that if the victim already had DIC prior to the
chemotherapy, the hospital staff could have detected it. 44
On her part, Dr. Balmaceda declared that it is the physician's duty to inform
and explain to the patient or his relatives every known side effect of the
procedure or therapeutic agents to be administered, before securing the
consent of the patient or his relatives to such procedure or therapy. The
physician thus bases his assurance to the patient on his personal
assessment of the patient's condition and his knowledge of the general
effects of the agents or procedure that will be allowed on the patient. Dr.
Balmaceda stressed that the patient or relatives must be informed of all
known side effects based on studies and observations, even if such will
aggravate the patient's condition. 45
Dr. Jaime Tamayo, the orthopaedic surgeon who operated on Angelica's
lower extremity, testified for the defendants. He explained that in case of
malignant tumors, there is no guarantee that the ablation or removal of the
amputated part will completely cure the cancer. Thus, surgery is not
enough. The mortality rate of osteosarcoma at the time of modern
chemotherapy and early diagnosis still remains at 80% to 90%. Usually,
deaths occur from metastasis, or spread of the cancer to other vital organs
like the liver, causing systemic complications. The modes of therapy
available are the removal of the primary source of the cancerous growth and
then the residual cancer cells or metastasis should be treated with
chemotherapy. Dr. Tamayo further explained that patients with
osteosarcoma have poor defense mechanism due to the cancer cells in the
blood stream. In the case of Angelica, he had previously explained to her
parents that after the surgical procedure, chemotherapy is imperative so
that metastasis of these cancer cells will hopefully be addressed. He
referred the patient to petitioner because he felt that petitioner is a
competent oncologist. Considering that this type of cancer is very
aggressive and will metastasize early, it will cause the demise of the patient
should there be no early intervention (in this case, the patient developed
sepsis which caused her death). Cancer cells in the blood cannot be seen
by the naked eye nor detected through bone scan. On cross-examination,
Dr. Tamayo stated that of the more than 50 child patients who had
osteogenic sarcoma he had handled, he thought that probably all of them
died within six months from amputation because he did not see them
anymore after follow-up; it is either they died or had seen another doctor. 46
In dismissing the complaint, the trial court held that petitioner was not liable
for damages as she observed the best known procedures and employed her
highest skill and knowledge in the administration of chemotherapy drugs on
Angelica but despite all efforts said patient died. It cited the testimony of Dr.
Tamayo who testified that he considered petitioner one of the most
proficient in the treatment of cancer and that the patient in this case was
afflicted with a very aggressive type of cancer necessitating chemotherapy
as adjuvant treatment. Using the standard of negligence laid down in Picart
v. Smith, 47 the trial court declared that petitioner has taken the necessary
precaution against the adverse effect of chemotherapy on the patient,
adding that a wrong decision is not by itself negligence. Respondents were
ordered to pay their unpaid hospital bill in the amount of P139,064.43. 48
Respondents appealed to the CA which, while concurring with the trial
court's finding that there was no negligence committed by the petitioner in
the administration of chemotherapy treatment to Angelica, found that
petitioner as her attending physician failed to fully explain to the
respondents all the known side effects of chemotherapy. The appellate
court stressed that since the respondents have been told of only three side
effects of chemotherapy, they readily consented thereto. Had petitioner
made known to respondents those other side effects which gravely affected
their child — such as carpo-pedal spasm, sepsis, decrease in the blood
platelet count, bleeding, infections and eventual death — respondents could
have decided differently or adopted a different course of action which could
have delayed or prevented the early death of their child.
The CA thus declared:
Plaintiffs-appellants' child was suffering from a malignant
disease. The attending physician recommended that she
undergo chemotherapy treatment after surgery in order to
increase her chances of survival. Appellants consented to
the chemotherapy treatment because they believed in Dr.
Rubi Li's representation that the deceased would have a
strong chance of survival after chemotherapy and also
 because of the representation of appellee Dr. Rubi Li that
there were only three possible side-effects of the
treatment. However, all sorts of painful side-effects
resulted from the treatment including the premature death
of Angelica. The appellants were clearly and totally
unaware of these other side-effects which manifested
only during the chemotherapy treatment. This was
shown by the fact that every time a problem would
take place regarding Angelica's condition (like an
unexpected side-effect manifesting itself), they would
immediately seek explanation from Dr. Rubi Li. Surely,
those unexpected side-effects culminating in the loss of a
love[d] one caused the appellants so much trouble, pain
and suffering.
On this point therefore, [w]e find defendant-appellee Dr.
Rubi Li negligent which would entitle plaintiffs-appellants
to their claim for damages.
xxx xxx xxx
WHEREFORE, the instant appeal is hereby GRANTED.
Accordingly, the assailed decision is hereby modified to
the extent that defendant-appellee Dr. Rubi Li is ordered
to pay the plaintiffs-appellants the following amounts:
1. Actual damages of P139,064.43, plus
P9,828.00 for funeral expenses;
2. Moral damages of P200,000.00;
3. Exemplary damages of P50,000.00;
4. Attorney's fee of P30,000.00.
SO ORDERED. 49 (Emphasis supplied.)
Petitioner filed a motion for partial reconsideration which the appellate court
denied.
Hence, this petition.
Petitioner assails the CA in finding her guilty of negligence in not explaining
to the respondents all the possible side effects of the chemotherapy on their
child, and in holding her liable for actual, moral and exemplary damages and
attorney's fees. Petitioner emphasized that she was not negligent in the pre-
chemotherapy procedures and in the administration of chemotherapy
treatment to Angelica.
On her supposed non-disclosure of all possible side effects of
chemotherapy, including death, petitioner argues that it was foolhardy to
imagine her to be all-knowing/omnipotent. While the theoretical side effects
of chemotherapy were explained by her to the respondents, as these should
be known to a competent doctor, petitioner cannot possibly predict how a
particular patient's genetic make-up, state of mind, general health and body
constitution would respond to the treatment. These are obviously dependent
on too many known, unknown and immeasurable variables, thus requiring
that Angelica be, as she was, constantly and closely monitored during the
treatment. Petitioner asserts that she did everything within her professional
competence to attend to the medical needs of Angelica.
Citing numerous trainings, distinctions and achievements in her field and her
current position as co-director for clinical affairs of the Medical Oncology,
Department of Medicine of SLMC, petitioner contends that in the absence of
any clear showing or proof, she cannot be charged with negligence in not
informing the respondents all the side effects of chemotherapy or in the pre-
treatment procedures done on Angelica.
As to the cause of death, petitioner insists that Angelica did not die of
platelet depletion but of sepsis which is a complication of the cancer itself.
Sepsis itself leads to bleeding and death. She explains that the response
rate to chemotherapy of patients with osteosarcoma is high, so much so
that survival rate is favorable to the patient. Petitioner then points to some
probable consequences if Angelica had not undergone chemotherapy. Thus,
without chemotherapy, other medicines and supportive treatment, the
patient might have died the next day because of massive infection, or the
cancer cells might have spread to the brain and brought the patient into a
coma, or into the lungs that the patient could have been hooked to a
respirator, or into her kidneys that she would have to undergo dialysis.
Indeed, respondents could have spent as much because of these
complications. The patient would have been deprived of the chance to
survive the ailment, of any hope for life and her "quality of life" surely
compromised. Since she had not been shown to be at fault, petitioner
maintains that the CA erred in holding her liable for the damages suffered by
the respondents. 50
The issue to be resolved is whether the petitioner can be held liable for
failure to fully disclose serious side effects to the parents of the child patient
who died while undergoing chemotherapy, despite the absence of finding
that petitioner was negligent in administering the said treatment.
The petition is meritorious.
The type of lawsuit which has been called medical malpractice or, more
appropriately, medical negligence, is that type of claim which a victim has
available to him or her to redress a wrong committed by a medical
professional which has caused bodily harm. In order to successfully pursue
such a claim, a patient must prove that a health care provider, in most cases
a physician, either failed to do something which a reasonably prudent health
care provider would have done, or that he or she did something that a
reasonably prudent provider would not have done; and that that failure or
action caused injury to the patient. 51
This Court has recognized that medical negligence cases are best proved by
opinions of expert witnesses belonging in the same general neighborhood
and in the same general line of practice as defendant physician or surgeon.
The deference of courts to the expert opinion of qualified physicians stems
from the former's realization that the latter possess unusual technical skills
which laymen in most instances are incapable of intelligently evaluating,
hence the indispensability of expert testimonies. 52
In this case, both the trial and appellate courts concurred in finding that the
alleged negligence of petitioner in the administration of chemotherapy drugs
to respondents' child was not proven considering that Drs. Vergara and
Balmaceda, not being oncologists or cancer specialists, were not qualified
to give expert opinion as to whether petitioner's lack of skill, knowledge and
professional competence in failing to observe the standard of care in her line
of practice was the proximate cause of the patient's death. Furthermore,
respondents' case was not at all helped by the non-production of medical
records by the hospital (only the biopsy result and medical bills were
submitted to the court). Nevertheless, the CA found petitioner liable for her
failure to inform the respondents on all possible side effects of
chemotherapy before securing their consent to the said treatment.
The doctrine of informed consent within the context of physician-patient
relationships goes far back into English common law. As early as 1767,
doctors were charged with the tort of "battery" (i.e., an unauthorized
physical contact with a patient) if they had not gained the consent of their
patients prior to performing a surgery or procedure. In the United States, the
seminal case was Schoendorff v. Society of New York Hospital 53 which
involved unwanted treatment performed by a doctor. Justice Benjamin
Cardozo's oft-quoted opinion upheld the basic right of a patient to give
consent to any medical procedure or treatment: "Every human being of
adult years and sound mind has a right to determine what shall be done with
his own body; and a surgeon who performs an operation without his
patient's consent, commits an assault, for which he is liable in
damages." 54 From a purely ethical norm, informed consent evolved into a
general principle of law that a physician has a duty to disclose what a
reasonably prudent physician in the medical community in the exercise of
reasonable care would disclose to his patient as to whatever grave risks of
injury might be incurred from a proposed course of treatment, so that a
patient, exercising ordinary care for his own welfare, and faced with a choice
of undergoing the proposed treatment, or alternative treatment, or none at
all, may intelligently exercise his judgment by reasonably balancing the
probable risks against the probable benefits. 55
Subsequently, in Canterbury v. Spence 56 the court observed that the duty
to disclose should not be limited to medical usage as to arrogate the
decision on revelation to the physician alone. Thus, respect for the patient's
right of self-determination on particular therapy demands a standard set by
law for physicians rather than one which physicians may or may not impose
upon themselves. 57 The scope of disclosure is premised on the fact that
patients ordinarily are persons unlearned in the medical sciences.
Proficiency in diagnosis and therapy is not the full measure of a physician's
responsibility. It is also his duty to warn of the dangers lurking in the
proposed treatment and to impart information which the patient has every
right to expect. Indeed, the patient's reliance upon the physician is a trust of
the kind which traditionally has exacted obligations beyond those
associated with armslength transactions. 58 The physician is not expected
to give the patient a short medical education, the disclosure rule only
requires of him a reasonable explanation, which means generally informing
the patient in nontechnical terms as to what is at stake; the therapy
alternatives open to him, the goals expectably to be achieved, and the risks
that may ensue from particular treatment or no treatment. 59 As to the issue
of demonstrating what risks are considered material necessitating
disclosure, it was held that experts are unnecessary to a showing of the
materiality of a risk to a patient's decision on treatment, or to the
reasonably, expectable effect of risk disclosure on the decision. Such
unrevealed risk that should have been made known must further materialize,
for otherwise the omission, however unpardonable, is without legal
consequence. And, as in malpractice actions generally, there must be a
causal relationship between the physician's failure to divulge and damage to
the patient. 60
Reiterating the foregoing considerations, Cobbs v. Grant 61 deemed it as
integral part of physician's overall obligation to patient, the duty of
reasonable disclosure of available choices with respect to proposed therapy
and of dangers inherently and potentially involved in each. However, the
physician is not obliged to discuss relatively minor risks inherent in common
procedures when it is common knowledge that such risks inherent in
procedure of very low incidence. Cited as exceptions to the rule that the
patient should not be denied the opportunity to weigh the risks of surgery or
treatment are emergency cases where it is evident he cannot evaluate data,
and where the patient is a child or incompetent. 62 The court thus
concluded that the patient's right of self-decision can only be effectively
exercised if the patient possesses adequate information to enable him in
making an intelligent choice. The scope of the physician's communications
to the patient, then must be measured by the patient's need, and that need
is whatever information is material to the decision. The test therefore for
determining whether a potential peril must be divulged is its materiality to
the patient's decision. 63
Cobbs v. Grant further reiterated the pronouncement in Canterbury v.
Spence that for liability of the physician for failure to inform patient, there
must be causal relationship between physician's failure to inform and the
injury to patient and such connection arises only if it is established that, had
revelation been made, consent to treatment would not have been given.
There are four essential elements a plaintiff must prove in a malpractice
action based upon the doctrine of informed consent: "(1) the physician had
a duty to disclose material risks; (2) he failed to disclose or inadequately
disclosed those risks; (3) as a direct and proximate result of the failure to
disclose, the patient consented to treatment she otherwise would not have
consented to; and (4) plaintiff was injured by the proposed treatment." The
gravamen in an informed consent case requires the plaintiff to "point to
significant undisclosed information relating to the treatment which would
have altered her decision to undergo it. 64
Examining the evidence on record, we hold that there was adequate
disclosure of material risks inherent in the chemotherapy procedure
performed with the consent of Angelica's parents. Respondents could not
have been unaware in the course of initial treatment and amputation of
Angelica's lower extremity, that her immune system was already weak on
account of the malignant tumor in her knee. When petitioner informed the
respondents beforehand of the side effects of chemotherapy which includes
lowered counts of white and red blood cells, decrease in blood platelets,
possible kidney or heart damage and skin darkening, there is reasonable
expectation on the part of the doctor that the respondents understood very
well that the severity of these side effects will not be the same for all
patients undergoing the procedure. In other words, by the nature of the
disease itself, each patient's reaction to the chemical agents even with pre-
treatment laboratory tests cannot be precisely determined by the physician.
That death can possibly result from complications of the treatment or the
underlying cancer itself, immediately or sometime after the administration of
chemotherapy drugs, is a risk that cannot be ruled out, as with most other
major medical procedures, but such conclusion can be reasonably drawn
from the general side effects of chemotherapy already disclosed.
As a physician, petitioner can reasonably expect the respondents to have
considered the variables in the recommended treatment for their daughter
afflicted with a life-threatening illness. On the other hand, it is difficult to give
credence to respondents' claim that petitioner told them of 95% chance of
recovery for their daughter, as it was unlikely for doctors like petitioner who
were dealing with grave conditions such as cancer to have falsely assured
patients of chemotherapy's success rate. Besides, informed consent laws in
other countries generally require only a reasonable explanation of potential
harms, so specific disclosures such as statistical data, may not be legally
necessary. 65
The element of ethical duty to disclose material risks in the proposed
medical treatment cannot thus be reduced to one simplistic formula
applicable in all instances. Further, in a medical malpractice action based on
lack of informed consent, "the plaintiff must prove both the duty and the
breach of that duty through expert testimony. 66 Such expert testimony
must show the customary standard of care of physicians in the same
practice as that of the defendant doctor. 67
In this case, the testimony of Dr. Balmaceda who is not an oncologist but a
Medical Specialist of the DOH's Operational and Management Services
charged with receiving complaints against hospitals, does not qualify as
expert testimony to establish the standard of care in obtaining consent for
chemotherapy treatment. In the absence of expert testimony in this regard,
the Court feels hesitant in defining the scope of mandatory disclosure in
cases of malpractice based on lack of informed consent, much less set a
standard of disclosure that, even in foreign jurisdictions, has been noted to
be an evolving one.
As society has grappled with the juxtaposition between
personal autonomy and the medical profession's intrinsic
impetus to cure, the law defining "adequate" disclosure
has undergone a dynamic evolution. A standard once
guided solely by the ruminations of physicians is now
dependent on what a reasonable person in the patient's
position regards as significant. This change in perspective
is especially important as medical breakthroughs move
practitioners to the cutting edge of technology, ever
encountering new and heretofore unimagined treatments
for currently incurable diseases or ailments. An adaptable
standard is needed to account for this constant
progression. Reasonableness analyses permeate our legal
system for the very reason that they are determined by
social norms, expanding and contracting with the ebb and
flow of societal evolution.
As we progress toward the twenty-first century, we now
realize that the legal standard of disclosure is not
subject to construction as a categorical imperative.
Whatever formulae or processes we adopt are only useful
as a foundational starting point; the particular quality or
 quantity of disclosure will remain inextricably bound [G.R. No. 143196. November 26, 2002.]
by the facts of each case. Nevertheless, juries that
ultimately determine whether a physician properly
STI DRIVERS ASSOCIATION, SALVADOR CARANZA,
informed a patient are inevitably guided by what they
MARIANO TAN, AMADO EVANGELISTA, MANUEL
perceive as the common expectation of the medical
EVANGELISTA, EUSEBIO TABULOD, JR., MANUEL T.
consumer — "a reasonable person in the patient's
RODULFO, JOHNNY BUMATAY, FRANCISCO
position when deciding to accept or reject a
DOMINGO, NOLITO BRANZUELA, DOMIZALDE
recommended medical procedure." 68 (Emphasis
BUMATAY, FERNANDO ARIBON, JUNELIAM
supplied.)
QUINANOLA, JESUS FERRER, RAYMUNDO
WHEREFORE, the petition for review on certiorari is GRANTED. The BUMATAY, JR., MANUEL MOSTRALES, ROGELIO
Decision dated June 15, 2004 and the Resolution dated September 1, 2004 MAZO, ROLANDO EVASCO, FELIXBERTO BADINAS,
of the Court of Appeals in CA-G.R. CV No. 58013 are SET ASIDE. GERRY BOLIDO, GREGORIO GALVEZ, JR., CHARITO
MOSCOSA, MARCELINO VILLANUEVA, IBARISTO
The Decision dated September 5, 1997 of the Regional Trial Court of LACATA, FELIX OROGAN, GERRY CONDA, DENNIS
Legazpi City, Branch 8, in Civil Case No. 8904 is REINSTATED and SANCHEZ, PABLO ARAOS, NARIO BERNALDEZ, LITO
UPHELD. YAMBA, ANDRES NOVAL, JUDY VICENTE, DAVID
No costs. CAJES, and FELIPE CASBADILLO, petitioners, vs.
COURT OF APPEALS, SIMENT TRANSPORT, INC., ELY
SO ORDERED. CHUA, WILLIAM CHUA, SIMON CHUAHE, ELIZABETH
TAN, JRB MANPOWER AGENCY/EDWIN
Corona, C.J. and Perez, J., concur.
BUMATAY, respondents.
Carpio, J., see dissenting opinion.
Carpio Morales, Velasco, Jr. and Peralta, JJ., join the dissent of J. Carpio. Ricardo M. Perez for petitioners.
Nachura, Leonardo-de Castro and Mendoza, JJ., join the separate opinion of Isidro T. Gamutan for respondents.
J. Brion.

Brion, J., in the result: see separate opinion.

SYNOPSIS
Bersamin, J., concur in the result, and I join the separate opinion of J. Brion.
Del Castillo, J., took no part. Petitioners filed a petition for review of the CA decision praying that the case
be remanded to the Regional Arbitration Branch of the NLRC on the ground
Abad, J., please see my concurring opinion. that they were denied due process for being represented by an impostor
lawyer who was negligent in attending to their case from the moment it was
Sereno, J., I dissent. Evidence was provided by the doctor-petitioner herself.
filed up to its dismissal by the appellate court. Petitioners claimed that a
I join J. Antonio Carpio.
certain Mr. Villamor Mostrales led them to believe that he was a lawyer, but
||| (Li v. Spouses Soliman, G.R. No. 165279, [June 7, 2011], 666 PHIL 29- he failed to file the position papers required by the Labor Arbiter and to
121) appeal on time to the NLRC. aESIHT
The Supreme Court denied the petition, ruling: that records showed that
aside from Mr. Mostrales, the petitioners were duly represented by a bona
THIRD DIVISION fidelawyer, Atty. Ernesto R. Arellano, and the latter's failure to file the
required position papers is not a ground to declare the proceedings a
quo null and void; that it was ruled that any act performed by a lawyer within
the scope of his general or implied authority is regarded as an act of his
client; consequently, the mistake or negligence of petitioners' counsel may
result in the rendition of an unfavorable judgment against them. After all, in
applying the principle of due process, what is sought to be guarded against
is not the lack of previous notice but the denial of the opportunity to be
heard. Petitioners can file appropriate proceedings to recover damages from
Mr. Mostrales and Atty. Arellano as a result of fraud or inaction.
SYLLABUS
1. LEGAL AND JUDICIAL ETHICS; ATTORNEYS; MISTAKE OF COUNSEL
BINDS THE CLIENT; EXCEPTIONS; CASE AT BAR. — We find that the
petitioners were duly represented by a bona-fide lawyer and the latter's
failure to file the required position papers before the Labor Arbiter or to
appeal on time to the NLRC is not a ground to declare the proceedings a
quo null and void. We have ruled time and again that any act performed by a
lawyer within the scope of his general or implied authority is regarded as an
act of his client. Consequently, the mistake or negligence of petitioners'
counsel may result in the rendition of an unfavorable judgment against them.
Exceptions to the foregoing have been recognized by this Court in cases
where reckless or gross negligence of counsel deprives the client of due
process of law, or when its application "results in the outright deprivation of
one's property through a technicality." None of these exceptions has been
sufficiently shown in the instant case. In the case at bar, the petitioners
merely claimed deprivation of their rights as a result of misrepresentations
perpetrated by an impostor lawyer. But, as already discussed, we cannot
overlook the fact that they retained the services of Atty. Arellano. The
petitioners failed to show any evidence that the services of Atty. Arellano
violated their right to due process or deprived them of their property through
a technicality. No gross negligence can be attributed to Atty. Arellano
inasmuch as he did not totally abandon or disregard his clients' cases. He
filed pleadings for and in their behalf. The petitioners should therefore, as far
as this suit is concerned, bear the consequences of their faulty option. After
all, in the application of the principle of due process, what is sought to be
safeguarded against is not the lack of previous notice but the denial of the
opportunity to be heard. The question is not whether the petitioners
succeeded in defending their interest but whether the petitioners had the
opportunity to present their side.
2. ID.; ID.; ID.; DAMAGES ARE RECOVERABLE AS A RESULT OF FRAUD
OR INACTION. — Although nothing can be done to reverse the decision of
the appellate court, the aggrieved petitioners can still explore the feasibility
of filing the appropriate criminal, civil and administrative cases against Mr.
Mostrales and Atty. Arellano, as warranted. Damages, after all, can be
recovered as a result of fraud or inaction. cTEICD
DECISION
CORONA, J p:
Before us is a petition for review of the decision 1 dated July 26, 1999 of the
Court of Appeals 2 in CA-G.R. SP No. 51216 dismissing the petition
for certiorariof the decision 3 dated January 31, 1996 of the National Labor
Relations Commission in NLRC NCR Case No. 008951-95 which affirmed
the decision 4 dated April 21, 1995 of Labor Arbiter Romulus Protasio ruling
in favor of the respondents.
The facts, as found by the appellate court, are as follows:
The petitioners are truck drivers and truck helpers of herein respondents
Siment Transport, Inc. (STI, for brevity), Family Mercantile (FM, for brevity),
Simon Enterprises (SE, for brevity), and their owners, namely, Ely Chua,
William Chua, Simon Chuahe, and Elizabeth Tan. JRB Manpower Agency
and Edwin Bumatay were likewise included as respondents in the instant
petition. The petitioners are Salvador Caranza, Mariano Tan, Amado
Evangelista, Manuel Evangelista, Eusebio Tabulod, Jr., Manuel T. Rodulfo,
Johnny Bumatay, Francisco Domingo, Nolito Branzuela, Domizalde
Bumatay, Fernando Aribon, Juneliam Quinanola, Jesus Ferrer, Raymundo
Bumatay, Jr., Manuel Mostrales, Rogelio Mazo, Rolando Evasco, Felixberto
Badinas, Gerry Bolido, Gregorio Galvez, Jr., Charito Moscosa, Marcelino
Villanueva, Ibaristo Lacata, Felix Orogan, Gerry Conda, Dennis Sanchez,
Pablo Araos, Nario Bernaldez, Lito Yamba, Andres Noval, Judy Vicente,
David Cajes and Felipe Casbadillo.
The petitioner drivers formed STI Drivers Association which was registered
with the Department of Labor and Employment (DOLE, for brevity) under
Registration Certificate No. NCR-UR-1-1188-94. On May 2, 1994, the said
union filed a petition for certification election duly signed by Atty. Ernesto
Arellano. On June 13, 1994, Med-arbiter Brigada Fadrigon issued an order
dismissing the petition. On appeal to the DOLE, Undersecretary Bienvenido
Laguesma affirmed the said order on August 25, 1994.
Pending resolution of the appeal to the DOLE, however, on June 29, 1994,
petitioner drivers Salvador Caranza, Mariano Tan, Amado Evangelista,
Manuel Rodulfo, Johnny Bumatay and Eusebio Tabulod, Jr. were dismissed
by respondent STI for violation of the "Union Security Clause" provided for
in respondent's Collective Bargaining Agreement (CBA, for brevity) with the
Federation of Democratic Trade Unions-STI Workers Union Chapter (FDTU-
STI, for brevity). Subsequently, the concerned petitioners filed a complaint
for illegal dismissal, unfair labor practice and payment of damages against
the respondents before the Regional Arbitration Branch of the NLRC. On the
same day, the petitioner drivers also filed a complaint for underpayment of
their vacation leave, sick leave and 13th month pay against the respondents.
The petitioner truck helpers (pahinantes) were also dismissed for
abandonment of work when they failed to report for work on July 13, 1994
on the ground that they allegedly attended an organizational meeting of the
drivers' union. Respondent JRB sent notices to the concerned petitioners
requiring them to report for work with a stern warning that their employment
would be terminated if they failed to comply. Inasmuch as they disobeyed
the said order, they were dismissed for abandonment of work. On August 2,
1994, they filed a complaint for illegal dismissal, unfair labor practice and
payment of damages against the respondents before the Regional
Arbitration Branch of the NLRC. SCaITA
On October 1, 1994, the petitioner drivers Francisco Domingo, Nolito
Branzuela, Domizalde Bumatay, Fernando Aribon, Juneliam Quinanola,
Jesus Ferrer, Manuel Mostrales, Raymundo Bumatay, Jr., Rogelio Mazo,
and Rolando Evasco were also dismissed on the ground that they failed to
join FDTU-STI as required by the union security clause of their CBA. They
filed a complaint for illegal dismissal, unfair labor practice and damages.
This case was consolidated with the first case filed by the first group of
petitioner drivers.
The three cases were consolidated and assigned to Labor Arbiter Ernesto
Dinopol. They were later on re-raffled and assigned to Labor Arbiter
Romulus Protasio. The parties were required to submit their respective
position papers. However, petitioners failed to submit their position paper.
Hence, Labor Arbiter Protasio proceeded to hear the case ex parte. On April
21, 1995, Labor Arbiter Protasio dismissed the three consolidated
complaints, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered declaring the
dismissal of the complainants in Case No. 1 by JRB
Manpower Agency/Edwin Bumatay and the dismissal of
complainants by respondent Siment Transport, Inc. and
its officers, William Chua, Ely Chua, Simon Chuahe and
Elizabeth Tan in Case No. 2 as valid and legal. Paragraph
Case No. 3 is also dismissed since the benefits prayed for
have already been fully paid for as here before
indicated." 5
On May 9, 1995, the petitioners appealed the case to the NLRC but, in a
resolution dated June 30, 1995, the NLRC dismissed the appeal for being
filed out of time. The motion for reconsideration was likewise denied.
They filed a petition for certiorari before the Court of Appeals questioning
the decision of the NLRC but the appellate court dismissed the same. The
Court of Appeals held that the petitioners were not denied due process
inasmuch as their counsel, a certain Villamor Mostrales, was informed in
open court to submit petitioners' position paper, but he did not. In affirming
the legality of the petitioners' dismissal, the Court of Appeals found that they
committed an act of disloyalty when, during the existence of the CBA, they
organized another union (the STI Drivers' Association) and then filed a
petition for certification election outside the 60-day freedom period, in
violation of the "contract bar rule" under Articles 253 and 253-A of the Labor
Code. SIDTCa
Hence, this petition for review of the decision of the Court of Appeals based
on this sole assignment of error:
"I
"PETITIONERS WERE DENIED DUE PROCESS BECAUSE
THEY WERE MISREPRESENTED BY AN IMPOSTOR
LAWYER OR A NON-LAWYER." 6
The petitioners pray that the case be remanded to the Regional Arbitration
Branch of the NLRC on the ground that they were denied due process for
being represented by an impostor lawyer who was negligent in attending to
their case from the moment it was filed up to its dismissal by the appellate
court. They claim that a certain Villamor Mostrales led them to believe that
he was a lawyer who could represent them in the consolidated labor
complaints against herein respondents. However, Mr. Mostrales failed to file
the necessary position papers required by Labor Arbiter Protasio. As a
result, Labor Arbiter Protasio declared the petitioners in default and ruled
against them on the basis of the position paper submitted by the
respondents. The petitioners discovered that Mr. Mostrales was not a lawyer
after they secured a certification from the Office of the Bar Confidant that
Mr. Mostrales' name is not included in the Roll of Attorneys. They now argue
that the actions of the impostor lawyer denied them due process for the
reason that they were not given competent representation during the
hearing of the case and thus the proceedings a quo were null and void.
We deny the petition.
The records show that, aside from Mr. Mostrales, a counsel named Atty.
Ernesto R. Arellano, represented them in all the stages of the proceedings.
In fact, the Labor Arbiter issued an order notifying Atty. Arellano of the
reglementary period within which to file the petitioners' position papers. We
herein quote the judgment of the NLRC denying petitioners' motion for
reconsideration as proof of this fact, to wit:
"Records show that contrary to complainants' allegations,
the Order of February 20, 1995 was served to their
counsel, 'Atty. Ernesto R. Arellano of Rm. 400, Jino Bldg.,
Timog Avenue, Quezon City.' It was received by certain
'Edmond T. Lao' on February 27, 1995 (See Record, p.
268). . . ." 7
In addition, the petitioners failed to dispute the fact that the written
notification of the order of dismissal of the petition for certification
election was directed to Atty. Arellano as petitioners' counsel of
record. 8 And after the adverse decision of the Labor Arbiter, Atty.
Ernesto Arellano filed the appeal to the NLRC, as evidenced by his
signature on the appeal brief. 9 Also, the NLRC directed the notice of its
resolution (dismissing the petitioners' appeal for having been filed out of
time) to his law firm, Arellano and Associates. 10 The earlier petition that
they filed before this Court (involving the same parties and issues),
which was remanded to the Court of Appeals as a result of our ruling
in St. Martin Funeral Home vs. National Labor Relations
Commission, 11 was likewise signed by the same Atty. Ernesto R.
Arellano. 12 These undisputed facts prove that, during the entire
proceedings, a bona-fide lawyer represented them and filed pleadings in
their behalf.
Based on the foregoing, we find that the petitioners were duly represented
by a bona-fide lawyer and the latter's failure to file the required position
papers before the Labor Arbiter or to appeal on time to the NLRC is not a
ground to declare the proceedings a quo null and void. We have ruled time
and again that any act performed by a lawyer within the scope of his general
or implied authority is regarded as an act of his client. Consequently, the
mistake or negligence of petitioners' counsel may result in the rendition of
an unfavorable judgment against them. 13 Exceptions to the foregoing have
been recognized by this Court in cases where reckless or gross negligence
of counsel deprives the client of due process of law, or when its application
"results in the outright deprivation of one's property through a
technicality." 14 None of these exceptions has been sufficiently shown in the
instant case.
In the case at bar, the petitioners merely claimed deprivation of their rights
as a result of misrepresentations perpetrated by an impostor lawyer. But, as
already discussed, we cannot overlook the fact that they retained the
services of Atty. Arellano. The petitioners failed to show any evidence that
the services of Atty. Arellano violated their right to due process or deprived
them of their property through a technicality. No gross negligence can be
attributed to Atty. Arellano inasmuch as he did not totally abandon or
disregard his clients' cases. He filed pleadings for and in their behalf. The
petitioners should therefore, as far as this suit is concerned, bear the
consequences of their faulty option. After all, in the application of the
principle of due process, what is sought to be safeguarded against is not the
lack of previous notice but the denial of the opportunity to be heard. The
question is not whether the petitioners succeeded in defending their interest
but whether the petitioners had the opportunity to present their side. 15
Although nothing can be done to reverse the decision of the appellate court,
the aggrieved petitioners can still explore the feasibility of filing the
appropriate criminal, civil and administrative cases against Mr. Mostrales
and Atty. Arellano, as warranted. Damages, after all, can be recovered as a
result of fraud or inaction.
WHEREFORE, premises considered, the petition is hereby DENIED. No
costs.
SO ORDERED.
Panganiban, Sandoval-Gutierrez and Carpio-Morales, JJ., concur.
Puno, J., is on official leave.
||| (STI Drivers Association v. Court of Appeals, G.R. No. 143196, [November
26, 2002], 441 PHIL 166-174)
SECOND DIVISION
[G.R. No. 160110. June 18, 2014.]
MARIANO C. MENDOZA and ELVIRA
LIM, petitioners, vs. SPOUSES LEONORA J. GOMEZ
and GABRIEL V. GOMEZ, respondents.
DECISION
PEREZ, J p:
Assailed in the present appeal by certiorari is the Decision 1 dated 29
September 2003 of the Special Fourth Division of the Court of Appeals (CA)
in CA-G.R. CV No. 71877, which affirmed with modification the
Decision 2 dated 31 January 2001 of the Regional Trial Court (RTC), Branch
172, Valenzuela City in Civil Case No. 5352-V-97, and which effectively
allowed the award of actual, moral, and exemplary damages, as well as
attorney's fees and costs of the suit in favor of respondent Spouses Leonora
and Gabriel Gomez (respondents).
Antecedent Facts
On 7 March 1997, an Isuzu Elf truck (Isuzu truck) with plate number UAW
582, 3 owned by respondent Leonora J. Gomez (Leonora) 4 and driven by
Antenojenes Perez (Perez), 5 was hit by a Mayamy Transportation bus
(Mayamy bus) with temporary plate number 1376-1280, 6 registered under
the name of petitioner Elvira Lim (Lim) 7 and driven by petitioner Mariano C.
Mendoza (Mendoza). 8
Owing to the incident, an Information for reckless imprudence resulting in
damage to property and multiple physical injuries was filed against
Mendoza. 9Mendoza, however, eluded arrest, thus, respondents filed a
separate complaint for damages against Mendoza and Lim, seeking actual
damages, compensation for lost income, moral damages, exemplary
damages, attorney's fees and costs of the suit. 10 This was docketed as
Civil Case No. 5352-V-97. ECAaTS
According to PO1 Melchor F. Rosales (PO1 Rosales), investigating officer of
the case, at around 5:30 a.m., the Isuzu truck, coming from Katipunan Road
and heading towards E. Rodriguez, Sr. Avenue, was travelling along the
downward portion of Boni Serrano Avenue when, upon reaching the corner
of Riviera Street, fronting St. Ignatius Village, its left front portion was hit by
the Mayamy bus. 11 According to PO1 Rosales, the Mayamy bus, while
traversing the opposite lane, intruded on the lane occupied by the Isuzu
truck. 12
PO1 Rosales also reported that Mendoza tried to escape by speeding away,
but he was apprehended in Katipunan Road corner C. P. Garcia Avenue by
one Traffic Enforcer Galante and a security guard of St. Ignatius Village. 13
As a result of the incident, Perez, as well as the helpers on board the Isuzu
truck, namely Melchor V. Anla (Anla), Romeo J. Banca (Banca), and Jimmy
Repisada (Repisada), sustained injuries necessitating medical treatment
amounting to P11,267.35, which amount was shouldered by respondents.
Moreover, the Isuzu truck sustained extensive damages on its cowl, chassis,
lights and steering wheel, amounting to P142,757.40. 14
Additionally, respondents averred that the mishap deprived them of a daily
income of P1,000.00. Engaged in the business of buying plastic scraps and
delivering them to recycling plants, respondents claimed that the Isuzu truck
was vital in the furtherance of their business.
For their part, petitioners capitalized on the issue of ownership of the bus in
question. Respondents argued that although the registered owner was Lim,
the actual owner of the bus was SPO1 Cirilo Enriquez (Enriquez), who had
the bus attached with Mayamy Transportation Company (Mayamy
Transport) under the so-called "kabit system". Respondents then impleaded
both Lim and Enriquez.
Petitioners, on the other hand, presented Teresita Gutierrez (Gutierrez),
whose testimony was offered to prove that Mayamy Bus or Mayamy
Transport is a business name registered under her name, and that such
business is a sole proprietorship. Such was presented by petitioners to
rebut the allegation of respondents that Mayamy Transport is a
corporation; 15 and to show, moreover, that although Gutierrez is the sole
proprietor of Mayamy Transport, she was not impleaded by respondents in
the case at bar. 16
After weighing the evidence, the RTC found Mendoza liable for direct
personal negligence under Article 2176 of the Civil Code,and it also found
Lim vicariously liable under Article 2180 of the same Code.
As regards Lim, the RTC relied on the Certificate of Registration issued by
the Land Transportation Office on 9 December 1996 17 in concluding that
she is the registered owner of the bus in question. Although actually owned
by Enriquez, following the established principle in transportation law, Lim, as
the registered owner, is the one who can be held liable.
Thus, the RTC disposed of the case as follows:
WHEREFORE, judgment is hereby rendered in favor of the
[respondents] and against the [petitioners]:
1. Ordering the [petitioners] except Enriquez to pay
[respondents], jointly and severally, the costs of
repair of the damaged vehicle in the amount of
P142,757.40;
2. Ordering the defendants except Enriquez to pay
[respondents], jointly and severally, the amount of
P1,000.00 per day from March 7, 1997 up to
November 1997 representing the unrealized
income of the [respondents] when the incident
transpired up to the time the damaged Isuzu truck
was repaired;
 3. Ordering the [petitioners] except Enriquez to pay
[respondents], jointly and severally, the amount of
P100,000.00 as moral damages, plus a separate
amount of P50,000.00 as exemplary
damages; DISEaC
4. Ordering the [petitioners] except Enriquez to pay
[respondents], jointly and severally, the amount of
P50,000.00 as attorney's fees;
5. Ordering the [petitioners] except Enriquez to pay
[respondents] the costs of suit. 18
Displeased, petitioners appealed to the CA, which appeal was docketed as
CA-G.R. CV No. 71877. After evaluating the damages awarded by the RTC,
such were affirmed by the CA with the exception of the award of unrealized
income which the CA ordered deleted, viz.:
WHEREFORE, premises considered, the appeal
is PARTLY GRANTED. The judgment of the Regional Trial
Court of Valenzuela City, Branch 172 dated January 31,
2001, is MODIFIED, in that the award of P1,000.00 per
day from March 1997 up to November 1997 representing
unrealized income is DELETED. The award of
P142,757.40 for the cost of repair of the damaged vehicle,
the award of P100,000.00 as moral damages, the award
of P50,000.00 as exemplary damages, the award of
P50,000.00 as attorney's fees and the costs of the suit are
hereby MAINTAINED. 19
The Present Petition
Unsatisfied with the CA ruling, petitioners filed an appeal by certiorari before
the Court, raising the following issues: 20
1. The court a quo has decided questions of substance in
a way not in accord with law or with the
applicable decisions of the Supreme Court when
it awarded:
a. Moral damages in spite of the fact that the
[respondents'] cause of action is clearly based
on quasi-delict and [respondents] did not
sustain physical injuries to be entitled thereto
pursuant to Article 2219 (2) of the New Civil
Code and pertinent decisions of the Supreme
Court to that effect. The court a quo erroneously
concluded that the driver acted in bad faith and
erroneously applied the provision of Article 21 of
the same code to justify the award for bad faith is
not consistent with quasi-delict which is founded
on fault or negligence.
b. Exemplary damages in spite of the fact that
there is no finding that the vehicular accident was
due to petitioner-driver's gross negligence to be
entitled thereto pursuant to Article 2231 of
the New Civil Code and pertinent decisions of the
Supreme Court to that effect. The factual basis of
the court a quo that "the act of the driver of the
bus in attempting to escape after causing the
accident in wanton disregard of the
consequences of his negligent act is such gross
negligence that justifies an award of exemplary
damages" is an act after the fact which is not
within the contemplation of Article 2231 of
the New Civil Code.
c. Attorney's fees in spite of the fact that the
assailed decisions of the trial court and the
court a quo are bereft with jurisdictions for the
award of attorney's fees pursuant to the pertinent
decisions of the Supreme Court on the matter and
provision Article 2208 of the New Civil Code. The
court a quo erroneously applied the decision of
the Supreme Court in Bañas, Jr. vs. Court of
Appeals, 325 SCRA 259.
The Court's Ruling
The petition is partially meritorious.
Respondents anchor their claim for damages on Mendoza's negligence,
banking on Article 2176 of the Civil Code,to wit:
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.
In impleading Lim, on the other hand, respondents invoke the latter's
vicarious liability as espoused in Article 2180 of the same Code:
 The obligation imposed by Article 2176 is demandable not
only for one's own acts or omissions, but also for those of
persons for whom one is responsible.
xxx xxx xxx
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope
of their assigned tasks, even though the former are not
engaged in any business or industry.
The first question to address, then, is whether or not Mendoza's negligence
was duly proven. Negligence is defined as the failure to observe for the
protection of the interests of another person, that degree of care, precaution
and vigilance which the circumstances justly demand, whereby such other
person suffers injury. 21
As found by the RTC, and affirmed by the CA, Mendoza was negligent in
driving the subject Mayamy bus, as demonstrated by the fact that, at the
time of the collision, the bus intruded on the lane intended for the Isuzu
truck. Having encroached on the opposite lane, Mendoza was clearly in
violation of traffic laws. Article 2185 of the Civil Code provides that unless
there is proof to the contrary, it is presumed that a person driving a motor
vehicle has been negligent if at the time of the mishap, he was violating any
traffic regulation. In the case at bar, Mendoza's violation of traffic laws was
the proximate cause of the harm. CAIHaE
Proximate cause is defined as that cause, which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces the injury,
and without which the result would not have occurred. And more
comprehensively, the proximate legal cause is that acting first and
producing the injury, either immediately or by setting other events in motion,
all constituting a natural and continuous chain of events, each having a
close causal connection with its immediate predecessor, the final event in
the chain immediately effecting the injury as a natural and probable result of
the cause which first acted, under such circumstances that the person
responsible for the first event should, as an ordinary prudent and intelligent
person, have reasonable ground to expect at the moment of his act or
default that an injury to some person might probably result therefrom. 22
The evidence on record shows that before the collision, the Isuzu truck was
in its rightful lane, and was even at a stop, having been flagged down by a
security guard of St. Ignatius Village. 23 The mishap occurred when the
Mayamy bus, travelling at a fast speed as shown by the impact of the
collision, and going in the opposite direction as that of the Isuzu truck,
encroached on the lane rightfully occupied by said Isuzu truck, and caused
the latter to spin, injuring Perez, Anla, Banca, and Repisada, and
considerably damaging the Isuzu truck.
Having settled the fact of Mendoza's negligence, then, the next question
that confronts us is who may be held liable. According to Manresa, liability
for personal acts and omissions is founded on that indisputable principle of
justice recognized by all legislations that when a person by his act or
omission causes damage or prejudice to another, a juridical relation is
created by virtue of which the injured person acquires a right to be
indemnified and the person causing the damage is charged with the
corresponding duty of repairing the damage. The reason for this is found in
the obvious truth that man should subordinate his acts to the precepts of
prudence and if he fails to observe them and causes damage to another, he
must repair the damage. 24 His negligence having caused the damage,
Mendoza is certainly liable to repair said damage.
Additionally, Mendoza's employer may also be held liable under the doctrine
of vicarious liability or imputed negligence. Under such doctrine, a person
who has not committed the act or omission which caused damage or injury
to another may nevertheless be held civilly liable to the latter either directly
or subsidiarily under certain circumstances. 25 In our jurisdiction, vicarious
liability or imputed negligence is embodied in Article 2180 of the Civil
Code and the basis for damages in the action under said article is the direct
and primary negligence of the employer in the selection or supervision, or
both, of his employee. 26
In the case at bar, who is deemed as Mendoza's employer? Is it Enriquez,
the actual owner of the bus or Lim, the registered owner of the bus?
In Filcar Transport Services v. Espinas, 27 we held that the registered owner
is deemed the employer of the negligent driver, and is thus vicariously liable
under Article 2176, in relation to Article 2180, of the Civil
Code.Citing Equitable Leasing Corporation v. Suyom, 28 the Court ruled that
in so far as third persons are concerned, the registered owner of the motor
vehicle is the employer of the negligent driver, and the actual employer is
considered merely as an agent of such owner. Thus, whether there is an
employer-employee relationship between the registered owner and the
driver is irrelevant in determining the liability of the registered owner who the
law holds primarily and directly responsible for any accident, injury or death
caused by the operation of the vehicle in the streets and highways. 29
As early as Erezo v. Jepte, 30 the Court, speaking through Justice Alejo
Labrador summarized the justification for holding the registered owner
directly liable, to wit:
. . . The main aim of motor vehicle registration is to
identify the owner so that if any accident happens, or
 that any damage or injury is caused by the vehicles on
the public highways, responsibility therefore can be
fixed on a definite individual, the registered owner.
Instances are numerous where vehicle running on public
highways caused accidents or injuries to pedestrians or
other vehicles without positive identification of the
owner or drivers, or with very scant means of
identification. It is to forestall these circumstances, so
inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest
of the determination of persons responsible for
damages or injuries caused on public highways.
"One of the principal purposes of motor vehicles
legislation is identification of the vehicle and of the
operator, in case of accident; and another is that the
knowledge that means of detection are always available
may act as a deterrent from lax observance of the law and
of the rules of conservative and safe operation. Whatever
purpose there may be in these statutes, it is subordinate
at the last to the primary purpose of rendering it certain
that the violator of the law or of the rules of safety shall
not escape because of lack of means to discover him."
The purpose of the statute is thwarted, and the displayed
number becomes a "snare and delusion", if courts will
entertain such defenses as that put forward by appellee in
this case. No responsible person or corporation could be
held liable for the most outrageous acts of negligence, if
they should be allowed to place a "middleman" between
them and the public, and escape liability by the manner in
which they recompense their servants. 31
Generally, when an injury is caused by the negligence of a servant or
employee, there instantly arises a presumption of law that there was
negligence on the part of the master or employer either in the selection of
the servant or employee (culpa in eligiendo) or in the supervision over him
after the selection (culpa vigilando), or both. The presumption is juris
tantum and not juris et de jure; consequently, it may be rebutted.
Accordingly, the general rule is that if the employer shows to the satisfaction
of the court that in the selection and supervision of his employee he has
exercised the care and diligence of a good father of a family, the
presumption is overcome and he is relieved of liability. 32 However, with the
enactment of the motor vehicle registration law, the defenses available
under Article 2180 of the Civil Code — that the employee acts beyond the
scope of his assigned task or that it exercised the due diligence of a good
father of a family to prevent damage — are no longer available to the
registered owner of the motor vehicle, because the motor vehicle
registration law, to a certain extent, modified Article 2180. 33
As such, there can be no other conclusion but to hold Lim vicariously liable
with Mendoza. TAcSaC
This does not mean, however, that Lim is left without any recourse against
Enriquez and Mendoza. Under the civil law principle of unjust enrichment,
the registered owner of the motor vehicle has a right to be indemnified by
the actual employer of the driver; and under Article 2181 of the Civil
Code,whoever pays for the damage caused by his dependents or
employees may recover from the latter what he has paid or delivered in
satisfaction of the claim.
Having identified the persons liable, our next question is what may be
awarded.
Actual or Compensatory Damages. Actual or compensatory damages are
those awarded in satisfaction of, or in recompense for, loss or injury
sustained. They simply make good or replace the loss caused by the
wrong. 34
Article 2202 of the Civil Code provides that in crimes and quasi-delicts, the
defendant shall be liable for all damages which are the natural and probable
consequences of the act or omission complained of. It is not necessary that
such damages have been foreseen or could have reasonably been foreseen
by the defendant. Article 2199 of the same Code, however, sets the
limitation 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. As such, to warrant an award of actual or compensatory
damages, the claimant must prove that the damage sustained is the natural
and probable consequences of the negligent act and, moreover, the
claimant must adequately prove the amount of such damage.
In the case at bar, the RTC, basing on the receipts submitted by
respondents and which receipts petitioners had the opportunity to examine,
found that the total repairs on the Isuzu truck amounted to P142,757.40,
and that the full hospitalization and medical expenses of Perez, Anla, Banca,
and Repisada amounted to P11,267.35. As such, these are the amounts that
respondents are entitled to as actual and compensatory damages.
Although respondents alleged in their complaint that the damage to their
Isuzu truck caused them the loss of a daily income of P1,000.00, such claim
was not duly substantiated by any evidence on record, and thus cannot be
awarded in their favor.
Moral Damages. Moral damages are awarded to enable the injured party to
obtain means, diversions or amusements that will serve to alleviate the
moral suffering he has undergone, by reason of the defendant's culpable
action. 35
In prayers for moral damages, however, recovery is more an exception
rather than the rule. Moral damages are not meant to be punitive 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. To be entitled to such an award, the claimant must satisfactorily
prove that he has suffered damages and that the injury causing it has
sprung from any of the cases listed in Articles 2219 and 2220 of the Civil
Code.Moreover, the damages must be shown to be the proximate result of a
wrongful act or omission. The claimant must thus establish the factual basis
of the damages and its causal tie with the acts of the defendant. 36
In fine, an award of moral damages calls for the presentation of 1) evidence
of besmirched reputation or physical, mental or psychological suffering
sustained by the claimant; 2) a culpable act or omission factually
established; 3) proof that the wrongful act or omission of the defendant is
the proximate cause of the damages sustained by the claimant; and 4) the
proof that the act is predicated on any of the instances expressed or
envisioned by Article 2219 and Article 2220 of the Civil Code.37
A review of the complaint and the transcript of stenographic notes yields the
pronouncement that respondents neither alleged nor offered any evidence
of besmirched reputation or physical, mental or psychological suffering
incurred by them. All that Leonora and her counsel had to say on the matter
of damages other than actual or compensatory damages is this: 38 ASEIDH
Q: Did you ever spend covering attorney's fees?
A: Yes, sir. P50,000.00.
Q: Aside from the actual damage that you have mentioned
. . ., how much more would you like this Court to
award you by way of moral damages?
A: P100,000.00, sir.
Q: How about exemplary damages?
A: P50,000.00, sir.
Q: What happened to you, what did you feel when the
defendants failed to immediately repair your
vehicle that was damaged Madam Witness?
A: I have incurred expenses and I was forced to apply for
a loan, sir.
In Kierulf v. CA, 39 we observed that 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. Citing Francisco v. GSIS, 40 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 social humiliation, wounded feelings and anxiety, moral damages cannot
be awarded.
Moreover, respondents were not able to show that their claim properly falls
under Articles 2219 and 2220 of the Civil Code.Respondents cannot rely on
Article 2219 (2) of the Civil Code which allows moral damages in quasi-
delicts causing physical injuries because in physical injuries, moral damages
are recoverable only by the injured party, 41 and in the case at bar, herein
respondents were not the ones who were actually injured.
In B.F. Metal (Corp.) v. Sps. Lomotan, et al., 42 the Court, in a claim for
damages based on quasi-delict causing physical injuries, similarly
disallowed an award of moral damages to the owners of the damaged
vehicle, when neither of them figured in the accident and sustained injuries.
Neither can respondents rely on Article 21 of the Civil Code as the RTC
erroneously did. 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; (3) and it is
done with intent to injure. 43 In the present case, it can hardly be said that
Mendoza's negligent driving and violation of traffic laws are legal acts.
Moreover, it was not proven that Mendoza intended to injure Perez, et al.
Thus, Article 21 finds no application to the case at bar.
All in all, we find that the RTC and the CA erred in granting moral damages
to respondents. CHDAEc
Exemplary Damages. Article 2229 of the Civil Code provides that
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. Article 2231 of the same Code further states that
in quasi-delicts, exemplary damages may be granted if the defendant acted
with gross negligence.
Our jurisprudence sets certain conditions when exemplary damages may be
awarded: First, they 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.
Second, the claimant must first establish his right to moral, temperate,
liquidated or compensatory damages. Third, 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. 44
In motor vehicle accident cases, exemplary damages may be awarded
where the defendant's misconduct is so flagrant as to transcend simple
negligence and be tantamount to positive or affirmative misconduct rather
than passive or negative misconduct. In characterizing the requisite positive
misconduct which will support a claim for punitive damages, the courts have
used such descriptive terms as willful, wanton, grossly negligent, reckless,
or malicious, either alone or in combination. 45
Gross negligence is the absence of care or diligence as to amount to a
reckless disregard of the safety of persons or property. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid
them. 46
In the case at bar, having established respondents' right to compensatory
damages, exemplary damages are also in order, given the fact that
Mendoza was grossly negligent in driving the Mayamy bus. His act of
intruding or encroaching on the lane rightfully occupied by the Isuzu truck
shows his reckless disregard for safety.
In Baño v. Bachelor Express, Inc., et al., 47 where an erring bus, in the
process of overtaking a jeepney, also encroached on the opposite lane, and
consequently collided with a dump truck, the Court held the driver of the
bus grossly negligent and affirmed the award of exemplary damages.
Attorney's Fees. Article 2208 of the Civil Code enumerates the instances
when attorney's fees may be recovered:
Art. 2208. In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial costs,
cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has
compelled the plaintiff to litigate with third
persons or to incur expenses to protect
his interest;
(3) In criminal cases of malicious prosecution
against the plaintiff;
(4) In case of a clearly unfounded civil action or
proceeding against the plaintiff;
(5) Where the defendant acted in gross and
evident bad faith in refusing to satisfy the
plaintiff's valid and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of
household helpers, laborers and skilled
workers;
(8) In actions for indemnity under workmen's
compensation and employer's liability
laws;
(9) In a separate civil action to recover civil liability
arising from a crime;
(10) When at least double judicial costs are
awarded;
(11) In any other case where the court deems it
just and equitable that attorney's fees and
expenses of litigation should be
recovered;
In all cases, the attorney's fees and expenses of litigation
must be reasonable.
From the very opening sentence of Article 2208 of the Civil Code,it is clearly
intended to retain the award of attorney's fees as the exception in our law,
as the general rule remains that attorney's fees are not recoverable in the
absence of a stipulation thereto, the reason being that it is not sound policy
to set a premium on the right to litigate. 48
As such, in Spouses Agustin v. CA, 49 we held that, the award of attorney's
fees being an exception rather than the general rule, it is necessary for the
court to make findings of facts and law that would bring the case within the
exception and justify the grant of such award. Thus, the reason for the
award of attorney's fees must be stated in the text of the court's decision;
otherwise, if it is stated only in the dispositive portion of the decision, the
same must be disallowed on appeal. SaIACT
In the case at bar, the RTC Decision had nil discussion on the propriety of
attorney's fees, and it merely awarded such in the dispositive. The CA
Decision, on the other hand, merely stated that the award of attorney's fees
is merited as such is allowed when exemplary damages are
awarded. 50 Following established jurisprudence, 51 however, the CA
should have disallowed on appeal said award of attorney's fees as the RTC
failed to substantiate said award.
Costs of suit. The Rules of Court provide that, generally, costs shall be
allowed to the prevailing party as a matter of course, thus: 52
Section 1. Costs ordinarily follow results of suit. —
Unless otherwise provided in these rules, costs shall be
allowed to the prevailing party as a matter of course, but
the court shall have power, for special reasons, to
adjudge that either party shall pay the costs of an
action, or that the same be divided, as may be
equitable. No costs shall be allowed against the
Republic of the Philippines, unless otherwise provided
by law.
In the present case, the award of costs of suit to respondents, as the
prevailing party, is in order.
WHEREFORE, premises considered, the Court Resolves to PARTIALLY
GRANT the appeal by certiorari, as follows:
1) DECLARE Mariano Mendoza and Elvira Lim solidarily
liable to respondent Spouses Leonora and Gabriel
Gomez;
2) MAINTAIN the award of actual or compensatory
damages in the amount of P142,757.40 for the
repair of the Isuzu Elf truck, with legal interest
beginning 31 January 2001 until fully paid;
3) GRANT additional actual or compensatory damages in
the amount of P11,267.35 for the medical
expenses shouldered by respondent Spouses
Leonora and Gabriel Gomez, with legal interest
beginning 31 January 2001 until fully paid;
4) DELETE the award of moral damages; ICAcaH

Interests. Interest by way of damages has been defined as interest allowed 5) MAINTAIN the award of exemplary damages at
in actions for breach of contract or tort for the unlawful detention of money P50,000.00;
already due. This type of interest is frequently called "moratory interest".
6) DELETE the award of attorney's fees; and
Interest as a part of damage, is allowed, not by application of arbitrary rules,
but as a result of the justice of the individual case and as compensation to 7) MAINTAIN the award of costs of suit.
the injured party. 53
SO ORDERED.
The legal provision on interests in quasi-delicts is Article 2211 of the Civil
Code which provides that in crimes and quasi-delicts, interest as part of the Brion, * Del Castillo, Mendoza ** and Perlas-Bernabe, JJ., concur.
damage, may, in a proper case, be adjudicated in the discretion of the ||| (Mendoza v. Spouses Gomez, G.R. No. 160110, [June 18, 2014], 736 PHIL
court. 460-487)
Generally, interest is allowed as a matter of right for failure to pay liquidated
claims when due. 54 For unliquidated claims, however, Article 2213 of
the Civil Code provides that interest cannot be recovered upon unliquidated
claims or damages, except when the demand can be established with THIRD DIVISION
reasonable certainty.
[G.R. No. 166869. February 16, 2010.]
In the case at bar, although the award of exemplary damages is unliquidated
in the sense that petitioners cannot know for sure, before judgment, the
exact amount that they are required to pay to respondents, the award of PHILIPPINE HAWK CORPORATION, petitioner, vs.
actual or compensatory damages, however, such as the truck repairs and VIVIAN TAN LEE, respondent.
medical expenses, is arguably liquidated in that they can be measured
against a reasonably certain standard. 55 Moreover, justice would seem to
require that the delay in paying for past losses which can be made
reasonably certain should be compensated through an award of interest. 56 DECISION
PERALTA, J p:
This is a Petition for Review on Certiorari 1 of the Decision of the
Court of Appeals in CA-G.R. CV No. 70860, promulgated on August 17,
2004, affirming with modification the Decision of the Regional Trial Court
(RTC) of Quezon City, Branch 102, dated March 16, 2001, in Civil Case
No. 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 respondent's 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 motorcycle's repair, attorney's 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. CcaDHT
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 latter's
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. Luke's 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
Respondent's 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 petitioner's 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: TcHDIA
(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] husband's
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 DaAISH
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 inAbubakar v. Abubakar, G.R. No.
134622, October 22, 1999.
2) The Court of Appeals committed reversible error in its
finding that the petitioner's 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 respondent's 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 inDanao 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 petitioner's 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 petitioner's driver
was negligent in driving the bus, which caused physical injuries to
respondent and the death of respondent's 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: DACaTI
The Court agree[s] with the bus driver Margarito that the
motorcycle was moving ahead of the bus towards the
right side from the left side of the road, but disagrees with
him that it crossed the path of the bus while the bus was
running on the right side of the highway.
If the bus were on the right side of the highway and
Margarito turned his bus to the right in an attempt to avoid
hitting it, then the bus would not have hit the passenger
jeep vehicle which was then parked on the left side of the
road. The fact that the bus hit the jeep too, shows that the
bus must have been running to the left lane of the
highway from right to the left, that the collision between it
and the parked jeep and the moving rightways cycle
became inevitable. Besides, Margarito said he saw the
motorcycle before the collision ahead of the bus; that
being so, an extra-cautious public utility driver should
have stepped on his brakes and slowed down. Here, the
bus never slowed down, it simply maintained its highway
speed and veered to the left. This is negligence indeed. 25
Petitioner contends that the Court of Appeals was mistaken in
stating that the bus driver saw respondent's motorcycle "about 15
meters away" before the collision, because the said distance, as
testified to by its witness Efren Delantar Ong, was Ong's 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 petitioner's 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 petitioner's 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
Justice Florenz D. Regalado to explain the section above, thus:
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 employee's negligence causes damage or injury to
another, there instantly arises a presumption that the employer failed to
exercise the due diligence of a good father of the family in the selection
or supervision of its employees. 29 To avoid liability for a quasi-
delict committed by his employee, an employer must overcome the
presumption by presenting convincing proof that he exercised the care
and diligence of a good father of a family in the selection and
supervision of his employee. 30 SacTCA
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, petitioner's 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 court's decision.
Petitioner's 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
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. CEDScA
2. The procedure in the Supreme Court being generally
the same as that in the Court of Appeals, unless
otherwise indicated (see Secs. 2 and 4, Rule 56), it has
been held that the latter is clothed with ample
authority to review matters, even if they are not
assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a just
decision of the case. Also, an unassigned error closely
related to an error properly assigned (PCIB vs. CA, et al.,
L-34931, Mar. 18, 1988), or upon which the determination
of the question raised by error properly assigned is
dependent, will be considered by the appellate court
notwithstanding the failure to assign it as error (Ortigas, Jr.
vs. Lufthansa German Airlines, L-28773, June 30,
1975; Soco vs. Militante, et al., G.R. No. 58961, June 28,
1983).
It may also be observed that under Sec. 8 of this Rule, the
appellate court is authorized to consider a plain error,
although it was not specifically assigned by the appellant
 (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it the earnings less expenses necessary for the creation of such earnings
would be sacrificing substance for technicalities. 33 or income, less living and other incidental expenses. 39 In the absence
of documentary evidence, it is reasonable to peg necessary expenses
In this case for damages based on quasi-delict, the trial court for the lease and operation of the gasoline station at 80 percent of the
awarded respondent the sum of P745,575.00, representing loss of gross income, and peg living expenses at 50 percent of the net income
earning capacity (P590,000.00) and actual damages (P155,575.00 for (gross income less necessary expenses). ECcTaH
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 In this case, the computation for loss of earning capacity is as follows:
the trial court on the ground that it was based merely on suppositions
Gross Annual
and surmises, not the admissions made by respondent during the trial. Net Earning = Life Expectancy x - Reasonable and
Income
In its Decision, the Court of Appeals sustained the award by the Capacity [2/3 (80-age at the (GAI) Necessary
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 time of death) Expenses
latter award was modified.
(80% of GAI)
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
X = [2/3 (80-65) x P1,000,000.00 - P800,000.00
earn money. 35
As a rule, documentary evidence should be presented to X = 2/3 (15) x P200,000.00 - P100,000.00
substantiate the claim for damages for loss of earning capacity. 36 By (Living Expenses)
way of exception, damages for loss of earning capacity may be awarded
despite the absence of documentary evidence when: (1) the deceased is X = 30/3 x P100,000.00
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 X = 10 x P100,000.00
the deceased's line of work no documentary evidence is available; or (2) X = P1,000,000.00
the deceased is employed as a daily wage worker earning less than the
minimum wage under current labor laws. 37 The Court of Appeals also awarded actual damages for the
In this case, the records show that respondent's husband was expenses incurred in connection with the death, wake, and interment of
leasing and operating a Caltex gasoline station in Gumaca, Quezon. respondent's husband in the amount of P154,575.30, and the medical
Respondent testified that her husband earned an annual income of one expenses of respondent in the amount of P168,019.55.
million pesos. Respondent presented in evidence a Certificate of Actual damages must be substantiated by documentary
Creditable Income Tax Withheld at Source for the Year 1990, 38 which evidence, such as receipts, in order to prove expenses incurred as a
showed that respondent's husband earned a gross income of result of the death of the victim 40 or the physical injuries sustained by
P950,988.43 in 1990. It is reasonable to use the Certificate and the victim. A review of the valid receipts submitted in evidence showed
respondent's testimony as bases for fixing the gross annual income of that the funeral and related expenses amounted only to P114,948.60,
the deceased at one million pesos before respondent's husband died on while the medical expenses of respondent amounted only to
March 17, 1999. However, no documentary evidence was presented P12,244.25, yielding a total of P127,192.85 in actual damages.
regarding the income derived from their copra business; hence, the
testimony of respondent as regards such income cannot be Moreover, the Court of Appeals correctly sustained the award of
considered. HDTSIE moral damages in the amount of P50,000.00 for the death of
respondent's husband. Moral damages are not intended to enrich a
In the computation of loss of earning capacity, only net plaintiff at the expense of the defendant. 41 They are awarded to allow
earnings, not gross earnings, are to be considered; that is, the total of the plaintiff to obtain means, diversions or amusements that will serve to
alleviate the moral suffering he/she has undergone due to the
defendant's 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
respondent's 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 motorcycle's
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 petitioner's 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 SCDaHc
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 respondent's husband, temperate damages, and moral
damages for the physical injuries sustained by respondent in addition to
the damages granted by the trial court to respondent. The trial court
overlooked awarding the additional damages, which were prayed for by
respondent in her Amended Complaint. The appellate court is clothed
with ample authority to review matters, even if they are not assigned as
errors in the appeal, if it finds that their consideration is necessary in
arriving at a just decision of the case. 49
WHEREFORE, the petition is DENIED. The Decision of the
Court of Appeals dated August 17, 2004 in CA-G.R. CV No. 70860 is
hereby AFFIRMEDwith 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.
Corona, Velasco, Jr., Nachura and Mendoza, JJ., concur.
||| (Philippine Hawk Corporation v. Lee, G.R. No. 166869, [February 16,
2010], 626 PHIL 483-501)
EN BANC
[G.R. No. 97412. July 12, 1994.]
EASTERN SHIPPING LINES, INC., petitioner, vs. HON.
COURT OF APPEALS AND MERCANTILE INSURANCE
COMPANY, INC., respondents.
SYLLABUS
1. CIVIL LAW; COMMON CARRIERS; TIME FRAME WITHIN WHICH
DILIGENCE REQUIRED IN SHIPMENT OF GOODS LAST. — The common
carrier's duty to observe the requisite diligence in the shipment of goods
lasts from the time the articles are surrendered to or unconditionally placed
in the possession of, and received by, the carrier for transportation until
delivered to, or until the lapse of a reasonable time for their acceptance, by
the person entitled to receive them (Arts. 1736-1738, Civil Code; Ganzon vs.
Court of Appeals, 161 SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52
Phil. 863).
2. ID.; ID.; ID.; PRESUMPTION OF CARRIER'S FAULT ON LOST OR
DAMAGED GOODS SHIPPED; CASE AT BAR NOT AN EXCEPTION. —
When the goods shipped either are lost or arrive in damaged condition, a
presumption arises against the carrier of its failure to observe that diligence,
and there need not be an express finding of negligence to hold it liable (Art.
1735, Civil Code; Philippine National Railways vs. Court of Appeals, 139
SCRA 87; Metro Port Service vs. Court of Appeals, 131 SCRA 365). There
are, of course, exceptional cases when such presumption of fault is not
observed but these cases, enumerated in Article 1734 of the Civil Code, are
exclusive, not one of which can be applied to this case.
3. ID.; DAMAGES; INTEREST AWARDED AS A CONCEPT THEREOF; RATE
AND ACCRUAL THEREOF, HOW DETERMINED. — 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 a
obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at
the discretion 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 of the judgment of the court is made (at
which time the 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 of 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.
DECISION
VITUG, J p:
The issues, albeit not completely novel, are: (a) whether or not a claim for
damage sustained on a shipment of goods can be a solidary, or joint and
several, liability of the common carrier, the arrastre operator and the
customs broker; (b) whether the payment of legal interest on an award of
loss or damage is to be computed from the time the complaint is filed or
from the date the decision appealed from is rendered; and (c) whether the
applicable rate of interest, referred to above, is twelve percent (12%) or six
percent (6%). llcd
The findings of the court a quo, adopted by the Court of Appeals, on the
antecedent and undisputed facts that have led to the controversy are
hereunder reproduced:
"This is an action against defendants shipping company,
arrastre operator and broker-forwarded for damages
sustained by a shipment while in defendants' custody,
filed by the insurer-subrogee who paid the consignee the
value of such losses/damages.
"On December 4, 1981, two fiber drums of riboflavin were
shipped from Yokohama, Japan for delivery vessel `SS
EASTERN COMET' owned by defendant Eastern Shipping
Lines under Bill of Lading No. YMA-8 (Exh. B). The
shipment was insured under plaintiff's Marine Insurance
Policy No. 81/01177 for P36,382,466.38.
"Upon arrival of the shipment in Manila on December 12,
1981, it was discharged unto the custody of defendant
Metro Port Services, Inc. The latter excepted to one drum,
said to be in bad order, which damage was unknown to
plaintiff.
"On January 7, 1982 defendant Allied Brokerage
Corporation received the shipment from defendant Metro
Port Service, Inc., one drum opened and without seal (per
'Request for Bad Order Survey.' (Exh. D).
"On January 8 and 14, 1982, defendant Allied Brokerage
Corporation made deliveries of the shipment to the
consignees' warehouse. The latter excepted to one drum
which contained spillages, while the rest of the contents
was adulterated/fake (per 'Bad Order Waybill' No. 10649,
Exh. E).
"Plaintiff contended that due to the losses/damage
sustained by said drum, the consignee suffered losses
totaling P19,032.95, due to the fault and negligence of
defendants. Claims were presented against defendants
who failed and refused to pay the same (Exhs. H, I, J, K,
L). Cdpr
 "As a consequence of the losses sustained, plaintiff was
compelled to pay the consignee P19,032.95 under the
aforestated marine insurance policy, so that it became
subrogated to all the rights of action of said consignee
against defendants (per 'Form of Subrogation,' 'Release'
and Philbanking check, Exhs. M, N, and O)." (pp. 85-86,
Rollo.)
There were, to be sure, other factual issues that confronted both courts.
Here, the appellate court said:
"Defendants filed their respective answers, traversing the
material allegations of the compliant contending that: As
for defendant Eastern Shipping it alleged that the
shipment was discharged in good order from the vessel
unto the custody of Metro Port Service so that any
damage/losses incurred after the shipment was incurred
after the shipment was turned over to the latter, is no
longer its liability (p. 17, Record); Metroport averred that
although subject shipment was discharged unto its
custody, portion of the same was already in bad order (p.
11, Record); Allied Brokerage alleged that plaintiff has no
cause of action against it, not having negligent or at fault
for the shipment was already in damage and bad order
condition when received by it, but nonetheless, it still
exercised extra ordinary care and diligence in he
handling/delivery of the cargo to consignee in the same
condition shipment was received by it.
"From the evidence that court found the following:
"'The issues are:
'1. Whether or not the
shipment sustained
losses/damages;
'2. Whether or not these
losses/damages were sustained
while in the custody of defendants
(in whose respective custody, if
determinable); prLL
'3. Whether or not
defendant(s) should be held liable
for the losses/damages (see
plaintiff's pre-Trial Brief, Records,
p. 34; Allied's pre-Trial Brief,
adopting plaintiff's Records, p. 38).'
'As to the first issue, there can be no doubt that
the shipment sustained losses/damages. The two
drums were shipped in good order and condition,
as clearly shown by the Bill of Lading and
Commercial Invoice which do not indicate any
damages drum that was shipped (Exhs. B and C).
But when on December 12, 1981 the shipment
was delivered to defendant Metro Port Service,
Inc., it excepted to one drum in bad order.
'Correspondingly, as to the second issue,
it follows that the losses/damages were sustained
while in the respective and/or successive custody
and possession of defendants carrier (Eastern),
arrastre operator (Metro Port) and broker (Allied
Brokerage). This becomes evident when the
Marine Cargo Survey Report (Exh. G), with its
'Additional Survey Notes,' are considered. In the
latter notes, it is stated that when the shipment
was 'landed on vessel' to dock of Pier # 15, South
Harbor, Manila on December 12, 1981,' it was
observed that 'one (1) fiber drum (was) in
damaged condition, covered by the vessel's
Agent's Bad order Tally Sheet No. 86427.' The
report further states that when defendant Allied
Brokerage withdrew the shipment, from defendant
arrastre operator's custody on January 7, 1982,
one drum was found opened without seal, cello
bag partly torn but contents intact. Net
unrecovered spillages was 15 kgs. The report
went on to state that when the drums reached the
consignee, one drum was found with
adulterated/faked contents. It is obvious,
therefore, that these losses/damages occurred
before the shipment reached the consignee while
under the successive custodies of defendants.
Under Art. 1737 of the New Civil Code, the
common carrier's duty to observe extraordinary
diligence in the vigilance of goods remains in full
force and effect even if the goods are temporarily
unloaded and stored in transit in the warehouse of
the carrier at the place of destination, until the
consignee has been advised and has had
 reasonable opportunity to remove or dispose of
the goods (Art. 1738, NCC). Defendant Eastern
Shipping's own exhibit, the 'Turn-Over Survey of
Bad Order Cargoes' (Exhs. 3-Eastern) states that
on December 12, 1981 one drum was found
'open.'
"and thus held:
'WHEREFORE, PREMISES
CONSIDERED, judgment is hereby rendered:
A. Ordering defendants to
pay plaintiff, jointly and severally:
1. The amount of
P19,032.95 with the
present legal interest of
12% per annum from
October 1, 1982, the date
of filing of this complaints,
until fully paid (the liability
of defendant Eastern
Shipping, Inc. shall not
exceed US$500 per case or
the CIF value of the loss,
whichever is lesser, while
the liability of defendant
Metro Port Service, Inc.
shall be to the extent of the
actual invoice value of each
package, crate box or
container in no case to
exceed P5,000.00 each,
pursuant to Section 6.01 of
the Management
Contract); LexLib
2. P3,000.00 as
attorney's fees, and
3. Costs.
B. Dismissing the
counterclaims and crossclaim of
defendant/cross-claimant Allied
Brokerage Corporation.
SO ORDERED.' (p. 207, Record).
"Dissatisfied, defendant's recourse to US.
"The appeal is devoid of merit.
"After a careful scrutiny of the evidence on record. We
find that the conclusion drawn therefrom is correct. As
there is sufficient evidence that the shipment sustained
damage while in the successive possession of appellants,
and therefore they are liable to the appellee, as subrogee
for the amount it paid to the consignee." (pp. 87-89,
Rollo.)
The Court of Appeal thus affirmed in toto the judgment of the court a
quo.
In this petition, Eastern Shipping Lines, Inc., the common carrier, attributes
error and grave abuse of discretion on the part of the appellate court when
—
I. IT HELD PETITIONER CARRIER JOINTLY AND
SEVERALLY LIABLE WITH THE ARRASTRE OPERATOR
AND CUSTOMS BROKER FOR THE CLAIM OF PRIVATE
RESPONDENT AS GRANTED IN THE QUESTIONED
DECISION;
II. IT HELD THAT THE GRANT OF INTEREST ON THE
CLAIM OF PRIVATE RESPONDENT SHOULD
COMMENCE FROM THE DATE OF THE FILING OF THE
COMPLAINT AT THE RATE OF TWELVE PERCENT PER
ANNUM INSTEAD OF FROM THE DATE OF THE
DECISION OF THE TRIAL COURT AND ONLY AT THE
RATE OF SIX PERCENT PER ANNUM, PRIVATE
RESPONDENT'S CLAIM BEING INDISPUTABLY
UNLIQUIDATED.
The petition is, in part, granted.
In this decision, we have begun by saying that the questions raised by
petitioner carrier are not all that novel. Indeed, we do have a fairly good
number of previous decisions this Court can merely tack to. Cdpr
The common carrier's duty to observe the requisite diligence in the
shipment of goods lasts from the time the articles are surrendered to or
unconditionally placed in the possession of, and received by, the carrier for
transportation until delivered to, or until the lapse of a reasonable time for
their acceptance, by the person entitled to receive them (Arts. 1736-1738,
Civil Code; Ganzon vs. Court of Appeals, 161 SCRA 646; Kui Bai vs. Dollar
Steamship Lines, 52 Phil. 863).When the goods shipped either are lost or
arrive in damaged condition, a presumption arises against the carrier of its
failure to observe that diligence, and there need not be an express finding of
negligence to hold it liable (Art. 1735, Civil Code; Philippine National
Railways vs. Court of Appeals, 139 SCRA 87; Metro Port Service vs. Court of
Appeals, 131 SCRA 365). There are, of course, exceptional cases when
such presumption of fault is not observed but these cases, enumerated
in Article 1734 1 of the Civil Code, are exclusive, not one of which can be
applied to this case.
The question of charging both the carrier and the arrastre operator with the
obligation of properly delivering the goods to the consignee has, too, been
passed upon by the Court. In Fireman's Fund Insurance vs. Metro Port
Services (182 SCRA 455), we have explained in holding the carrier and the
arrastre operator liable in solidum, thus: Cdpr
"The legal relationship between the consignee and the
arrastre operator is akin to that of a depositor and
warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA
5 [1967]. The relationship between the consignee and the
common carrier is similar to that of the consignee and the
arrastre operator (Northern Motors, Inc. v. Prince Line, et
al., 107 Phil. 253 [1960]). Since it is the duty of the
ARRASTRE to take good care of the goods that are in its
custody and to deliver them in good condition to the
consignee, such responsibility also devolves upon the
CARRIER. Both the ARRASTRE and the CARRIER are
therefore charged with the obligation to deliver the goods
in goods condition to the consignee."
We do not, of course, imply by the above pronouncement that the arrastre
operator and the customs broker are themselves always and necessarily
liable solidarily with the carrier, or vice-versa, nor that attendant facts in a
given case may not vary the rule. The instant petition has been brought
solely by Eastern Shipping Lines which, being the carrier and not having
been able to rebut the presumption of fault, is, in any event, to be held liable
in this particular case. A factual finding of both the court a quo and the
appellate court, we take note, is that "there is sufficient evidence that the
shipment sustained damage while in the successive possession of
appellants" (the herein petitioner among them). Accordingly, the liability
imposed on Eastern Shipping Lines, Inc., the sole petitioner in this case, is
inevitable regardless of whether there are others solidarily liable with it. llcd
It is over the issue of legal interest adjudged by the appellate court that
deserves more than just a passing remark.
Let us first see a chronological recitation of the major rulings of this Court:
The early case of Malayan Insurance Co., Inc., vs. Manila Port
Service, 2 decided 3 on 15 May 1969, involved a suit for recovery of money
arising out of short deliveries and pilferage of goods. In this case, appellee
Malayan Insurance (the plaintiff in the lower court) averred in its complaint
that the total amount of its claim for the value of the undelivered goods
amounted to P3,947.20. This demand, however, was neither established in
its totality nor definitely ascertained. In the stipulation of facts later entered
into by the parties, in lieu of proof, the amount of P1,447.51 was agreed
upon. The trial court rendered judgment ordering the appellants (defendants)
Manila Port Service and Manila Railroad Company to pay appellee Malayan
Insurance the sum of P1,447.51 with legal interest thereon from the date the
complaint was filed on 28 December 1962 until full payment thereof. The
appellants then assailed, inter alia, the award of legal interest. In sustaining
the appellants, this Court ruled:
"Interest upon an obligation which calls for the payment of
money, absent a stipulation, is the legal rate. Such interest
normally is allowable from the date of demand, judicial or
extrajudicial. The trial court opted for judicial demand as
the starting point.
"But then upon the provisions of Article 2213 of the Civil
Code, interest 'cannot be recovered upon unliquidated
claims or damages, except when the demand can be
established with reasonable certainty.' And as was held
by this Court in Rivera vs. Perez 4 , L-6998, February 29,
1956, if the suit were for damages, 'unliquidated and not
known until definitely ascertained, assessed and
determined by the courts after proof (Montilla c.
Corporacion de P. P. Agustinos, 25 Phil. 447; Lichauco v.
Guzman, 38 Phil. 302),' then, interest 'should be from the
date of the decision.'" (Emphasis supplied). Cdpr
The case of Reformina vs. Tomol, 5 rendered on 11 October 1985, was for
"Recovery of Damages for Injury to Person and Loss of Property." After trial,
the lower court decreed:
"WHEREFORE, judgment is hereby rendered in favor of
the plaintiffs and third party defendants and against the
defendants and third party plaintiffs as follows:
"Ordering defendants and third party plaintiffs Shell and
Michael, Incorporated to pay jointly and severally the
following persons:
"(a) . . .
 "xxx xxx xxx
"(g) Plaintiffs Pacita F. Reformina and Francisco
Reformina the sum of P131,084.00 which is the value of
the boat F B Pacita III together with its accessories,
fishing gear and equipment minus P80,000.00 which is the
value of the insurance recovered and the amount of
P10,000.00 a month as the estimated monthly loss
suffered by them as a result of the fire of May 6, 1969 up
to the time they are actually paid or already the total sum
of P370,000.00 as of June 4, 1972 with legal interest from
the filing of the complaint until paid and to pay attorney's
fees of P5,000.00 with costs against defendants and third
party plaintiffs." (Emphasis supplied.)
On appeal of the Court of Appeals, the latter modified the amount of
damages awarded but sustained the trial court in adjudging legal
interest from the filing of the complaint until fully paid. When the
appellate court's decision became final, the case was remanded to the
lower court for execution, and this was when the trial court issued its
assailed resolution which applied the 6% interest per annum prescribed
in Article 2209 of the Civil Code. In their petition for review on certiorari,
the petitioners contended that Central Bank Circular No. 416, providing
thus — Cdpr
"By virtue of the authority granted to it under Section 1 of
Act 2655, as amended, Monetary Board in its Resolution
No. 1622 dated July 29, 1974, has prescribed that the rate
of interest for the loan, or forbearance of any money,
goods, or credits and the rate allowed in judgments, in the
absence of express contract as to such rate of interest,
shall be twelve (12%) percent per annum. This Circular
shall take effect immediately." (Emphasis found in the text)
— from November 29, 1968, the date of the filing of the complaint until full
should have, instead, been applied. This Court 6 ruled:
"The judgments spoken of and referred to are judgments
in litigations involving loans or forbearance of any money,
goods or credits. any other kind of monetary judgment
which has nothing to do with, nor involving loans or
forbearance of any money, goods or credits does not fall
within the coverage of the said law for it is not within the
ambit of the authority granted to the Central Bank.
"xxx xxx xxx
"Coming to the case at bar, the decision
herein sought to be executed is one rendered in an
Action for Damages for injury to persons and loss of
property and does not involve any loan, much less
forbearances of any money, goods or credits. As
correctly argued by the private respondents, the law
applicable to the said case is Article 2209 of the
New Civil Code which reads —
'ARTICLE 2209. 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 interest agreed upon, and in the
absence of stipulation, the legal interest which is
six percent per annum.'"
The above rule was reiterated in Philippine Rabbit Bus Lines, Inc., v.
Cruz, 7 promulgated on 28 July 1986. The case was for damages
occasioned by an injury to person and loss of property. The trial court
awarded private respondent Pedro Manabat actual and compensatory
damages in the amount of P72,500.00 with legal interest thereon from the
filing of the complaint until fully paid. Relying on the Reformina v. Tomol
case, this Court 8 modified the interest award from 12% to 6% interest per
annum but sustained the time computation thereof, i.e., from the filing of the
complaint until fully paid. Cdpr
In Nakpil and Sons vs. Court of Appeals, 9 the trial court, in an action for the
recovery of damages arising from the collapse of a building, ordered inter
alia,the "defendant United Construction Co., Inc. (one of the petitioners) . . .
to pay the plaintiff, . . ., the sum of P989,335.68 with interest at the legal rate
payment . . . ." Save from the modification of the amount granted by the
lower court, the Court of Appeals sustained the trial court's decision. When
taken to this Court for review, the case, on 03 October 1986, was decided,
thus:
"WHEREFORE, the decision appealed from is hereby
MODIFIED and considering the special and environmental
circumstances of this case, we deem it reasonable to
render a decision imposing, as We do hereby impose,
upon the defendant and the third-party defendants (with
the exception of Roman Ozaeta) a solidary (Art. 1723, Civil
Code, Supra. p. 10) indemnity in favor of the Philippine
Bar Association of FIVE MILLION (P5,000,000.00) Pesos
 to cover all damages (with the exception of attorney's
fees) occasioned by the loss of the building and an
additional ONE HUNDRED THOUSAND (P100,000.00)
Pesos as and for attorney's fees, the total sum being
payable upon the finality of this decision. Upon failure to
pay on such finality, twelve (12%) per cent interest per
annum shall be imposed upon aforementioned amounts
from finality until paid. Solidary costs against the
defendant and third-party defendants (except Roman
Ozaeta)." (Emphasis supplied).
A motion for reconsideration was filed by United Construction,
contending that "the interest of twelve (12%) per cent per annum
imposed on the total amount of the monetary award was in
contravention of law." The Court 10 ruled out the applicability of the
Reformina and Philippine Rabbit Bus Lines cases and, in its resolution of
15 April 1988, it explained: LLphil
"There should be no dispute that the imposition of 12%
interest pursuant to Central Bank Circular No. 416 . . . is
applicable only in the following: (1) loans; (2) forbearance
of any money, goods or credit; and (3) rate allowed in
judgments (judgments spoken of refer to judgments
involving loans or forbearance of any money, goods or
credits. (Philippine Rabbit Bus Lines Inc. v. Cruz, 143
SCRA 160-161 [1986]; Reformina v. Tomol, Jr., 139 SCRA
260 [1985]). It is true that in the instant case, there is
neither a loan or a forbearance, but then no interest is
actually imposed provided the sums referred to in the
judgment are paid upon the finality of the judgment. It is
delay in the payment of such final judgment, that will
cause the imposition of the interest.
"It will be noted that in the cases already adverted to, the
rate of interest is imposed on the total sum, from the filing
of the complaint until paid; in other words, as part of the
judgment for damages. Clearly, they are not applicable to
the instant case." (Emphasis supplied)
The subsequent case of American Express International, Inc., vs.
International Appellate Court 11 was a petition for review on certiorari from
the decision, dated 27 February 1985, of the then Intermediate Appellate
Court reducing the amount of moral and exemplary damages awarded by
the trial court, to P240,000.00 and P100,000.00, respectively, and its
resolution, dated 29 April 1985, restoring the amount of damages awarded
by the trial court, i.e., P2,000,000,00 as moral damages and P400,000.00 as
exemplary damages with interest thereon at 12% per annum from notice of
judgment, plus costs of suit. In a decision of 09 November 1988, this Court,
while recognizing the right of the private respondent to recover damages,
held the award, however, for moral damages by the trial court, later
sustained by the IAC, to be inconceivably large. The Court 12 thus set aside
the decision of the appellate court and rendered a new one, "ordering the
petitioner to pay private respondent the sum of One Hundred Thousand
(P100,000.00) Pesos as moral damages, withsix (6%) percent interest
thereon computed from the finality of this decision until paid." (Emphasis
supplied). Cdpr
Reformina came into fore again in the 21 February 1989 case of Florendo v.
Ruiz 13 which arose from a breach of employment contract. For having been
illegally dismissed, the petitioner was awarded by the trial court moral and
exemplary damages without, however, providing any legal interest thereon.
When the decision was appealed to the Court of Appeals, the latter held:
"WHEREFORE, except as modified hereinabove the
decision of the CFI of Negros Oriental dated October 31,
1972 is affirmed in all respects, with the modification that
defendants-appellants, except defendant-appellant
Merton Munn, are ordered to pay, jointly and severally, the
amounts stated in the dispositive portion of the decision,
including the sum of P1,400.00 in concept of
compensatory damages, with interest at the legal rate
from the date of the filing of the complaint until fully paid."
(Emphasis supplied)
The petition for review to this Court was denied. The records were
thereupon transmitted to the trial court, and an entry of judgment was
made. The writ of execution issued by the trial court directed that only
compensatory damages should earn interest at 6% per annum from the
date of the filing of the complaint. Ascribing grave abuse of discretion
on the part of the trial judge, a petition for certiorari assailed the said
order. This court said:
". . ., it is to be noted that the Court of Appeals ordered
the payment of interest 'at the legal rate' from the time of
the filing of the complaint. . . . Said circular [Central Bank
Circular No. 416] does not apply to actions based on a
breach of employment contract like the case at bar."
(Emphasis supplied)
The Court reiterated that the 6% interest per annum on the damages
should be computed from the time the complaint was filed until the
amount is fully paid.
Quite recently, the Court had another occasion to rule on the
matter. National Power Corporation vs. Angas, 14 decided on 08 May 1992,
involved the expropriation of certain parcels of land. After conducting a
hearing on the complaints for eminent domain, the trial court ordered the
petitioner to pay the private respondents certain sums of money as just
compensation for their lands so expropriated "with legal interest thereon . .
. until fully paid." Again, in applying the 6% legal interest per annum under
the Civil Code, the Court 15 declared: LLpr
". . ., (T)he transaction involved is clearly not a loan or
forbearance of money, goods or credits but expropriation
of certain parcels of land for a public purpose, the
payment of which is without stipulation regarding interest,
and the interest adjudged by the trial court is in the nature
of indemnity for damages. The legal interest required to
be paid on the amount of just compensation for the
properties expropriated is manifestly in the form of
indemnity for damages for the delay in the payment
thereof. Therefore, since the kind of interest involved in
the joint judgment of the lower court sought to be
enforced in this case is interest by way of damages, and
not by way of earnings from loans, etc. Art. 2209 of the
Civil Code shall apply."
Concededly, there have been seeming variances in the above holdings. The
cases can perhaps be classified into two groups according to the similarity
of the issues involved and the corresponding rulings rendered by the court.
The " first group" would consist of the cases of Reformina v.
Tomol (1985), Philippine Rabbit Bus Lines v. Cruz (1986), Florendo v.
Ruiz (1989) and National Power Corporation v. Angas (1992). In the "second
group" would be Malayan Insurance Company v. Manila Port
Service (1969), Nakpil and Sons v. Court of Appeals (1988), and American
Express International v. Intermediate Appellate Court (1988). LLpr
In the " first group," the basic issue focus on the application of either the 6%
(under the Civil Code) or 12% (under the Central Bank Circular) interest per
annum. It is easily discernible in these cases that there has been a
consistent holding that the Central Bank Circular imposing the 12% interest
per annum applies only to loans or forbearance 16 of money, goods or
credits, as well as to judgments involving such loan or forbearance of
money, goods or credits, and that the 6% interest under the Civil Code
governs when the transaction involves the payment of indemnities in the
concept of damage arising from the breach of a delay in the performance of
obligations in general. Observe, too, that in these cases, a common time
frame in the computation of the 6% interest per annum has been applied,
i.e., from the time the complaint is filed until the adjudged amount is fully
paid.
The "second group," did not alter the pronounced rule on the application of
the 6% or 12% interest per annum, 17 depending on whether or not the
amount involved is a loan or forbearance, on the one hand, or one of
indemnity for damage, on the other hand. Unlike, however, the "first group"
which remained consistent in holding that the running of the legal interest
should be from the time of the filing of the complaint until fully paid, the
"second group" varied on the commencement of the running of the legal
interest. cdll
Malayan held that the amount awarded should bear legal interest from the
date of the decision of the court a quo, explaining that "if the suit were for
damages, 'unliquidated and not known until definitely ascertained, assessed
and determined by the courts after proof,' then, interest 'should be from the
date of the decision.'" American Express International v. IAC, introduced a
different time frame for reckoning the 6% interest by ordering it to be
"computed from the finality of (the) decision until paid." The Nakpil and Sons
case ruled that 12% interest per annum should be imposed from the finality
of the decision until the judgment amount is paid.
The ostensible discord is not difficult to explain. The factual circumstances
may have called for different applications, guided by the rule that the courts
are vested with discretion, depending on the equities of each case, on the
award of interest. Nonetheless, it may not be unwise, by way of clarification
and reconciliation, to suggest the following rules of thumb for future
guidance.
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts 18 is breached, the contravenor can be
held liable for damages. 19 The provisions under Title XVIII on "Damages" of
the Civil Code govern in determining the measure of recoverable
damages. 20
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: LibLex
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. 21 Furthermore, the interest
due shall itself earn legal interest from the time it is judicially
demanded. 22 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 23 of the Civil PHILIPPINE NATIONAL CONSTRUCTION CORPORATI
Code. ON, petitioner, vs. APAC MARKETING CORPORATION,
represented by CESAR M. ONG, JR., respondents.
2. When a obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed
at the discretion of the court 24 at the rate of 6% per annum. 25 No interest,
however, shall be adjudged on unliquidated claims or damages except when DECISION
or until the demand can be established with reasonable
certainty. 26 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 SERENO, C.J p:
cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date of the judgment of the court is In this Petition for Review on Certiorari under Rule 45 of the Revised Rules
made (at which time the quantification of damages may be deemed to have on Civil Procedures, the primordial issue to be resolved is whether the Court
been reasonably ascertained). The actual base for the computation of legal of Appeals (CA) 1 correctly affirmed the court a quo 2 in holding petitioner
interest shall, in any case, be on the amount of finally adjudged. LLjur liable to respondent for attorney's fees. HCITDc

3. When the judgment of the court awarding a sum of money becomes final The Antecedent Facts
and executory, the rate of legal interest, whether the case falls under Considering that there are no factual issues involved, as the Court of
paragraph 1 or paragraph 2, above, shall be 12% per annum from such Appeals (CA) adopted the findings of fact of the Regional Trial Court (RTC)
finality until its satisfaction, this interim period being deemed to be by then of Quezon City, Branch 96, we hereby adopt the CA's findings, as follows:
an equivalent to a forbearance of credit.
The present case involves a simple purchase transaction
WHEREFORE, the petition is partly GRANTED. The appealed decision is between defendant-
AFFIRMED with the MODIFICATION that the legal interest to be paid is SIX appellant Philippine National Construction Corporation (P
PERCENT(6%) on the amount due computed from the decision, dated 03 NCC), represented by defendants-appellants Rogelio
February 1988, of the court a quo. A TWELVE PERCENT (12%) interest, in Espiritu and Rolando Macasaet, and plaintiff-
lieu of SIX PERCENT (6%), shall be imposed on such amount upon finality of appellee APAC, represented by Cesar M. Ong, Jr.,
this decision until the payment thereof. cdll involving crushed basalt rock delivered by plaintiff-
SO ORDERED. appellee to defendant-appellant PNCC.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, On August 17, 1999, plaintiff-appellee filed with the trial
Bellosillo, Melo, Quiason, Puno and Kapunan, JJ., concur. court a complaint against defendants-appellees for
collection of sum of money with damages, alleging that (i)
Mendoza, J., took no part. in March 1998, defendants-appellants engaged the
services of plaintiff-appellee by buying aggregates
||| (Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, [July 12, materials from plaintiff-appellee, for which the latter had
1994], 304 PHIL 236-254) delivered and supplied good quality crushed basalt rock;
(ii) the parties had initially agreed on the terms of payment,
whereby defendants-appellants would issue the check
corresponding to the value of the materials to be
FIRST DIVISION
delivered, or "Check Before Delivery," but prior to the
implementation of the said payment agreement,
[G.R. No. 190957. June 5, 2013.] defendants-appellants requested from plaintiff-appellee a
30-day term from the delivery date within which to pay,
which plaintiff-appellee accepted; and (iii) after making
deliveries pursuant to the purchase orders and despite
demands by plaintiff-appellee, defendants-appellants
failed and refused to pay and settle their overdue
accounts. The complaint prayed for payment of the
amount of P782,296.80 "plus legal interest at the rate of
not less than 6% monthly, to start in April, 1999 until the
full obligation is completely settled and paid," among
others.
On November 16, 1999, defendants-appellants filed a
motion to dismiss, alleging that the complaint was
premature considering that defendant-appellant PNCC
had been faithfully paying its obligations to plaintiff-
appellee, as can be seen from the substantial reduction of
its overdue account as of August 1999.
In an Order dated January 17, 2000, the trial court denied
the motion to dismiss. Thus, defendants-appellants filed
their answer, alleging that the obligation of defendant-
appellant PNCC was only with respect to the balance of
the principal obligation that had not been fully paid which,
based on the latest liquidation report, amounted to only
P474,095.92.
After the submission of the respective pre-trial briefs of
the parties, trial was held. However, only plaintiff-appellee
presented its evidence. For their repeated failure to attend
the hearings, defendants-appellants were deemed to have
waived the presentation of their evidence.
On July 10, 2006, the trial court rendered a Decision, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in
favor of the plaintiff, ordering defendants jointly
and solidarily to pay:
1. P782,296.80 as actual damages;
2. P50,000.00 as attorney's fees, plus P3,000.00
per court appearance;
3. Cost of suit.
SO ORDERED.
Defendants-appellants filed a motion for reconsideration,
alleging that during the pendency of the case, the
principal obligation was fully paid and hence, the award
by the trial court of actual damages in the amount of
P782,269.80 was without factual and legal bases.
In an Order dated October 6, 2006, the trial court
considered defendants-appellants' claim of full payment
of the principal obligation, but still it ordered them to pay
legal interest of twelve per cent (12%) per annum. Thus:
"WHEREFORE, the decision dated July 10, 2006
is hereby modified, by ordering defendants jointly
and solidarily to pay plaintiff as follows, to wit:
1. P220,234.083
2. P50,000.00 as attorney's fees, plus
P3,000.00 per court appearance;
3. Cost of Suit.
SO ORDERED."
Defendants-appellants filed the present appeal which is
premised on the following assignment of errors:
I.THE REGIONAL TRIAL COURT GRAVELY
ERRED IN AWARDING INTEREST AT THE
RATE OF 12% PER ANNUM
AMOUNTING TO P220,234.083 AND
ATTORNEY'S FEES IN FAVOR OF
PLAINTIFF-APPELLEE.
II.THE REGIONAL TRIAL COURT GRAVELY
ERRED IN HOLDING DEFENDANTS
ROGELIO ESPIRITU AND ROLANDO
MACASAET JOINTLY AND SOLIDARILY
LIABLE WITH DEFENDANT PNCC.
THE RULING OF THE COURT OF APPEALS
On 9 July 2009, the Special Fourth Division of the CA promulgated a
Decision 3 in CA-G.R. CV No. 88827, affirming with modification the
assailed Decision of the court a quo. The dispositive portion of the CA
Decision reads as follows:
WHEREFORE, the appealed Order dated October 6, 2006
is affirmed, subject to the modification that defendant-
appellant PNCC is ordered to pay legal interest at six per
cent (6%) per annum on the principal obligation,
 computed from January 8, 1999 until its full payment in (4) In case of a clearly unfounded civil
January 2001. Defendants-appellants Rogelio Espiritu and action or proceeding against the
Rolando Macasaet are absolved from liability. The Order plaintiff;
dated October 6, 2006 is affirmed in all other respects.
(5) Where the defendant acted in gross
On 29 July 2009, herein petitioner filed a Motion for Reconsideration, which and evident bad faith in refusing to
raised the lone issue of the propriety of the award of attorney's fees in favor satisfy the plaintiff's plainly valid, just
of respondent. 4 It should be noted that in said motion, petitioner fully and demandable claim;
agreed with the CA Decision imposing 6% legal interest per annum on the
principal obligation and absolving Rogelio Espiritu and Rolando Macasaet (6) In actions for legal support;
from any liability as members of the board of directors of PNCC. 5 Thus, the (7) In actions for the recovery of wages
main focus of the Motion for Reconsideration was on the CA's affirmation of of household helpers, laborers and
the court a quo's Decision awarding attorney's fees in favor of respondent. skilled workers;
However, the appellate court's Former Special Fourth Division denied
petitioner's Motion for Reconsideration in a Resolution dated 18 January (8) In actions for indemnity under
2010. 6 workmen's compensation and
employer's liability laws;
THE SOLE ISSUE
(9) In a separate civil action to recover
Aggrieved, petitioner now assails before us the 9 July 2009 Decision of the civil liability arising from a crime;
CA by raising the sole issue of whether the CA gravely erred in awarding
attorney's fees to respondent. (10) When at least double judicial costs
are awarded;
THE COURT'S RULING
(11) In any other case where the court
The Petition is impressed with merit.
deems it just and equitable that
Article 2208 of the New Civil Code of the Philippines states the policy that attorney's fees and expenses of
should guide the courts when awarding attorney's fees to a litigant. As a litigation should be recovered.
general rule, the parties may stipulate the recovery of attorney's fees. In the
In all cases, the attorney's fees and expenses of litigation
absence on such stipulation, this article restrictively enumerates the
must be reasonable.
instances when these fees may be recovered, to wit:
In ABS-CBN Broadcasting Corp. v. CA, 7 this Court had the occasion to
Art. 2208.In the absence of stipulation, attorney's fees and
expound on the policy behind the grant of attorney's fees as actual or
expenses of litigation, other than judicial costs, cannot be
compensatory damages:
recovered, except:
(T)he law is clear that in the absence of stipulation,
(1) When exemplary damages are
attorney's fees may be recovered as actual or
awarded;
compensatory damages under any of the circumstances
(2) When the defendant's act or provided for in Article 2208 of the Civil Code.
omission has compelled the plaintiff to
The general rule is that attorney's fees cannot be
litigate with third persons or to incur
recovered as part of damages because of the policy that
expenses to protect his interest;
no premium should be placed on the right to litigate. They
(3) In criminal cases of malicious are not to be awarded every time a party wins a suit. The
prosecution against the plaintiff; power of the court to award attorney's fees under Article
2208 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 no sufficient
showing of bad faith could be reflected in a party's
persistence in a case other than an erroneous conviction
of the righteousness of his cause.
In Benedicto v. Villaflores, 8 we explained the reason behind the need for the
courts to arrive upon an actual finding to serve as basis for a grant of
attorney's fees, considering the dual concept of these fees as ordinary and
extraordinary:
It is settled that the award of attorney's fees is the
exception rather than the general rule; counsel's fees 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. Attorney's fees, as part of damages, are
not necessarily equated to the amount paid by a litigant to
a lawyer. In the ordinary sense, attorney's fees represent
the reasonable compensation paid to a lawyer by his
client for the legal services he has rendered to the latter;
while in its extraordinary concept, they may be awarded
by the court as indemnity for damages to be paid by the
losing party to the prevailing party. Attorney's fees as part
of damages are awarded only in the instances specified in
Article 2208 of the Civil Code.As such, it is necessary for
the court to make findings of fact and law that would bring
the case within the ambit of these enumerated instances
to justify the grant of such award, and in all cases it must
be reasonable.
We can glean from the above ruling that attorney's fees are not awarded as
a matter of course every time a party wins. We do not put a premium on the
right to litigate. On occasions that those fees are awarded, the basis for the
grant must be clearly expressed in the decision of the court.
Petitioner contends that the RTC's Decision has no finding that would fall
under any of the exceptions enumerated in Article 2208 of the new Civil
Code. Further, it alleges that the court a quo has not given any factual, legal,
or equitable justification for applying paragraph 11 of Article 2208 as basis
the latter's exercise of discretion in holding petitioner liable for attorney's
fees. 9 We agree with petitioner on these points.
We have consistently held that an award of attorney's fees under Article
2208 demands factual, legal, and equitable justification to avoid speculation
and conjecture surrounding the grant thereof. 10 Due to the special nature
of the award of attorney's fees, a rigid standard is imposed on the courts
before these fees could be granted. Hence, it is imperative that they clearly
and distinctly set forth in their decisions the basis for the award thereof. It is
not enough that they merely state the amount of the grant in the dispositive
portion of their decisions. 11 It bears reiteration that the award of attorney's
fees is an exception rather than the general rule; thus, there must be
compelling legal reason to bring the case within the exceptions provided
under Article 2208 of the Civil Code to justify the award. 12
We have perused the assailed CA's Decision, but cannot find any factual,
legal, or equitable justification for the award of attorney's fees in favor of
respondent. The appellate court simply quoted the portion of the RTC
Decision that granted the award as basis for the affirmation thereof. There
was no elaboration on the basis. There is therefore an absence of an
independent CA finding of the factual circumstances and legal or equitable
basis to justify the grant of attorney's fees. The CA merely adopted the
RTC's rational for the award, which in this case we find to be sorely
inadequate.
The RTC found as follows:
. . . since it is clear that plaintiff was compelled to hire
the services of a counsel, to litigate and to protect his
interest by reason of an unjustified act of the other
party, plaintiff is entitled to recover attorney's fees in the
amount of P50,000.00 which it paid as acceptance fee
and P3,000.00 as appearance fee. 13
The only discernible reason proffered by the trial court in granting the award
was that respondent, as complainant in the civil case, was forced to litigate
to protect the latter's interest. Thus, we find that there is an obvious lack of
a compelling legal reason to consider the present case as one that falls
within the exception provided under Article 2208 of the Civil Code.Absent
such finding, we hold that the award of attorney's fees by the court a
quo, as sustained by the appellate court, was improper and must be
deleted.
WHEREFORE, the foregoing Petition is GRANTED. The assailed Decision
dated 9 July 2009 of the Court of Appeals in CA-G.R. CV No. 88827
is MODIFIED, in that the award of attorney's fees in the amount of P50,000
as acceptance fee and P3,000 as appearance fee, in favor of
respondent APAC MarketingIncorporated, is hereby DELETED.
No pronouncement as to costs.
SO ORDERED.
Leonardo-de Castro, Bersamin, Velasco, Jr. * and Reyes, JJ., concur.
||| (Philippine National Construction Corp. v. APAC Marketing Corp., G.R. No.
190957, [June 5, 2013], 710 PHIL 389-397)
FIRST DIVISION
[G.R. No. 146918. May 2, 2006.]
CITIBANK, N.A., petitioner, vs. SPOUSES LUIS AND
CARMELITA CABAMONGAN AND THEIR SONS LUIS
CABAMONGAN, JR. AND LITO
CABAMONGAN, respondents.
DECISION
AUSTRIA-MARTINEZ, J p:
Before the Court is a petition for review on certiorari of the Decision 1 dated
January 26, 2001 and the Resolution 2 dated July 30, 2001 of the Court of
Appeals (CA) in CA-G.R. CV No. 59033.
The factual background of the case is as follows:
On August 16, 1993, spouses Luis and Carmelita Cabamongan opened a
joint "and/or" foreign currency time deposit in trust for their sons Luis, Jr.
and Lito at the Citibank, N.A., Makati branch, with Reference No. 60-
22214372, in the amount of $55,216.69 for a term of 182 days or until
February 14, 1994, at 2.5625 per cent interest per annum. 3 Prior to
maturity, or on November 10, 1993, a person claiming to be Carmelita went
to the Makati branch and pre-terminated the said foreign currency time
deposit by presenting a passport, a Bank of America Versatele Card, an
ATM card and a Mabuhay Credit Card. 4She filled up the necessary forms
for pre-termination of deposits with the assistance of Account Officer Yeye
San Pedro. While the transaction was being processed, she was casually
interviewed by San Pedro about her personal circumstances and investment
plans. 5 Since the said person failed to surrender the original Certificate of
Deposit, she had to execute a notarized release and waiver document in
favor of Citibank, pursuant to Citibank's internal procedure, before the
money was released to her. 6 The release and waiver document 7 was not
notarized on that same day but the money was nonetheless given to the
person withdrawing. 8 The transaction lasted for about 40 minutes. 9
After said person left, San Pedro realized that she left behind an
identification card. 10 Thus, San Pedro called up Carmelita's listed address
at No. 48 Ranger Street, Moonwalk Village, Las Piñas, Metro Manila on the
same day to have the card picked up. 11 Marites, the wife of Lito, received
San Pedro's call and was stunned by the news that Carmelita preterminated
her foreign currency time deposit because Carmelita was in the United
States at that time. 12The Cabamongan spouses work and reside in
California. Marites made an overseas call to Carmelita to inform her about
what happened. 13 The Cabamongan spouses were shocked at the news. It
seems that sometime between June 10 and 16, 1993, an unidentified person
broke in at the couple's residence at No. 3268 Baldwin Park Boulevard,
Baldwin Park, California. Initially, they reported that only Carmelita's jewelry
box was missing, but later on, they discovered that other items, such as
their passports, bank deposit certificates, including the subject foreign
currency deposit, and identification cards were also missing. 14 It was only
then that the Cabamongan spouses realized that their passports and bank
deposit certificates were lost. 15
Through various overseas calls, the Cabamongan spouses informed
Citibank, thru San Pedro, that Carmelita was in the United States and did
not preterminate their deposit and that the person who did so was an
impostor who could have also been involved in the break-in of their
California residence. San Pedro told the spouses to submit the necessary
documents to support their claim but Citibank concluded nonetheless that
Carmelita indeed preterminated her deposit. In a letter dated September 16,
1994, the Cabamongan spouses, through counsel, made a formal demand
upon Citibank for payment of their preterminated deposit in the amount of
$55,216.69 with legal interests. 16 In a letter dated November 28, 1994,
Citibank, through counsel, refused the Cabamongan spouses' demand for
payment, asserting that the subject deposit was released to Carmelita upon
proper identification and verification. 17
On January 27, 1995, the Cabamongan spouses filed a complaint against
Citibank before the Regional Trial Court of Makati for Specific Performance
with Damages, docketed as Civil Case No 95-163 and raffled to Branch 150
(RTC). 18
In its Answer dated April 20, 1995, Citibank insists that it was not negligent
of its duties since the subject deposit was released to Carmelita only upon
proper identification and verification. 19
At the pre-trial conference the parties failed to arrive at an amicable
settlement. 20 Thus, trial on the merits ensued. HDTSCc
For the plaintiffs, the Cabamongan spouses themselves and Florenda G.
Negre, Documents Examiner II of the Philippine National Police (PNP) Crime
Laboratory in Camp Crame, Quezon City, testified. The Cabamongan
spouses, in essence, testified that Carmelita could not have preterminated
the deposit account since she was in California at the time of the
incident. 21 Negre testified that an examination of the questioned signature
and the samples of the standard signatures of Carmelita submitted in the
RTC showed a significant divergence. She concluded that they were not
written by one and the same person. 22
For the respondent, Citibank presented San Pedro and Cris Cabalatungan,
Vice-President and In-Charge of Security and Management Division. Both
San Pedro and Cabalatungan testified that proper bank procedure was
followed and the deposit was released to Carmelita only upon proper
identification and verification. 23
On July 1, 1997, the RTC rendered a decision in favor of the Cabamongan
spouses and against Citibank, the dispositive portion of which reads, thus:
WHEREFORE, premises considered, defendant Citibank,
N.A., is hereby ordered to pay the plaintiffs the following:
1) the principal amount of their Foreign Currency Deposit
(Reference No. 6022214372) amounting to $55,216.69 or
its Phil. Currency equivalent plus interests from August 16,
1993 until fully paid;
2) Moral damages of P50,000.00;
3) Attorney's fees of P50,000.00; and
4) Cost of suit.
SO ORDERED. 24
The RTC reasoned that:
. . . Citibank, N.A., committed negligence resulting to the
undue suffering of the plaintiffs. The forgery of the
signatures of plaintiff Carmelita Cabamongan on the
questioned documents has been categorically established
by the handwriting expert. . . . Defendant bank was clearly
remiss in its duty and obligations to treat plaintiff's
account with the highest degree of care, considering the
nature of their relationship. Banks are under the obligation
to treat the accounts of their depositors with meticulous
care. This is the reason for their established procedure of
requiring several specimen signatures and recent picture
from potential depositors. For every transaction, the
depositor's signature is passed upon by personnel to
check and countercheck possible irregularities and
therefore must bear the blame when they fail to detect the
forgery or discrepancy. 25
Despite the favorable decision, the Cabamongan spouses filed on October
1, 1997 a motion to partially reconsider the decision by praying for an
increase of the amount of the damages awarded. 26 Citibank opposed the
motion. 27 On November 19, 1997, the RTC granted the motion for partial
reconsideration and amended the dispositive portion of the decision as
follows:
From the foregoing, and considering all the evidence laid
down by the parties, the dispositive portion of the court's
decision dated July 1, 1997 is hereby amended and/or
modified to read as follows:
WHEREFORE, defendant Citibank, N.A., is hereby
ordered to pay the plaintiffs the following:
1) the principal amount of their foreign currency
deposit (Reference No. 6022214372) amounting
to $55,216.69 or its Philippine currency equivalent
(at the time of its actual payment or execution)
plus legal interest from Aug. 16, 1993 until fully
paid.
2) moral damages in the amount of
P200,000.00; cAISTC
3) exemplary damages in the amount of
P100,000.00;
4) attorney's fees of P100,000.00;
5) litigation expenses of P200,000.00;
6) cost of suit.
SO ORDERED. 28
Dissatisfied, Citibank filed an appeal with the CA, docketed as CA-G.R. CV
No. 59033. 29 On January 26, 2001, the CA rendered a decision sustaining
the finding of the RTC that Citibank was negligent, ratiocinating in this wise:
In the instant case, it is beyond dispute that the subject
foreign currency deposit was pre-terminated on 10
November 1993. But Carmelita Cabamongan, who works
as a nursing aid (sic) at the Sierra View Care Center in
Baldwin Park, California, had shown through her
Certificate of Employment and her Daily Time Record from
the [sic] January to December 1993 that she was in the
United States at the time of the incident.
Defendant Citibank, N.A., however, insists that Carmelita
was the one who pre-terminated the deposit despite
claims to the contrary. Its basis for saying so is the fact
that the person who made the transaction on the incident
mentioned presented a valid passport and three (3) other
identification cards. The attending account officer
examined these documents and even interviewed said
person. She was satisfied that the person presenting the
documents was indeed Carmelita Cabamongan. However,
such conclusion is belied by these following
circumstances.
First, the said person did not present the certificate of
deposit issued to Carmelita Cabamongan. This would not
have been an insurmountable obstacle as the bank, in the
absence of such certificate, allows the termination of the
deposit for as long as the depositor executes a notarized
release and waiver document in favor of the bank.
However, this simple procedure was not followed by the
bank, as it terminated the deposit and actually delivered
the money to the impostor without having the said
document notarized on the flimsy excuse that another
department of the bank was in charge of notarization. The
said procedure was obviously for the protection of the
bank but it deliberately ignored such precaution. At the
very least, the conduct of the bank amounts to
negligence.
Second, in the internal memorandum of Account Officer
Yeye San Pedro regarding the incident, she reported that
upon comparing the authentic signatures of Carmelita
Cabamongan on file with the bank with the signatures
made by the person claiming to be Cabamongan on the
documents required for the termination of the deposit, she
noticed that one letter in the latter [sic] signatures was
different from that in the standard signatures. She
requested said person to sign again and scrutinized the
identification cards presented. Presumably, San Pedro
was satisfied with the second set of signatures made as
she eventually authorized the termination of the deposit.
However, upon examination of the signatures made
during the incident by the Philippine National Police (PNP)
Crime Laboratory, the said signatures turned out to be
forgeries. As the qualifications of Document Examiner
Florenda Negre were established and she satisfactorily
testified on her findings during the trial, we have no
reason to doubt the validity of her findings. Again, the
bank's negligence is patent. San Pedro was able to detect
discrepancies in the signatures but she did not exercise
additional precautions to ascertain the identity of the
person she was dealing with. In fact, the entire transaction
took only 40 minutes to complete despite the anomalous
situation. Undoubtedly, the bank could have done a better
job. CDScaT
Third, as the bank had on file pictures of its depositors, it
is inconceivable how bank employees could have been
duped by an impostor. San Pedro admitted in her
testimony that the woman she dealt with did not resemble
the pictures appearing on the identification cards
presented but San Pedro still went on with the sensitive
transaction. She did not mind such disturbing anomaly
because she was convinced of the validity of the
passport. She also considered as decisive the fact that
the impostor had a mole on her face in the same way that
the person in the pictures on the identification cards had a
mole. These explanations do not account for the disparity
between the pictures and the actual appearance of the
impostor. That said person was allowed to withdraw the
money anyway is beyond belief.
The above circumstances point to the bank's clear
negligence. Bank transactions pass through a successive
[sic] of bank personnel, whose duty is to check and
countercheck transactions for possible errors. While a
bank is not expected to be infallible, it must bear the
blame for failing to discover mistakes of its employees
despite established bank procedure involving a battery of
personnel designed to minimize if not eliminate errors. In
the instant case, Yeye San Pedro, the employee who
primarily dealt with the impostor, did not follow bank
procedure when she did not have the waiver document
notarized. She also openly courted disaster by ignoring
discrepancies between the actual appearance of the
 impostor and the pictures she presented, as well as the
disparities between the signatures made during the
transaction and those on file with the bank. But even if
San Pedro was negligent, why must the other employees
in the hierarchy of the bank's work flow allow such thing
to pass unnoticed and unrectified? 30
The CA, however, disagreed with the damages awarded by the RTC. It held
that, insofar as the date from which legal interest of 12% is to run, it should
be counted from September 16, 1994 when extrajudicial demand was made.
As to moral damages, the CA reduced it to P100,000.00 and deleted the
awards of exemplary damages and litigation expenses. Thus, the dispositive
portion of the CA decision reads:
WHEREFORE, the decision of the trial court dated 01 July
1997, and its order dated 19 November 1997, are hereby
AFFIRMED with the MODIFICATION that the legal interest
for actual damages awarded in the amount of $55,216.69
shall run from 16 September 1994; exemplary damages
amounting to P100,000.00 and litigation expenses
amounting to P200,000.00 are deleted; and moral
damages is reduced to P100,000.00.
Costs against defendant.
SO ORDERED. 31
The Cabamongan spouses filed a motion for partial reconsideration on the
matter of the award of damages in the decision. 32 On July 30, 2001, the CA
granted in part said motion and modified its decision as follows:
1. The actual damages in amount of $55,216.69,
representing the amount of appellees' foreign currency
time deposit shall earn an interest of 2.5625% for the
period 16 August 1993 to 14 February 1994, as stipulated
in the contract;
2. From 16 September 1994 until full payment, the amount
of $55,216.69 shall earn interest at the legal rate of 12%
per annum, and;
3. The award of moral damages is reduced to
P50,000.00. 33
Dissatisfied, both parties filed separate petitions for review on certiorari with
this Court. The Cabamongan spouses' petition, docketed as G.R. No.
149234, was denied by the Court per its Resolution dated October 17,
2001. 34 On the other hand, Citibank's petition was given due course by the
Court per Resolution dated December 10, 2001 and the parties were
required to submit their respective memoranda. 35
Citibank poses the following errors for resolution:
1. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED AND GRAVELY ABUSED ITS
DISCRETION IN UPHOLDING THE LOWER
COURT'S DECISION WHICH IS NOT BASED ON
CLEAR EVIDENCE BUT ON GRAVE
MISAPPREHENSION OF FACTS.
2. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN UPHOLDING THE DECISION OF THE
TRIAL COURT AWARDING MORAL DAMAGES
WHEN IN FACT THERE IS NO BASIS IN LAW
AND FACT FOR SAID AWARD. IESAac
3. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN RULING THAT THE PRINCIPAL
AMOUNT OF US$55,216.69 SHOULD EARN
INTEREST AT THE RATE OF 12% PER ANNUM
FROM 16 SEPTEMBER 1994 UNTIL FULL
PAYMENT. 36
Anent the first ground, Citibank contends that the CA erred in affirming the
RTC's finding that it was negligent since the said courts failed to appreciate
the extra diligence of a good father of a family exercised by Citibank thru
San Pedro.
As to the second ground, Citibank argues that the Cabamongan spouses
are not entitled to moral damages since moral damages can be awarded
only in cases of breach of contract where the bank has acted willfully,
fraudulently or in bad faith. It submits that it has not been shown in this case
that Citibank acted willfully, fraudulently or in bad faith and mere negligence,
even if the Cabamongan spouses suffered mental anguish or serious anxiety
on account thereof, is not a ground for awarding moral damages.
On the third ground, Citibank avers that the interest rate should not be 12%
but the stipulated rate of 2.5625% per annum. It adds that there is no basis
to pay the interest rate of 12% per annum from September 16, 1994 until full
payment because as of said date there was no legal ground yet for the
Cabamongan spouses to demand payment of the principal and it is only
after a final judgment is issued declaring that Citibank is obliged to return
the principal amount of US$55,216.69 when the right to demand payment
starts and legal interest starts to run.
On the other hand, the Cabamongan spouses contend that Citibank's
negligence has been established by evidence. As to the interest rate, they
submit that the stipulated interest of 2.5635% should apply for the 182-day
contract period from August 16, 1993 to February 14, 1993; thereafter, 12%
should apply. They further contend that the RTC's award of exemplary
damages of P100,000.00 should be maintained. They submit that the CA
erred in treating the award of litigation expenses as lawyer's fees since they
have shown that they incurred actual expenses in litigating their claim
against Citibank. They also contend that the CA erred in reducing the award
of moral damages in view of the degree of mental anguish and emotional
fears, anxieties and nervousness suffered by them. 37
Subsequently, Citibank, thru a new counsel, submitted a Supplemental
Memorandum, 38 wherein it posits that, assuming that it was negligent, the
Cabamongan spouses were guilty of contributory negligence since they
failed to notify Citibank that they had migrated to the United States and
were residents thereat and after having been victims of a burglary, they
should have immediately assessed their loss and informed Citibank of the
disappearance of the bank certificate, their passports and other
identification cards, then the fraud would not have been perpetuated and
the losses avoided. It further argues that since the Cabamongan spouses
are guilty of contributory negligence, the doctrine of last clear chance is
inapplicable.
Citibank's assertion that the Cabamongan spouses are guilty of contributory
negligence and non-application of the doctrine of last clear chance cannot
pass muster since these contentions were raised for the first time only in
their Supplemental Memorandum. Indeed, the records show that said
contention were neither pleaded in the petition for review and the
memorandum nor in Citibank's Answer to the complaint or in its appellant's
brief filed with the CA. To consider the alleged facts and arguments raised
belatedly in a supplemental pleading to herein petition for review at this very
late stage in the proceedings would amount to trampling on the basic
principles of fair play, justice and due process. 39
The Court has repeatedly emphasized that, since the banking business is
impressed with public interest, of paramount importance thereto is the trust
and confidence of the public in general. Consequently, the highest degree of
diligence 40 is expected, 41 and high standards of integrity and
performance are even required, of it. 42 By the nature of its functions, a
bank is "under obligation to treat the accounts of its depositors with
meticulous care, 43 always having in mind the fiduciary nature of their
relationship." 44
In this case, it has been sufficiently shown that the signatures of Carmelita in
the forms for pretermination of deposits are forgeries. Citibank, with its
signature verification procedure, failed to detect the forgery. Its negligence
consisted in the omission of that degree of diligence required of banks. The
Court has held that a bank is "bound to know the signatures of its
customers; and if it pays a forged check, it must be considered as making
the payment out of its own funds, and cannot ordinarily charge the amount
so paid to the account of the depositor whose name was forged." 45 Such
principle equally applies here.
Citibank cannot label its negligence as mere mistake or human error. Banks
handle daily transactions involving millions of pesos. 46 By the very nature
of their works the degree of responsibility, care and trustworthiness
expected of their employees and officials is far greater than those of
ordinary clerks and employees. 47 Banks are expected to exercise the
highest degree of diligence in the selection and supervision of their
employees. 48
The Court agrees with the observation of the CA that Citibank, thru Account
Officer San Pedro, openly courted disaster when despite noticing
discrepancies in the signature and photograph of the person claiming to be
Carmelita and the failure to surrender the original certificate of time deposit,
the pretermination of the account was allowed. Even the waiver document
was not notarized, a procedure meant to protect the bank. For not observing
the degree of diligence required of banking institutions, whose business is
impressed with public interest, Citibank is liable for damages. SHECcT
As to the interest rate, Citibank avers that the claim of the Cabamongan
spouses does not constitute a loan or forbearance of money and therefore,
the interest rate of 6%, not 12%, applies.
The Court does not agree.
The time deposit subject matter of herein petition is a simple loan. The
provisions of the New Civil Code on simple loan govern the contract
between a bank and its depositor. Specifically, Article 1980 thereof
categorically provides that ". . . savings . . . deposits of money in banks and
similar institutions shall be governed by the provisions concerning simple
loan." Thus, the relationship between a bank and its depositor is that of a
debtor-creditor, the depositor being the creditor as it lends the bank money,
and the bank is the debtor which agrees to pay the depositor on demand.
The applicable interest rate on the actual damages of $55,216.69, should be
in accordance with the guidelines set forth in Eastern Shipping Lines, Inc. v.
Court of Appeals 49 to wit:
I. When an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on "Damages" of the Civil
Code govern in determining the measure of recoverable
damages.
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 the discretion 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 the 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. ScEaAD
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. 50
Thus, in a loan or forbearance of money, the interest due should be that
stipulated in writing, and in the absence thereof, the rate shall be 12% per
annum counted from the time of demand. Accordingly, the stipulated
interest rate of 2.562% per annum shall apply for the 182-day contract
period from August 16, 1993 to February 14, 1994. For the period from the
date of extra-judicial demand, September 16, 1994, until full payment, the
rate of 12% shall apply. As for the intervening period between February 15,
1994 to September 15, 1994, the rate of interest then prevailing granted by
Citibank shall apply since the time deposit provided for roll over upon
maturity of the principal and interest. 51
As to moral damages, in culpa contractual or breach of contract, as in the
case before the Court, moral damages are recoverable only if the defendant
has acted fraudulently or in bad faith, 52 or is found guilty of gross
negligence amounting to bad faith, or in wanton disregard of his contractual
obligations. 53The act of Citibank's employee in allowing the pretermination
of Cabamongan spouses' account despite the noted discrepancies in
Carmelita's signature and photograph, the absence of the original certificate
of time deposit and the lack of notarized waiver dormant, constitutes gross
negligence amounting to bad faith under Article 2220 of the Civil Code.
There is no hard-and-fast rule in the determination of what would be a fair
amount of moral damages since each case must be governed by its own
peculiar facts. The yardstick should be that it is not palpably and
scandalously excessive. 54 The amount of P50,000.00 awarded by the CA is
reasonable and just. Moreover, said award is deemed final and executory
insofar as respondents are concerned considering that their petition for
review had been denied by the Court in its final and executory Resolution
dated October 17, 2001 in G.R. No. 149234.
Finally, Citibank contends that the award of attorney's fees should be
deleted since such award appears only in the dispositive portion of the
decision of the RTC and the latter failed to elaborate, explain and justify the
same.
Article 2208 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. 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. 55 The award of
attorney's fees is the exception rather than the general rule. As such, it is
necessary for the 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. 56They must be clearly explained and justified by the trial court in
the body of its decision. Consequently, the award of attorney's fees should
be deleted.
WHEREFORE, the instant petition is PARTIALLY GRANTED. The assailed
Decision and Resolution are AFFIRMED with MODIFICATIONS, as follows:
1. The interest shall be computed as follows:
a. The actual damages in principal amount of
$55,216.69, representing the amount of
foreign currency time deposit shall earn
interest at the stipulated rate of 2.5625%
for the period August 16, 1993 to
February 14, 1994;
b. From February 15, 1994 to September 15,
1994, the principal amount of $55,216.69
and the interest earned as of February 14,
1994 shall earn interest at the rate then
prevailing granted by Citibank; DSIaAE
c. From September 16, 1994 until full payment,
the principal amount of $55,216.69 and
the interest earned as of September 15,
1994, shall earn interest at the legal rate
of 12% per annum;
2. The award of attorney's fees is DELETED.
No pronouncement as to costs.
SO ORDERED.
Panganiban, C.J., Ynares-Santiago and Callejo, Sr., JJ., concur.
Chico-Nazario, J., is on official leave.
||| (Citibank, N.A. v. Spouses Cabamongan, G.R. No. 146918, [May 2, 2006],
522 PHIL 476-497)
FIRST DIVISION
[G.R. No. 170073. October 18, 2010.]
SPOUSES RAMY and ZENAIDA
PUDADERA, petitioners, vs. IRENEO MAGALLANES
and the late DAISY TERESA CORTEL MAGALLANES
substituted by her children, NELLY M. MARQUEZ,
ELISEO MAGALLANES and ANGEL
MAGALLANES, respondents.
DECISION
DEL CASTILLO, J p:
One is considered a buyer in bad faith not only when he
purchases real estate with knowledge of a defect or lack of title in his
seller but also when he has knowledge of facts which should have
alerted him to conduct further inquiry or investigation.
This Petition for Review on Certiorari seeks to reverse and set
aside the Court of Appeal's (CA's) June 6, 2005 Decision 1 in CA-G.R.
CV No. 55850, which affirmed the September 3, 1996 Decision 2 of the
Regional Trial Court (RTC) of Iloilo City, Branch 39 in Civil Case No.
22234. Likewise assailed is the September 20, 2005
Resolution 3 denying petitioners' motion for reconsideration.
Factual Antecedents
Belen Consing Lazaro (Lazaro) was the absolute owner of a
parcel of land, Lot 11-E, with an area of 5,333 square meters (sq. m.)
located in the District of Arevalo, Iloilo City and covered by Transfer
Certificate of Title (TCT) No. T-51250. On March 13, 1979, Lazaro sold a
400 sq. m. portion of Lot 11-E to Daisy Teresa Cortel Magallanes
(Magallanes) for the sum of P22,000.00 under a "Contract to
Sale" 4 [sic] payable in two years. On July 21, 1980, upon full payment
of the monthly installments, Lazaro executed a "Deed of Definite
Sale" 5 in favor of Magallanes. Thereafter, Magallanes had the lot fenced
and had a nipa hut constructed thereon.
The other portions of Lot 11-E were, likewise, sold by Lazaro to
several buyers, namely, Elizabeth Norada, Jose Macaluda, Jose
Melocoton, Nonilon Esteya, Angeles Palma, Medina Anduyan,
Evangelina Anas and Mario Gonzales. 6 On July 14, 1980, Lazaro
executed a "Partition Agreement" 7 in favor of Magallanes and the
aforesaid buyers delineating the portions to be owned by each buyer.
Under this agreement, Magallanes and Mario Gonzales were assigned
an 800 sq. m. portion of Lot 11-E, with each owning 400 sq. m. thereof,
denominated as Lot No. 11-E-8 in a Subdivision Plan 8 which was
approved by the Director of Lands on August 25, 1980. SCaEcD
It appears that the "Partition Agreement" became the subject of
legal disputes because Lazaro refused to turn over the mother title, TCT
No. T-51250, of Lot 11-E to the aforesaid buyers, thus, preventing them
from titling in their names the subdivided portions thereof.
Consequently, Magallanes, along with the other buyers, filed an adverse
claim with the Register of Deeds of Iloilo City which was annotated at
the back of TCT No. T-51250 on April 29, 1981. 9 Thereafter,
Magallanes and Gonzales filed a motion to surrender title in Cadastral
Case No. 9741 with the then Court of First Instance of Iloilo City, Branch
1 and caused the annotation of a notice of lis pendens at the back of
TCT No. T-51250 on October 22, 1981. 10
On November 23, 1981, Lazaro sold Lot 11-E-8, i.e., the lot
previously assigned to Magallanes and Mario Gonzales under the
aforesaid "Partition Agreement," to her niece, Lynn Lazaro, and the
latter's husband, Rogelio Natividad (Spouses Natividad), for the sum of
P8,000.00. 11 As a result, a new title, TCT No. T-58606, 12 was issued
in the name of Spouses Natividad. Due to this development, Magallanes
pursued her claims against Spouses Natividad by filing a civil case for
specific performance, injunction and damages. On September 2, 1983,
Magallanes caused the annotation of a notice of lis pendens at the back
of TCT No. T-58606. 13 Subsequently, Spouses Natividad subdivided
Lot 11-E-8 into two, Lot 11-E-8-A and Lot 11-E-8-B, each containing
400 sq. m.
The civil case filed by Magallanes was later dismissed by the
trial court for lack of jurisdiction as per an Order dated September 16,
1985 which was inscribed at the back of TCT No. T-58606 on July 7,
1986. 14 Four days prior to this inscription or on July 3, 1986, Spouses
Natividad sold Lot 11-E-8-A (subject lot) to petitioner Ramy Pudadera
(who later married petitioner Zenaida Pudadera on July 31, 1989) as
evidenced by a "Deed of Sale" 15 for the sum of P25,000.00. As a
consequence, a new title, TCT No. 72734, 16 was issued in the name of
the latter.
Sometime thereafter Magallanes caused the construction of two
houses of strong materials on the subject lot. On April 20, 1990,
petitioners filed an action for forcible entry against Magallanes with the
Municipal Trial Court in Cities of Iloilo City, Branch 2. On July 17, 1991,
the trial court dismissed the action. 17 It held that Magallanes was first
in possession of the subject lot by virtue of the "Deed of Definite Sale"
dated July 21, 1980 between Lazaro and Magallanes. After the aforesaid
sale, Magallanes filled the lot with soil; put up a fence; and built a small
hut thereon. On the other hand, the trial court found that when petitioner
Ramy Pudadera bought the subject lot from Spouses Natividad on July
3, 1986, the former had notice that someone else was already in
possession of the subject lot.
Having failed to recover the possession of the subject lot
through the aforesaid forcible entry case, petitioners commenced the
subject action for Recovery of Ownership, Quieting of Title and
Damages against Magallanes and her husband, Ireneo, in a
Complaint 18 dated February 25, 1995. Petitioners alleged that they are
the absolute owners of Lot 11-E-8-A as evidenced by TCT No. T-72734;
that Magallanes is also claiming the said lot as per a "Deed of Definite
Sale" dated July 21, 1980; that the lot claimed by Magallanes is different
from Lot 11-E-8-A; and that Magallanes constructed, without the
consent of petitioners, several houses on said lot. They prayed that they
be declared the rightful owners of Lot 11-E-8-A and that Magallanes be
ordered to pay damages. acIASE
In her Answer, 19 Magallanes countered that she is the absolute
lawful owner of Lot 11-E-8-A; that Lot 11-E-8-A belongs to her while Lot
11-E-8-B belongs to Mario Gonzales; that petitioners had prior
knowledge of the sale between her and Lazaro; that she enclosed Lot
11-E-8-A with a fence, constructed a house and caused soil fillings on
said lot which petitioners were aware of; and that she has been in actual
possession of the said lot from March 11, 1979 up to the present. She
prayed that TCT No. T-72734 in the name of petitioner Ramy Pudadera
be cancelled and a new one be issued in her name.
During the pendency of this case, Magallanes passed away and
was substituted by her heirs, herein respondents.
Ruling of the Regional Trial Court
On September 6, 1996, the trial court rendered judgment in
favor of respondents, viz.:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the [respondents] and against the
[petitioners]:
1. Declaring the [respondent] Daisy Teresa Cortel
Magallanes, substituted by her heirs, Nelly M. Magallanes,
Eliseo Magallanes and Angel Magallanes and Ireneo
Magallanes, as the rightful owners of Lot 11-E-8-A, Psd-
06-002539, which is now covered by Transfer Certificate
 of Title No. T-72734, still in the name of Ramy Pudadera,
situated in the District of Arevalo, Iloilo City, with an area
of 400 square meters more or less;
2. The [petitioners] spouses Ramy Pudadera and Zenaida
Pudadera are hereby ordered to execute the necessary
Deed of Reconveyance in favor of the above-named
parties, namely[,] Nelly M. Magallanes, Eliseo Magallanes,
. . . Angel Magallanes, and Ireneo Magallanes;
3. Ordering the [petitioners] to pay jointly and severally the
[respondents] the amount of P10,000.00 as attorney's
fees and the costs of the suit.
SO ORDERED. 20
The trial court ruled that respondents are the rightful owners of the
subject lot which was sold by Lazaro to their predecessor-in-interest,
Magallanes, on July 21, 1980. When Lazaro sold the subject lot for a
second time to Spouses Natividad on November 23, 1981, no rights
were transmitted because, by then, Magallanes was already the owner
thereof. For the same reason, when Spouses Natividad subsequently
sold the subject lot to petitioners on July 3, 1986, nothing was
transferred to the latter.
The trial court further held that petitioners cannot be considered
buyers in good faith and for value because after Magallanes bought the
subject lot from Lazaro, Magallanes immediately took possession of the
lot, and constructed a fence with barbed wire around the property. The
presence of these structures should, thus, have alerted petitioners to the
possible flaw in the title of the Spouses Natividad considering that
petitioners visited the subject lot several times before purchasing the
same. Neither can petitioners claim that the title of the subject lot was
clean considering that a notice of lis pendens was annotated thereon in
connection with a civil case that Magallanes filed against Spouses
Natividad involving the subject lot. Although the notice of lis
pendens was subsequently cancelled on July 7, 1986, the deed of sale
between petitioners and Spouses Natividad was executed on July 3,
1986 or four days before said cancellation. Thus, petitioners had notice
that the subject property was under litigation. Since respondents are the
rightful owners of the subject lot, petitioners should execute a deed of
conveyance in favor of the former so that a new title may be issued in
the name of the respondents. aTcIEH
Ruling of the Court of Appeals
On June 6, 2005, the CA rendered the assailed Decision:
WHEREFORE, with all the foregoing, the decision of the
Regional Trial Court, Branch 39, Iloilo City dated
September 3, 1996 in civil case no. 22234 for Quieting of
Title, Ownership and Damages is hereby AFFIRMED in
toto.
All other claims and counterclaims are hereby dismissed
for lack of factual and legal basis.
No pronouncement as to cost.
SO ORDERED. 21
In affirming the ruling of the trial court, the appellate court reasoned that
under the rule on double sale what finds relevance is whether the
second buyer registered the second sale in good faith, that is, without
knowledge of any defect in the title of the seller. Petitioners'
predecessor-in-interest, Spouses Natividad, were not registrants in
good faith. When Magallanes first bought the subject lot from Lazaro on
July 21, 1980, Magallanes took possession of the same and had it
fenced and filled with soil. This was made way ahead of the November
23, 1981 Deed of Sale between Lazaro and Spouses Natividad. With so
much movement and transactions involving the subject lot and given
that Lyn Lazaro-Natividad is the niece of Lazaro, the appellate court
found it hard to believe that the Spouses Natividad were completely
unaware of any controversy over the subject lot.
The CA, likewise, agreed with the trial court that at the time
petitioners acquired the subject lot from Spouses Natividad on July 3,
1986, a notice of lis pendens was still annotated at the back of TCT No.
T-58606 due to a civil case filed by Magallanes against Spouses
Natividad. Although the case was subsequently dismissed by the trial
court for lack of jurisdiction, the notice of lis pendens was still subsisting
at the time of the sale of the subject lot between Spouses Natividad and
petitioners on July 3, 1986 because the lis pendens notice was
cancelled only on July 7, 1986. Consequently, petitioners cannot be
considered buyers and registrants in good faith because they were
aware of a flaw in the title of the Spouses Natividad prior to their
purchase thereof.
Issues
1. The Court of Appeals erred in not considering the
judicial admissions of Magallanes as well as the
documentary evidence showing that she was
claiming a different lot, Lot No. 11-E-8-B, and not
Lot 11-E-8-A which is registered in the name of
petitioners under TCT No. T-72734, consequently,
 its findings that Magallanes is the rightful owner of
Lot 11-E-8-A is contrary to the evidence on
record;
2. The Court of Appeals erred in applying the principle of
innocent purchasers for value and in good faith to
petitioners. Granting that the said principle may
be applied, the Court of Appeals erred in finding
that petitioners are not innocent purchasers for
value; SEAHID
3. The Court of Appeals erred in affirming the award of
attorney's fees against the petitioners. 22
Petitioners' Arguments
Petitioners postulate that the subject lot is different from the lot
which Magallanes bought from Lazaro. As per Magallanes' testimony in
the ejectment case, she applied for the zoning permit for Lot 11-E-8-B
and not Lot 11-E-8-A. Further, the tax declarations submitted in
evidence therein showed that Magallanes paid for the real estate taxes
of Lot 11-E-8-B and not Lot 11-E-8-A. Hence, there is no conflict of
claims since petitioners are asserting their rights over Lot 11-E-8-A while
respondents claim ownership over Lot 11-E-8-B. Moreover, assuming
that there was a double sale, the same did not involve petitioners. The
first sale was between Lazaro and Magallanes while the second sale
was between Lazaro and Spouses Natividad. It was erroneous for the
appellate court to conclude that Lyn Natividad was in bad faith simply
because she is the niece of Lazaro. The Spouses Natividad were not
impleaded in this case and cannot be charged as buyers in bad faith
without giving them their day in court. Petitioners claim that respondents
should first impugn the validity of Spouses Natividad's title by proving
that the latter acted in bad faith when they bought the subject lot from
Lazaro. Petitioners aver that the evidence on record failed to overcome
the presumption of good faith. Considering that Spouses Natividad were
buyers in good faith and considering further that petitioners' title was
derived from Lazaro, petitioners should, likewise, be considered buyers
in good faith.
Petitioners further argue that the rule on notice of lis
pendens was improperly applied in this case. The trial court's order
dismissing the civil case filed by Magallanes against Spouses Natividad
had long become final and executory before petitioners bought the
subject lot from Spouses Natividad. While it is true that the order of
dismissal was annotated at the back of TCT No. T-58606 only on July 7,
1986 or four days after the sale between Spouses Natividad and
petitioners, the cancellation of the notice of lis pendens was a mere
formality. In legal contemplation, the notice was, at the time of the sale
on July 3, 1986, ineffective. Citing Spouses Po Lam v. Court of
Appeals, 23 petitioners contend that the then existing court order for the
cancellation of the lis pendens notice at the time of the sale made them
buyers in good faith.
Finally, petitioners question the award of attorney's fees in favor
of respondents for lack of basis. Petitioners claim that they should be
awarded damages because respondents unlawfully prevented them
from taking possession of the subject lot.
Respondents' Arguments
Respondents counter that they are in possession of, and
claiming ownership over the subject lot, i.e., Lot 11-E-8-A, and not Lot
11-E-8-B. The claim of petitioners that the subject lot is different from
what respondents assert to be lawfully theirs is, thus, misleading. The
subject lot was acquired by respondents' predecessor-in-interest,
Magallanes, when Lazaro sold the same to Magallanes through a
contract to sell in 1979 and a deed of sale in 1980 after full payment of
the monthly installments. IcDHaT
After executing the contract to sell, Magallanes immediately
took possession of the subject lot; constructed a fence with barbed
wire; and filled it up with soil in preparation for the construction of
concrete houses. She also built a nipa hut and stayed therein since 1979
up to her demise. Respondents emphasize that upon payment of the full
purchase price under the contract to sell and the execution of the deed
of sale, Magallanes undertook steps to protect her rights due to the
refusal of Lazaro to surrender the mother title of the subject lot.
Magallanes recorded an adverse claim at the back of the mother title of
the subject lot and an initial notice of lis pendens thereon. She then filed
a civil case against Lazaro, and, later on, against Lazaro's successors-
in-interest, Spouses Natividad, which resulted in the inscription of a
notice of lis pendens on TCT No. 51250 and TCT No. T-58606. When
petitioners bought the subject lot from Spouses Natividad on July 3,
1986, the said notice of lis pendens was subsisting because the court
dismissal of said case was inscribed on the title only on July 7, 1986.
Petitioners cannot, therefore, be considered buyers in good faith.
Our Ruling
We affirm the decision of the CA with modifications.
Petitioners and respondents are claiming
ownership over the same lot.
 Petitioners contend that they are claiming ownership over Lot an Order dated September 16, 1985 which has already become final
11-E-8-A while Magallanes' claim is over Lot 11-E-8-B. Thus, there is no and executory as per the Certification dated June 16, 1986 issued by
conflict between their claims. the Branch Clerk of Court of the RTC of Iloilo City, Branch 33. 26 The
aforesaid court dismissal was, however, inscribed only on July 7, 1986
The argument is specious.
or three days after the sale of the subject lot to petitioners. 27
It is clear that Magallanes is claiming ownership over Lot 11-E-
Based on these established facts, petitioners correctly argue
8-A and not Lot 11-E-8-B. In her Answer to the Complaint, she alleged
that the said notice of lis pendens cannot be made the basis for holding
that she is "the absolute lawful owner of Lot 11-E-8-A." 24 Her act of
that they are buyers in bad faith. Indeed, at the time of the sale of the
fencing Lot 11-E-8-A and constructing two houses of strong materials
subject lot by Spouses Natividad to petitioners on July 7, 1986, the civil
thereon further evince her claim of ownership over the subject lot. Thus,
case filed by Magallanes against Spouses Natividad had long been
in the forcible entry case which petitioners previously filed against
dismissed for lack of jurisdiction and the said order of dismissal had
Magallanes involving the subject lot, the trial court noted:
become final and executory. In Spouses Po Lam v. Court of
At the pre-trial conference held on June 13, 1990, both Appeals, 28 the buyers similarly bought a property while a notice of lis
parties agreed to a relocation survey of the lot whereupon pendens was subsisting on its title. Nonetheless, we ruled that the
the Court commissioned the Bureau of Lands to buyers cannot be considered in bad faith because the alleged flaw, the
undertake a relocation survey of the lot in question. notice of lis pendens, was already being ordered cancelled at the time of
the sale and the cancellation of the notice terminated the effects of such
On October 1, 1990, the Bureau of Lands thru Engr.
notice. 29
Filomeno P. Daflo submitted the relocation survey report
with the following findings: . . . AaEcHC This notwithstanding, petitioners cannot be considered buyers
in good faith because, as will be discussed hereunder, they were aware
xxx xxx xxx of other circumstances pointing to a possible flaw in the title of Spouses
5. That it was ascertained in our investigation that the Natividad prior to the sale of the subject lot. Despite these
entire lot occupied by [Magallanes] (lot 11-E-8-A) is circumstances, petitioners did not take steps to ascertain the status of
the very same lot claimed by the [petitioners], as pointed the subject lot but instead proceeded with the purchase of the same.
out by its representative. 25 (Emphasis supplied.) One who buys a property with
knowledge of facts which should put him
After losing in the aforesaid forcible entry case, petitioners commenced
upon inquiry or investigation as to a
the subject action for quieting of title and recovery of ownership over Lot
possible defect in the title of the seller
11-E-8-A. Plainly, both parties are asserting ownership over the same
acts in bad faith. EHTADa
lot, i.e.,Lot 11-E-8-A, notwithstanding the error in the entries made by
Magallanes in her zoning application and tax declaration forms. Lot 11-E-8, of which the subject lot (i.e., Lot 11-E-8-A) forms
The notice of lis pendens at the back of part, was sold by Lazaro to two different buyers. As narrated earlier, Lot
the mother title of the subject lot was 11-E-8 is a portion of Lot 11-E, a 5,333 sq. m. lot covered by TCT No. T-
already ordered cancelled at the time of 51250. Lazaro subdivided the said lot and sold portions thereof to
the sale of the subject lot to petitioners, several buyers. One of these buyers was Magallanes who purchased a
hence, said notice cannot be made a 400 sq. m. portion on March 13, 1979. The metes and bounds of this lot
basis for finding petitioners as buyers in were later delineated in a "Partition Agreement" dated July 14, 1980
bad faith. executed by Lazaro in favor of the aforesaid buyers. As per this
agreement, Magallanes and Mario Gonzales were assigned Lot 11-E-8
A notice of lis pendens at the back of the mother title (i.e., TCT comprising 800 sq. m. with each owning a 400 sq. m. portion thereof.
No. T-58606) of Lot 11-E-8-A was inscribed on September 2, 1983 in This was the first sale involving Lot 11-E-8.
connection with the civil case for specific performance, injunction and
damages which Magallanes filed against Spouses Natividad. This case After the aforesaid sale, it appears Lazaro refused to turnover
was subsequently dismissed by the trial court for lack of jurisdiction in the mother title of Lot 11-E which resulted in the filing of legal suits by
Magallanes and the other buyers against her (Lazaro). While these suits
were pending, Lazaro sold Lot 11-E-8 to her niece Lynn and the latter's
husband Rogelio Natividad on November 23, 1981. Consequently, a
new title, TCT No. T-58606, was issued covering Lot 11-E-8 in the name
of Spouses Natividad. This was the second sale of Lot 11-E-8.
Subsequently, Spouses Natividad subdivided Lot 11-E-8 into
two, i.e., Lot 11-E-8-A and Lot 11-E-8-B, with each containing 400 sq.
m. On July 3, 1986, they sold Lot 11-E-8-A to petitioners. Lot 11-E-8-A
is the 400 sq. m. portion of Lot 11-E-8 which Magallanes claims to be
owned by her pursuant to the aforesaid "Partition Agreement" while the
other half, Lot 11-E-8-B, pertains to the lot of Mario Gonzales.
The question before us, then, is who between petitioners and
respondents have a better right over Lot 11-E-8-A?
Article 1544 of the Civil Code provides:
Art. 1544. If the same thing should have been sold to
different vendees, the ownership shall be transferred to
the person who may have first taken possession thereof in
good faith, if it should be movable property.
Should it be immovable property, the ownership shall
belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain
to the person who in good faith was first in the
possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
Thus, in case of a double sale of immovables, ownership shall belong to
"(1) the first registrant in good faith; (2) then, the first possessor in good
faith; and (3) finally, the buyer who in good faith presents the oldest
title." 30 However, mere registration is not enough to confer ownership.
The law requires that the second buyer must have acquired and
registered the immovable property in good faith. In order for the second
buyer to displace the first buyer, the following must be shown: "(1) the
second buyer must show that he acted in good faith (i.e., in ignorance of
the first sale and of the first buyer's rights) from the time of acquisition
until title is transferred to him by registration or failing registration, by
delivery of possession; and (2) the second buyer must show continuing
good faith and innocence or lack of knowledge of the first sale until his
contract ripens into full ownership through prior registration as provided
by law." 31 CIDTcH
One is considered a purchaser in good faith if he buys the
property without notice that some other person has a right to or interest
in such property and pays its fair price before he has notice of the
adverse claims and interest of another person in the same
property. 32 Well-settled is the rule that every person dealing with
registered land may safely rely on the correctness of the certificate of
title issued therefor and the law will in no way oblige him to go beyond
the certificate to determine the condition of the property. 33 "However,
this rule shall not apply when the party has actual knowledge of facts
and circumstances that would impel a reasonably cautious man to make
such inquiry or when the purchaser has knowledge of a defect or the
lack of title in his vendor or of sufficient facts to induce a reasonably
prudent man to inquire into the status of the title of the property in
litigation." 34 "His mere refusal to believe that such defect exists, or his
willful closing of his eyes to the possibility of the existence of a defect in
his vendor's title will not make him an innocent purchaser for value if it
later develops that the title was in fact defective, and it appears that he
had such notice of the defect had he acted with that measure of
precaution which may reasonably be required of a prudent man in a like
situation." 35
In the case at bar, both the trial court and CA found that
petitioners were not buyers and registrants in good faith owing to the
fact that Magallanes constructed a fence and small hut on the subject
lot and has been in actual physical possession since 1979. Hence,
petitioners were aware or should have been aware of Magallanes' prior
physical possession and claim of ownership over the subject lot when
they visited the lot on several occasions prior to the sale thereof. Thus,
the trial court held:
This Court believes the version of [Magallanes], that when
she bought the property from [Lazaro], she took
immediate possession of the 400-square meter portion
and constructed a fence [with] barbed wire surrounding
the said property. She also constructed a house made of
nipa, bamboo and concrete materials. This fact was even
confirmed by [petitioner] Zenaida Pudadera in her
testimony.
This Court cannot believe the testimony of [petitioner]
Zenaida Pudadera that they were the ones who
constructed the fence surrounding the 400-square meter
portion, because there was already an existing fence
made of bamboos and barbed wire put up by
[Magallanes]. When the [petitioners] therefore, visited the
land in question, several times before the purchase,
 particularly [petitioner] Ramy Pudadera, he must have
seen the fence surrounding the property in question. He
should have been curious why there was an existing fence
surrounding the property? [sic] He should have asked or
verified as to the status of the said property. A real estate
buyer must exercise ordinary care in buying . . . real
estate, especially the existence of the fence in this case
which must have [alerted him to inquire] whether someone
was already in possession of the property in question. 36
We find no sufficient reason to disturb these findings. The factual
findings of the trial court are accorded great weight and respect and are
even binding on this Court particularly where, as here, the findings of the
trial and appellate courts concur. 37 Although this rule is subject to
certain exceptions, we find none obtaining in this case. IADCES
Petitioners next argue that since the second sale involves
Lazaro and their predecessor-in-interest, Spouses Natividad, due
process requires that Spouses Natividad should first be allowed to
establish that they (Spouses Natividad) are second buyers and first
registrants in good faith before any finding on petitioners' own good
faith can be made considering that they (petitioners) merely acquired
their title from Spouses Natividad. Petitioners lament that Spouses
Natividad were not impleaded in this case. Thus, the finding that
petitioners acted in bad faith was improper.
The argument fails on two grounds.
First, as previously explained, the evidence duly established that
petitioners were aware of facts pointing to a possible flaw in the title of
Spouses Natividad when they visited the subject lot on several
occasions prior to the sale. This, by itself, was sufficient basis to rule
that they acted in bad faith. Stated differently, the presence or absence
of good faith on the part of Spouses Natividad during the second sale
involving the subject lot will not erase the bad faith of petitioners in
purchasing the subject lot from Spouses Natividad.
Second, petitioners miscomprehend the right to due process.
The records indicate that at no instance during the trial of this case were
they prevented from presenting evidence, including the testimonies of
Spouses Natividad, to support their claims. Thus, they were not denied
their day in court. Petitioners seem to forget that they were the ones
who filed this action to recover ownership and quiet title against
Magallanes. If petitioners intended to bolster their claim of good faith by
impleading the Spouses Natividad in this case, there was nothing to
prevent them from doing so. Time and again, we have ruled that the
burden of proof to establish the status of a purchaser and registrant in
good faith lies upon the one who asserts it. 38This onus
probandi cannot be discharged by mere invocation of the legal
presumption of good faith. 39
In sum, petitioners were negligent in not taking the necessary
steps to determine the status of the subject lot despite the presence of
circumstances which would have impelled a reasonably cautious man to
do so. Thus, we affirm the findings of the lower courts that they cannot
be considered buyers and registrants in good faith. Magallanes, as the
first buyer and actual possessor, was correctly adjudged by the trial
court as the rightful owner of the subject lot and the conveyance thereof
in favor of her heirs, herein respondents, is proper under the premises.
In addition, the trial court should be ordered to cause the cancellation of
TCT No. T-72734 by the Register of Deeds of Iloilo City and the
issuance of a new certificate of title in the names of
respondents. 40 This is without prejudice to any remedy which
petitioners may have against Spouses Natividad and/or Lazaro.
The award of attorney's fees is improper.
On the issue of the propriety of attorney's fees which the trial
court awarded in favor of respondents, we are inclined to agree with
petitioners that the same should be deleted for lack of basis. An award
of attorney's fees is the exception rather than the rule. 41 "The right to
litigate is so precious that a penalty should not be charged on those
who may exercise it erroneously." 42 It is not given merely because the
defendant prevails and the action is later declared to be unfounded
unless there was a deliberate intent to cause prejudice to the other
party. 43 We find the evidence of bad faith on the part of petitioners in
instituting the subject action to be wanting. Thus, we delete the award
of attorney's fees. ISaTCD
WHEREFORE, the petition is PARTIALLY GRANTED. The June
6, 2005 Decision and September 20, 2005 Resolution of the Court of
Appeals in CA-G.R. CV No. 55850 are AFFIRMED with the
following MODIFICATIONS: (1) The Regional Trial Court of Iloilo City,
Branch 39 is ORDERED to cause the cancellation by the Register of
Deeds of Iloilo City of TCT No. T-72734 and the issuance, in lieu thereof,
of the corresponding certificate of title in the names of respondents,
heirs of Daisy Teresa Cortel Magallanes, and (2) The award of attorney's
fees in favor of respondents is DELETED.
No pronouncement as to costs.
SO ORDERED.
Corona, C.J., Velasco, Jr., Leonardo-de Castro and Perez, JJ., concur.
||| (Spouses Pudadera v. Magallanes, G.R. No. 170073, [October 18, 2010], FS CARTAGENA, REGINALD
647 PHIL 655-675)
FS NAVA, PETER DE GUZMAN
FS PADILLA, ANGELITO

SECOND DIVISION FA CRUZ, MARIA

FA MONTINOLA, NANCY
[G.R. No. 198656. September 8, 2014.]
FA VICTA, ROSE ANN (Emphasis supplied)

NANCY S. MONTINOLA, petitioner, vs. PHILIPPINE Another email 8 enumerated the list of items taken from the crew members:
AIRLINES, respondent.
Katie,
Here is the list.

DECISION Flight Crew Blitz in gate area 10 crew. Seven of the 10

crew members had items removed from the aircraft on
their possession. Two additional bags were found on
jet-way after blitz. No bonded items were found but
LEONEN, J p: crew removed food items as listed:

Illegally suspended employees, similar to illegally dismissed employees, are 18 bags Doritos
entitled to moral damages when their suspension was attended by bad faith 15 bags Banana Chips
or fraud, oppressive to labor, or done in a manner contrary to morals, good 5 pkg instant chocolate
customs, or public policy. 5 bars Granola cTDaEH
18 bars Kit Kat
Petitioner Nancy S. Montinola (Montinola) comes to this court via a petition 34 Chocolate flavored Goldilocks
for review on certiorari under Rule 45 of the Rules of Court. She assails the 16 Regular Goldilocks cakes
decision 1 of the Court of Appeals 2 dated June 28, 2011 and its 9 1st class Bulgari Kits
resolution 3 dated September 20, 2011 in Philippine Airlines v. National 2 magazines
Labor Relations Commission and Nancy S. Montinola. 4 The Court of 6 rolls toilet paper
Appeals affirmed the finding of the National Labor Relations Commission 9 cans soda
that petitioner was suspended illegally but deleted the award of moral and 16 bottles of water
exemplary damages and attorney's fees. 5 1 yogurt
The deletion of the award of attorney's fees and moral and exemplary 12 small ice creams
damages is the subject of this petition. ICcaST 2 jars salsa
2 bottles Orange Juice
Montinola was employed as a flight attendant of Philippine Airlines (PAL) 1 bottle Cranberry Juice
since 1996. 6 On January 29, 2008, Montinola and other flight crew 1 bottle smoothie
members were subjected to custom searches in Honolulu, Hawaii, USA.
Items from the airline were recovered from the flight crew by customs All items returned to Philippine Airlines.
officials. Nancy Graham (Graham), US Customs and Border Protection Nancy I. Graham
Supervisor, sent an email to PAL regarding the search. The Supervisory CBPO
email 7 contained a list of PAL flight crew members involved in the search: A-TCET Air
FP CHUIDIAN, JUAN DE GUZMAN Honolulu Hi
PAL conducted an investigation. Montinola was among those implicated
because she was mentioned in Graham's email. 9 On February 1, 2008,
PAL's Cabin Services Sub-Department required Montinola to comment on
the incident. 10 She gave a handwritten explanation three days after, stating
that she did not take anything from the aircraft. She also committed to give
her full cooperation should there be any further inquiries on the
matter. 11 AEIHCS
On February 22, 2008, PAL's International Cabin Crew Division Manager,
Jaime Roberto A. Narciso (Narciso), furnished Montinola the emails from the
Honolulu customs official. 12 This was followed by a notice of administrative
charge 13 which Narciso gave Montinola on March 25, 2008. On April 12,
2008, there was a clarificatory hearing. 14 The clarificatory hearing was
conducted by a panel of PAL's Administrative Personnel, namely, Senior
Labor Counsel Atty. Crisanto U. Pascual (Atty. Pascual), Narciso, Salvador
Cacho, June Mangahas, Lina Mejias, Carolina Victorino, and Ruby
Manzano. 15
Montinola alleged that her counsel objected during the clarificatory hearing
regarding PAL's failure to specify her participation in the alleged
pilferage. 16Atty. Pascual threatened Montinola that a request for
clarification would result in a waiver of the clarificatory hearing. 17 This
matter was not reflected in the transcript of the hearing. 18 Despite her
counsel's objections, Montinola allowed the clarificatory hearings to
proceed because she "wanted to extend her full cooperation [in] the
investigation[s]." 19
During the hearing, Montinola admitted that in Honolulu, US customs
personnel conducted a search of her person. At that time, she had in her
possession only the following food items: cooked camote, 3-in-1 coffee
packs, and Cadbury hot chocolate. 20
PAL, through Senior Assistant Vice President for Cabin Services Sub-
Department Sylvia C. Hermosisima, found Montinola guilty of 11
violations 21 of the company's Code of Discipline and Government
Regulation. She was meted with suspension for one (1) year without
pay. 22 Montinola asked for a reconsideration. 23 Hermosisima, however,
denied her motion for reconsideration a month after. 24 AaDSEC
Montinola brought the matter before the Labor Arbiter. 25 The Labor
Arbiter 26 found her suspension illegal, 27 finding that PAL never presented
evidence that showed Montinola as the one responsible for any of the
illegally taken airline items. 28 The Labor Arbiter ordered Montinola's
reinstatement with backwages, inclusive of allowances and benefits
amounting to PhP378,630.00. 29
In addition, the Labor Arbiter awarded moral damages in the amount of
PhP100,000.00 and exemplary damages amounting to PhP100,000.00 for
the following reasons: 30
This Office observes that the records are replete with
substantial evidence that the circumstances leading to
complainant's one-year suspension without pay are
characterized by arbitrariness and bad faith on the part of
respondents. The totality of respondents' acts clearly
shows that complainant had been treated unfairly and
capriciously, for which complainant should be awarded
moral damages in the amount of One Hundred Thousand
Pesos (PhP100,000.00) and exemplary damages also in
the amount of One Hundred Thousand Pesos
(PhP100,000.00). 31
The Labor Arbiter also awarded attorney's fees to Montinola because she
was "forced to litigate and incur expenses to protect [her]
rights." 32 STHDAc
PAL appealed the Labor Arbiter's decision to the National Labor Relations
Commission (NLRC). 33 During the pendency of the appeal, PAL submitted
new evidence consisting of an affidavit executed by Nancy Graham, the
Customs and Border Protection Supervisor who witnessed the January 29,
2008 search in Honolulu. 34 This affidavit enumerated the names of the
flight crew members searched by the Honolulu customs officials. However,
the National Labor Relations Commission observed that "it was categorically
admitted in the said declaration that Ms. Graham did not know which items
were attributable to each of the seven crew members whom she identified
and there was no individual inventories (sic)." 35
Through the resolution 36 dated June 9, 2009, the National Labor Relations
Commission 37 affirmed the decision of the Labor Arbiter. PAL appealed the
Commission's decision to the Court of Appeals through a petition
for certiorari. 38 HASDcC
The Court of Appeals affirmed the decisions of the Labor Arbiter and
National Labor Relations Commission in finding the suspension
illegal. 39 However, the Court of Appeals modified the award:
WHEREFORE, premises considered, the petition
is DENIED. Respondent NLRC's Decision in NLRC LAC
No. 01000263-09 (NLRC NCR CN 08-11137-08), dated
June 9, 2009, is AFFIRMED with MODIFICATION in
that the award of moral and exemplary damages and
attorney's fees to private respondent are
deleted. 40 (Emphasis supplied)
The Court of Appeals deleted the moral and exemplary damages and
attorney's fees stating that:
Relevant to the award of moral damages, not every
employee who is illegally dismissed or suspended is
entitled to damages. Settled is the rule that moral
damages are recoverable only where the dismissal or
suspension of the employee was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or
public policy. Bad faith does not simply mean negligence
or bad judgment. It involves a state of mind dominated by
ill will or motive. It implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or
some moral obliquity. The person claiming moral
damages must prove the existence of bad faith by clear
and convincing evidence for the law always presumes
good faith. SIcEHC
In the case at bar, there is no showing that PAL was
moved by any ill will or motive in suspending private
respondent. It is evident that petitioner gave private
respondent every opportunity to refute the charges
against her and to present her side as part of due
process. These negate the existence of bad faith on the
part of petitioner. Under the circumstances, we hold that
private respondent is not entitled to moral damages and
exemplary damages. Furthermore, the Court finds the
award of attorney's fees improper. The award of
attorney's fees was merely cited in the dispositive portion
of the decision without the RTC [sic] stating any legal or
factual basis for said award. 41 (Citations omitted)
Montinola filed a partial motion for reconsideration, 42 praying that the
award of moral and exemplary damages and attorney's fees be reintegrated
into the decision. PAL also filed a motion for reconsideration, 43 but its
motion sought a complete reversal of the decision.
The Court of Appeals denied both motions. 44 Only Montinola sought to
continue challenging the Court of Appeals' decision through a petition for
review on certiorari 45 brought to this court.
The sole issue in this case is whether Montinola's illegal suspension entitled
her to an award of moral and exemplary damages and attorney's fees.
Montinola claims that she is entitled to moral damages because her illegal
suspension was attended by bad faith, causing her to suffer "mental
anguish, fright, serious anxiety, and moral shock." 46 Furthermore, the
illegal suspension tarnished her good standing. 47 Prior to this incident and
in her 12 years of service, she was never charged administratively. 48 The
illegal suspension likewise affected her family because it created "a state of
uncertainty and adversity." 49 ECcaDT
Montinola underscores that the investigation against her was conducted in a
"hasty, impetuous, harsh and unjust" 50 manner. She was not properly
apprised of the charges against her. 51 She requested for proper notice of
the acts violative of PAL's Code of Discipline. Instead of giving proper
notice, PAL threatened that she would be waiving her right to a clarificatory
hearing if she insisted on her request. 52
Montinola likewise alleges that PAL violated its own rules by not applying
the same penalty uniformly. 53 Flight Purser Juan Chuidian III was involved
in the same incident and was likewise suspended. However, on motion for
reconsideration, PAL allowed him to retire early without serving the penalty
of suspension. 54
The claim for exemplary damages is anchored on Montinola's belief that
such damages "are designed to permit the courts to mould behaviour that
has socially deleterious consequences, and their imposition is required by
public policy to suppress the wanton acts of the offender." 55 In Montinola's
view, PAL suspended her in a "wanton, oppressive, and malevolent
manner." 56
Finally, Montinola argues that she is entitled to attorney's fees because she
was forced to litigate. In Article 2208, paragraph (2) of the Civil
Code,individuals forced to litigate may ask for attorney's fees.
On the other hand, PAL argues that moral damages are only recoverable
when "the dismissal of the employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to
morals, good customs or public policy." 57 The company believes that
Montinola failed to present clear and convincing proof of bad faith.
PAL stands by how it investigated the alleged pilferage of the in-flight items
in the January 29, 2008 flight. It believes that it afforded due process to
Montinola and the other implicated crew members. From PAL's point of
view, she was given an opportunity to explain her side and was even
assisted by counsel of her choice. 58 TDcCIS
PAL claims that since moral damages have not been proven, exemplary
damages should likewise not be awarded. 59
Moreover, PAL argues that Montinola failed to provide basis for the award of
attorney's fees. Attorney's fees are only awarded when the trial court (or in
this case, the Labor Arbiter) states a factual, legal, or equitable justification
for awarding the same. 60
I worker whose employment is sought to be terminated a
Montinola is entitled to moral and exemplary damages. She is also entitled
to attorney's fees.
The Labor Code provides:
Art. 279. Security of Tenure. — In cases of regular
employment, the employer shall not terminate the services
of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to
full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the
time of his actual reinstatement. DaTICc
Security of tenure of workers is not only statutorily protected, it is also a
constitutionally guaranteed right. 61 Thus, any deprivation of this right must
be attended by due process of law. 62 This means that any disciplinary
action which affects employment must pass due process scrutiny in both its
substantive and procedural aspects.
The constitutional protection for workers elevates their work to the status of
a vested right. It is a vested right protected not only against state action but
against the arbitrary acts of the employers as well. This court in Philippine
Movie Pictures Workers' Association v. Premier Productions,
Inc. 63 categorically stated that "[t]he right of a person to his labor is
deemed to be property within the meaning of constitutional
guarantees." 64 Moreover, it is of that species of vested constitutional right
that also affects an employee's liberty and quality of life. Work not only
contributes to defining the individual, it also assists in determining one's
purpose. Work provides for the material basis of human dignity.
Suspension from work is prima facie a deprivation of this right. Thus,
termination and suspension from work must be reasonable to meet the
constitutional requirement of due process of law. It will be reasonable if it is
based on just or authorized causes enumerated in the Labor Code. 65
On the other hand, articulation of procedural due process in labor cases is
found in Article 277 (b) of the Labor Code,which states:
(b) Subject to the constitutional right of workers to
security of tenure and their right to be protected against
dismissal except for a just and authorized cause and
without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the
written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity
to be heard and to defend himself with the assistance of
his representative if he so desires in accordance with
the company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor
and Employment. Any decision taken by the employer
shall be without prejudice to the right of the worker to
consent the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor
Relations Commission. The burden of proving that the
termination was for a valid or authorized cause shall rest
on the employer. cSIADH
The procedure can be summarized in this manner. First, the employer must
furnish the employee with a written notice containing the cause for
termination. Second, the employer must give the employee an opportunity
to be heard. This could be done either through a position paper or through a
clarificatory hearing. 66 The employee may also be assisted by a
representative or counsel. Finally, the employer must give another
written notice apprising the employee of its findings and the penalty to be
imposed against the employee, if any. 67 In labor cases, these requisites
meet the constitutional requirement of procedural due process, which
"contemplates notice and opportunity to be heard before judgment is
rendered, affecting one's person or property." 68
In this case, PAL complied with procedural due process as laid out in Article
277, paragraph (b) of the Labor Code.PAL issued a written notice of
administrative charge, conducted a clarificatory hearing, and rendered a
written decision suspending Montinola. However, we emphasize that the
written notice of administrative charge did not serve the purpose required
under due process. PAL did not deny her allegation that there would be a
waiver of the clarificatory hearing if she insisted on a specific notice of
administrative charge. With Montinola unable to clarify the contents of the
notice of administrative charge, there were irregularities in the procedural
due process accorded to her.
Moreover, PAL denied Montinola substantial due process.
Just cause has to be supported by substantial evidence. Substantial
evidence, or "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion," 69 is the quantum of evidence required
in administrative bodies such as the National Labor Relations Commission.
It is reasonable to expect the employer to consider substantial evidence in
disciplinary proceedings against its employees. The employer's decision will
be subject to review by the Labor Arbiter and National Labor Relations
Commission.
The employer has the burden of proof in showing that disciplinary action
was made for lawful cause. 70 The employer must consider and show facts
adequate to support the conclusion that an employee deserves to be
disciplined for his or her acts or omissions.
PAL, however, merely relied on these pieces of information in finding
administrative liability against Montinola:
1) a list of offenses found in PAL's Code of Discipline that Montinola
allegedly violated;
2) a list of flight crew members that were checked at the Honolulu airport;
and
3) a list of all items confiscated from all these flight crew members.
The lists are not sufficient to show the participation of any of the flight crew
members, least of all Montinola. None of the evidence presented show that
the customs officials confiscated any of these items from her. Thus, the
evidence by themselves do not show that Montinola pilfered airline items.
Together with the manner in which the investigation proceeded, i.e., that
Montinola was prevented from asking for clarification of the charges against
her, the absence of substantial evidence is so apparent that disciplining an
employee only on these bases constitutes bad faith. TcCDIS
Under the Labor Code, Labor Arbiters are authorized by law to award moral
and exemplary damages:
Art. 217. Jurisdiction of Labor Arbiters and the
Commission. — (a) Except as otherwise provided under
this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide within thirty
(30) calendar days after the submission of the case by
the parties for decision without extension, even in the
absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-
agricultural:
xxx xxx xxx
4. Claims for actual, moral, exemplary and other forms
of damages arising from the employer-employee
relations[.]
The nature of moral damages is defined under our Civil Code. Article 2220
states that "[w]illful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith." In Primero v.
Intermediate Appellate Court, 71 this court stated that damages, as defined
in the Civil Code,is recoverable in labor cases. Thus, moral
damages: AICDSa
. . . cannot be justified solely upon the premise (otherwise
sufficient for redress under the Labor Code) that the
employer fired his employee without just cause or due
process. Additional facts must be pleaded and proven to
warrant the grant of moral damages under the Civil
Code,these being, to repeat, that the act of dismissal
was attended by bad faith or fraud, or was oppressive to
labor, or done in a manner contrary to morals, good
customs, or public policy; and, of course, that social
humiliation, wounded feelings, grave anxiety, etc., resulted
therefrom. 72
The employee is entitled to moral damages when the employer acted a) in
bad faith or fraud; b) in a manner oppressive to labor; or c) in a manner
contrary to morals, good customs, or public policy.
Bad faith "implies a conscious and intentional design to do a wrongful act
for a dishonest purpose or moral obliquity." 73 Cathay Pacific Airways v.
Spouses Vazquez 74 established that bad faith must be proven through
clear and convincing evidence. 75 This is because "[b]ad faith and fraud . . .
are serious accusations that can be so conveniently and casually invoked,
and that is why they are never presumed. They amount to mere slogans or
mudslinging unless convincingly substantiated by whoever is alleging
them." 76 Here, there was clear and convincing evidence of bad faith
adduced in the lower tribunals.
PAL's actions in implicating Montinola and penalizing her for no clear reason
show bad faith. PAL's denial of her request to clarify the charges against her
shows its intent to do a wrongful act for moral obliquity. If it were acting in
good faith, it would have gathered more evidence from its contact in
Honolulu or from other employees before it started pointing fingers. PAL
should not have haphazardly implicated Montinola and denied her livelihood
even for a moment.
PAL apparently granted Montinola procedural due process by giving her a
notice of administrative charge and conducting a hearing. However, this was
more apparent than real. The notice of administrative charge did not specify
the acts committed by Montinola and how these acts violated PAL's Code
of Discipline. The notice did not state which among the items confiscated by
the US customs officials were originally found in Montinola's possession.
Worse, the panel of PAL officers led by Atty. Pascual did not entertain any
query to clarify the charges against her.
"Note: U.S. Customs Trade Law/Sec. 301 on Intellectual
Property Right prohibits bringing of counterfeit
consumer goods such as fake bags, clothes,
shoes, colognes, books, medicine, audio/video
tapes & CD's." (ref. Entry-Exit Requirements
Quick Reference Guide-Transpacific)
III. ANTI-COMPANY OFFENSES — Article 44/Section 5

There is denial of an opportunity to be heard if the employee is not clearly xxx xxx xxx
apprised of the acts she committed that constituted the cause for As noted on the e-mail report from HNL Station dated 30
disciplinary action. The Omnibus Rules Implementing the Labor January 2008, PAL will be penalized by customs
Code requires that "a written notice [be] served on the employee specifying and border protection — HNL due to cabin crew
the ground or grounds for termination, and giving said took items again from the aircraft upon arrival.
employee reasonable opportunity within which to explain his
side." 77 Reasonable opportunity has been described as "every kind of Article 26. NON-OBSERVANCE OF QUALITY
assistance that management must accord to the employees to enable them STANDARDS. —
to prepare adequately for their defense." 78
xxx xxx xxx
When the alleged participation of the employee in the illicit act which serves
As a cabin attendant, it is your responsibility to strictly
as a basis for the disciplinary action is not clear from the notice, the
adhered [sic] to the rules, regulations,
opportunity to be heard will not be reasonable. The notice fails to meet
prescriptions, mandates and policies of the
reasonable standards. It does not have enough information to enable the
Company. TASCDI
employee to adequately prepare a defense. HAEIac
Article 28. INEFFICIENCY AND WASTE. —
Moreover, the list of provisions in PAL's Code of Discipline allegedly violated
was long and exhaustive. PAL's notice of administrative charge stated that it xxx xxx xxx
had probable cause to administratively charge Montinola of the following:
The subject items confiscated at the holding gate area
I. ILLEGAL ACTS — Section 2/Article 20 are Company supplies and resources which must
only be consumed or utilized reasonably
xxx xxx xxx
inflight [sic].
As a cabin attendant you should know very well the laws,
Article 37. ANTI-TEAMWORK OFFENSES. —
rules and regulations of every country in which the
Company operates including the entry/exit xxx xxx xxx
requirements to which your cabin crew must
adhere. In the email report from HNL Station, Ms. Nancy Graham,
CBP-Supervisor your name was specifically listed
II. VIOLATION OF LAW/GOVERNMENT REGULATIONS — as part of the cabin crew members who were
Section 6/Article 46 involved in the Flight Crew Blitz in gate area.
xxx xxx xxx Article 38. INSUBORDINATIONS OR WILLFUL
DISOBEDIENCE. —
Incident is a violation of the Entry/Exit requirements in
HNL Station, as quoted: xxx xxx xxx
 Article 58. MISHANDLING/MISUSE OF COMPANY
FUNDS, PROPERTY OR RECORDS. —
xxx xxx xxx
The subject items confiscated at the holding gate area
are Company supplies and resources which must
only be consumed or utilized reasonably
inflight [sic].
Article 59. THEFT, PILFERAGE, OR EMBEZZLEMENT. —
xxx xxx xxx
As noted on the e-mail reports from HNL Station both
from Station Supervisor, Ms. Keity Wells and Ms.
Nancy Graham, CBP-Supervisor, The different
items confiscated are taken by the cabin crew
from the aircraft upon arrival. CTcSIA
Article 61. UNOFFICIAL USE OF COMPANY PROPERTY
AND FACILITIES. —
xxx xxx xxx
IV. FAILURE ON THE JOB — Article 25/Section 2
xxx xxx xxx
As a cabin attendant, you should know very well the
certain laws, rules and regulations of every
country in which the Company operates. Thus,
adherence (sic) to these rules and regulations is a
must. 79
To constitute proper notice, the facts constitutive of the violations of these
rules — and not just the rules of conduct — must be clearly stated. Proper
notice also requires that the alleged participation of the employee be clearly
specified. Without these, the most fundamental requirement of a fair hearing
cannot be met.
Parenthetically, we note that the enumeration of rules violated even included
violation of "U.S. Customs Trade Law/Sec. 301 on Intellectual Property
Right." This has no bearing on the basis for the termination or suspension of
the employee. It only serves to confuse. At worse, it is specified simply to
intimidate. ICHcaD
Montinola was found by PAL to be guilty of all the charges against her.
According to PAL, "[t]hese offenses call for the imposition of the penalty of
Termination, however, we are imposing upon you the reduced penalty of
One (01) year Suspension." 80 It is not clear how she could violate all the
prestations in the long list of rules she allegedly violated. There is also no
clear explanation why termination would be the proper penalty to impose.
That the penalty was downgraded, without legal explanation, to suspension
appears as a further badge of intimidation and bad faith on the part of the
employer.
Nothing in PAL's action supports the finding that Montinola committed
specific acts constituting violations of PAL's Code of Discipline.
This act of PAL is contrary to morals, good customs, and public policy. PAL
was willing to deprive Montinola of the wages she would have earned during
her year of suspension even if there was no substantial evidence that she
was involved in the pilferage.
Moral damages are, thus, appropriate. In Almira v. B.F. Goodrich
Philippines, this court noted that unemployment "brings untold hardships
and sorrows on those dependent on the wage-earner." 81 This is also true
for the case of suspension. Suspension is temporary unemployment. During
the year of her suspension, Montinola and her family had to survive without
her usual salary. The deprivation of economic compensation caused mental
anguish, fright, serious anxiety, besmirched reputation, and wounded
feelings. All these are grounds for an award of moral damages under
the Civil Code. 82 ScEaAD
II
Montinola is also entitled to exemplary damages.
Under Article 2229 of the Civil Code,"[e]xemplary or corrective damages are
imposed, by way of example or correction for the public good, in addition to
the moral, temperate, liquidated or compensatory damages." As this court
has stated in the past: "Exemplary damages are designed by our civil law to
permit the courts to reshape behaviour that is socially deleterious in its
consequence by creating negative incentives or deterrents against such
behaviour." 83
If the case involves a contract, Article 2332 of the Civil Code provides that
"the court may award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner." Thus,
in Garcia v. NLRC, 84 this court ruled that in labor cases, the court may
award exemplary damages "if the dismissal was effected in a wanton,
oppressive or malevolent manner." 85
It is socially deleterious for PAL to suspend Montinola without just cause in
the manner suffered by her. Hence, exemplary damages are necessary to
deter future employers from committing the same acts.
III
Montinola is also entitled to attorney's fees.
Article 2208 of the Civil Code enumerates the instances when attorney's
fees can be awarded:
ART. 2208. In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial costs,
cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled
the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3) In criminal cases of malicious prosecution against
the plaintiff;
(4) In case of a clearly unfounded civil action or
proceeding against the plaintiff; AIHaCc
(5) Where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiff's plainly valid, just
and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household
helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's
compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability
arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation
should be recovered.
In all cases, the attorney's fees and expenses of
litigation must be reasonable. (Emphasis supplied)
This case qualifies for the first, second, and seventh reasons why attorney's
fees are awarded under the Civil Code.
First, considering that we have awarded exemplary damages in this case,
attorney's fees can likewise be awarded.
Second, PAL's acts and omissions compelled Montinola to incur expenses
to protect her rights with the National Labor Relations Commission and the
judicial system. She went through four tribunals, and she was assisted by
counsel. These expenses would have been unnecessary if PAL had
sufficient basis for its decision to discipline Montinola. CAETcH
Finally, the action included recovery for wages. To bring justice to the illegal
suspension of Montinola, she asked for backwages for her year of
suspension.
PAL argued that the factual, legal, or equitable justification for awarding
attorney's fees must be stated in the Labor Arbiter's decision. The legal
justification of the Labor Arbiter is apparent in the decision:
Complainant's claim for attorney's fees is also justified. It
is settled that where an employee was forced to litigate
and incur expenses to protect his rights and interest, as in
the instant case, he is entitled to an award of attorney's
fees (Building Case Corp. vs. NLRC, G.R. No. 94237,
February 26, 1997). She is thus granted attorney's fees
equivalent to ten percent of the total award. 86
We find no factual, legal, or equitable reason to depart from this justification.
Hence, we also affirm the award of attorney's fees equivalent to 10% of the
total award, or P57,863.00. 87
We acknowledge the right of PAL to be constantly vigilant to prevent and
deter pilferage. After all, that is equally its property which is also protected
by the Constitution. However, PAL cannot assume liability on the employee.
It has to endeavor to move through its administrative investigations more
humanely and more in consonance with the law. Its employees may only
have their work. It is their work, no matter what the classification and how
significant they may be in the eyes of their employer, that should give them
their dignity.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals in CA-G.R. SP No. 112552 is MODIFIED in order to REINTEGRATE
the award for moral damages of P100,000.00, exemplary damages of
P100,000.00, and attorney's fees of P57,863.00.
SO ORDERED. HASDcC
Carpio, Del Castillo, Villarama, Jr. * and Reyes, ** JJ., concur.
||| (Montinola v. Philippine Airlines, G.R. No. 198656, [September 8, 2014])
THIRD DIVISION
[G.R. No. 104576. January 20, 1995.]
MARIANO L. DEL MUNDO, petitioner, vs. HON. COURT
OF APPEALS, JOSE U. FRANCISCO and GENOVEVA V.
ROSALES, respondents.
David D. Aguila for petitioner.
Malaya and Galicia Law Office for private respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; SECTION 14, ARTICLE 8 THEREOF; FORM OF
DECISION OF THE COURT; CASE AT BAR. — It is understandable that
courts, with their heavy dockets and time constraints, often find themselves
with little to spare in the preparation of decisions to the extent most
desirable. We have thus pointed out that judges might learn to synthesize
and to simplify their pronouncements. Nevertheless, concisely written such
as they may be, decisions must still distinctly and clearly express, at least in
minimum essence, its factual and legal bases.
2. CIVIL LAW; DAMAGES; ACTUAL AND MORAL DAMAGES; MUST BE
SEPARATELY IDENTIFIED AND JUSTIFIED. — The two awards — one for
actual damages and the other for moral damages — cannot be dealt with in
the aggregate; neither being kindred terms nor governed by a coincident set
of rules, each must be separately identified and independently justified. A
requirement common to both, of course, is that an injury must have been
sustained by the claimant. The nature of that injury, nonetheless, differs for
while it is pecuniary in actual or compensatory damages, it is, upon the
other hand, non-pecuniary in the case of moral damages.
3. ID.; ID.; ACTUAL DAMAGES; RECOVERABLE WHEN PROVED WITH A
REASONABLE DEGREE OF CERTAINTY. — A party is entitled to an
adequate compensation for such pecuniary loss actually suffered by him as
he has duly proved. Actual damages, to be recoverable, must not only be
capable of proof, but must actually be proved 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 could
afford a basis for measuring whatever compensatory or actual damages are
borne.
4. ID.; ID.; MORAL DAMAGES; NATURE THEREOF; WHEN AWARDED. —
Moral damages, upon the other hand, may be awarded to compensate one
for manifold injuries such as physical suffering, mental anguish, serious,
anxiety, besmirched reputation, wounded feelings and social humiliation.
These damages must be understood to be in the concept of grants, not
punitive or corrective in nature, calculated to compensate the claimant for
the injury suffered. Although incapable of exactness and 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, it is
imperative, nevertheless, that (1) injury must have been suffered by the
claimant, and (2) such injury must have sprung from any of the cases
expressed in Article 2219 and Article 2220 of the Civil Code. A causal
relation, in fine, must exist between the act or omission referred to in the
Code which underlies, or gives rise to, the case or proceeding, on the one
hand, and the resulting injury, on the other hand; i.e., the first must be the
proximate cause and the latter the direct consequence thereof.
RESOLUTION
VITUG, J p:
Mariano Del Mundo ("Del Mundo") impugns in this petition for
review on certiorari the 07th April 1989 decision 1 of the Court of
Appeals which has affirmed, with modification, the 29th June 1984
decision 2 of the Regional Trial Court of Quezon City ordering him,
together with the Republic Planters Bank ("RPB"), inter-alia, to pay
jointly and severally herein private respondents, the spouses Jose
Francisco and Genoveva Francisco ("Franciscos"), the sum of
P200,000.00 by way of actual and moral damages, as well as P6,000.00
of attorney's fees, plus litigation expenses.
The Franciscos are the owners of a parcel of land, with an area
of 38,010 square meters, situated in Barrio Anilao, Municipality of
Mabini, Province of Batangas, covered by and described in Original
Certificate of Title ("OCT") No. 0-3267 of the Registry of Deeds of
Batangas. Del Mundo, on the other hand, is the operator of a dive camp
resort adjacent to the property. cdasia
Some time in June of 1980, Del Mundo proposed a corporate
joint venture with the Franciscos for the development of the latter's
property. The corporation (to be named the "Anilao Development
Corporation") would have a capital stock of One Million (P1,000,000.00)
 Pesos to be subscribed equally between Del Mundo and the Franciscos.
To cover the proposed subscription of the Franciscos, Del Mundo
assured the couple that he could get for them a P125,000.00 loan
secured by the realty. 3
The Franciscos executed a special power of attorney ("SPA"),
dated 25 July 1980, 4 in favor of Del Mundo authorizing him to obtain a
bank loan. The SPA, in part, provided:
"1. To negotiate for a loan with any bank or financial
institution, in such amount or amounts as our said
attorney-in-fact may deem proper and expedient and
under such terms and conditions as he may also deem
proper and convenient;
"2. To sign, execute and deliver by way of first mortgage
in favor of said bank or financial institution on our property
situated in Anilao, Mabini, Batangas, . . .
"3. To receive and receipt for the proceeds of the loan,
and to sign such other papers and documents as may be
necessary in connection therewith;
"GIVING AND GRANTING unto our said attorney-in-fact
full power and authority as we might or could do if
personally present and acting in person, and hereby
CONFIRMING all that our said attorney-in-fact may
lawfully do under and by virtue of these presents."
Only the duplicate copy of the SPA was given to Del Mundo by the
Franciscos. The latter kept the original copy but agreed to have it delivered
to Del Mundo once he would have been able to firm up the P125,000.00
financing to cover their (the Franciscos) proposed subscription. 5 Aside from
the special power of attorney, the Franciscos, who were then about to
depart for abroad, 6 turned over to Del Mundo the physical possession of
the real property along with its existing facilities and equipment. cdasia
Del Mundo proceeded to the Republic Planters Bank ("RPB") to
apply for the loan. After the loan application was approved, Del Mundo
executed a deed of real estate mortgage over the Franciscos' property
to secure a P265,000.00 loan. The mortgage, however, could not be
annotated on the owner's copy of OCT No. 0-3267, then in the
possession of the Development Bank of the Philippines ("DBP") which
had a previous mortgage lien on it. To obtain said owner's copy, the
RPB agreed to assume, and thereafter paid, Franciscos' outstanding
indebtedness to the DBP. The latter, despite the payment, refused to
release the owner's copy of the certificate of title due to Franciscos'
objection. 7 In order to allow the release of the loan proceeds, Del
Mundo submitted additional collaterals. The RPB then withdrew its
previous payment to the DBP of P22,621.75, and the P265,000.00 loan
was forthwith released to Del Mundo. 8
The joint venture project did not materialize. The Franciscos
wrote a demand letter addressed to Del Mundo for the payment of
rentals for the use of their property at the rate of P3,000.00 a month
(totaling P42,000.00) and for the return of the equipment taken by Del
Mundo from the bodega of the Franciscos valued at P15,000.00. 9
Since Del Mundo failed to settle with the Franciscos, the latter
sued Del Mundo, along with the RPB, for annulment of the mortgage, as
well as for damages, before the Regional Trial Court of Quezon City. The
Franciscos asserted that Del Mundo made use of their property for his
sole benefit and purpose, and that the use of the property could not
have been availed of by Del Mundo himself had it not been for the
latter's proposal to put up the joint venture. After trial, the trial court
rendered judgment, dated 29 June 1984, 10 in favor of the Franciscos
thusly:
"(1) Declaring the real estate mortgage (Exh. E) executed
by defendant Mariano Del Mundo in favor of defendant
Republic Planters Bank on January 10, 1981, null and
void ab initio;
"(2) Declaring the unauthorized payments made by
defendant Republic Planters Bank to the Development
Bank of the Philippines for the account of plaintiffs as null
and void;
"(3) Ordering defendant Mariano L. Del Mundo to pay to
plaintiffs the sum of P42,000.00 as reasonable rental
payment for the use and occupancy of plaintiffs' property,
plus P15,000.00 representing the value of equipment
taken by said defendant from plaintiffs;
"(4) Ordering defendants jointly and severally, to pay to
plaintiffs the sum of P200,000.00 as actual and moral
damages, plus P6,000.00 as attorney's fees and litigation
expenses, plus costs;
"(5) Ordering plaintiffs to reimburse defendant Republic
Planters Bank the sum of P67,000.00;cdasia
"(6) Dismissing defendants' counterclaims for lack of
merit." 11
Both parties appealed the decision to the Court of Appeals.
While the appeal was pending, Jose Francisco died; he was substituted
 by his heirs. On 07 April 1989, the Court of Appeals rendered its now
assailed decision 12 which decreed:
"WHEREFORE, the appealed decision is hereby
AFFIRMED in all respects subject to the modification that
plaintiff-appellants be absolved of any liability to appellant
bank." 13
On its assumption that the decision had already become final
and executory, the Court of Appeals made an entry of judgment on 28
September 1989. 14 Thus, RPB, sometime in October 1990, paid
Genoveva Francisco and the substituted heirs the amount of
P209,126.00, the extent to which RPB was held to be jointly and
solidarily liable with Del Mundo conformably with the appellate court's
decision (affirming that of the trial court). 15 The Franciscos
acknowledged the payment and manifested that "(t)he only amount not
satisfied . . . (was) the amount due solely from defendant Mariano L. Del
Mundo" pursuant to that portion of the judgment —
'3) Ordering defendant Mariano L. Del Mundo to pay to
plaintiffs the sum of P42,000.00 as reasonable rental
payment for the use and occupancy of plaintiff's property,
plus P15,000.00 representing the value of equipment
taken by said defendant from plaintiffs;' 16
When Del Mundo learned, for the first time, that a writ of
execution pursuant to the appellate court's decision was sought to be
implemented against his property on 09 October 1990, he filed on the
very next day, or on 10 October 1990, an urgent manifestation with
motion to lift the entry of judgment against him alleging non-service of
the assailed decision. 17 The appellate court acted favorably on Del
Mundo's motion and, "in the interest of justice," 18 he was also allowed
to file his own motion for reconsideration. He did in due time. 19
After Del Mundo's motion for reconsideration was denied on 18
March 1992, the present petition was seasonably instituted assigning
three alleged errors; viz:cdasia
"A.
"RESPONDENT C.A. ERRED IN AFFIRMING THE TRIAL COURT'S FINDING
THAT PRIVATE RESPONDENTS HAVE A CAUSE OF ACTION AGAINST
PETITIONER DESPITE THE TOTAL ABSENCE OF DAMAGE ON THE PART
OF PRIVATE RESPONDENTS.
"B.
"RESPONDENT C.A. ERRED IN AFFIRMING THE TRIAL COURT'S
DECISION DESPITE THE FACT THAT SAID DECISION DOES NOT STATE
THE FACTS AND THE LAW ON WHICH IT IS BASED IN GROSS VIOLATION
OF SEC. 9, ART. X OF THE 1973 CONSTITUTION THEN IN FORCE AND
EFFECT.
"C.
"RESPONDENT C.A. ERRED IN AFFIRMING THE TRIAL COURT'S
DECISION ORDERING PETITIONER AND CO-DEFENDANT REPUBLIC
PLANTERS BANK ("RPB") TO PAY PRIVATE RESPONDENTS, JOINTLY
AND SEVERALLY, THE SUM OF P200,000.00 AS ACTUAL AND MORAL
DAMAGES PLUS ATTORNEY'S FEES, AND COSTS/EXPENSES OF
LITIGATION."
We see partial merit in the petition.
In its 29th June 1984 decision, the trial court, after summarizing
the conflicting asseverations of the parties, went on to discuss, and
forthwith to conclude on, the kernel issue of the case in just two
paragraphs, to wit:cdasia
"The evidence disclose that defendant RPB executed said
mortgage with Del Mundo, although the original of said
special power-of-attorney and the original of the owner's
duplicate certificate of title was not presented to it and
without requiring its registration. Under the
circumstances, the mortgage to defendant RPB was
irregularly executed, justifying annulment of said mortgage
in its favor. prLL
"However, the evidence disclose that plaintiffs has
received the sum of P45,000.00 from Del Mundo, and the
sum of P22,300.00 was paid to DBP (Exh. F) and applied
to plaintiffs' previous loan with DBP, as part of an
agreement between plaintiffs and Del Mundo, or a total of
P67,300.00. Plaintiffs are, therefore, duty bound to make
reimbursement of said amount to RPB, as they cannot be
allowed to enrich themselves at RPB's expense and
prejudice." 20
After that brief disquisition, the trial court disposed of the case
by ordering Del Mundo and RPB, inter alia, jointly and severally to pay
the Franciscos the sum of P200,000.00 as actual and moral damages,
P6,000.00 as attorney's fees, and litigation expenses plus costs. cdasia
It is understandable that courts, with their heavy dockets and
time constraints, often find themselves with little to spare in the
 preparation of decisions to the extent most desirable. We have thus
pointed out that judges might learn to synthesize and to simplify their
pronouncements. 21Nevertheless, concisely written such as they may
be, decisions must still distinctly and clearly express, at least in
minimum essence, its factual and legal bases. 22
The two awards — one for actual damages and the other for
moral damages — cannot be dealt with in the aggregate; neither being
kindred terms nor governed by a coincident set of rules, each must be
separately identified and independently justified. A requirement common
to both, of course, is that an injury must have been sustained by the
claimant. The nature of that injury, nonetheless, differs for while it is
pecuniary in actual or compensatory damages, 23 it is, upon the other
hand, non-pecuniary in the case of moral damages. 24
A party is entitled to an adequate compensation for such
pecuniary loss actually suffered by him as he has duly proved. 25 Such
damages, to be recoverable, must not only be capable of proof, but
must actually be proved with a reasonable degree of certainty. 26 We
have emphasized that these damages cannot be presumed, 27 and
courts, in making an award must point out specific facts which could
afford a basis for measuring whatever compensatory or actual damages
are borne. 28
Moral damages, upon the other hand, may be awarded to compensate one
for manifold injuries such as physical suffering, mental anguish, serious
anxiety, besmirched reputation, wounded feelings and social humiliation.
These damages must be understood to be in the concept of grants, not
punitive 29 or corrective 30 in nature, calculated to compensate the claimant
for the injury suffered. 31 Although incapable of exactness and 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, 32 it is
imperative, nevertheless, that (1) injury must have been suffered by the
claimant, and (2) such injury must have sprung from any of the cases
expressed in Article 2219 33 and Article 2220 34 of the Civil Code. A causal
relation, in fine, must exist between the act or omission referred to in the
Code which underlies, or gives rise to, the case or proceeding, on the one
hand, and the resulting injury, on the other hand; i.e., the first must be the
proximate cause and the latter the direct consequence thereof. cdrep
A judicious review of the records in the case at bench, indeed,
fails to show that substantial legal basis was shown to support the
herein questioned collective award for the questioned damages. We are,
therefore, constrained to disregard them.
As regards the other issues raised by petitioner, the findings of
the appellate court, involving such as they do mainly factual matters that
are not entirely bereft of substantial basis, must be respected and held
binding on this Court.
In passing, we have taken note of the fact that the RPB, itself a
judgment co-debtor in solidum with Del Mundo, did not join the latter in
this appeal. The Court, accordingly, cannot here and now make any
pronouncement on the effects of said bank's payment to Del Mundo
under and by virtue of the appellate court's appealed decision. cdasia
WHEREFORE, the decision of the Court of Appeals is accordingly
MODIFIED by deleting the award of P200,000.00 for actual and moral
damages. In all other respects, the appealed decision is AFFIRMED. No
costs.
SO ORDERED.
Feliciano, Bidin, Romero and Melo, JJ ., concur.
||| (Del Mundo v. Court of Appeals, G.R. No. 104576 (Resolution), [January
20, 1995], 310 PHIL 367-378)
SECOND DIVISION
[G.R. No. 126363. June 26, 1998.]
THE CONGREGATION OF THE RELIGIOUS OF THE
VIRGIN MARY, petitioner, vs. THE COURT OF APPEALS
and SPOUSES JEROME and TERESA
PROTASIO, respondents.
Padilla Law Office for petitioner.
Carpio, Villaraza & Cruz for private respondents.
SYNOPSIS
Gervacio Serapio, the grandfather of herein respondents-spouses, sold to
herein petitioner two (2) lots identified as Lot No. 5-A and Lot No. 5-C. In
between the two lots is Lot 5-B, which the petitioner did not buy. Gervacio
died and his estate consisting of several parcels of land was settled extra-
judicially among his heirs. Respondents-spouses purchased Lot No. 5-B
from the heirs of Gervacio Serapio and discovered that some portion of the
lot was fenced and occupied by petitioner. Despite repeated demands by
the respondents-spouses, petitioner failed and refused to restore to them
possession of the encroached property. Thus, a complaint for recovery of
possession of real property, damages, back rentals and attorney's fees was
filed by respondents-spouses against the petitioner. After trial on the merits,
the trial court rendered judgment in favor of respondents-spouses and
against the petitioner. It rejected petitioner's claim of being a builder in good
faith of the improvements it introduced on the disputed lot of respondents-
spouses. Petitioner appealed to the Court of Appeals, which affirmed in
toto the judgment of the trial court. Petitioner then filed before the Supreme
Court the present petition assailing the respondent court's decision. The real
issue in this petition is whether the petitioner could legally occupy part of the
contested lot. TDESCa
The Supreme Court held that the petitioner has no right whatsoever to
possess and construct permanent structures on the questioned land owned
by respondents-spouses. Petitioner admits in its answer to the complaint
that it introduced improvements on the subject lot without the consent and
knowledge of respondents-spouses. It is thus a builder in bad faith. The
decision of the respondent Court of Appeals was modified in the sense that
the awards of back rentals, moral damages and attorney's fees were
deleted. In all other respects, the assailed decision was affirmed.
SYLLABUS
1. REMEDIAL LAW; PETITION FOR REVIEW ON CERTIORARI;
JURISDICTION OF THE SUPREME COURT; LIMITED TO REVIEWING
ERRORS OF LAW; EXCEPTION. — As a general rule, the re-examination of
the evidence submitted by the contending parties during the trial of the case
is not a function that this Court normally undertakes inasmuch as the
findings of facts of the respondent court are generally binding and
conclusive on the Supreme Court. The jurisdiction of this Court in a petition
for review on certiorari under Rule 45 of the Revised Rules of Court is limited
to reviewing only errors of law, not of fact, unless the factual findings
complained of are devoid of support by the evidence on record or the
assailed judgment is based on misapprehension of facts.
2. ID.; EVIDENCE; ORAL EVIDENCE OF AN AGREEMENT SHOULD BE
EXCLUDED WHEN THE EXISTING AGREEMENT IS ALREADY IN WRITING.
— Section 9, Rule 130 of the Revised Rules of Court provides in part that
where, as here, "the terms of an agreement have been reduced to writing, it
is considered as containing all the terms agreed upon and there can be,
between the parties and their successors-in-interest, no evidence of such
terms other than the contents of the written agreement." Simply put, any oral
evidence of an agreement should be excluded when after all, the existing
agreement is already in writing.
3. ID.; ACTION; LACHES, DEFINED. — In Olizon vs. Court of Appeals, 236
SCRA 148, the Supreme Court once again defined laches — . . . as the
failure or neglect, for an unreasonable and unexplained length of time, to do
that which by exercising due diligence could or should have been done
earlier: it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. aTEACS
4. CIVIL LAW; DAMAGES; A PARTY IS ENTITLED TO AN ADEQUATE
COMPENSATION FOR SUCH PECUNIARY LOSS ACTUALLY SUFFERED
BY HIM AS HE HAS DULY PROVED. — A party is entitled to an adequate
compensation for such pecuniary loss actually suffered by him as he has
duly proved. Such damages, to be recoverable, must not only be capable of
proof, but must actually be proved with a reasonable degree of certainty.
These damages cannot be presumed, and the courts in making such award
of damages must point out specific facts which could afford a basis for
measuring whatever compensatory or actual damages are borne.
5. ID.; ID.; MORAL DAMAGES; WHEN AVAILABLE. — Moral damages must
be disallowed when it is not specifically prayed for in the complaint. It is
elementary that in order that moral damages may be awarded, there must
be pleading and proof of moral suffering, mental anguish, fright and the like,
both of which are absent in this case.
6. ID.; ID.; ATTORNEY'S FEES; THE DISCRETION OF THE COURT FOR
THE AWARD THEREOF DEMANDS FACTUAL, LEGAL AND EQUITABLE
JUSTIFICATION; CASE AT BAR. — The award of attorney's fees of
P100,000.00 should be eliminated for lack of factual basis and legal
justification. The only evidence to support respondents-spouses' claim for
attorney's fees is the testimony of Jerome Protasio to the effect that his
agreement with the law firm handling his case is that he is obligated to pay
"25% of the obligation receivable . . . ." That is all. Both the trial court and
respondent Court of Appeals likewise did not cite specific factual basis to
justify the award of attorney's fees, which is in violation of the proscription
against the imposition of a penalty on the right to litigate. As we enunciated
in Refractories Corporation of the Philippines vs. Intermediate Appellate
Court: ". . . . The award of attorney's fees is the exception rather than the
general rule and counsel's fees is not to be awarded every time a party wins
a suit. The discretion of the court to award attorney's fees under Article
2208 of the Civil Code 'demands factual, legal and equitable justification,
without which the award is a conclusion without a premise, its basis being
improperly left to speculation and conjecture.' In all events, the court must
state the reason for the award of attorney's fees."
DECISION
MARTINEZ, J p:
Petitioner, The Congregation Of The Religious Of The Virgin Mary, has filed
this petition for review on certiorari, urging us to reverse the decision 1 of
the Court of Appeals dated September 12, 1996, in CA-G.R. CV No. 43311,
entitled "SPS. JEROME and TERESA PROTASIO, Plaintiffs-Appellees,
versus, THE RELIGIOUS OF THE VIRGIN MARY, Defendant-Appellant." The
decision affirmed the judgment of the Regional Trial Court of Davao City in
Civil Case No. 29,960-91, ordering the petitioner to return the possession of
the disputed land to the respondents-spouses and to pay them
damages. LibLex
The facts of this case, as found by the respondent court, 2 are as follows:
On December 26, 1964, Gervacio Serapio, the grandfather of herein
respondents-spouses Jerome and Teresa Protasio, sold to herein petitioner,
the Congregation of the Religious of the Virgin Mary, two (2) lots identified
as Lot No. 5-A and Lot No. 5-C which were covered by TCT Nos. 14834 and
14835, respectively. In between Lot No. 5-A and Lot No. 5-C is Lot No. 5-B.
Petitioner did not buy it when it was offered for sale by Gervacio Serapio. In
1978, Gervacio died and his estate consisting of several parcels of land was
settled extra-judicially among his heirs.
In October of 1989, respondents-spouses purchased Lot No. 5-B from the
heirs of Gervacio Serapio. Accordingly, TCT No. 148595 was issued in their
name. Sometime in November of 1989, respondents-spouses had the
subject Lot No. 5-B surveyed and they discovered that 664 square meters of
their 858 square meters property was fenced and occupied by petitioner.
They also found out that a building for the boys' quarters and a portion of
petitioner's gymnasium were constructed inside Lot No. 5-B. The
encroachment by petitioner on respondents-spouses land was made
without the latter's knowledge and consent. Despite repeated demands by
respondents-spouses, petitioner failed and refused to (1) restore to the
spouses possession of the encroached property; (2) demolish the
improvements constructed thereon, and (3) pay damages and back rentals.
Thus, on September 23, 1991, a complaint for recovery of possession of real
property, damages, back rentals and attorney's fees was filed by
respondents-spouses against the petitioner. The complaint was docketed as
Civil Case No. 20,960-91 of the Regional Trial Court of Davao City, Branch
15. In answer to the complaint, petitioner admitted that it occupies part of
the litigated property but averred that Lot No. 5-B was supposed to be a
road lot that would give their Lots 5-A and 5-C means of entry and egress to
the public road and, therefore, was beyond the commerce of man. Petitioner
further claims that respondents-spouses, as successors-in-interest of
Gervacio Serapio, have the obligation to respect the perpetual use of Lot
No. 5-B ceded to it by Serapio.
After trial on the merits, the trial court rendered judgment in favor of
respondents-spouses and against the petitioner. It rejected petitioner's
claim of being a builder in good faith of the improvements it introduced on
the disputed lot of respondents-spouses. The dispositive portion of the
decision dated July 30, 1993 reads:
"WHEREFORE, judgment is rendered ordering the
defendant (now petitioner):
1. To vacate the part of the plaintiffs' (now respondents-
spouses') lot covered by TCT No. 148595 it is presently
occupying and to peaceably return the possession to the
plaintiffs at its own expense.
2. To demolish the buildings and improvements it
introduced on the lot of the plaintiffs at its own expense.
3. To pay one hundred thousand pesos (P100,000.00) as
moral damages.
4. To pay back rentals of fifteen thousand pesos
(P15,000.00) with legal interests to be computed from
January 31, 1991 until fully paid.
5. To pay one hundred thousand pesos (P100,000.00) as
attorney's fees, four thousand pesos (P4,000.00) as
litigation expenses and the costs of suit.
"SO ORDERED." 3
Upon appeal by petitioner to the respondent court, the latter affirmed in
toto the judgment of the trial court.
Still dissatisfied, petitioner now comes to us via the present petition,
assailing the respondent court's decision on the following grounds:
"I
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT
FINDING THAT PRIVATE RESPONDENTS' ANCESTOR,
GERVACIO SERAPIO, HAD CEDED TO THE PETITIONER
THE PERPETUAL USE OF LOT 5-B.
 II
THE PUBLIC RESPONDENT GRIEVOUSLY IGNORED
THE EVIDENCE ON RECORD AND ERRED IN NOT
HOLDING THAT PRIVATE RESPONDENTS' CLAIM HAD
CLEARLY BEEN BARRED BY LACHES.
III
THE PUBLIC RESPONDENT COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT AWARDED ACTUAL
DAMAGES IN THE FORM OF BACK RENTALS WITHOUT
PROOF TO SUPPORT THE SAME.
IV
THE PUBLIC RESPONDENT COMMITTED GRAVE
ABUSE OF DISCRETION IN AWARDING MORAL
DAMAGES TO PRIVATE RESPONDENTS —
(A) IN THE ABSENCE OF A PRAYER FOR THE AWARD
NOR PROOF OF THE SAME.
(B) IN THE FACE OF EVIDENCE CLEARLY SHOWING
THAT PRIVATE RESPONDENTS WERE PURCHASERS IN
BAD FAITH." 4
The above-quoted errors allegedly committed by the respondent court call
for a review of its findings of facts. As a general rule, the re-examination of
the evidence submitted by the contending parties during the trial of the case
is not a function that this Court normally undertakes inasmuch as the
findings of facts of the respondent court are generally binding and
conclusive on the Supreme Court. 5 The jurisdiction of this Court in a
petition for review on certiorari under Rule 45 of the Revised Rules of Court
is limited to reviewing only errors of law, 6 not of fact, unless the factual
findings complained of are devoid of support by the evidence on record or
the assailed judgment is based on misapprehension of facts. 7
Petitioner contends that its case should be treated as an exception to the
said general rule since the respondent court "overlooked certain relevant
facts not disputed by the parties, which if properly considered, would justify
a different conclusion." 8
Let us examine these "relevant facts" which the respondent court allegedly
overlooked when it rendered the assailed decision.
First. Petitioner maintains that Gervacio Serapio, the original owner of the
land in question (Lot 5-B), had in his lifetime represented, committed and
warranted that the said lot would be for petitioner's perpetual use as a road
lot, it being the only access to the public road for Lot 5-A and Lot 5-C, and
to each other. 9
In support of this posture, petitioner cited the document entitled "Agreement
Of Purchase And Sale" 10 dated July 8, 1959, executed between Gervacio
Serapio and petitioner, which Agreement shows a sketch attached thereto
as Annex "A" 11 indicating the location of the two (2) lots subject of the
Agreement and two (2) proposed roads, the Simeon de Jesus St. and Padre
Faura St. (which is the disputed Lot B). Petitioner argues that "without that
map (sketch) and the implicit assurance that goes with it, there could not
have been a sale." 12
There is nothing significant in the said sketch which would justify a reversal
of the findings and conclusions reached by the respondent court. It is
merely a sketch of the location of the two (2) lots subject of the sale. There is
no express or implied agreement in said annex containing the sketch which
would confirm petitioner's claim that Geronimo Serapio "had ceded to the
petitioner the perpetual use of Lot 5-B." If petitioner's claim was true, then
the same could have easily been inserted as an additional agreement
between the parties. That it was not made so, only shows that petitioner's
claim is nothing but a mere conjecture, which has zero evidentiary
weight. Section 9, Rule 130 of the Revised Rules of Court provides in part
that where, as here, "the terms of an agreement have been reduced to
writing, it is considered as containing all the terms agreed upon and there
can be, between the parties and their successors in interest, no evidence of
such terms other than the contents of the written agreement." Simply put,
any oral evidence of an agreement should be excluded when after all, the
existing agreement is already in writing. 13 Thus, we are not prepared to
disturb the following findings and conclusions of the respondent court:
"Appellant first argues that the original owner of the
subject land, Gervacio Serapio, had intended, represented
and warranted that the same would be for its perpetual
use as a road lot. Involving as it does a transmission of
real rights, this claim should be based on something more
concrete than bare allegations and speculations. In the
instant case, however, there is notably no concrete
evidence supporting appellant's claim.
"Appellant would have Us believe that the map attached
to the Agreement of Purchase and Sale between it and
Gervacio Serapio, containing as it does the proposed
roads in the area, implicitly carries the assurance that
Gervacio Serapio had made with respect to said proposed
roads.
 "Even the most careful perusal of the map attached to the
Agreement of Purchase and Sale between appellant and
Gervacio Serapio, however, does not reveal anything
other than that it merely shows the location of the lots
subject of such Agreement. Indeed, from the Agreement
itself, it is clear that said map was attached simply to
identify the location of the lots covered by the Agreement;
and that reference to the map was simply as follows —
cdtai
. . ., the SELLER by these presents PROMISE TO
SELL to said BUYER, these portions of land more
particularly identified and designated as Lot
Nos. "A" and "C" in the sketch hereto
attached and marked as Annex "A," . . . (Exh. 16,
Agreement of Purchase and Sale) [emphasis ours]
"There being no provision in the Agreement, whatsoever,
regarding the subject lot, or the grant of its use unto
appellant, We cannot now accept appellant's bare
allegations on Gervacio Serapio's representation and
warranty that the subject land would be for its perpetual
use as a road lot. At any rate, it has been ruled that in
case of doubt in the provisions of the Deed of Sale, the
least transmission of rights should prevail (Gacos vs.
Court of Appeals, 212 SCRA 8).
"The rest of appellant's arguments in support of its claim
regarding perpetual use of the subject land as a road lot
are nothing but mere speculations which, as We have
stressed, cannot suffice for Us to uphold any transmission
of real rights. Being painfully bereft of concrete evidence,
said claim of appellant must be brushed aside." 14
Even if we were to accept as true petitioner's stance that Lot 5-B was
intended by Gervacio Serapio as a road right of way for petitioner's
perpetual use, still a grant of a right of way in favor of petitioner does not
legally entitle it to occupy part of the said lot which is registered in
respondents-spouses' name, more so to introduce permanent
improvements thereon such as a gymnasium and a boys'
quarters/dormitory.
Thus, what is actually at issue here is not whether the petitioner could use
Lot 5-B in question as a road, but rather whether the petitioner could legally
possess/occupy part of the said lot. This is, in fact, the only issue as agreed
upon by the contending parties during the pre-trial conference of this case
before the trial court. 15 As discussed earlier, petitioner has no right
whatsoever to possess and construct permanent structures on the
questioned land owned by respondents-spouses. Petitioner admits in its
answer to the complaint that it introduced improvements on the subject lot
without the consent and knowledge of respondents-spouses. 16 It is thus a
builder in bad faith. Again, we find no reversible error in the following ruling
of the respondent court:
"Which leads us to a discussion of whether or not
appellant was in bad faith in introducing improvements on
the subject land. It cannot be denied that appellant never
gained title to the subject land as it admits to not having
purchased the said lot (TSN, p. 81, November 9, 1992).
Neither has appellant successfully shown any right to
introduce improvements on the said land (its claim of
grant of perpetual use of the same as a road lot and its
right to build on a right of way both having been rejected
above). This being so, it follows that appellant was a
builder in bad faith in that, knowing that the land did not
belong to it and that it had no right to build thereon, it
nevertheless caused the improvements in question to be
erected.
"Next, appellant claims that granting that it was in bad
faith, appellees and their predecessors-in-interest were
equally guilty of bad faith in allowing the construction of
the improvements. This bad faith on the part of the
appellees and their predecessors-in-interest should,
however, have been proved at the hearing below, for in
the absence of such proof, it must be presumed that with
the unlawful trespass upon the subject land, the buildings
were commenced thereon without the knowledge and
consent of the owners thereof (Rivera vs. Archbishop of
Manila, 40 Phil. 717). Again, We find such proof absent in
the instant case." 17
Second. Petitioner contends that the respondent court struck down its
defense of laches "with a grossly erroneous and unfair declaration that since
the private respondents themselves did not sleep on their rights, there could
be no laches." 18 Suffice it to state that no evidence was presented by
petitioner during the trial to prove that the improvements constructed on the
subject property were made during the lifetime of Gervacio Serapio, nor that
Serapio, his heirs or respondents-spouses were aware of, much less
tolerated, the said structures so as to make them guilty of laches. In this
regard, we find the respondent court's disputation on the issue of laches
proper:

"Neither are We convinced by appellant's argument that
appellee's claim is barred by laches. In Olizon vs. Court of
Appeals, 236 SCRA 148, the Supreme Court once again
defined laches —
. . . as the failure or neglect, for an unreasonable
and unexplained length of time, to do that which
by exercising due diligence could or should have
been done earlier: it is negligence or omission to
assert a right within a reasonable time, warranting
a presumption that the party entitled to assert it
either has abandoned it or declined to assert it.
"Here, the improvements introduced by appellant were
finished in 1988. In November 1989, a month after
appellees purchased the subject lot, they had the same
surveyed, after which they immediately sought to inform
the appellant about the encroachment they had
discovered (TSN, pp. 8-11, August 26, 1992). Thereafter,
on October 26, 1990, appellees, through their lawyer, sent
a demand letter to appellant regarding the matter,
followed by another demand letter dated January 31,
1991. Finally the Complaint was filed on September 23,
1991. All told, We do not find laches to have set in to
effectively bar appellees from the claims contained in their
Complaint. By any indication, the lapse of a mere three (3)
years from the time the improvements were constructed
up to the time of the filing of the Complaint cannot be
construed as sufficient to hold the complainant as barred
by laches. Especially so since during the interim,
appellees were diligent in having the subject land
surveyed and in sending demand letters to appellant." 19
Third. Petitioner claims that the respondent court committed grave abuse of
discretion when it awarded respondents-spouses actual damages in the
form of back rentals of P15,000.00 a month, plus the legal rate of interest, to
be reckoned from January, 1991, without proof to support the same. We
have examined the respondents-spouses' complaint and the testimony of
respondent Jerome Protasio on the matter of back rentals prayed for in the
complaint, and we find no factual basis how such award was arrived at.
Thus, we have to discard such award of damages. A party is entitled to an
adequate compensation for such pecuniary loss actually suffered by him as
he has duly proved. 20 Such damages, to be recoverable, must not only be
capable of proof, but must actually be proved with a reasonable degree of
certainty. 21 These damages cannot be presumed, 22 and the courts in
making such award of damages must point out specific facts which could
afford a basis for measuring whatever compensatory or actual damages are
borne. 23
Fourth. We also agree with the petitioner that the respondent court should
not have awarded respondents-spouses moral damages of P100,000.00
simply because their complaint did not specifically ask for such relief. Moral
damages must be disallowed when it is not specifically prayed for in the
complaint. 24It is elementary that in order that moral damages may be
awarded, there must be pleading and proof of moral suffering, mental
anguish, fright and the like, 25 both of which are absent in this case.
Finally. We further agree with the petitioner that the award of attorney's fees
of P100,000.00 should be eliminated for lack of factual basis and legal
justification. The only evidence to support respondents-spouses' claim for
attorney's fees is the testimony of Jerome Protasio to the effect that his
agreement with the law firm handling his case is that he is obligated to pay
"25% of the obligation receivable . . ." 26 That is all. Both the trial court and
respondent Court of Appeals likewise did not cite specific factual basis to
justify the award of attorney's fees, which is in violation of the proscription
against the imposition of a penalty on the right to litigate. 27 As we
enunciated in Refractories Corporation of the Philippines vs. Intermediate
Appellate Court. 28
". . . The award of attorney's fees is the exception rather
than the general rule and counsel's fees is not to be
awarded every time a party wins a suit. The discretion of
the court to award attorney's fees under Article 2208 of
the Civil Code 'demands factual, legal and equitable
justification, without which the award is a conclusion
without a premise, its basis being improperly left to
speculation and conjecture.' In all events, the court must
state the reason for the award of attorney's fees."
WHEREFORE, the decision of the respondent Court of Appeals dated
September 12, 1996, in CA-G.R. CV No. 43311, is hereby MODIFIED in the
sense that the awards of back rentals, moral damages and attorney's fees
are hereby DELETED. In all other respects, the assailed decision is
AFFIRMED. No pronouncement as to costs.
SO ORDERED. LLphil
Regalado, Puno and Mendoza, JJ ., concur.
Melo, J ., is on leave.
||| (Congregation of the Religious of the Virgin Mary v. Court of Appeals, G.R.
No. 126363, [June 26, 1998], 353 PHIL 591-604)
FIRST DIVISION
[G.R. Nos. 129292-93. June 20, 2001.]
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.
ARLENGEN DEGALA, accused-appellant.
The Solicitor General for plaintiff-appellee.
Public Attorney's Office for accused-appellant.
SYNOPSIS
Complainant, Hailyn Degala, is the second child in a brood of six children of
spouses Heidi Degala and accused Arlengen Degala. On school days, Hailyn
and her siblings stayed in the house of their maternal grandparents. They
went home to their parents on weekends or when they did not have classes.
She was 10 years and 7 months old when her father started raping her,
which was repeated several times for four years. Her last sexual molestation
happened on December 6, 1992. Hailyn learned from her mother (Heidi) that
the accused tried to rape her aunt, Nora Ronquillo. Such information
enraged her and she finally revealed to her mother that the accused had
raped her. Her mother then asked her other daughters (Helen and Harlyn) if
the accused also raped them. They made the same revelations. The
accused laughed off the charges upon confrontation. Nelida Ladrillo, a
younger sister of Heidi, happened to drop by her sister's house and sensed
that something wrong had happened when she talked to Hailyn and her
sisters. They admitted the rapes to Nelida. Hailyn requested Nelida to
accompany them to a doctor. Nelida then brought the three girls to the
police station where Hailyn executed her sworn statement accusing their
father of raping them on separate occasions from 1988 to 1992. As Heidi
was disinterested to prosecute her husband, Nelida assisted Hailyn and her
sisters in filing the rape cases. Of the three girls, only Hailyn did not desist
from prosecuting the accused. The defense was anchored on denial. After
trial, the court a quo found the accused guilty of two counts of rape. He was
sentenced in each case to suffer the penalty of reclusion perpetua and
ordered to pay a total of P100,000.00 as civil indemnity by way of moral
damages. Hence, this appeal where the only issue posed is whether or not
appellant's guilt was established beyond reasonable ground.
After a study of the evidence, the Supreme Court was convinced that Hailyn
narrated the truth in court. Her testimony is full of details and
straightforward. The appellant's mere denial that he raped Hailyn will not
exonerate him. Denial cannot prevail over the positive and candid testimony
of the victim whose credibility was not eroded. The Court agreed with the
judgment of the trial court that the appellant is liable for two counts of rape.
At the time the rape incidents were committed, Republic Act Nos. 7659 and
8353 were not yet in effect. Thus, he was correctly sentenced to suffer the
penalty of reclusion perpetua. The damages awarded by the trial court must
be modified. Appellant should be held liable to pay the complainant
P50,000.00 as civil indemnity and another P50,000.00 as moral damages in
each rape case.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; CREDIBILITY OF WITNESSES;
ASSESSMENT OF THE TRIAL COURT SHOULD BE CONTROLLING,
EXCEPTION. — In rape cases, the lone testimony of the victim, if credible, is
sufficient to sustain a conviction. It is a settled rule that when the issue
focuses on the credibility of witnesses, or the lack of it, the assessment of
the trial court should be controlling, unless cogent reasons, and none exists
in this case, dictate otherwise.
2. ID.; ID.; ID.; NOT AFFECTED BY DELAY IN REPORTING THE OFFENSE
WHEN SUCH DELAY IS JUSTIFIED. — Accused-appellant banks on the
delayed filing of the rape cases against him. The rule is that delay in
reporting the offense of incestuous rape is not necessarily an indication that
the charge is fabricated. It does not diminish the complainant's credibility
nor undermine the charges of rape where the delay can be attributed to the
pattern of fear instilled by the threats of bodily harm, specially by one who
exercises moral ascendancy over the victim.
3. ID.; ID.; DENIAL OF ACCUSED; CANNOT PREVAIL OVER THE POSITIVE
AND CANDID TESTIMONY OF THE VICTIM. — The accused-appellant's
mere denial that he raped Hailyn will not exonerate him. Denial cannot
prevail over the positive and candid testimony of the victim whose credibility
was not eroded. No young girl would concoct a story of sexual assault,
undergo gynecologic examination and subject herself to the trauma and
embarrassment of criminal prosecution unless she speaks the truth.
4. CRIMINAL LAW; RAPE; LUST IS NOT A RESPECTER OF TIME AND
PLACE. — The accused-appellant claims that the place where he allegedly
raped Hailyn was too cramped. Allegedly, it was impossible for him to rape
her because they slept in one room with the other members of their
household. The argument that rape cannot be committed in a room shared
with other members of the family has long been rejected by this Court, lust
being no respecter of time and place.
5. CIVIL LAW; DAMAGES; MORAL DAMAGES; DISTINGUISHED FROM
CIVIL INDEMNITY. — As regards the damages, the trial court awarded in
favor of the complainant the amount of P50,000.00 in each case "as civil
indemnity by way of moral damages." We reiterate that civil indemnity is
distinct from moral damages and the two are awarded separately from each
other. Civil indemnity is mandatory upon the finding of the fact of rape. In
the case of People vs. Victor, we reemphasized the difference of the two
awards, thus: "The lower court, however, erred in categorizing the award of
P50,000.00 to the offended party as being in the nature of moral damages.
We have heretofore explained in People vs. Gementiza that the indemnity
authorized by our criminal law as civil indemnity ex delicto for the offended
party, in the amount authorized by the prevailing judicial policy and aside
from other proven actual damages, is itself equivalent to actual or
compensatory damages in civil law. It is not to be considered as moral
damages thereunder, the latter being based on different jural foundations
and assessed by the court in the exercise of sound discretion."
6. ID.; ID.; ID.; MAY BE AWARDED TO RAPE VICTIM WITHOUT THE NEED
FOR PLEADING OR PROOF OF THE BASIS THEREOF. — In People vs.
Prades, we also resolved that moral damages may be awarded to the rape
victim, in such amount as the Court deems just, without the need for
pleading or proof of the basis thereof. The conventional requirement
of allegata et probata in civil procedure and for essentially civil cases was
dispensed with in criminal prosecutions for rape with the civil aspect
included therein since no appropriate pleadings are filed wherein such
allegations can be made. EDATSI
7. ID.; ID.; EXEMPLARY DAMAGES; SHOULD BE AWARDED IN CASE OF
INCESTUOUS RAPE. — Accused-appellant should be held liable for
exemplary damages in accord with our ruling in People vs. Antipona. We
held therein that when a man perpetrates his lascivious designs on his own
direct blood relative, he descends to a level lower than beasts. Exemplary
damages is thus awarded to deter other fathers with perverse tendencies or
aberrant sexual behavior from abusing their own daughters.
DECISION
PUNO, J p:
Accused-appellant ARLENGEN DEGALA seeks to reverse the judgment in
Criminal Case Nos. 916 and 917 of the Regional Trial Court (Branch XXV) of
Koronadal, South Cotabato, finding him guilty as charged of two (2) counts
of rape committed in March 1988 and December 6, 1992. 1 The complainant
is his minor daughter, HAILYN DEGALA.
When arraigned, the accused pled not guilty to both crimes. 2
The records show that the complainant, Hailyn Degala, is the second child in
a brood of six children of spouses Heidi Degala and accused Arlengen
Degala. She was born on August 3, 1977. 3 Her siblings are Arnel, Helen,
Harlyn, Arnold and Arlengen, Jr. 4
The Degalas used to live in Tubing, Tupi, South Cotabato. On school days,
the complainant, Hailyn, and her siblings stayed in the house of their
maternal grandparents in Martinez Subdivision, Marbel, Koronadal, South
Cotabato. They went home on weekends or when they did not have classes.
In the evening of March 1988, Hailyn and her younger sisters were in their
house in Tubing. They slept in one room at the ground floor. The accused
slept outside their room near the door. Hailyn's paternal grandparents were
in another house, about a meter away from their place. At that time, Hailyn's
mother was in Koronadal where she worked as a laundry woman.
Later that night, the accused broke into the room where Hailyn was
sleeping. He was wearing only his brief. He crept towards Hailyn. He lifted
her T-shirt and touched her body. He mashed her left breast. She resisted
and they wrestled. He succeeded in lifting her skirt and taking off her panty.
He started to caress her and kiss her on the face, neck and lips. She then
kicked his feet and desperately reached out for her sisters who were
sleeping beside her. Unfortunately, she failed to awake them. Finally, the
accused succeeded in having carnal knowledge of her. She asked the
accused: "Why are you doing this to me?" He replied that she was sweet.
After satisfying his lust, he rushed out of the room. It was Hailyn's first
sexual contact. The experience was painful. She was 10 years and 7 months
old.
She wept the whole night until morning. Her sisters woke up and left the
room, but did not see her crying because she was lying face down. She kept
herself in the room the whole day crying. Nobody was able to talk to her that
day because the accused shouted at her siblings when they tried to enter
her room. 5
The rape was repeated several times for four years. Hailyn estimated that
she was abused twenty (20) times. Her last sexual molestation happened on
December 6, 1992. On that day, the accused directed her siblings to go to
the house of their paternal grandparents and ordered her to stay behind.
Again, he forced himself on Hailyn. He boxed her in the epigastric region
and violated her.
On December 10, 1992, Hailyn learned from her mother (Heidi) that the
accused tried to rape her aunt, Nora Ronquillo. The information enraged her
and she finally revealed to her mother that the accused had raped her. Her
mother then asked her other daughters (Helen and Harlyn) if the accused
also raped them. They made the same revelations. The accused laughed off
the charges upon confrontation. He eventually left their house when Hailyn's
mother threatened him that she would call the police.
Nelida Ladrillo, a younger sister of Heidi, happened to drop by her sister's
house in Marbel. She sensed that something wrong had happened when
she talked to Hailyn and her sisters. The three girls were sad. They admitted
the rapes to Nelida. Hailyn requested Nelida to accompany them to a
doctor.
On December 14, 1992, Dr. Apolinar Hatulan of the Municipal Health Office
of Tupi examined Hailyn and her sisters. He found healed lacerations on
Hailyn's genitalia at 12, 3, 5 and 7 o'clock positions, indicating the
possibility of her sexual molestation. 6 He also confirmed the possible
sexual abuses on her sisters. Nelida then brought the three girls to Tupi
Police Station where Hailyn executed her sworn statement accusing their
father of raping them on separate occasions from 1988 to 1992.
When Nelida finally had the chance to talk to Heidi, she reported that the
medical test results confirmed the girls' accusations of rape. Heidi refused
to believe her and insisted that Hailyn could have made up the story. As
Heidi was disinterested to prosecute the accused, Nelida assisted Hailyn
and her sisters in filing the rape cases against him. Helen's complaint was
docketed as Criminal Case Nos. 913-914, Harlyn's, Criminal Case No. 915
and Hailyn's, Criminal Case Nos. 916-917. Of the three girls, only Hailyn did
not desist from prosecuting the accused. Nelida went to Harlyn's school and
talked to her niece about the case. The latter refused to continue with its
prosecution because Heidi would not let her go to court. Nelida also tried to
talk to Helen but she failed because Heidi sent Helen to work in Davao.
Nelida testified that when Hailyn was still in the custody of her parents, the
accused would often beat her up. The beatings only stopped after
December 6, 1992 because she ceased living with them.
The defense was anchored on denial. The accused presented Heidi, his
mother (Julieta), his mother-in-law (Magdalena Dariaga), and Harlyn as
witnesses. They testified that Hailyn was a disrespectful and stubborn child.
Allegedly, in the evening of December 6, 1992, Magdalena Dariaga caught
Hailyn and her boyfriend having sexual intercourse inside their toilet located
in their backyard. The toilet had no roof, its four sides were covered with
sacks: three served as walls while one served as its door. The earth served
as its floor. Magdalena claimed she saw Hailyn's boyfriend on top of her.
She stood by the makeshift door for two minutes and was not noticed by
them. She did not stop the two but waited for them to come out from the
toilet. She then scolded them.
The next day, Magdalena allegedly went to Tubing and informed Hailyn's
parents about her indiscretion. They went to Marbel and there, the accused
beat up Hailyn in the presence of Heidi, Helen and Harlyn. He used his
leather belt and later a branch of ipil-ipil in hitting her.
The defense charged that Hailyn carried a grudge against the accused for
the constant beatings she received from him. Thus, to spite him, she falsely
accused him of raping her. The defense witnesses claimed that the rape
could not take place in Tubing because they always slept in one room.
As for the rape cases filed by Harlyn, the latter denied that the accused
raped her. Allegedly, Nelida threatened them that they would go to prison if
they refused to charge the accused in court.
To further discredit Nelida, the defense alleged that Nelida's husband had a
fistfight with the accused on one occasion, in connection with the expenses
incurred during the wake of a relative. Since then, Nelida allegedly bore a
grudge against him and to get even, she forced the three girls to charge him.
After trial, the court a quo found the accused guilty of two counts of
rape. 7 He was sentenced in each case to suffer the penalty of reclusion
perpetua and ordered to pay a total of P100,000.00 as civil indemnity by
way of moral damages.
Hence, this appeal.
The only issue posed is whether or not the accused-appellant's guilt was
established beyond reasonable ground.
In rape cases, the lone testimony of the victim, if credible, is sufficient to
sustain a conviction. 8 It is a settled rule that when the issue focuses on the
credibility of witnesses, or the lack of it, the assessment of the trial court
should be controlling, unless cogent reasons, and none exists in this case,
dictate otherwise.
After a study of the evidence, we are convinced that Hailyn narrated the
truth in court. Her testimony is full of details and straightforward. As rightly
ruled by the trial court, "it can come only from one who has truly and
personally undergone the agonizing events." We also note that there were
instances when Hailyn was ashamed to narrate her ordeal in court, an
indication of a sense of loss of self-pride because of what she had gone
through. She testified as follows: 9
"PROSECUTOR LECHONSITO:
Q: How did your father rape you, please tell the Court.
A: He entered the room, sir.
Q: And then what happened?
A: Then (he) creeped (sic) towards me, then he touched
my body and pointed a gun to my head.
xxx xxx xxx
Q: You said that your father approached you by creeping.
How did you know that he approached you by
creeping, please tell the Court.
A: Because I was able to notice.
Q: So that because you noticed it, you were not yet
sleeping at that time, is that correct?
A: I was already asleep, but I noticed when he crept
towards me.
Q: And then after he crept towards you, what happened?
A: He pointed a gun at my head (witness pointing at the
left temple) and he undressed me by removing my
panty.
COURT:
Hailyn, do not be embarrassed, when you testify. If you
like, we can have the other people sent outside
the courtroom.
WITNESS:
I would like the audience to move out. cTIESD
COURT:
Those who are not concerned, please step out.
PROSECUTOR LECHONSITO:
Q: You said that when your father approach (sic) you
creeping, he touched you body. Did I get you right
when you testified on that a while ago?
A: Yes, sir.
Q: What part of your body was touched by your father?
A: He touched my breast, sir.
Q: How did he touch your breast, tell the Court.
A: He mashed my breast.
Q: You were wearing clothes during that time:
A: Yes, sir.
xxx xxx xxx
PROSECUTOR LECHONSITO:
Q: How did he mash your breast, please tell the Court.
A: He placed his hands under my dress and then he
mashed my breast.
Q: What side of your breast was mashed by your father?
A: My left breast, sir.
Q: After he mashed you left breast, what else did he do?
A: He removed my panty, sir.
Q: And then?
A: We wrestled with each other.
Q: How did you wrestle with each other.
A: He laid on me.
Q: What kind of dress were you wearing during that time?
A: I was wearing a skirt and a t-shirt.
Q: When he removed your panty, did he remove also your
skirt?
A: No, sir.
Q: What did he do with your skirt?
 A: He raised my skirt upwards, sir. Atty. Sunga, please come forward.
Q: How about your shirt, what did he do with your shirt? COURT:
A: He did not remove it. Prosecutor advised the witness not to be ashamed in
testifying. The advice was made in the presence of
Q: You said that after your father removed your panty, he counsel for the accused. Proceed.
laid on top of you. What did he do when he laid on
top of you? PROSECUTOR LECHONSITO:
A: He caressed me. Q: When your father mashed your vagina, was your panty
still on?
Q: How did he caress you?
A: No more, sir.
A: He kissed me, sir, on my face and on my lips.
Q: When he mashed your vagina, what else did he do
Q: When your father was doing that to you, what was your after mashing your vagina?
reaction, if any?
A: He let his penis touched (sic) my vagina.
A: I was struggling, sir.
Q: How long did he touch your vagina?
Q: How did you struggle?
A: For a short time, sir.
A: I struggled by kicking him.
Q: You said that after mashing your vagina for a short
Q: Did you kick your father? time, he let his penis touch your vagina, how long
A: Yes, sir. did he let his penis touch your vagina?

xxx xxx xxx A: For a long time, sir.

Q: You said that your father caressed you by kissing your Q: What was he doing with his penis?
face and your lips and whatelse (sic) did he kiss in
you, aside from those: A: He was inserting his penis into my vagina.

A: My neck, sir. Q: How did he insert his penis towards your vagina?

Q: What else? A: He spread my legs.

A: No more, sir. Q: How did he spread your legs?

Q: What else did he do, after kissing you? A: He held both my legs and spread them, sir.

A: He touched my vagina, sir. Q: By the way, when your father approached you by
creeping towards your, what was he wearing, if
Q: How did he touch your vagina? you could recall?

A: He mashed my vagina. A: He was wearing a brief and he was naked on the other
part of his body.
PROSECUTOR LECHONSITO:
xxx xxx xxx
Will I be allowed to talk to the witness?
PROSECUTOR LECHONSITO:
ATTY. SUNGA: (sic)
 Q: What did you feel when his penis entered your vagina? A: He told me that I am sweet.
A: It was painful, sir. xxx xxx xxx."
Q: Because it was painful, what did you do? We do not believe that Hailyn would accuse her father of rape to spite him
for the beatings she received from him when she was still in his custody.
A: Nothing, sir. Even with these alleged beatings, it would take a most senseless kind of
depravity for a young daughter to concoct a story against her father,
Q: Did you not cry because of the pain?
accusing him of beastly conduct that would put him for most of his
ATTY. SUNGA: remaining life in jail and expose herself and her family to public
humiliation. 10 Hailyn was only ten years old at the time of the first sexual
We object. molestation.
COURT: The accused-appellant claims that the place where he allegedly raped
Sustained. Hailyn was too cramped. Allegedly, it was impossible for him to rape her
because they slept in one room with the other members of their household.
WITNESS: The argument that rape cannot be committed in a room shared with other
members of the family has long been rejected by this Court, lust being no
I cried.
respecter of time and place. 11
xxx xxx xxx
Next, accused-appellant banks on the delayed filing of the rape cases
Q: In your estimate, how long did it take him to let his against him. The rule is that delay in reporting the offense of incestuous rape
penis enter into your vagina? is not necessarily an indication that the charge is fabricated. It does not
diminish the complainant's credibility nor undermine the charges of rape
A: It took a long time. where the delay can be attributed to the pattern of fear instilled by the
Q: And in the process, what did you feel while he was threats of bodily harm, specially by one who exercises moral ascendancy
letting his penis enter into your vagina? over the victim. 12
In the cases at bar, it is understandable why it took a long time for Hailyn to
reveal to her mother that she was sexually molested by accused-appellant.
A: It was painful, sir. She was very young. She grew up being beaten up by him. He had
threatened her with harm should she tell anyone about the rapes. Obviously,
xxx xxx xxx
fear cowed her to silence and inaction.
Q: Did you tell your father not to do that to you?
The accused-appellant's mere denial that he raped Hailyn will not exonerate
A: I told him, "Why are you doing this to me?" him. Denial cannot prevail over the positive and candid testimony of the
victim whose credibility was not eroded. No young girl would concoct a
Q: What was his response to you?
story of sexual assault, undergo gynecologic examination and subject
A: He told me, "Don't tell this to your mother or to others herself to the trauma and embarrassment of criminal prosecution unless she
or else, I will kill you." speaks the truth. 13

Q: What else did you talk about?
A: I told him, "There is my mother. Why are you doing it to
me when in fact, I am your daughter."
Q: What was his answer?
The defense's story that Hailyn was caught by her grandmother having
sexual intercourse with her boyfriend is incredible. We agree with the trial
court's observation, thus: 14
"Even the allegation of sexual intercourse between
complainant Hailyn Degala and her supposed boyfriend
which per the defense is the reason why Hailyn Degala
 was beaten by her father taxes our mind into disbelief.
The toilet where the sex act was performed was square-
shaped structure, two arms length wide. There was no
door which could be secured, only a piece of sack serving
as curtain would hide the person attending to his
biological needs inside. The walling was also made of
sack. There was no roof. The boyfriend was supposed to
be five feet and five inches tall. Verily, if the two sex
partners would lie on the floor, as what complainant and
Marlon did, and with a toilet bowl and other articles such
as pail for water inside, the lovers would be in a cramped
position. Being lovers, why would the two choose of all
places a ramshackle toilet to do their thing."
We add that it is implausible that Hailyn's grandmother would just stand
by the sack door of the toilet for two minutes while her granddaughter
was having sex with her boyfriend. Common human experience dictates
that such a scandalous conduct would have prompted her to call
Hailyn's attention right away and not wait for the alleged young lovers to
consummate their lustful act. Evidence to be believed must not only
proceed from the mouth of a credible witness but must foremost be
credible in itself. 15
The accused-appellant also alleges that Hailyn's maternal aunt, Nelida
Ladrillo, induced her and her sisters to file a complaint against him. The
reason given was the alleged misunderstanding between him and Nelida's
husband. The allegation does not merit serious consideration especially
when viewed against the fact that when Hailyn and her sisters were
examined by the doctor, all three medical results showed signs that they
were sexually molested.
All told, we agree with the judgment of the trial court that the accused-
appellant is liable for two counts of rape. At the time the rape incidents were
committed, Republic Act Nos. 7659 and 8353 were not yet in effect. Thus,
he was correctly sentenced to suffer the penalty of reclusion perpetua. 16
As regards the damages, the trial court awarded in favor of the complainant
the amount of P50,000.00 in each case "as civil indemnity by way of moral
damages." We reiterate that civil indemnity is distinct from moral damages
and the two are awarded separately from each other. 17 Civil indemnity is
mandatory upon the finding of the fact of rape. In the case of People
vs. Victor, 18 we reemphasized the difference of the two awards, thus:
"The lower court, however, erred in categorizing the
award of P50,000.00 to the offended party as being in the
nature of moral damages. We have heretofore explained
in People vs. Gementiza that the indemnity authorized by
our criminal law as civil indemnity ex delicto for the
offended party, in the amount authorized by the prevailing
judicial policy and aside from other proven actual
damages, is itself equivalent to actual or compensatory
damages in civil law. It is not to be considered as moral
damages thereunder, the latter being based on different
jural foundations and assessed by the court in the
exercise of sound discretion."
In People vs. Prades, 19 we also resolved that moral damages may be
awarded to the rape victim, in such amount as the Court deems just, without
the need for pleading or proof of the basis thereof. The conventional
requirement of allegata et probata in civil procedure and for essentially civil
cases was dispensed with in criminal prosecutions for rape with the civil
aspect included therein since no appropriate pleadings are filed wherein
such allegations can be made.
Accordingly, the damages awarded by the trial court must be
modified. 20 Accused-appellant should be held liable to pay the
complainant P50,000.00 as civil indemnity and another P50,000.00 as moral
damages in each rape case. 21 In addition, accused-appellant should be
held liable for exemplary damages in accord with our ruling in People
vs. Antipona. 22 We held therein that when a man perpetrates his lascivious
designs on his own direct blood relative, he descends to a level lower than
beasts. Exemplary damages is thus awarded to deter other fathers with
perverse tendencies or aberrant sexual behavior from abusing their own
daughters. 23
IN VIEW WHEREOF, the decision of the Regional Trial Court of Koronadal,
South Cotabato, Branch 25, in Criminal Case Nos. 916 and 917 is
AFFIRMED, with the modification that accused-appellant Arlengen Degala is
ordered to pay complainant Hailyn Degala, in each criminal case, the
amount of P50,000.00 as civil indemnity, P50,000 as moral damages and
P50,000.00 as exemplary damages. Costs against accused-
appellant. cSCTID
SO ORDERED.
Davide, Jr., C.J., Kapunan, Pardo and Ynares-Santiago, JJ., concur.
||| (People v. Degala, G.R. Nos. 129292-93, [June 20, 2001], 411 PHIL 650-
666)
SECOND DIVISION
[G.R. No. 192180. March 21, 2012.]
PEOPLE OF THE PHILIPPINES, appellee, vs. ALIAS
KINO LASCANO (at large) and ALFREDO DELABAJAN
alias TABOYBOY, accused.
ALFREDO DELABAJAN, appellant.
DECISION
BRION, J p:
We decide the appeal, filed by Alfredo Delabajan (appellant), from the
decision 1 of the Court of Appeals (CA) dated May 25, 2006 in CA-G.R.
CEB-CR-H.C. No. 00228. The CA decision affirmed with modification the
November 26, 2001 decision 2 of the Regional Trial Court (RTC), Branch 23,
Allen, Northern Samar, and found the appellant guilty beyond reasonable
doubt of three (3) counts of rape, sentencing him to suffer the penalty
of reclusion perpetua for each count. TaCSAD
The RTC Decision
In its November 26, 2001 decision, the RTC found the appellant guilty
beyond reasonable doubt of three (3) counts of rape. It gave credence to the
testimony of AAA 3 that alias Kino Lascano and the appellant took turns in
raping her. According to the trial court, the victim recognized her assailants
through their respective voices. The trial court held that a public accusation
by a blind Filipina whose virtue has been unblemished is worthy of belief. It
also disregarded the appellant's alibi, as he failed to show that it was
physically impossible for him to be at the scene of the crime. The RTC
sentenced the appellant to suffer the penalty of reclusion perpetua for each
count, and to pay the victim the amounts of P50,000.00 as civil indemnity
and P50,000.00 as moral damages, also for each count. 4
The CA Decision
On intermediate appellate review, the CA affirmed the RTC decision with the
modification that the appellant is guilty beyond reasonable doubt of six (6)
counts of qualified rape. It held that the appellant actively participated with
Kino in raping AAA; he tied the victim's hands, and then held her feet when
Kino was raping her. In addition, AAA's testimony was corroborated by the
medical findings of Dr. Ethel Simeon. The appellate court also rejected the
appellant's alibi in light of the victim's positive declaration, and for the
appellant's failure to show that it was physically impossible for him to be at
the locus criminis. 5
Our Ruling
We dismiss the appeal, but modify the counts of rape committed and
the awarded indemnities.
Sufficiency of Prosecution Evidence
For a charge of rape to prosper under Article 266-A of the Revised Penal
Code, as amended, the prosecution must prove that (1) the offender had
carnal knowledge of a woman; and (2) he accompanied such act through
force, threat, or intimidation, or when she was deprived of reason or
otherwise unconscious, or when she was under twelve years of age or was
demented. 6
In her September 20, 2000 testimony, AAA narrated in detail how the
appellant and Kino threatened to kill her, and then took turns in raping her.
AAA explained that she recognized her assailants through their respective
voices. We emphasize that the victim, although blind, knew the identities of
her two assailants because they were her neighbors. AAA explained that
Kino and the appellant often went to her residence in Sitio Maraga-as
because they were the friends of her brother. Notably, the appellant
admitted that he talked to AAA on many occasions. DCAEcS
We view AAA's testimony to be clear, convincing and credible considering
especially the corroboration it received from the medical certificate and
testimony of Dr. Simeon. Our examination of the records shows no
indication that we should view the victim's testimony in a suspicious light. It
bears stressing that identification of an accused by his voice has been
accepted, particularly in cases where, as in this case, the victim has known
the perpetrator for a long time; 7 for the blind voice recognition must be a
special sense that has been developed to a very high degree. Besides, it is
inconceivable that a blind woman would concoct a story of defloration, allow
an examination of her private parts and subject herself to public trial or
ridicule if she has not, in truth, been a victim of rape and impelled to seek
justice for the wrong done to her. Thus, to us, the prosecution positively
established the elements of rape required under Article 266-A of the Revised
Penal Code. First, the appellant and Kino succeeded in having carnal
knowledge with the victim. AAA was steadfast in her assertion that both the
appellant and Kino had raped her, as a result of which, she felt pain. She
also felt that something "sticky" came out of the appellant's and Kino'
private parts. Second, the assailants employed force, threat and intimidation
in satisfying their bestial desires. According to AAA, the appellant and Kino
threatened to kill her if she refused to obey them.
 The Presence of Conspiracy
We agree with the CA that the appellant and Kino conspired in sexually
assaulting AAA. "Conspiracy exists when the acts of the accused
demonstrate a common design towards the accomplishment of the same
unlawful purpose." 8 In the present case, the acts of Kino and of the
appellant clearly indicate a unity of action: (1) Kino and the appellant entered
the victim's house at around 9:00 p.m.; (2) Kino and the appellant ordered
the victim to lie down, and threatened to kill her if she refused to do so; (3)
Kino undressed AAA, while the appellant tied her hands; (4) the appellant
held AAA's feet, while Kino inserted his penis into the victim's private parts;
and (5) the appellant raped AAA afterwards.
Clearly, the appellant and Kino performed specific acts with such closeness
and coordination as to indicate an unmistakably common purpose or design
to commit the felony. Thus, they are liable for two (2) counts of rape on
account of a clear conspiracy between them, shown by their obvious
concerted efforts to perpetrate, one after the other, the rapes. Each of them
is responsible not only for the rape committed personally by him but also for
the rape committed by the other as well.
The Appellant's Defenses
We reject the appellant's claim that he was gathering coconuts
in Sitio Pasakayon on the date and time of the rapes. It is settled that the
defense of alibi is inherently weak and easily fabricated, particularly when it
is corroborated only by the wife of the appellant, as in this case. In order for
the defense of alibi to prosper, it is not enough to prove that the appellant
was somewhere else when the offense was committed, but it must likewise
be demonstrated that he was so far away that it was not possible for him to
have been physically present at the place of the crime or its immediate
vicinity at the time of its commission. 9
In the present case, the appellant admitted that Sitio Pasakayon is just a 30-
minute walk from Sitio Maraga-as. Considering how near he was to the
place where the crime was committed, the appellant's alibi cannot be given
any value. Clearly, the defense failed to prove that it was physically
impossible for the appellant to have been at the locus criminis at the time of
the commission of the rapes. ISDHcT
The Court also finds unmeritorious the appellant's contention that AAA had
been instigated by Wawing Lascano to falsely testify against him. The
appellant alleged that Wawing was mad at him because he struck the
latter's pigs. Aside from being uncorroborated, we find this claim implausible
as the victim has no relation at all to Wawing. It is inconceivable that a
young girl would be willing to drag her honor to a merciless public scrutiny,
and expose herself and her family to scandal upon the mere command and
instigation of a complete stranger.
The Other Rapes Not Proven with Moral Certainty
As earlier stated, the CA convicted the appellant of six (6) counts of qualified
rape. After a meticulous reading of the records, we sustain the appellant's
conviction for only two (2) counts of rape. It is settled that each and every
charge of rape is a separate and distinct crime that the law requires to be
proven beyond reasonable doubt. 10 The prosecution's evidence must pass
the exacting test of moral certainty that the law demands to satisfy the
burden of overcoming the appellant's presumption of innocence. 11
AAA's testimonies on two of the sexual abuses were explicit, detailing the
participations of the appellant and Kino, and clearly illustrating all the
elements of the crime. However, AAA's statements that the appellant and
Kino each raped her three times were too general and clearly inadequate to
establish beyond reasonable doubt that each accused committed two other
succeeding rapes. Her testimonies were overly generalized and lacked
specific details on how the other rapes were committed. We stress that a
witness is not permitted to make her own conclusion of law; whether the
victim had been raped is a conclusion for this Court to make based on the
evidence presented. 12
The Proper Penalty
Under Article 266-B of the Revised Penal Code, the penalty of reclusion
perpetua to death shall be imposed whenever the rape is committed by two
or more persons. Since reclusion perpetua and death are two indivisible
penalties, Article 63 13 of the Revised Penal Code applies; when there are
neither mitigating nor aggravating circumstances in the commission of the
deed, as in this case, the lesser penalty shall be applied. The lower courts
were, therefore, correct in imposing the penalty of reclusion perpetua on the
appellant. ETIHCa
It bears noting that under Article 266-B, paragraph 10 of the Revised Penal
Code, the death penalty shall be imposed when the offender knew of the
mental disability, emotional disorder and/or physical handicap of the
offended party at the time of the commission of the crime. However, the
information in the present case merely stated that the victim was blind; it did
not specifically allege that the appellant knew of her blindness at the time of
the commission of the rape. Hence, we cannot impose the death penalty on
the appellant.
The Civil Indemnities
The award of civil indemnity to the rape victim is mandatory upon the finding
that rape took place. Moral damages, on the other hand, are awarded to
rape victims without need of proof other than the fact of rape, under the 1. REMEDIAL LAW; CIVIL PROCEDURAL COMPLAINT; FAILURE TO
assumption that the victim suffered moral injuries from the experience she ALLEGE AMOUNT OF EXEMPLARY DAMAGE THEREIN; RULING IN
underwent. Therefore, this Court affirms the award of P50,000.00 as civil MANCHESTER DEVELOPMENT CORPORATION V. COURT OF APPEALS
indemnity and P50,000.00 as moral damages, based on prevailing (NO. L-75919, MAY 1987, 149 SCRA 662) NOT VIOLATED TO WARRANT
jurisprudence. 14 DISMISSAL THEREOF. — The complaint (first or second) specified enough
sums, as and for actual damages, except exemplary damages, within
In addition, we likewise award exemplary damages in the amount of Manchester's (or Circular No. 7's) contemplation. What would have been
P30,000.00 for each count of rape. 15 The award of exemplary damages is fatal was if the petitioners mentioned no amount at all. This is the teaching
justified under Article 2229 of the Civil Code to set a public example or of Manchester. At any rate: Art. 2233. Exemplary damages cannot be
correction for the public good. recovered as a matter of right; the court will decide whether or not they
WHEREFORE, the decision of the Court of Appeals dated May 25, 2006 in should be adjudicated. So also, ". . . the amount of the exemplary damages
CA-G.R. CEB-CR-H.C. No. 00228 is AFFIRMED with the need not be proved. . . ." In other words, the amount payable by way of
following MODIFICATIONS: (a) Alfredo Delabajan is found guilty beyond exemplary damages may be determined in the course of the trial. The
reasonable doubt of two (2) counts of rape; and (b) he is further ordered to plaintiff (the petitioners in this case) could not have therefore predicted how
pay the victim the amount of P30,000.00 as exemplary damages for each much exemplary losses they had incurred. We are not saying — so let us
count of rape. make one thing clear — that the amount of exemplary damages need not be
alleged in all cases. Certainly, it would have been different had the case
SO ORDERED. been one purely for moral, nominal, temperate, or exemplary, damages, (as
in libel) other than actual. Though these damages are, under the Civil Code,
Carpio, Perez, Sereno and Reyes, JJ., concur. damages that can not be shown with certainty, unlike actual damages, the
||| (People v. Delabajan, G.R. No. 192180, [March 21, 2012], 685 PHIL 236- plaintiff must ascertain, in his estimation, the sums he wants, and the sums
245) required to determine the amount of docket and other fees. The case at bar
is different. It is, in essence, a demand for specific performance, as a
consequence of a contract of loan between the parties in the sum of: "a. The
principal of P100,000.00, less whatever was paid per evidence to be
SECOND DIVISION presented, if any; b. Attorney's fees of 25% of principal, plus interest or
P52,000.00; c. Interests of 12% per annum = P108,000.00 for nine (9) years
which is provided in Annex "B" and is part of the principal = P100,000.00 +
[G.R. No. 85847. December 21, 1989.] P108,000.00; d. Exemplary damages subject to the discretion of the
Honorable Court; e. Expenses of litigation of P10,000.00; f. For other relief
SPOUSES BELEN GREGORIO, petitioners, vs. THE which the Honorable Court may deem just to impose under the
HONORABLE JUDGE ZOSIMO Z. ANGELES, Presiding circumstances, such as issuance of the order/writ of attachment due to
Judge of the Regional Trial Court, Makati, Branch 58, conversion as stated in the herein affidavit." The demand for exemplary
SPOUSES SYLVIA AND RAMON CARRION, and THE OFFICE damages was obviously meant to magnify the total claims, as is the usual
OF THE SHERIFF OF MAKATI, respondents. practice, but the failure to specify it is not lethal. The court can assess the
docketing fees on the basis of the actual damages sought. So it has been
held that where the complaint states enough facts and sums to "enable . . .
Victoria S.A. Cuyos for petitioners. the Clerk of Court of the lower Court to compute the docket fees payable,"
the trial court would be in error to expunge the pleading.
Rogelio N. Velarde for respondents.

SYLLABUS DECISION
SARMIENTO, J p:
The only issue here is whether or not the failure of the complaint to specify
the sum of exemplary damages allegedly suffered (among other damages
sustained) warrants its dismissal ostensibly in consonance with the Court's
ruling in Manchester Development Corporation v. Court of Appeals. 1 The
Court rules, insofar as the litigation is concerned, that it does not. LexLib
The facts, in their barest essentials, are not disputed.
On October 16, 1987, the petitioners sued the private respondents for a sum
of money arising from a loan. The complaint, docketed as Civil Case No.
18058 of the Regional Trial Court, Branch 137, Makati, Metro Manila, prayed
for judgment as follows;
WHEREFORE, premises considered, it is respectfully
prayed that the Honorable Court, after due hearing, orders
the defendants to pay jointly and severally:
a. The principal of P100 ,000.00, less whatever was paid
per evidence to be presented, if any;
b. Attorney's fees of 25% of principal, plus interest or
P52,000.00;
c. Interests of 12% per annum = P108,000.00 for nine (9)
years which is provided in Annex "B" and is part of the
principal = P100,000.00 + P108,000.00;
d. Exemplary damages subject to the discretion of the
Honorable Court
e. Expenses of litigation of P10,000.00;
f. For other relief which the Honorable Court may deem
just to impose under the circumstances, such as issuance
of the order/writ of attachment due to conversion as
stated in the herein affidavit. 2
On account of the failure on the part of the petitioners to appear at the pre-
trial conference and to file a pre-trial brief, the trial court dismissed the
complaint.
On February 23, 1988, the petitioners filed another complaint, denominated
as Civil Case No. 88-159 of the Regional Trial Court, Branch 58, Makati,
Metro Manila, praying as follows:
WHEREFORE, premises considered, it is respectfully
prayed that the Honorable Court, after due hearing, orders
the defendants to pay jointly and severally:
a. The principal of P100,000.00, less whatever was paid
per evidence to be presented, if any;
b. Attorney's fees of 25% of principal, plus interest or
P52,000.00;
c. Interests of 12% per annum = P108,000.00 for nine (9)
years which is provided in Annex "B" and is part of the
principal = P100,000.00 + P108,000.00;
d. Exemplary damages subject to the discretion of the
Honorable Court
e. Expenses of litigation of P10,000.00;
f. For other relief which the Honorable Court may deem
just to impose under the circumstances, such as issuance
of the order/writ of attachment due to conversion as
stated in the herein affidavit. 3
The private respondents moved for the dismissal of this complaint on the
ground of failure to prosecute for an unreasonable' length of time pursuant
to Section 3, Rule 17 of the Revised Rules of Court. The trial court denied
the dismissal motion.
Subsequently, the private respondents filed a "Motion to Dismiss and/or to
Expunge Complaint from the Record." Expunction was sought for failure of
the petitioners "to specify both in the body and in the prayer of their
Complaint the amount of exemplary damages they seek to recover from the
defendants . . ." 4 on the strength of Manchester as well as Circular No. 7 of
the Court, implementing Manchester. prcd
On November 10, 1988, the trial judge dismissed the case . . .
. . . for failure of the plaintiff to comply with Administration
Circular No. 7 dated March 24, 1988 re-affirming the
pronouncement of the Supreme Court in this case in
Manchester Development Corporation vs. Court of
Appeals "No. L-75919, May 7, 1987." (149 SCRA 562) 5
The lower court is now held to be in error in ordering dismissal.
The petition is possessed of merit.
The complaint (first or second) specified enough sums, as and for actual
damages, except exemplary damages, within Manchester's (or Circular No.
7's) contemplation. What would have been fatal was if the petitioners
mentioned no amount at all. This is the teaching of Manchester.
At any rate:
Art. 2233. Exemplary damages cannot be recovered as a
matter of right; the court will decide whether or not they
should be adjudicated. 6
Finally, Manchester involved clearly an effort to defraud the government, and
so, resort to its ruling must be justified by a showing of a prior attempt to
cheat the courts. This is not the case here.
WHEREFORE, the petition is GRANTED. The case is REMANDED to the
court a quo for further proceedings.
SO ORDERED.

So also, ". . . the amount of the exemplary damages need not be proved. . . Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.
." 7
||| (Gregorio v. Angeles, G.R. No. 85847, [December 21, 1989], 259 PHIL
In other words, the amount payable by way of exemplary damages may be 974-979)
determined in the course of the trial. The plaintiff (the petitioners in this case)
could not have therefore predicted how much exemplary losses they had
incurred. LLjur
SECOND DIVISION
We are not saying — so let us make one thing clear — that the amount of
exemplary damages need not be alleged in all cases. Certainly, it would
have been different had the case been one purely for moral, nominal, [G.R. No. 148246. February 16, 2007.]
temperate, or exemplary, damages, (as in libel) other than actual. Though
these damages are, under the Civil Code, damages that can not be shown REPUBLIC OF THE PHILIPPINES, petitioner, vs. JUAN
with certainty, unlike actual damages, the plaintiff must ascertain, in his C. TUVERA, VICTOR P. TUVERA and TWIN PEAKS
estimation, the sums he wants, and the sums required to determine the DEVELOPMENT CORPORATION,respondents.
amount of docket and other fees.
The case at bar is different. It is, in essence, a demand for specific
performance, as a consequence of a contract of loan between the parties in DECISION
the sum of: "a. The principal of P100,000.00, less whatever was paid per
evidence to be presented, if any; b. Attorney's fees of 25% of principal, plus
interest or P52,000.00; c. Interests of 12% per annum = P108,000.00 for
nine (9) years which is provided in Annex "B" and is part of the principal = TINGA, J p:
P100,000.00 + P108,000.00; d. Exemplary damages subject to the
discretion of the Honorable Court; e. Expenses of litigation of P10,000.00; f. The long-term campaign for the recovery of ill-gotten wealth of
For other relief which the Honorable Court may deem just to impose under former President Ferdinand E. Marcos, his wife Imelda, and their associates,
the circumstances, such as issuance of the order/writ of attachment due to has been met with many impediments, some of which are featured in this
conversion as stated in the herein affidavit." 8 case, that have led to doubts whether there is still promise in that enterprise.
Yet even as the prosecution of those cases have drudged on and on, the era
The demand for exemplary damages was obviously meant to magnify the
of their final reckoning is just beginning before this Court. The heavy
total claims, as is the usual practice, but the failure to specify it is not lethal.
hammer of the law is just starting to fall.
The court can assess the docketing fees on the basis of the actual damages
sought. The instant action originated from a civil complaint for restitution
and damages filed by the Republic of the Philippines against Marcos and his
So it has been held that where the complaint states enough facts and sums
longtime aide Juan Tuvera, as well as Tuvera's son Victor and a corporation
to "enable . . . the Clerk of Court of the lower Court to compute the docket
the younger Tuvera had controlled. Trial on the case against the Tuveras
fees payable," 9 the trial court would be in error to expunge the pleading.
proceeded separately before the Sandiganbayan. After the Republic had
What is fatal, so we are told, 10 is if the complaint left to the judge mere
presented its evidence, the Tuveras successfully moved for the dismissal of
"guesswork" as to the amounts payable as and by way of docket fees. Cdpr
the case on demurrer to evidence. The demurrer was sustained, and it falls
upon this Court to ascertain the absence or existence of sufficient proof to
support the relief sought by the Republic against the Tuveras.
I.
We begin with the facts.
Twin Peaks Development Corporation (Twin Peaks) was organized
on 5 March 1984 as a corporation with a principal purpose of engaging in
the real estate business. There were five incorporating stockholders,
including respondent Victor Tuvera (Victor) 1 who owned 48% of the shares
of the fledgling corporation. Victor was the son of respondent Juan Tuvera,
who was then Presidential Executive Assistant of President Marcos. HSDIaC
Acting on a letter dated 31 May 1984 of Twin Peaks' Vice-President
and Treasurer Evelyn Fontanilla in behalf of the corporation, President
Marcos granted the award of a Timber License Agreement (TLA), more
specifically TLA No. 356, in favor of Twin Peaks to operate on 26,000
hectares of forest land with an annual allowable cut of 60,000 cubic meters
of timber and to export 10,000 cubic meters of mahogany of the narra
species. 2 As a result, Twin Peaks was able to engage in logging operations.
On 25 February 1986, President Marcos was ousted, and Corazon C.
Aquino assumed the presidency. Among her first acts as President was
to establish the Philippine Commission on Good Government (PCGG),
tasked with tracking down the ill-gotten wealth procured by Marcos, his
family, and associates during his 20-year rule. Among the powers
granted to the PCGG was the power to issue writs of
sequestration. 3 On 13 June 1988, the PCGG issued a Writ of
Sequestration on all assets, properties, records, documents, and shares
of stock of Twin Peaks on the ground that all the assets of the
corporation are ill-gotten wealth for having been acquired directly or
indirectly through fraudulent and illegal means. 4 This was followed two
days later by Mission Order No. MER-88 (Mission Order), also issued by
the PCGG, implementing the aforementioned Writ of Sequestration. 5
On 9 December 1988, the PCGG, in behalf of the Republic, filed the
Complaint now subject of this Petition. 6 Impleaded as defendants in the
Complaint 7 were Juan and Victor Tuvera, as well as the then-exiled
President Marcos. Through the Complaint, the Republic sought to recover
funds allegedly acquired by said parties in flagrant breach of trust and
fiduciary obligations with grave abuse of right and power in violation of the
Constitution and the laws of the Republic of the Philippines. 8
In particular, the Complaint alleged that Juan Tuvera, as Presidential
Executive Assistant of President Marcos, took advantage of his relationship
to influence upon and connection with the President by engaging in a
scheme to unjustly enrich himself at the expense of the Republic and of the
Filipino people. This was allegedly accomplished on his part by securing
TLA No. 356 on behalf of Twin Peaks despite existing laws expressly
prohibiting the exportation of mahogany of the narra species 9 and Twin
Peaks' lack of qualification to be a grantee thereof for lack of sufficient
logging equipment to engage in the logging business. 10 The Complaint
further alleged that Twin Peaks exploited the country's natural resources by
engaging in large-scale logging and the export of its produce through its
Chinese operators whereby respondents obtained a revenue of
approximately P45 million. EHaCID
The Complaint prayed that (1) TLA No. 356 be reverted to the State
or cancelled; (2) respondents be jointly and severally ordered to pay P48
million 11 as actual damages; and (3) respondents pay moral, temperate and
exemplary damages, litigation expenses, and treble judicial costs. 12 It cited
as grounds for relief, gross abuse of official position and authority, breach of
public trust and fiduciary obligations, brazen abuse of right and power,
unjust enrichment, and violation of the Constitution. 13
In their Answer, 14 respondents Victor Tuvera and Twin Peaks
claimed that Twin Peaks was awarded TLA No. 356 only after its articles of
incorporation had been amended enabling it to engage in logging
operations, 15 that the Republic's reference to Chinese operations and
revenue of approximately P45 million were merely imagined, 16 and that the
PCGG has no statutory authority to institute the action. 17 By way of
counterclaim, respondents asked that the Republic be ordered to pay Victor
Tuvera moral damages and to pay both Victor Tuvera and Twin Peaks
exemplary damages, and to reimburse their attorney's fees. 18
Anent the allegation that Twin Peaks sold about P3 million worth of
lumber despite the Writ of Sequestration issued by the PCGG, respondents
stressed that the Director of Forest Development acted within the scope of
his authority and the courts have no supervising power over the actions of
the Director of Forest Development and the Secretary of the Department of
Environment and Natural Resources (DENR) in the performance of their
official duties. 19
As an affirmative and special defense, respondents Victor Tuvera
and Twin Peaks alleged that after Twin Peaks was granted TLA No. 356 in
24 August 1984, Felipe Ysmael, Jr. and Co., Inc. had filed a motion for the
cancellation of the same with the DENR Secretary. When respondents
submitted their Answer, the denial by the DENR of the Ysmael motion was
under review before the Court. 20
 Juan Tuvera, who was abroad when the case was filed on 9
December 1988, later submitted his own Answer on 6 December
1989. 21 He also denied the allegations of the Republic and alleged that as
Presidential Executive Assistant of then President Marcos, he acted within
the confines of his duties and had perpetrated no unlawful acts. He merely
transmitted communications of approval in the course of his duties and had
nothing to do with the decisions of then President Marcos. 22 He denied
having anything to do with Twin Peaks.
The Pre-Trial Order also indicated that the Republic admitted the
exhibits by respondents, subject to the presentation of certified true copies
thereof. Respondents' exhibits were as follows: 30
Exhibit Nos. Description
1 Amended Articles of Incorporation dated 31 July 1984

Juan Tuvera filed a compulsory counterclaim on the ground that the

instant action had besmirched his reputation and caused serious anxiety
and mental anguish thus entitling him to moral and exemplary damages and 2 TLA No. 356
litigation expenses. 23
On 3 May 1989, respondents filed an Omnibus Motion to Nullify Writ 3 Order, Minister Ernesto M. Maceda, 22 July 1986
of Sequestration and/or the Mission Order. 24 The Sandiganbayan issued a
Temporary Restraining Order against the PCGG requiring it to cease, refrain
and desist from further implementing the Writ of Sequestration and the
Mission Order. 25 Subsequently, on motion of respondents, the 3-A Order, Minister Ernesto M. Maceda, 10 October 1986
Sandiganbayan granted a Writ of Preliminary Injunction covering the Mission
Order. The Sandiganbayan deferred its resolution on the Motion to Lift the
Writ of Sequestration. 26 3-B Order, Minister Ernesto M. Maceda, 26 November 1986,
From 1988 to 1993, the proceedings before the Sandiganbayan O.P. Case No. 3521
were delayed owing to the difficulty of acquiring jurisdiction over the person
of President Marcos, who was by then already in exile. Thus, upon motion 3-C Resolution, Office of the President, 6 July 1987, O.P.
by respondents, the Sandiganbayan granted them a separate pre-trial/trial Case
from President Marcos. 27 No. 3521

Respondents submitted their documentary

evidence in the Pre-Trial Conference while the Republic
3-D Order, Office of the President, 14 August 1987, I.S. No.
reserved to present the same during trial. After the pre-
66
trial conference, the Sandiganbayan issued a Pre-Trial
Order 28 dated 3 November 1993, which presented the
issues for litigation as follows: 3-E Complaint, PCGG, dated 20 July 1988
Whether or not defendant Juan C. Tuvera who was a
Presidential Executive Assistant at the time material to this
case, by himself and in concert with his co-defendants 3-E-1, 3-E-2, I.S. No. 66 Affidavit, PCGG, Almario F. Mendoza, Ltv.
Ferdinand E. Marcos and Victor Tuvera, took advantage of
his relation and connection with the late Marcos, secure
(sic) a timber concession for Twin Peaks Development 3-E-3 Mendoza and Affidavit, Isidro Santiago
Corporation and, engage (sic) in a scheme to unjustly
enrich himself at the expense of the Republic and the
Filipino People. 29
3-F Counter-Affidavit, Juan C. Tuvera, 17 August 1989
 and marked in the same memorandum were the name and signature of Juan
Tuvera. 32 Upon cross-examination, Galicia stated that she was not yet the
3-F-1 PCGG, Motion to Withdraw, Jose Restituto F. Mendoza, chief of the Division when the documents she identified were submitted to
10 May 1989 the Bureau. She further stated it was her first time to see the aforementioned
documents when she was asked to bring the same before the trial court. 33
The next witness was Fortunato S. Arcangel, Regional Technical
3-F-2 Decision, Supreme Court, 18 October 1990 Director III of the DENR. He testified that he is a Technical Director under the
Forest Management Services of the DENR. 34 He identified Forestry
Administration Order (FAO) No. 11 dated 1 September 1970. He said he was
3-G Resolution, Supreme Court, 5 June 1991 aware of TLA No. 356 of Twin Peaks 35 because at the time it was issued,
he was the chief of the Forestry Second Division and his duties included the
evaluation and processing of applications for licenses and permits for the
disposition and distribution of timber and other forest
4 Complaint, DENR, Almario F, Mendoza, 9 March 1990 products. 36 Consequently, he was aware of the process by which TLA No.
356 was issued to Twin Peaks. 37 According to him, they processed the
application insofar as they evaluated the location of the area concerned and
4-A Answer/Comment, DENR, Almario F. Mendoza, dated 20 its present vegetative state, examined the records, and determined the
annual allowable land. After the examination, the license agreement was
April 1990 prepared and submitted for approval. 38 He continued that under FAO No.
11, a public bidding is required before any license agreement or permit for
the utilization of timber within the forestry land is issued 39 but no public
4-B Decision, DENR, dated 28 August 1990 bidding was conducted for TLA No. 356. 40 He explained that no such
bidding was conducted because of a Presidential Instruction not to accept
any application for timber licensing as a consequence of which bidding
5 Complaint, Ombudsman, etc., Case No. 0-90-0708, 9 procedures were stopped. 41 Upon cross-examination, Arcangel said that at
the time TLA No. 356 was issued, the Revised Forestry Code of the
March 1990 Philippines42 was already in effect but there were still provisions in FAO No.
11 that remained applicable such as the terms and conditions of granting a
license. He also stated that the issuance of the license to Twin Peaks
6, 6-A Answer/Counter-Affidavit, etc. emanated from the President of the Philippines. 43
The Republic's third and last witness was Teresita M. Zuñiga,
employee of the Bureau of Internal Revenue. She identified the 1986 Income
6-B Decision, Ombudsman Case No. 0-90-0708, dated 8 Tax Returns of Victor P. Tuvera, Evelyn Fontanilla and Feliciano O. Salvana,
stockholders of Twin Peaks. 44
August 1990
On 24 June 1994, the Republic rested its case after its formal offer
The Republic presented three (3) witnesses during the trial. The first of evidence, as follows: 45
witness was Joveniana M. Galicia, Chief of the National Forest Management
Division of the Forest Management Bureau. She identified TLA No. 356 of Exhibits Documents Purpose
Twin Peaks dated 20 August 1984 and a Memorandum dated 18 July 1984.
She testified that TLA No. 356 covers 26,000 hectares of forest land located
in the Municipality of Isabela, Province of Quirino. 31 The Memorandum A Timber License Agreement To prove that the Timber
dated 18 July 1984 addressed to Director Edmundo Cortez recited then License
President Marcos' grant of the timber concession to Twin Peaks. Identified
 No. 356 of Twin Peaks Realty Agreement was executed Fontanilla
prior
Development Corp. dated 20 to the amendment of the Evelyn Fontanilla was not a legitimate
Articles stockholder
August 1984 of Incorporation of Twin of Twin Peaks Realty
Peaks Development Corp.
Realty Development Corp.

F Income Tax Return of To prove that Feliciano

B Memorandum dated 18 To prove the participation Salvana
July 1984 of Juan C. of Juan C. Tuvera in the Feliciano Salvana was not a legitimate
grant stockholder
Tuvera, Presidential of the timber concession of of Twin Peaks Realty

Executive Secretary Twin Peaks Realty Development Corp.

Development
Corp.
G Articles of Incorporation To prove that Twin Peaks

of Twin Peaks Realty Realty Development Corp.

C Forestry Administrative To prove that Twin Peaks
Development Corp. (original) was organized to engage in
Order No. 11 (Revised) Realty Development Corp. the
was granted a timber license real estate business and not

agreement without following in the logging industry.

the
procedure outlined in the
forestry H Timber Manifestation Report To show that Twin Peaks
rules and regulations and in Realty
of [Twin Peaks Realty Development Corp. lacks
violation of law.
Development Corp.] equipment to process logs.

consigned to Scala
D Income Tax Return of To prove that Victor Tuvera
was Sawmill 46
Victor Tuvera not a legitimate stockholder
of
Twin Peaks Realty I Timber Manifestation To show that Twin Peaks
Development Realty
Corp. Report of Twin Peaks Development Corp. lacks

consigned to La Peña equipment to process logs.

E Income Tax Return of To prove that Evelyn
 Sawmill 47
Respondents subsequently submitted certified true copies of the
exhibits they had presented during the pre-trial conference. 48
With leave of court, respondents filed a Demurrer to Evidence.
Respondents argued that the Republic failed to present sufficient legal
affirmative evidence to prove its claim. In particular, respondents' demurrer
contends that the memorandum (Exh. B) and TLA No. 356 are not "legal
evidence" because "legal evidence" is not meant to raise a mere suspicion
or doubt. Respondents also claim that income tax returns are not sufficient
to show one's holding in a corporation. Respondents also cited the factual
antecedents culminating with the Court's decision in Felipe Ysmael, Jr. &
Corp., Inc. v. Sec. of Environment and Natural Resources. 49
The Republic filed a Manifestation, contending that the demurrer is
not based on the insufficiency of its evidence but on the strength of the
evidence of respondents as shown by their own exhibits. The Republic
claimed that the Revised Forestry Code of the Philippines does not dispense
with the requirement of public bidding. The Republic added that Sec. 5 of
said law clearly provides that all applications for a timber license agreement
must be filed before the Bureau of Forest Development and that
respondents still have to prove compliance with the requirements for service
contracts. 50
Respondents opposed the Manifestation, maintaining that since the
Republic admitted the exhibits of respondents during the pre-trial, it is
bound by its own admission. Further, these same exhibits contain
uncontroverted facts and laws that only magnify the conclusion that the
Republic has no right to relief. 51
In its Resolution dated 23 May 2001, 52 the Sandiganbayan
sustained the demurrer to evidence and referred to the decision of this Court
in Ysmaelin holding that res judicata applies. The Anti-Graft Court also did
not give credence to the Republic's allegations concerning respondents'
abuse of power and/or public trust and consequent liability for damages in
view of its failure to establish any violation of Arts. 19, 20 and 21 of the Civil
Code. DAHCaI
In essence, the Sandiganbayan held that the validity of TLA No. 356
was already fully adjudicated in a Resolution/Order issued by the Office of
the President on 14 August 1987, which had become final and executory
with the failure of the aggrieved party to seek a review thereof. The
Sandiganbayan continued that the above pronouncement is supported by
this Court in Ysmael. Consequently, the Sandiganbayan concluded, the
Republic is barred from questioning the validity of TLA No. 356 in
consonance with the principle of res judicata.
The Republic now questions the correctness of the
Sandiganbayan's decision to grant the demurrer to evidence because it was
not based solely on the insufficiency of its evidence but also on the evidence
of respondent mentioned during the pre-trial conference. The Republic also
challenges the applicability of res judicata.
II.
Preliminarily, we observe that respondents had filed before the
Sandiganbayan a pleading captioned Motion to Dismiss or Demurrer to
Evidence, thus evincing that they were seeking the alternative reliefs of
either a motion to dismiss or a demurrer to evidence. However, the
Sandiganbayan, in resolving this motion, referred to it as Motion to
Dismiss on Demurrer to Evidence, a pleading of markedly different character
from a Motion to Dismiss orDemurrer to Evidence. Still, a close reading of
the Sandiganbayan Resolution reveals clearly that the Sandiganbayan was
treating the motion as a demurrer, following Rule 33, Section 1 of the Rules
of Court, rather than a motion to dismiss under Rule 16, Section 1.
This notwithstanding, the Sandiganbayan justified the grant of
demurrer with res judicata as rationale. Res judicata is an inappropriate
ground for sustaining a demurrer to evidence, even as it stands as a proper
ground for a motion to dismiss. A demurrer may be granted if, after the
presentation of plaintiff's evidence, it appears upon the facts and the law
that the plaintiff has shown no right to relief. In contrast, the grounds for res
judicata present themselves even before the presentation of evidence, and it
should be at that stage that the defense of res judicata should be invoked as
a ground for dismissal. Properly speaking, the movants for demurral who
wish to rely on a controlling value of a settled case as a ground for demurrer
should invoke the ground of stare decisis in lieu of res judicata. CAHTIS
In Domondon v. Lopez, 53 we distinguished a motion to dismiss for
failure of the complainant to state a cause of action from a motion to
dismiss based on lack of cause of action. The first is governed by Rule 16,
Section 1 (g), 54 while the second by Rule 33 55 of the Rules of Court, to
wit:
. . . The first [situation where the complaint
does not alleged cause of action] is raised in a motion
to dismiss under Rule 16 before a responsive pleading is
filed and can be determined only from the allegations in
the initiatory pleading and not from evidentiary or other
matter aliunde. The second [situation where the
evidence does not sustain the cause of action
alleged] is raised in a demurrer to evidence under Rule 33
 after the plaintiff has rested his case and can be resolved
only on the basis of the evidence he has presented in
support of his claim. The firstdoes not concern itself with
the truth and falsity of the allegations while the
second arises precisely because the judge has
determined the truth and falsity of the allegations and has
found the evidence wanting.
Hence, a motion to dismiss based on lack of
cause of action is filed by the defendant after the plaintiff
has presented his evidence on the ground that the latter
has shown no right to the relief sought. While a motion to
dismiss under Rule 16 is based on preliminary objections
which can be ventilated before the beginning of the trial, a
motion to dismiss under Rule 33 is in the nature of a
demurrer to evidence on the ground of insufficiency of
evidence and is presented only after the plaintiff has
rested his case. 56 [Emphasis supplied]
III .
We shall first discuss the question of whether or not a demurrer to
evidence may be granted based on the evidence presented by the opposing
parties.
An examination of the Sandiganbayan's Resolution shows that
dismissal of the case on demurrer to evidence was principally anchored on
the Republic's failure to show its right to relief because of the existence of a
prior judgment which consequently barred the relitigation of the same issue.
In other words, the Sandiganbayan did not dismiss the case on the
insufficiency of the Republic's evidence nor on the strength of respondents'
evidence. Rather, it based its dismissal on the existence of the Ysmael case
which, according to it, would render the case barred by res
judicata. EaHATD
Prescinding from this procedural miscue, was the Sandiganbayan
correct in applying res judicata to the case at bar? To determine whether or
not res judicata indeed applies in the instant case, a review of Ysmael is
proper.
In brief, Felipe Ysmael, Jr. & Co., Inc. was a grantee of a timber
license agreement, TLA No. 87. Sometime in August 1983, the Bureau of
Forest Development cancelled TLA No. 87 despite the company's letter for
the reconsideration of the revocation. Barely one year thereafter, one-half (or
26,000 hectares) of the area formerly covered by TLA No. 87 was re-
awarded to Twin Peaks under TLA No. 356.
In 1986, Felipe Ysmael, Jr. & Co., Inc. sent separate letters to the
Office of the President and the Ministry of Natural Resources primarily
seeking the reinstatement of TLA No. 87 and the revocation of TLA No. 356.
Both offices denied the relief prayed for. Consequently, Felipe Ysmael, Jr. &
Co., Inc. filed a petition for review before this Court.
The Court, through the late Justice Irene Cortes, held that Ysmael's
letters to the Office of the President and to the Ministry of Natural Resources
in 1986 sought the reconsideration of a memorandum order by the Bureau
of Forest Development canceling their timber license agreement in 1983 and
the revocation of TLA No. 356 subsequently issued by the Bureau in 1984.
Ysmael did not attack the administrative actions until after 1986. Since the
decision of the Bureau has become final, it has the force and effect of a final
judgment within the purview of the doctrine of res judicata. These decisions
and orders, therefore, are conclusive upon the rights of the affected parties
as though the same had been rendered by a court of general jurisdiction.
The Court also denied the petition of Ysmael because it failed to file the
special civil action for certiorari under Rule 65 within a reasonable time, as
well as in due regard for public policy considerations and the principle of
non-interference by the courts in matters which are addressed to the sound
discretion of government agencies entrusted with the regulation of activities
coming under the special technical knowledge and training of such
agencies.
In Sarabia and Leido v. Secretary of Agriculture and Natural
Resources, et al., 57 the Court discussed the underlying principle for res
judicata, to wit:
The fundamental principle upon which the
doctrine of res judicata rests is that parties ought not to
be permitted to litigate the same issue more than once;
that, when a right or fact has been judicially tried and
determined by a court of competent jurisdiction, or an
opportunity for such trial has been given, the judgment of
the court, so long as it remains unreversed, should be
conclusive upon the parties and those in privity with them
in law or estate.
For res judicata to serve as an absolute bar to a subsequent action,
the following requisites must concur: (1) the former judgment or order must
be final; (2) the judgment or order must be on the merits; (3) it must have
been rendered by a court having jurisdiction over the subject matter and
parties; and (4) there must be between the first and second actions, identity
of parties, of subject matter, and of causes of action. 58 When there is only
identity of issues with no identity of causes of action, there exists res
judicata in the concept of conclusiveness of judgment. 59
 In Ysmael, the case was between Felipe Ysmael Jr. & Co., Inc. and
the Deputy Executive Secretary, the Secretary of Environment and Natural
Resources, the Director of the Bureau of Forest Development and Twin
Peaks Development and Realty Corporation. The present case, on the other
hand, was initiated by the Republic of the Philippines represented by the
Office of the Solicitor General. No amount of imagination could let us believe
that there was an identity of parties between this case and the one formerly
filed by Felipe Ysmael Jr. & Co., Inc. EacHCD
The Sandiganbayan held that despite the difference of parties, res
judicata nevertheless applies on the basis of the supposed sufficiency of the
"substantial identity" between the Republic of the Philippines and Felipe
Ysmael, Jr. Co., Inc. We disagree. The Court in a number of cases
considered the substantial identity of parties in the application of res
judicata in instances where there is privity between the two parties, as
between their successors in interest by title 60 or where an additional party
was simply included in the subsequent case 61 or where one of the parties
to a previous case was not impleaded in the succeeding case. 62
The Court finds no basis to declare the Republic as having
substantial interest as that of Felipe Ysmael, Jr. & Co., Inc. In the first place,
the Republic's cause of action lies in the alleged abuse of power on
respondents' part in violation of R.A. No. 3019 63 and breach of public trust,
which in turn warrants its claim for restitution and damages. Ysmael, on the
other hand, sought the revocation of TLA No. 356 and the reinstatement of
its own timber license agreement. Indeed, there is no identity of parties and
no identity of causes of action between the two cases.
IV.
What now is the course of action to take since we cannot affirm the
Sandiganbayan's grant of the demurrer to evidence? Rule 33, Sec. 1 reads:
Sec. 1. Effect of judgment on demurrer to
evidence. — After the plaintiff has completed the
presentation of his evidence, the defendant may move for
dismissal on the ground that upon the facts and the law
the plaintiff has shown no right to relief. If his motion is
denied, he shall have the right to present evidence. If the
motion is granted but on appeal the order of dismissal is
reversed he shall have be deemed to have waived the
right to present evidence.
The general rule is that upon the dismissal of the demurrer in the
appellate court, the defendant loses the right to present his evidence and
the appellate court shall then proceed to render judgment on the merits on
the basis of plaintiff's evidence. As the Court explained in Generoso
Villanueva Transit Co., Inc. v. Javellana: 64
The rationale behind the rule and doctrine is
simple and logical. The defendant is permitted, without
waiving his right to offer evidence in the event that his
motion is not granted, to move for a dismissal (i.e., demur
to the plaintiff's evidence) on the ground that upon the
facts as thus established and the applicable law, the
plaintiff has shown no right to relief. If the trial
court denies the dismissal motion, i.e., finds that plaintiff's
evidence is sufficient for an award of judgment in the
absence of contrary evidence, the case still remains
before the trial court which should then proceed to hear
and receive the defendant's evidence so that all the facts
and evidence of the contending parties may be properly
placed before it for adjudication as well as before the
appellate courts, in case of appeal. Nothing is lost. The
doctrine is but in line with the established procedural
precepts in the conduct of trials that the trial court liberally
receive all proffered evidence at the trial to enable it to
render its decision with all possibly relevant proofs in the
record, thus assuring that the appellate courts upon
appeal have all the material before them necessary to
make a correct judgment, and avoiding the need of
remanding the case for retrial or reception of improperly
excluded evidence, with the possibility thereafter of still
another appeal, with all the concomitant delays. The rule,
however, imposes the condition by the same token that if
his demurrer is granted by the trial court, and the order of
dismissal is reversed on appeal, the movant loses his right
to present evidence in his behalf and he shall have been
deemed to have elected to stand on the insufficiency of
plaintiff's case and evidence. In such event, the appellate
court which reverses the order of dismissal shall proceed
to render judgment on the merits on the basis of plaintiff's
evidence. 65
It thus becomes the Court's duty to rule on the merits of the
complaint, duly taking into account the evidence presented by the Republic,
and without need to consider whatever evidence the Tuveras have, they
having waived their right to present evidence in their behalf. aDHCEA
V.
 Executive Order No. 14-A 66 establishes that the degree of proof
required in cases such as this instant case is preponderance of evidence.
Section 3 thereof reads:
SEC. 3. The civil suits to recover unlawfully
acquired property under Republic Act No. 1379 or for
restitution, reparation of damages, or indemnification for
consequential and other damages or any other civil
actions under the Civil Code or other existing laws filed
with the Sandiganbayan against Ferdinand E. Marcos,
Imelda R. Marcos, members of their immediate family,
close relatives, subordinates, close and/or business
associates, dummies, agents and nominees, may proceed
independently of any criminal proceedings and may
be proved by a preponderance of evidence. [Emphasis
supplied.]
Thus, the Court recently held in Yuchengco v.
Sandiganbayan, 67 that in establishing the quantum of evidence required for
civil cases involving the Marcos wealth held by their immediate family, close
relatives, subordinates, close and/or business associates, dummies, agents
and nominees filed before the Sandiganbayan, that "the Sandiganbayan, . . .
was not to look for proof beyond reasonable doubt, but to determine, based
on the evidence presented, in light of common human experience, which of
the theories proffered by the parties is more worthy of credence."
In order that restitution may be proper in this case, it must be first
established that the grant of the TLA to Twin Peaks was illegal. With the
illegality of the grant established as fact, finding Victor Tuvera, the major
stockholder of Twin Peaks, liable in this case should be the ineluctable
course. In order that Juan Tuvera may be held answerable as well, his own
participation in the illegal grant should also be substantiated.
Regarding the first line of inquiry, the Complaint adverted to several
provisions of law which ostensibly were violated by the grant of the TLA in
favor of Twin Peaks. These include R.A. No. 3019, otherwise known as the
Anti-Graft and Corrupt Practices Act, and Articles 19, 20 and 21 of the Civil
Code.
Still, the most organic laws that determine the validity or invalidity of
the TLA are those that governed the issuance of timber license agreements
in 1984. In that regard, the Republic argues that the absence of a bidding
process is patent proof of the irregularity of the issuance of the TLA in favor
of Twin Peaks.
A timber license agreement authorizes a person to utilize forest
resources within any forest land with the right of possession and exclusion
of others. 68 The Forestry Reform Code prohibits any person from utilizing,
exploiting, occupying, possessing or conducting any activity within any
forest land unless he had been authorized to do so under a license
agreement, lease, license or permit. 69 The Code also mandates that no
timber license agreement shall be issued unless the applicant satisfactorily
proves that he has the financial resources and technical capability not only
to minimize utilization, but also to practice forest protection, conservation
and development measures to insure the perpetuation of said forest in
productive condition. 70 However, the Code is silent as to the procedure in
the acquisition of such timber license agreement. Such procedure is more
particularly defined under FAO No. 11, dated 1 September 1970, which
provides for the "revised forestry license regulations."
FAO No. 11 establishes that it is the Director of Forestry who has
the power "to grant timber licenses and permits." 71 It also provides as a
general policy that timber license agreements shall be granted through no
other mode than public bidding. 72 However, Section 24 of FAO No. 11
does admit that a timber license agreement may be granted through
"negotiation," as well as through "public bidding."
26. When license may be issued. — A license
under this Regulations may be issued or granted only after
an application and an award either through bidding or by
negotiation has been made and the Director of Forestry
is satisfied that the issuance of such license shall not be
inconsistent with existing laws and regulations or
prejudicial to public interest, and that the necessary
license fee, bond deposit and other requirements of the
Bureau of Forestry have been paid and complied
with. 73 [Emphasis supplied.]
However, even a person who is granted a TLA through "negotiation"
is still required to submit the same requirements and supporting papers as
required for public bidding. The pertinent provisions of FAO No. 11 state:
18. Requirements and supporting papers to be submitted.
— The following requirements with accompanying
supporting papers or documents shall be
submitted in addition to the requirements of
Section 12:
a. With bid application:
The applicant shall support his bid application
with the required application fee duly paid and
proofs of the following:
(1) Capitalization. — Cash deposits and
established credit line by applicant in domestic
bank certified to by the bank President or any of
its authorized officials, duly attested by depositor
as his own to be used exclusively in logging and
wood processing operations if awarded the area.
The bank certificate shall be accompanied by a
written consent by the applicant-depositor for the
Director of Forestry or his authorized
representative to verify such cash deposit with
bank authorities. HIDCTA
Capitalization and financial statements. — A
minimum capitalization of P20.00 per cubit meter
in cash and an established credit line of P150.00
per cubic meter based on the allowable annual
cut are required. Financial statements certified by
the independent and reputable certified public
accountants must accompany the application as
proof of the necessary capitalization.
Additional capitalization, Real Estate. — In the
event that the capitalization of the applicant is
less than the minimum or less than that set by the
Director of Forestry for the area, the applicant
bidder may be asked to submit an affidavit
signifying his readiness, should the area be
awarded to him, to convert within a specified time
any specified unencumbered and titled real estate
into cash for use in operating and developing the
area. Presentation of real estate should show
location by municipality and province, hectarage,
title number, latest land tax declaration, assessed
value of land and improvements (stating kind of
improvements), and encumbrances if any.
(2) Logging machinery and equipment. —
Evidence of ownership or capacity to acquire the
requisite machinery or equipment shall
accompany the bid application. The capacity or
ability to acquire machineries and equipments
shall be determined by the committee on award.
Leased equipment or machineries may be
considered in the determination by the Committee
if expressly authorized in writing by the Director of
Forestry.
(3) Technical know-how. — To assure efficient
operation of the area or concession, the applicant
shall submit proof of technical competence and
know-how and/or his ability to provide hired
services of competent personnel.
(4) Operation or development plan. — An
appropriate plan of operation and development of
the forest area applied for shall be submitted,
including phasing plans and the fund
requirements therefor, consistent with selective
logging methods and the sustained yield policy of
the Bureau of Forestry. This plan must be in
general agreement with the working unit plan for
the area as contained in Chapter III, Section 6(a)
hereinabove. acCTIS
(5) Processing plant. — The bidder or applicant
shall show evidence of ownership of, or
negotiation to acquire, a wood processing plant.
The kind and type of plant, such as plywood,
veneer, bandmill, etc. shall be specified. The plant
should be capable of processing at least 60% of
the allowable annual cut.
(6) Forestry Department. — The applicant shall
submit assurance under oath that he shall put a
forestry department composed of trained or
experienced foresters to carry out forest
management activities such as selective logging,
planting of denuded or logged-over areas within
the concessions as specified by the Director of
Forestry and establish a forest nursery for the
purpose.
(7) Statement on sustained yield operations,
reforestation, and protection under management
plans. — The bidder or applicant shall submit a
sworn statement of his agreement and willingness
to operate the area under sustained yield to
reforest cleared areas and protect the concession
or licensed area and under the approved
management plan, and to abide with all existing
forestry laws, rules and regulations and those that
may hereafter be promulgated; and of his
agreement that any violation of these conditions
 shall be sufficient cause for the cancellation of the
licenses.
(8) Organization plan. — Other important
statement connected with sound management
and operation of the area, such as the submission
among others, of the organizational plan and
employment of concession guards, shall be
submitted. In this connection, the applicant shall
submit a sworn statement to the effect no alien
shall be employed without prior approval of
proper authorities.
(9) Unauthorized use of heave equipment. — The
applicant shall give his assurance that he shall not
introduce into his area additional heave
equipment and machinery without approval of the
Director of Forestry.
(10) Such other inducements or considerations to
the award as will serve public interest may also be
required from time to time.
xxx xxx xxx
d) With applications for areas to be negotiated. —
All the foregoing requirements and supporting papers
required for bidding under Section 18(a) hereinabove
and of Section 20(b) hereinbelow shall also apply to all
areas that may be granted through negotiation. In no
case shall an area exceeding 100,000 hectares be granted
thru negotiation. 74
The rationale underlying the very elaborate procedure that entails
prior to the grant of a timber license agreement is to avert the haphazard
exploitation of the State's forest resources as it provides that only the most
qualified applicants will be allowed to engage in timber activities within the
strict limitations of the grant and that cleared forest areas will have to be
renewed through reforestation. Since timber is not a readily renewable
natural resource, it is essential and appropriate that the State serve and act
as a jealous and zealous guardian of our forest lands, with the layers of
bureaucracy that encumber the grant of timber license agreements
effectively serving as a defensive wall against the thoughtless ravage of our
forest resources. TECIaH
There is no doubt that no public bidding occurred in this case.
Certainly, respondents did not raise the defense in their respective answers.
The absence of such bidding was testified on by prosecution witness
Arcangel. Yet even if we consider that Twin Peaks could have acquired the
TLA through "negotiation," the prescribed requirements for "negotiation"
under the law were still not complied with.
It is evident that Twin Peaks was of the frame of mind that it could
simply walk up to President Marcos and ask for a timber license agreement
without having to comply with the elaborate application procedure under the
law. This is indicated by the letter dated 31 May 1984 75 signed by Twin
Peaks' Vice President and Treasurer Evelyn Fontanilla, addressed directly to
then President Marcos, wherein Twin Peaks expressed that "we would like
to request a permit to export 20,000 cubic meters of logs and to cut and
process 10,000 cubic meters of the narra species in the same area." 76 A
marginal note therein signed by Marcos indicates an approval thereof.
Neither the Forestry Reform Code nor FAO No. 11 provide for the
submission of an application directly to the Office of the President as a
proper mode for the issuance of a TLA. Without discounting the breadth and
scope of the President's powers as Chief Executive, the authority of the
President with respect to timber licenses is, by the express terms of the
Revised Forestry Code, limited to the amendment, modification,
replacement or rescission of any contract, concession, permit, license or
any other form of privilege granted by said Code. 77
There are several factors that taint this backdoor application for a
timber license agreement by Twin Peaks. The forest area covered by the
TLA was already the subject of a pre-existing TLA in favor of Ysmael. The
Articles of Incorporation of Twin Peaks does not even stipulate that logging
was either a principal or secondary purpose of the corporation.
Respondents do allege that the Articles was amended prior to the grant in
order to accommodate logging as a corporate purpose, yet since
respondents have waived their right to present evidence by reason of their
resort to demurrer, we cannot consider such allegation as proven.
Sec. 18 (a) (1) of FAO No. 11 requires that an applicant must have a
minimum capitalization of P20.00 per cubic meter in cash and an
established credit line of P150.00 per cubic meter based on the allowable
annual cut. TLA No. 356 allowed Twin Peaks to operate on 26,000 hectares
of forest land with an annual allowable cut of 60,000 cubic meters of timber.
With such annual allowable cut, Twin Peaks, therefore, must have at least
P1,200,000.00 in cash as its minimum capitalization, following FAO No. 11.
An examination of Twin Peaks' Articles of Incorporation shows that its paid-
up capital was only P312,500.00. 78 Clearly, Twin Peaks' paid-up capital is
way below the minimum capitalization requirement.
 Moreover, Sec. 18 (5) provides that the bidder or applicant shall
show evidence of ownership of, or negotiation to acquire, a wood
processing plant. However, although TLA No. 356 was issued to Twin Peaks
in 1984, it continued to engage the services of at least two sawmills 79 as
late as 1988. Four (4) years from the issuance of the license, Twin Peaks
remained incapable of processing logs.
What could have made Twin Peaks feel emboldened to directly
request President Marcos for the grant of Timber License Agreement
despite the obvious problems relating to its capacity to engage in timber
activities? The reasonable assumption is that the official and personal
proximity of Juan Tuvera to President Marcos was a key factor, considering
that he was the father of Twin Peaks' most substantial stockholder. cDECIA
The causes of action against respondents allegedly arose from Juan
Tuvera's abuse of his relationship, influence and connection as Presidential
Executive Assistant of then President Marcos. Through Juan Tuvera's
position, the Republic claims that Twin Peaks was able to secure a Timber
License Agreement despite its lack of qualification and the absence of a
public bidding. On account of the unlawful issuance of a timber license
agreement, the natural resources of the country were unlawfully exploited at
the expense of the Filipino people. Victor Tuvera, as son of Juan Tuvera and
a major stockholder of Twin Peaks, was included as respondent for having
substantially benefited from this breach of trust. The circumstance of kinship
alone may not be enough to disqualify Victor Tuvera from seeking a timber
license agreement. Yet the basic ethical principle of delicadeza should have
dissuaded Juan Tuvera from any official or unofficial participation or
intervention in behalf of the "request" of Twin Peaks for a timber license.
Did Juan Tuvera do the honorable thing and keep his distance from
Twin Peaks' "request"? Apparently not. Instead, he penned a Memorandum
dated 18 July 1984 in his capacity as Presidential Executive Assistant,
directed at the Director of Forestry, the official who, under the law,
possessed the legal authority to decide whether to grant the timber license
agreements after deliberating on the application and its supporting
documents. The Memorandum reads in full:
Office of the President
of the Philippines
Malacañang
18 July 1984
74-84
MEMORANDUM to
Director Edmundo Cortes
Bureau of Forest Development
I wish to inform you that the President has
granted the award to the Twin Peaks Realty Development
Corporation, of the concession to manage, operate and
develop in accordance with existing policies and
regulations half of the timber area in the Province of
Quirino covered by TLA No. 87, formerly belonging to the
Felipe Ysmael, Jr. & Company and comprising 54,920
hectares, and to export half of the requested 20,000 cubic
meters of logs to be gathered from the area. IDScTE
Herewith is a copy of the letter concering (sic) this
matter of Ms. Evelyn F. Fontanilla, Vice-President and
Treasurer of the Twin Peaks Realty Development
Corporation, on which the President indicated such
approval in his own hand, which I am furnishing you for
your information and appropriate action.
(signed)
JUAN C. TUVERA
Presidential
Executive
Assistant 80
The Memorandum establishes at the very least that Tuvera knew
about the Twin Peaks "request," and of President Marcos's favorable action
on such "request." The Memorandum also indicates that Tuvera was willing
to convey those facts to the Director of Forestry, the ostensible authority in
deciding whether the Twin Peaks "request" should have been granted. If
Juan Tuvera were truly interested in preventing any misconception that his
own position had nothing to do with the favorable action on the "request"
lodged by the company controlled by his son, he would not have prepared
or signed the Memorandum at all. Certainly, there were other officials in
Malacañang who could have performed that role had the intent of the
Memorandum been merely to inform the Director of Forestry of such
Presidential action.
Delicadeza is not merely a stentorian term evincing a bygone ethic.
It is a legal principle as embodied by certain provisions of the Anti-Graft and
Corrupt Practices Act. Section 3 of R.A. No. 3019 states in part:
Sec. 3. Corrupt practices of public officers. — In
addition to acts or omissions of public officers already
penalized by existing law, the following shall constitute
 corrupt practices of any public officer and are hereby
declared to be unlawful:
(a) Persuading, inducing or influencing another
public officer to perform an act constituting a violation of
rules and regulations duly promulgated by competent
authority or an offense in connection with the official
duties of the latter, or allowing himself to be persuaded,
induced or influenced to commit such violation or
offense. STHAID
xxx xxx xxx
(h) Directly or indirectly having financial or
pecuniary interest in any business, contract or transaction
in connection with which he intervenes or takes part in his
official capacity, or in which he is prohibited by the
Constitution or by any law from having any interest.
The Memorandum signed by Juan Tuvera can be taken as proof that
he "persuaded, induced or influenced" the Director of Forestry to
accommodate a timber license agreement in favor of Twin Peaks, despite
the failure to undergo public bidding, or to comply with the requisites for the
grant of such agreement by negotiation, and in favor of a corporation that
did not appear legally capacitated to be granted such agreement. The fact
that the principal stockholder of Twin Peaks was his own son establishes his
indirect pecuniary interest in the transaction he appears to have intervened
in. It may have been possible on the part of Juan Tuvera to prove that he did
not persuade, induce or influence the Director of Forestry or any other
official in behalf of the timber license agreement of Twin Peaks, but then
again, he waived his right to present evidence to acquit himself of such
suspicion. Certainly, the circumstances presented by the evidence of the
prosecution are sufficient to shift the burden of evidence to Tuvera in
establishing that he did not violate the provisions of the Anti-Graft and
Corrupt Practices Act in relation to the Twin Peaks "request." Unfortunately,
having waived his right to present evidence, Juan Tuvera failed to disprove
that he failed to act in consonance with his obligations under the Anti-Graft
and Corrupt Practices Act.
In sum, the backdoor recourse for a hugely priced favor from the
government by itself, and more in tandem with other brazen relevant
damning circumstances, indicates the impudent abuse of power and the
detestable misuse of influence that homologously made the acquisition of ill-
gotten wealth a reality. Upon the facts borne out by the evidence for the
Republic and guideposts supplied by the governing laws, the Republic has a
clear right to the reliefs it seeks.
VI.
If only the Court's outrage were quantifiable in sums of money,
respondents are due for significant pecuniary hurt. Instead, the Court is
forced to explain in the next few paragraphs why respondents could not be
forced to recompensate the Filipino people in appropriate financial terms.
The fault lies with those engaged by the government to litigate this case in
behalf of the State. EIDATc
It bears to the most primitive of reasons that an action for recovery
of sum of money must prove the amount sought to be recovered. In the
case at bar, the Republic rested its case without presenting any evidence,
documentary or testimonial, to establish the amount that should be
restituted to the State by reason of the illegal acts committed by the
respondents. There is the bare allegation in the complaint that the State is
entitled to P48 million by way of actual damages, but no single proof
presented as to why the State is entitled to such amount.
Actual damages must be proven, not presumed. 81 The Republic
failed to prove damages. It is not enough for the Republic to have
established, as it did, the legal travesty that led to the wrongful obtention by
Twin Peaks of the TLA. It should have established the degree of injury
sustained by the State by reason of such wrongful act.
We fail to comprehend why the Republic failed to present any proof
of actual damages. Was it the inability to obtain the necessary financial
documents that would establish the income earned by Twin Peaks during
the period it utilized the TLA, despite the presence of the discovery
processes? Was it mere indolence or sheer incompetence? Whatever the
reason, the lapse is inexcusable, and the injury ultimately conduces to the
pain of the Filipino people. If the litigation of this case is indicative of the
mindset in the prosecution of ill-gotten wealth cases, it is guaranteed to
ensure that those who stole from the people will be laughing on their way to
the bank.
The claim for moral damages deserves short shrift. The claimant in
this case is the Republic of the Philippines, a juridical person. We explained
inFilipinas Broadcasting v. Ago Medical & Educational Center-Bicol Christian
College of Medicine (AMEC-BCCM): 82
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 Court's 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. EcHTCD
Nevertheless, AMEC's 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. 83
As explained, a juridical person is not entitled to moral damages
under Article 2217 of the Civil Code. It may avail of moral damages under
the analogous cases listed in Article 2219, such as for libel, slander or any
other form of defamation. Suffice it to say that the action at bar does not
involve any of the analogous cases under Article 2219, and indeed upon an
intelligent reading of Article 2219, it is difficult to see how the Republic could
sustain any of the injuries contemplated therein. Any lawyer for the Republic
who poses a claim for moral damages in behalf of the State stands in risk of
serious ridicule.
However, there is sufficient basis for an award of temperate
damages, also sought by the Republic notwithstanding the fact that a claim
for both actual and temperate damages is internally inconsistent. Temperate
or moderate damages avail when "the court finds that some pecuniary loss
has been suffered but its amount can not from the nature of the case, be
proved with certainty." 84 The textual language might betray an intent that
temperate damages do not avail when the case, by its nature, is susceptible
to proof of pecuniary loss; and certainly the Republic could have proved
pecuniary loss herein. 85 Still, jurisprudence applying Article 2224 is clear
that temperate damages may be awarded even in instances where
pecuniary loss could theoretically have been proved with certainty.
In a host of criminal cases, the Court has awarded temperate
damages to the heirs of the victim in cases where the amount of actual
damages was not proven due to the inadequacy of the evidence presented
by the prosecution. These cases include People v. Oliano, 86 People v.
Suplito, 87 People v. De la Tongga, 88 People v. Briones, 89 and People v.
Plazo. 90 In Viron Transportation Co., Inc. v. Delos Santos, 91 a civil action
for damages involving a vehicular collision, temperate damages were
awarded for the resulting damage sustained by a cargo truck, after the
plaintiff had failed to submit competent proof of actual damages.
We cannot discount the heavy influence of common law, and its
reliance on judicial precedents, in our law on tort and damages.
Notwithstanding the language of Article 2224, a line of jurisprudence has
emerged authorizing the award of temperate damages even in cases where
the amount of pecuniary loss could have been proven with certainty, if no
such adequate proof was presented. The allowance of temperate damages
when actual damages were not adequately proven is ultimately a rule drawn
from equity, the principle affording relief to those definitely injured who are
unable to prove how definite the injury. There is no impediment to apply this
doctrine to the case at bar, which involves one of the most daunting and
noble undertakings of our young democracy-the recovery of ill-gotten
wealth salted away during the Marcos years. If the doctrine can be justified
to answer for the unlawful damage to a cargo truck, it is a compounded
wrath if it cannot answer for the unlawful exploitation of our forests, to the
injury of the Filipino people. The amount of P1,000,000.00 as temperate
damages is proper. CAcEaS
The allowance of temperate damages also paves the way for the
award of exemplary damages. Under Article 2234 of the Civil Code, a
showing that the plaintiff is entitled to temperate damages allows for the
award of exemplary damages. Even as exemplary damages cannot be
recovered as a matter of right, the courts are empowered to decide whether
or not they should be adjudicated. Ill-gotten wealth cases are hornbook
demonstrations where damages by way of example or correction for the
public good should be awarded. Fewer causes of action deserve the stigma
left by exemplary damages, which "serve as a deterrent against or as a
negative incentive to curb socially deleterious actions." 92 The obtention of
the timber license agreement by Twin Peaks through fraudulent and illegal
means was highlighted by Juan Tuvera's abuse of his position as
Presidential Executive Assistant. The consequent exploitation of 26 hectares
of forest land benefiting all respondents is a grave case of unjust enrichment
at the expense of the Filipino people and of the environment which should
never be countenanced. Considering the expanse of forest land exploited by
respondents, the volume of timber that was necessarily cut by virtue of their
abuse and the estimated wealth acquired by respondents through grave
abuse of trust and public office, it is only reasonable that petitioner be
granted the amount of P1,000,000.00 as exemplary damages.
The imposition of exemplary damages is a means by which the
State, through its judicial arm, can send the clear and unequivocal signal
best expressed in the pithy but immutable phrase, "never again." It is
severely unfortunate that the Republic did not exert its best efforts in the full
recovery of the actual damages caused by the illegal grant of the Twin
Peaks TLA. To the best of our ability, through the appropriate vehicle of
exemplary damages, the Court will try to fill in that deficiency. For if there is
a lesson that should be learned from the national trauma of the rule of
Marcos, it is that kleptocracy cannot pay. As those dark years fade into the
backburner of the collective memory, and a new generation emerges
without proximate knowledge of how bad it was then, it is useful that the
Court serves a reminder here and now.
WHEREFORE, the petition is GRANTED. The Resolution of the
Sandiganbayan dated 23 May 2001 is REVERSED. Respondents Juan C.
Tuvera, Victor P. Tuvera and Twin Peaks Development Corporation are
hereby ordered to jointly and severally pay to the Republic of the Philippines
One Million (P1,000,000.00) Pesos, as and for temperate damages, and One
Million (P1,000,000.00) Pesos, as and for exemplary damages, plus costs of
suit. SECATH
SO ORDERED.
Quisumbing, Carpio, Carpio-Morales, Tinga and Velasco, Jr.,
JJ., concur.
||| (Republic v. Tuvera, G.R. No. 148246, [February 16, 2007], 545 PHIL 21-
61)
THIRD DIVISION
[G.R. No. 107518. October 8, 1998.]
PNOC SHIPPING AND TRANSPORT
CORPORATION, petitioner, vs. HONORABLE COURT
OF APPEALS and MARIA EFIGENIA FISHING
CORPORATION, respondents.
SYLLABUS
1. CIVIL LAW; DAMAGES; ACTUAL DAMAGES; MUST BE PROVED WITH A
REASONABLE DEGREE OF CERTAINTY. — A party is entitled to adequate
compensation only for such pecuniary loss actually suffered and duly
proved. Indeed, 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. The claimant is duty-
bound to point out specific facts that afford a basis for measuring whatever
compensatory damages are borne. A court cannot merely rely on
speculations, conjectures, or guesswork as to the fact and amount of
damages as well as hearsay or uncorroborated testimony whose truth is
suspect. cdasia
2. ID.; ID.; ID.; DEFINED. — 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. In actions
based on torts or quasi-delicts, actual damages include all the natural and
probable consequences of the act or omission complained of. There are two
kinds of actual or compensatory damages; one is the loss of what a person
already possesses (daño emergente), and the other is the failure to receive
as a benefit that which would have pertained to him (lucro cesante).
3. REMEDIAL LAW; EVIDENCE; TESTIMONY OF WITNESSES; CONFINED
TO PERSONAL KNOWLEDGE. — We hold, however, that the price
quotations are ordinary private writings which under the Revised Rules of
Court should have been proffered along with then 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.
4. ID.; ID.; HEARSAY EVIDENCE; PRICE QUOTATIONS PARTAKE THE
NATURE THEREOF; CASE AT BAR. — 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.
5. ID.; ID.; ID.; DEFINED. — 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. 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.
6. ID.; ID.; COMMERCIAL LISTS; REQUISITES. — 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.
7. ID.; ID.; ID.; NOT APPLICABLE IN CASE AT BAR. — Based on the above
requisites, it is our considered view that Exhibits B, C, D, E, F and H 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." 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." These are simply letters
responding to the queries of Del Rosario.
8. ID.; ID.; ADMISSIBILITY AND PROBATIVE VALUE; DISTINGUISHED. —
Admissibility of evidence refers to the question of whether or not the
circumstance (or evidence) is to be considered at all. On the other hand, the
probative value of evidence refers to the question of whether or not it proves
an issue. 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.
9. CIVIL LAW; DAMAGES; NOMINAL DAMAGES; EXPLAINED. — 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. 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. 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. The amount of nominal damages to be awarded may also
depend on certain special reasons extant in the case. aSIATD
10. ID.; ID.; ID.; ALLEGATIONS IN THE COMPLAINTS CAN BE THE BASIS
FOR ITS DETERMINATION; CASE AT BAR. — 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 plaintiff's cause of action. Private respondent should be
bound by its allegations on the amount of its claims.
11. REMEDIAL LAW; COURTS; JURISDICTION; NOT AFFECTED FOR
FAILURE TO PAY DOCKET FEE IN ACCORDANCE WITH THE AMENDED
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, 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.
12. ID.; ID.; ID.; PRINCIPLE OF ESTOPPEL. APPLIES; CASE AT BAR. —
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 answer 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, 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, petitioner did not question
the lower court's jurisdiction. It was only on December 29, 1989 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 TICAcD
DECISION
ROMERO, J p:
A party is entitled to adequate compensation only for such pecuniary loss
actually suffered and duly proved. 1 Indeed, 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 Efgenia 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 Efgenia 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 PNOC-STC 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 Efgenia XV was owned by private
respondent per Exhibit A, a certificate of ownership issued by the Philippine
Coast Guard showing that M/V Maria Efgenia 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 (bañeras) 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 Efgenia 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 XV sustained a hole at its
left side that caused it to sink with its cargo of
1,050 bañeras 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 bañera (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 aforesaid 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 43, 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, material 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.,
CA. 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
(daño 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 'capitalize 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 bañeras 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."
"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 pleased 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.

Under Section 45 of the aforesaid Rule, a document is a commercial list if: Price FOB Manila P580,000.00/unit
(1) it is a statement of matters of interest to persons engaged in an Total FOB Manila P1,160,000.00
occupation; (2) such statement is contained in a list, register, periodical or
other published compilation; (3) said compilation is published for the use of TERMS: CASH
persons engaged in that occupation, and (4) it is generally used and relied
upon by persons in the same occupation. DELIVERY: 60-90 days from date of order.

Based on the above requisites, it is our considered view that Exhibits B, C, VALIDITY: Subject to our final confirmation.
D, E, F and H 39 are not "commercial lists" for these do not belong to the WARRANTY: One (1) full year against factory defect.
category of "other published compilations" under Section 45 aforequoted.
Under the principle of ejusdem generis, "(w)here general words follow an Very truly
enumeration of persons or things, by words of a particular and specific yours,
meaning, such general words are not to be construed in their widest extent,
POWER
but are to be held as applying only to persons or things of the same kind or
SYSTEMS,
class as those specifically mentioned." 40 The exhibits mentioned are mere
INC.
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 (Sgd.)
vessels. These are not published in any list, register, periodical or other
compilation on the relevant subject matter. Neither are these "market E.D.
reports or quotations" within the purview of "commercial lists" as these are Daclan"
not "standard handbooks or periodicals, containing data of everyday To be sure, letters and telegrams are admissible in evidence but these are,
professional need and relied upon in the work of the occupation." 41 These however, subject to the general principles of evidence and to various rules
are simply letters responding to the queries of Del Rosario. Thus, take for relating to documentary evidence. 42 Hence, in one case, it was held that a
example Exhibit D which reads: 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 Corporation in the amount of P6,438,048.00 for lack of evidentiary bases
Efigenia XV . In its amended complaint, private respondent alleged that the therefor. Considering the fact, however, that (1) technically petitioner
vessel had an actual value of P800,000.00 but it had been paid insurance in sustained injury but which, unfortunately, was not adequately and properly
the amount of P200,000.00 and, therefore, it claimed only the amount of proved, and (2) this case has dragged on for almost two decades, we
P600,000.00. Ordinarily, the receipt of insurance payments should diminish believe that an award of Two Million (P2,000.000.00) 59 in favor of private
the total value of the vessel quoted by private respondent in his complaint respondent as and for nominal damages is in order.
considering that such payment is causally related to the loss for which it
claimed compensation. This Court believes that such allegations in the No pronouncement as to costs.
original and amended complaints can be the basis for determination of a fair SO ORDERED.
amount of nominal damages inasmuch as a complaint alleges the ultimate
facts constituting the plaintiffs cause of action. 54 Private respondent should Kapunan and Purisima, JJ ., concur.
be bound by its allegations on the amount of its claims.
Narvasa, C .J ., is on leave.
With respect to petitioner's contention that the lower court did not acquire
||| (PNOC Shipping and Transport Corp. v. Court of Appeals, G.R. No.
jurisdiction over the amended complaint increasing the amount of damages
107518, [October 8, 1998], 358 PHIL 38-63)
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
THIRD DIVISION
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 [G.R. No. 68138. May 13, 1991.]
Office, Ltd. (SIOL)v. Asuncion, 55 the unpaid docket fee should be
considered as a lien on the judgment even though private respondent
AGUSTIN Y. GO and THE CONSOLIDATED BAND AND
specified the amount of P600,000.00 as its claim for damages in its
TRUST CORPORATION
amended complaint.
(Solidbank), petitioners, vs. HONORABLE
Moreover, we note that petitioner did not question at all the jurisdiction of INTERMEDIATE APPELLATE COURT and FLOVERTO
the lower court on the ground of insufficient docket fees in its answers to JAZMIN, respondents.
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 C.M. De los Reyes & Associates for petitioners.
Express, Inc. v. Court of Appeals, 56 participation in all stages of the case
Millora & Maningding Law Offices for private respondent.
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
SYLLABUS
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 1. CIVIL LAW; TORTS AND DAMAGES; AWARD OF DAMAGES; BASIS
petitioner raised the question of the lower court's lack of jurisdiction. THEREOF. — The facts of this case reveal that damages in the form of
Petitioner thus foreclosed its right to raise the issue of jurisdiction by its own mental anguish, moral shock and social humiliation were suffered by private
inaction. respondent only after the filing of the petitioners' complaint with the
Philippine Constabulary. It was only then that he had to bear the
WHEREFORE, the challenged decision of the Court of Appeals dated inconvenience of travelling to Benguet and Lingayen for the investigations
October 14, 1992 in CA-G.R. CV No. 26680 affirming that of the Regional as it was only then that he was subjected to embarrassment for being a
Trial Court of Caloocan City, Branch 121, is hereby MODIFIED insofar as it suspect in the unauthorized alteration of the treasury checks. Hence, it is
awarded actual damages to private respondent Maria Efigenia Fishing
understandable why petitioners appear to have overlooked the facts
antecedent to the filing of the complaint to the constabulary authorities and
to have put undue emphasis on the appellate court's statement that
"denouncing a crime is not negligence." Although this Court has consistently
held that there should be no penalty on the right to litigate and that error
alone in the filing of a case be it before the courts or the proper police
authorities, is not a ground for moral damages, we hold that under the
peculiar circumstances of this case, private respondent is entitled to an
award of damages.
2. ID.; CRIMES AND QUASI-DELICTS; DEFENDANT LIABLE FOR
DAMAGES RESULTING FROM THE NATURAL AND PROBABLE
CONSEQUENCES OF THE ACT OR OMISSION COMPLAINED OF. — In
crimes and quasi-delicts, the defendant shall be liable for all damages which
are the natural and probable consequences of the act or omission
complained of. It is not necessary that such damages have been foreseen or
could have reasonably been foreseen by the defendant. As Go's negligence
was the root cause of the complained inconvenience, humiliation and
embarrassment, Go is liable to private respondents for damages.
3. ID.; TORTS AND DAMAGES; EMPLOYER LIABILITY FOR DAMAGES
CAUSED BY THEIR EMPLOYEES ACTING WITHIN THEIR ASSIGNED
TASKS. — Anent petitioner bank's claim that it is not "co-equally liable" with
Go for damages, under the fifth paragraph of Article 2180 of the Civil Code,
"(E)mployers shall be liable for the damages caused by their employees . . .
acting within the scope of their assigned tasks." Pursuant to this provision,
the bank is responsible for the acts of its employee unless there is proof that
it exercised the diligence of a good father of a family to prevent the damage.
Hence, the burden of proof lies upon the bank and it cannot now disclaim
liability in view of its own failure to prove not only that it exercised due
diligence to prevent damage but that it was not negligent in the selection
and supervision of its employees.
DECISION
FERNAN, C.J p:
The instant petition for review on certiorari questions the propriety of the
respondent appellate court's award of nominal damages and attorney's fees
to private respondent whose name was used by a syndicate in encashing
two U.S. treasury checks at petitioner bank.
Floverto Jazmin is an American citizen and retired employee of the United
States Federal Government. He had been a visitor in the Philippines since
1972 residing at 34 Maravilla Street, Mangatarem, Pangasinan. As
a pensionado of the U.S. government, he received annuity checks in the
amounts of $67.00 for disability and $620.00 for retirement through the
Mangatarem post office. He used to encash the checks at the Prudential
Bank branch at Clark Air Base, Pampanga. cdrep
In January, 1975, Jazmin failed to receive one of the checks on time thus
prompting him to inquire from the post offices at Mangatarem and Dagupan
City. As the result of his inquiries proved unsatisfactory, on March 4, 1975,
Jazmin wrote the U.S. Civil Service Commission, Bureau of Retirement at
Washington, D.C. complaining about the delay in receiving his check.
Thereafter, he received a substitute check which he encashed at the
Prudential Bank at Clark Air Base.
Meanwhile, on April 22, 1975, Agustin Go, in his capacity as branch
manager of the then Solidbank (which later became the Consolidated Bank
and Trust Corporation) in Baguio City, allowed a person named "Floverto
Jazmin" to open Savings Account No. BG 5206 by depositing two (2) U.S.
treasury checks Nos. 5-449-076 and 5-448-890 in the respective amounts
of $1810.00 and $913.40 1 equivalent to the total amount of P20,565.69,
both payable to the order of Floverto Jasmin of Maranilla St., Mangatarem,
Pangasinan and drawn on the First National City Bank, Manila. llcd
The savings account was opened in the ordinary course of business. Thus,
the bank, through its manager Go, required the depositor to fill up the
information sheet for new accounts to reflect his personal circumstances.
The depositor indicated therein that he was Floverto Jazmin with mailing
address at Mangatarem, Pangasinan and home address at Maravilla St.,
Mangatarem, Pangasinan; that he was a Filipino citizen and a security officer
of the US Army with the rank of a sergeant bearing AFUS Car No. H-
2711659; that he was married to Milagros Bautista; and that his initial
deposit was P3,565.35. He wrote CSA No. 138134 under remarks or
instructions and left blank the spaces under telephone number, residence
certificate/alien certificate of registration/passport, bank and trade
performance and as to who introduced him to the bank. 2 The depositor's
signature specimens were also taken.
Thereafter, the deposited checks were sent to the drawee bank for
clearance. Inasmuch as Solidbank did not receive any word from the drawee
bank, after three (3) weeks, it allowed the depositor to withdraw the amount
indicated in the checks.
On June 29, 1976 or more than a year later, the two dollar checks were
returned to Solidbank with the notation that the amounts were
altered. 3Consequently, Go reported the matter to the Philippine
Constabulary in Baguio City.
On August 3, 1976, Jazmin received radio message requiring him to appear
before the Philippine Constabulary headquarters in Benguet on September
7, 1976 for investigation regarding the complaint filed by Go against him for
estafa by passing altered dollar checks. Initially, Jazmin was investigated by
constabulary officers in Lingayen, Pangasinan and later, at Camp Holmes,
La Trinidad, Benguet. He was shown xerox copies of U.S. Government
checks Nos. 5-449-076 and 5-448-890 payable to the order of
Floverto Jasmin in the respective amounts of $1,810.00 and $913.40. The
latter amount was actually for only $13.40; while the records do not show
the unaltered amount of the other treasury check. LibLex
Jazmin denied that he was the person whose name appeared on the
checks; that he received the same and that the signature on the
indorsement was his. He likewise denied that he opened an account with
Solidbank or that he deposited and encashed therein the said checks.
Eventually, the investigators found that the person named "Floverto Jazmin"
who made the deposit and withdrawal with Solidbank was an
impostor. LibLex
On September 24, 1976, Jazmin filed with the then Court of First Instance of
Pangasinan, Branch II at Lingayen a complaint against Agustin Y. Go and
the Consolidated Bank and Trust Corporation for moral and exemplary
damages in the total amount of P90,000 plus attorney's fees of P5,000. He
alleged therein that Go allowed the deposit of the dollar checks and the
withdrawal of their peso equivalent without ascertaining the identity of the
depositor considering the highly suspicious circumstances under which said
deposit was made; that instead of taking steps to establish the correct
identity of the depositor, Go "immediately and recklessly filed (the)
complaint for estafa through alteration of dollar check" against him; that
Go's complaint was "an act of vicious and wanton recklessness and clearly
intended for no other purpose than to harass and coerce the plaintiff into
paying the peso equivalent of said dollar checks to the CBTC branch office
in Baguio City" so that Go would not be "disciplined by his employer;" that
by reason of said complaint, he was "compelled to present and submit
himself" to investigations by the constabulary authorities; and that he
suffered humiliation and embarrassment as a result of the filing of the
complaint against him as well as "great inconvenience" on account of his
age (he was a septuagenarian) and the distance between his residence and
the constabulary headquarters. He averred that his peace of mind and
mental and emotional tranquility as a respected citizen of the community
would not have suffered had Go exercised "a little prudence" in ascertaining
the identity of the depositor and, for the "grossly negligent and reckless act"
of its employee, the defendant CBTC should also be held responsible. 4
In their answer, the defendants contended that the plaintiff had no cause of
action against them because they acted in good faith in seeking the
"investigative assistance" of the Philippine Constabulary on the swindling
operations against banks by a syndicate which specialized in the theft,
alteration and encashment of dollar checks. They contended that contrary to
plaintiff's allegations, they verified the signature of the depositor and their
tellers conducted an identity check. As counterclaim, they prayed for the
award of P100,000 as compensatory and moral damages; P20,000 as
exemplary damages; P20,000 as attorney's fees and P5,000 as litigation,
incidental expenses and costs. 5
In its decision of March 27, 1978, 6 the lower court found that Go was
negligent in failing to exercise "more care, caution and vigilance" in
accepting the checks for deposit and encashment. It noted that the checks
were payable to the order of Floverto Jasmin, Maranilla St., Mangatarem,
Pangasinan and notto Floverto Jazmin, Maravilla. St., Mangatarem,
Pangasinan and that the differences in name and address should have put
Go on guard. It held that more care should have been exercised by Go in the
encashment of the U.S. treasury checks as there was no time limit for
returning them for clearing unlike in ordinary checks wherein a two to three-
week limit is allowed.
Emphasizing that the main thrust of the complaint was "the failure of the
defendants to take steps to ascertain the identity of the depositor," the court
noted that the depositor was allegedly a security officer while the plaintiff
was a retiree-pensioner. It considered as "reckless" the defendants' filing of
the complaint with the Philippine Constabulary noting that since the article
on a fake dollar check ring appeared on July 18, 1976 in the Baguio Midland
Courier, it was only on August 24, 1976 or more than a month after the bank
had learned of the altered checks that it filed the complaint and therefore, it
had sufficient time to ascertain the identity of the depositor.
The court also noted that instead of complying with the Central Bank
Circular Letter of January 17, 1973 requesting all banking institutions to
report to the Central Bank all crimes involving their property within 48 hours
from knowledge of the crime, the bank reported the matter to the Philippine
Constabulary.
Finding that the plaintiff had sufficiently shown that prejudice had been
caused to him in the form of mental anguish, moral shock and social
humiliation on account of the defendants' gross negligence, the court,
invoking Articles 2176, 2217 and 2219 (10) in conjunction with Article 21 of
the Civil Code, ruled in favor of the plaintiff. The dispositive portion of the
decision states:
 "WHEREFORE, this Court finds for plaintiff and that he is
entitled to the reliefs prayed for in the following manner:
Defendant Agustin Y. Co and the CONSOLIDATED BANK
AND TRUST CORPORATION are hereby ordered to pay,
jointly and severally, to the plaintiff the amount of SIX
THOUSAND PESOS (P6,000.00) as moral damages; ONE
THOUSAND PESOS (P1,000.00) as attorney's fees and
costs of litigation and to pay the costs and defendant
AGUSTIN Y. GO in addition thereto in his sole and
personal capacity to pay the plaintiff the amount of
THREE THOUSAND PESOS (P3,000.00) as exemplary
damages, all with interest at six (6) percent per annum
until fully paid.
"SO ORDERED."
The defendants appealed to the Court of Appeals. On January 24, 1984,
said court (then named Intermediate Appellate Court) rendered a
decision 7finding as evident negligence Go's failure to notice the substantial
difference in the identity of the depositor and the payee in the check,
concluded that Go's negligence in the performance of his duties was "the
proximate cause why appellant bank was swindled" and that denouncing
the crime to the constabulary authorities "merely aggravated the situation."
It ruled that there was a cause of action against the defendants although
Jazmin had nothing to do with the alteration of the checks, because he
suffered damages due to the negligence of Go. Hence, under Article 2180 of
the Civil Code, the bank shall be held liable for its manager's
negligence. cdll
The appellate court, however, disallowed the award of moral and exemplary
damages and granted nominal damages instead. It explained thus:
"While it is true that denouncing a crime is not negligence
under which a claim for moral damages is available, still
appellants are liable under the law for nominal damages.
The fact that appellee did not suffer from any loss is of no
moment for 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 (Article 2221, New
Civil Code). These are damages 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 (Elgara vs. Sandijas, 27 Phil.
284). They are not intended for indemnification of loss
suffered but for the vindication or recognition of a right
violated or invaded (Ventanilla vs. Centeno, L-14333,
January 28, 1961). And, where the plaintiff as in the case
at bar, the herein appellee has established a cause of
action, but was not able to adduce evidence showing
actual damages then nominal damages may be recovered
(Sia vs. Espenilla, CA-G.R. Nos. 45200-45201-R, April 21,
1975). Consequently, since appellee has no right to claim
for moral damages, then he may not likewise be entitled
to exemplary damages (Estopa vs. Piansay, No. L-14503,
September 30, 1960). Considering that he had to defend
himself in the criminal charges filed against him, and that
he was constrained to file the instant case, the attorney's
fees to be amended (sic) to plaintiff should be increased
to P3,000.00."
Accordingly, the appellate court ordered Go and Consolidated Bank and
Trust Corporation to pay jointly and severally Floverto Jazmin only
NOMINAL DAMAGES in the sum of Three Thousand Pesos (P3,000.00) with
interest at six (6%) percent per annum until fully paid and One Thousand
Pesos (P1,000.00) as attorney's fees and costs of litigation.
Go and the bank filed a motion for the reconsideration of said decision
contending that in view of the finding of the appellate court that
"denouncing a crime is not negligence under which a claim for moral
damages is available," the award of nominal damages is unjustified as they
did not violate or invade Jazmin's rights. Corollarily, there being no
negligence on the part of Go, his employer may not be held liable for
nominal damages.
The motion for reconsideration having been denied, Go and the bank
interposed the instant petition for review on certiorari arguing primarily that
the employer bank may not be held "co-equally liable" to pay nominal
damages in the absence of proof that it was negligent in the selection of and
supervision over its employee. 8
The facts of this case reveal that damages in the form of mental anguish,
moral shock and social humiliation were suffered by private respondent only
after the filing of the petitioners' complaint with the Philippine Constabulary.
It was only then that he had to bear the inconvenience of travelling to
Benguet and Lingayen for the investigations as it was only then that he was
subjected to embarrassment for being a suspect in the unauthorized
alteration of the treasury checks. Hence, it is understandable why petitioners
appear to have overlooked the facts antecedent to the filing of the complaint
to the constabulary authorities and to have put undue emphasis on the
appellate court's statement that "denouncing a crime is not negligence."
Although this Court has consistently held that there should be no penalty on
the right to litigate and that error alone in the filing of a case be it before the
courts or the proper police authorities, is not a ground for moral
damages, 9 we hold that under the peculiar circumstances of this case,
private respondent is entitled to an award of damages.
now disclaim liability in view of its own failure to prove not only that it
exercised due diligence to prevent damage but that it was not negligent in
the selection and supervision of its employees.
WHEREFORE, the decision of the respondent appellate court is hereby
affirmed. Costs against the petitioners.
SO ORDERED.

Indeed, it would be unjust to overlook the fact that petitioners' negligence Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.
was the root of all the inconvenience and embarrassment experienced by ||| (Go v. Intermediate Appellate Court, G.R. No. 68138, [May 13, 1991], 274
the private respondent albeit they happened after the filing of the complaint PHIL 305-314)
with the constabulary authorities. Petitioner Go's negligence in fact led to
the swindling of his employer. Had Go exercised the diligence expected of
him as a bank officer and employee, he would have noticed the glaring
disparity between the payee's name and address on the treasury checks FIRST DIVISION
involved and the name and address of the depositor appearing in the bank's
records. The situation would have been different if the treasury checks were
tampered with only as to their amounts because the alteration would have [G.R. No. 159352. April 14, 2004.]
been unnoticeable and hard to detect as the herein altered check bearing
the amount of $913.40 shows. But the error in the name and address of the PREMIERE DEVELOPMENT BANK, petitioner, vs.
payee was very patent and could not have escaped the trained eyes of bank COURT OF APPEALS, PANACOR MARKETING
officers and employees. There is therefore, no other conclusion than that the CORPORATION and ARIZONA TRANSPORT
bank through its employees (including the tellers who allegedly conducted CORPORATION, respondents.
an identification check on the depositor) was grossly negligent in handling
the business transaction herein involved. prLL
While at that stage of events private respondent was still out of the picture, DECISION
it definitely was the start of his consequent involvement as his name was
illegally used in the illicit transaction. Again, knowing that its viability
depended on the confidence reposed upon it by the public, the bank
through its employees should have exercised the caution expected of it. YNARES-SANTIAGO, J p:
In crimes and quasi-delicts, the defendant shall be liable for all damages
This is a petition for review under Rule 45 of the 1997 Rules on Civil
which are the natural and probable consequences of the act or omission
Procedure seeking the annulment of the Decision dated June 18, 2003 of
complained of. It is not necessary that such damages have been foreseen or
the Court of Appeals 1 which affirmed the Decision of the Regional Trial
could have reasonably been foreseen by the defendant. 10 As Go's
Court 2 in Civil Case No. 65577.
negligence was the root cause of the complained inconvenience, humiliation
and embarrassment, Go is liable to private respondents for damages. The undisputed facts show that on or about October 1994, Panacor
Marketing Corporation (Panacor for brevity), a newly formed corporation,
Anent petitioner bank's claim that it is not "co-equally liable" with Go for
acquired an exclusive distributorship of products manufactured by Colgate
damages, under the fifth paragraph of Article 2180 of the Civil Code,
Palmolive Philippines, Inc. (Colgate for short). To meet the capital
"(E)mployers shall be liable for the damages caused by their employees . . .
requirements of the exclusive distributorship, which required an initial
acting within the scope of their assigned tasks." Pursuant to this provision,
inventory level of P7.5 million, Panacor applied for a loan of P4.1 million with
the bank is responsible for the acts of its employee unless there is proof that
Premiere Development Bank. After an extensive study of Panacor’s
it exercised the diligence of a good father of a family to prevent the
creditworthiness, Premiere Bank rejected the loan application and
damage. 11 Hence, the burden of proof lies upon the bank and it cannot
suggested that its affiliate company, Arizona Transport Corporation (Arizona
for short), 3 should instead apply for the loan on condition that the proceeds
thereof shall be made available to Panacor. Eventually, Panacor was granted
a P4.1 million credit line as evidenced by a Credit Line Agreement. 4 As
suggested, Arizona, which was an existing loan client, applied for and was
granted a loan of P6.1 million, P3.4 million of which would be used to pay-
off its existing loan accounts and the remaining P2.7 million as credit line of
Panacor. As security for the P6.1 million loan, Arizona, represented by its
Chief Executive Officer Pedro Panaligan and spouses Pedro and Marietta
Panaligan in their personal capacities, executed a Real Estate Mortgage
against a parcel of land covered by TCT No. T-3475 as per Entry No. 49507
dated October 2, 1995. 5
Since the P2.7 million released by Premiere Bank fell short of the P4.1
million credit line which was previously approved, Panacor negotiated for a
take-out loan with Iba Finance Corporation (hereinafter referred to as Iba-
Finance) in the sum of P10 million, P7.5 million of which will be released
outright in order to take-out the loan from Premiere Bank and the balance of
P2.5 million (to complete the needed capital of P4.1 million with Colgate) to
be released after the cancellation by Premiere of the collateral mortgage on
the property covered by TCT No. T-3475. Pursuant to the said take-out
agreement, Iba-Finance was authorized to pay Premiere Bank the prior
existing loan obligations of Arizona in an amount not to exceed P6 million.
On October 5, 1995, Iba-Finance sent a letter to Ms. Arlene R. Martillano,
officer-in-charge of Premiere Bank’s San Juan Branch, informing her of the
approved loan in favor of Panacor and Arizona, and requesting for the
release of TCT No. T-3475. Martillano, after reading the letter, affixed her
signature of conformity thereto and sent the original copy to Premiere
Bank’s legal office. The full text of the letter reads: 6
Please be informed that we have approved the loan
application of ARIZONA TRANSPORT CORP. and
PANACOR MARKETING CORPORATION. Both
represented by MR. PEDRO P. PANALIGAN (hereinafter
the BORROWERS) in the principal amount of PESOS:
SEVEN MILLION FIVE HUNDRED THOUSAND ONLY
(P7,500,000.00) Philippine Currency. The loan shall be
secured by a Real Estate Mortgage over a parcel of land
located at #777 Nueve de Pebrero St. Bo. Mauway,
Mandaluyong City, Metro Manila covered by TCT No.
3475 and registered under the name of Arizona Haulers,
Inc. which is presently mortgaged with your bank.
The borrowers have authorized IBA FINANCE CORP. to
pay Premiere Bank from the proceeds of their loan. The
disbursement of the loan, however is subject to the
annotation of our mortgage lien on the said property and
final verification that said title is free from any other lien or
encumbrance other than that of your company and IBA
Finance Corporation.
In order to register the mortgage, please entrust to us the
owner’s duplicate copy of TCT No. 3475, current tax
declaration, realty tax receipts for the current year and
other documents necessary to affect annotation thereof.
Upon registration of our mortgage, we undertake to remit
directly to you or your authorized representative the
amount equivalent to the Borrower’s outstanding
indebtedness to Premiere Bank as duly certified by your
goodselves provided such an amount shall not exceed
PESOS: SIX MILLION ONLY (P6,000,000.00) and any
amount in excess of the aforestated shall be for the
account of the borrowers. It is understood that upon
receipt of payment, you will release to us the
corresponding cancellation of your mortgage within five
(5) banking days therefrom.
If the foregoing terms and conditions are acceptable to
you, please affix your signature provided below and
furnish us a copy of the Statement of Account of said
borrowers.
On October 12, 1995, Premiere Bank sent a letter-reply 7 to Iba-Finance,
informing the latter of its refusal to turn over the requested documents on
the ground that Arizona had existing unpaid loan obligations and that it was
the bank’s policy to require full payment of all outstanding loan obligations
prior to the release of mortgage documents. Thereafter, Premiere Bank
issued to Iba-Finance a Final Statement of Account 8 showing Arizona’s
total loan indebtedness. On October 19, 1995, Panacor and Arizona
executed in favor of Iba-Finance a promissory note in the amount of 7.5
million. Thereafter, Iba-Finance paid to Premiere Bank the amount of
P6,235,754.79 representing the full outstanding loan account of Arizona.
Despite such payment, Premiere Bank still refused to release the requested
mortgage documents specifically, the owner’s duplicate copy of TCT No. T-
3475. 9
On November 2, 1995, Panacor requested Iba-Finance for the immediate
approval and release of the remaining P2.5 million loan to meet the required
monthly purchases from Colgate. Iba-Finance explained however, that the
processing of the P2.5 million loan application was conditioned, among
others, on the submission of the owner’s duplicate copy of TCT No. 3475
and the cancellation by Premiere Bank of Arizona’s mortgage. Occasioned
by Premiere Bank’s adamant refusal to release the mortgage cancellation
document, Panacor failed to generate the required capital to meet its
distribution and sales targets. On December 7, 1995, Colgate informed
Panacor of its decision to terminate their distribution agreement.
On March 13, 1996, Panacor and Arizona filed a complaint for specific
performance and damages against Premiere Bank before the Regional Trial
Court of Pasig City, docketed as Civil Case No. 65577.
On June 11, 1996, Iba-Finance filed a complaint-in-intervention praying that
judgment be rendered ordering Premiere Bank to pay damages in its favor.
On May 26, 1998, the trial court rendered a decision in favor of Panacor and
Iba-Finance, the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiff Panacor Marketing Corporation and against the
defendant Premiere Bank, ordering the latter to pay the
former the following sums, namely:
1) P4,520,000.00 in addition to legal interest from
the time of filing of the complaint until full
payment;
2) P1,000,000.00 as and for exemplary damages;
3) P100,000.00 as and for reasonable attorney’s
fees; and
4) Costs of suit.
Similarly, judgment is hereby rendered in favor of plaintiff-
in-intervention IBA-Finance Corporation as against
defendant Premiere bank, as follows, namely:
1) Ordering defendant Premiere Bank to release to
plaintiff-intervenor IBA-Finance
Corporation the owner’s duplicate copy of
Transfer Certificate of Title No. 3475
registered in the name of Arizona Haulers,
Inc. including the deed of cancellation of
the mortgage constituted thereon;
2) Ordering the defendant Premiere Bank to pay
to Intervenor IBA-Finance, the following
sums, to wit:
3) P1,000,000.00 as and by way of exemplary
damages; and
4) P100,000.00 as and for reasonable attorney’s
fees; and
5) Costs of suit.
For lack of sufficient legal and factual basis, the
counterclaim of defendant Premiere Bank is
DISMISSED. SIAEHC
SO ORDERED.
Premiere Bank appealed to the Court of Appeals contending that the trial
court erred in finding, inter alia, that it had maliciously downgraded the
credit-line of Panacor from P4.1 million to P2.7 million.
In the meantime, a compromise agreement was entered into between Iba-
Finance and Premiere Bank whereby the latter agreed to return without
interest the amount of P6,235,754.79 which Iba-Finance earlier remitted to
Premiere Bank to pay off the unpaid loans of Arizona. On March 11, 1999,
the compromise agreement was approved.
On June 18, 2003, a decision was rendered by the Court of Appeals which
affirmed with modification the decision of the trial court, the dispositive
portion of which reads:
WHEREFORE, premises considered, the present appeal is
hereby DISMISSED, and the decision appealed from in
Civil Case No. 65577 is hereby AFFIRMED with
MODIFICATION in that the award of exemplary damages
in favor of the appellees is hereby reduced to
P500,000.00. Needless to add, in view of the Compromise
Agreement plaintiff-intervenor IBA-Finance and
defendant-appellant PREMIERE between plaintiff-
intervenor IBA-Finance and defendant-appellant
PREMIERE as approved by this Court per Resolution
dated March 11, 1999, Our dispositive of the present
appeal is only with respect to the liability of appellant
PREMIERE to the plaintiff-appellees.
With costs against the defendant-appellant.
SO ORDERED. 10
Hence the present petition for review, which raises the following issues: 11
I
 WHETHER OR NOT THE DECISION OF HONORABLE
COURT OF APPEALS EXCEEDED AND WENT BEYOND
THE FACTS, THE ISSUES AND EVIDENCE PRESENTED
IN THE APPEAL TAKING INTO CONSIDERATION THE
ARGUMENT OF PETITIONER BANK AND ADVENT OF
THE DULY APPROVED COMPROMISE AGREEMENT
BETWEEN THE PETITIONER BANK AND IBA FINANCE
CORPORATION.
II
WHETHER OR NOT THE ISSUES THAT SHOULD HAVE
BEEN RESOLVED BY THE HONORABLE COURT OF
APPEALS, BY REASON OF THE EXISTENCE OF THE
COMPROMISE AGREEMENT, IS LIMITED TO THE ISSUE
OF ALLEGED BAD FAITH OF PETITIONER BANK IN THE
DOWNGRADING OF THE LOAN AND SHOULD NOT
INCLUDE THE RENDITION OF AN ADVERSE
PRONOUNCEMENT TO AN ALREADY FAIT ACCOMPLI-
ISSUE ON THE REFUSAL OF THE BANK TO RECOGNIZE
THE TAKE-OUT OF THE LOAN AND THE RELEASE OF
TCT NO. 3475.
III
WHETHER OR NOT PETITIONER ACTED IN BAD FAITH
IN THE DOWNGRADING OF THE LOAN OF
RESPONDENTS TO SUPPORT AN AWARD OF ACTUAL
AND EXEMPLARY DAMAGES NOW REDUCED TO
P500,000.00.
IV
WHETHER OR NOT THERE IS BASIS OR COMPETENT
PIECE OF EVIDENCE PRESENTED DURING THE TRIAL
TO SUPPORT AN AWARD OF ACTUAL DAMAGES OF
P4,520,000.00.
Firstly, Premiere Bank argues that considering the compromise agreement it
entered with Iba-Finance, the Court of Appeals should have ruled only on
the issue of its alleged bad faith in downgrading Panacor’s credit line. It
further contends that the Court of Appeals should have refrained from
making any adverse pronouncement on the refusal of Premiere Bank to
recognize the take-out and its subsequent failure to release the cancellation
of the mortgage because they were rendered fait accompli by the
compromise agreement.
We are not persuaded.
In a letter-agreement 12 dated October 5, 1995, Iba-Finance informed
Premiere Bank of its approval of Panacor’s loan application in the amount of
P10 million to be secured by a real estate mortgage over a parcel of land
covered by TCT No. T-3475. It was agreed that Premiere Bank shall entrust
to Iba-Finance the owner’s duplicate copy of TCT No. T-3475 in order to
register its mortgage, after which Iba-Finance shall pay off Arizona’s
outstanding indebtedness. Accordingly, Iba-Finance remitted P6,235,754.79
to Premiere Bank on the understanding that said amount represented the
full payment of Arizona’s loan obligations. Despite performance by Iba-
Finance of its end of the bargain, Premiere Bank refused to deliver the
mortgage document. As a consequence, Iba-Finance failed to release the
remaining P2.5 million loan it earlier pledged to Panacor, which finally led to
the revocation of its distributorship agreement with Colgate.
Undeniably, the not-so-forthright conduct of Premiere Bank in its dealings
with respondent corporations caused damage to Panacor and Iba-Finance.
It is error for Premiere Bank to assume that the compromise agreement it
entered with Iba-Finance extinguished all direct and collateral incidents to
the aborted take-out such that it also cancelled its obligations to Panacor.
The unjustified refusal by Premiere Bank to release the mortgage document
prompted Iba-Finance to withhold the release of the P2.5 million earmarked
for Panacor which eventually terminated the distributorship agreement. Both
Iba-Finance and Panacor, which are two separate and distinct juridical
entities, suffered damages due to the fault of Premiere Bank. Hence, it
should be held liable to each of them.
While the compromise agreement may have resulted in the satisfaction of
Iba-Finance’s legal claims, Premiere Bank’s liability to Panacor remains. We
agree with the Court of Appeals that the “present appeal is only with respect
to the liability of appellant Premiere Bank to the plaintiffs-appellees (Panacor
and Arizona)” 13 taking into account the compromise agreement.
For the foregoing reasons, we find that the Court of Appeals did not err in
discussing in the assailed decision the abortive take-out and the refusal by
Premiere Bank to release the cancellation of the mortgage document.
Secondly, Premiere Bank asserts that it acted in good faith when it
downgraded the credit line of Panacor from P4.1 million to P2.7 million. It
cites the decision of the trial court which, albeit inconsistent with its final
disposition, expressly recognized that the downgrading of the loan was not
the proximate cause of the damages suffered by respondents.
Under the Credit Line Agreement 14 dated September 1995, Premiere Bank
agreed to extend a loan of P4.1 million to Arizona to be used by its affiliate,
Panacor, in its operations. Eventually, Premiere approved in favor of Arizona
a loan equivalent to P6.1 million, P3.4 million of which was allotted for the
payment of Arizona’s existing loan obligations and P2.7 million as credit line
of Panacor. Since only P2.7 million was made available to Panacor, instead
of P4.1 million as previously approved, Panacor applied for a P2.5 loan from
Iba-Finance, which, as earlier mentioned, was not released because of
Premiere Bank’s refusal to issue the mortgage cancellation.
It is clear that Premiere Bank deviated from the terms of the credit line
agreement when it unilaterally and arbitrarily downgraded the credit line of
Panacor from P4.1 million to P2.7 million. Having entered into a well-defined
contractual relationship, it is imperative that the parties should honor and
adhere to their respective rights and obligations thereunder. Law and
jurisprudence dictate that obligations arising from contracts have the force
of law between the contracting parties and should be complied with in good
faith. 15 The appellate court correctly observed, and we agree, that:
Appellant’s actuations, considering the actual knowledge
of its officers of the tight financial situation of appellee
PANACOR brought about primarily by the appellant
bank’s considerable reduction of the credit line portion of
the loan, in relation to the “bail-out” efforts of IBA Finance,
whose payment of the outstanding loan account of
appellee ARIZONA with appellant was readily accepted by
the appellant, were truly marked by bad faith and lack of
due regard to the urgency of its compliance by
immediately releasing the mortgage cancellation
document and delivery of the title to IBA Finance. That
time is of the essence in the requested release of the
mortgage cancellation and delivery of the subject title was
only too well-known to appellant, having only belatedly
invoked the cross-default provision in the Real Estate
Mortgage executed in its favor by appellee ARIZONA to
resist the plain valid and just demand of IBA Finance for
such compliance by appellant bank. 16
Premiere Bank cannot justify its arbitrary act of downgrading the credit line
on the alleged finding by its project analyst that the distributorship was not
financially feasible. Notwithstanding the alleged forewarning, Premiere Bank
still extended Arizona the loan of P6.1 million, albeit in contravention of the
credit line agreement. This indubitably indicates that Premiere Bank had
deliberately and voluntarily granted the said loan despite its claim that the
distributorship contract was not viable.
Neither can Premiere Bank rely on the puerile excuse that it was the bank’s
policy not to release the mortgage cancellation prior to the settlement of
outstanding loan obligations. Needless to say, the Final Statement of
Account dated October 17, 1995 showing in no uncertain terms Arizona’s
outstanding indebtedness, which was subsequently paid by Iba-Finance,
was the full payment of Arizona’s loan obligations. Equity demands that a
party cannot disown it previous declaration to the prejudice of the other
party who relied reasonably and justifiably on such declaration.
Thirdly, Premiere Bank avers that the appellate court’s reliance on the credit
line agreement as the basis of bad faith on its part was inadmissible or self-
serving for not being duly notarized, being unsigned in all of its left margins,
and undated. According to Premiere Bank, the irregularities in the execution
of the credit line agreement bolsters the theory that the same was the
product of manipulation orchestrated by respondent corporations through
undue influence and pressure exerted by its officers on Martillano.
Premiere Bank’s posture deserves scant consideration. As found by the
lower court, there are sufficient indicia that demonstrate that the alleged
unjust pressure exerted on Martillano was more imagined than real. In her
testimony, Martillano claims that she was persuaded and coaxed by Caday
of Iba-Finance and Panaligan of Panacor to sign the letter. It was she who
provided Iba-Finance with the Final Statement of Account and accepted its
payment without objection or qualification. These acts show that she was
vested by Premiere Bank with sufficient authority to enter into the said
transactions.
If a private corporation intentionally or negligently clothes its officers or
agents with apparent power to perform acts for it, the corporation will be
estopped to deny that the apparent authority is real as to innocent third
persons dealing in good faith with such officers or agents. 17 As testified to
by Martillano, after she received a copy of the credit line agreement and
affixed her signature in conformity thereto, she forwarded the same to the
legal department of the Bank at its Head Office. Despite its knowledge,
Premiere Bank failed to disaffirm the contract. When the officers or agents
of a corporation exceed their powers in entering into contracts or doing
other acts, the corporation, when it has knowledge thereof, must promptly
disaffirm the contract or act and allow the other party or third persons to act
in the belief that it was authorized or has been ratified. If it acquiesces, with
knowledge of the facts, or fails to disaffirm, ratification will be implied or else
it will be estopped to deny ratification. 18
Finally, Premiere Bank argues that the finding by the appellate court that it
was liable for actual damages in the amount of P4,520,000.00 is without
basis. It contends that the evidence presented by Panacor in support of its
claim for actual damages are not official receipts but self-serving
declarations.
To justify an award for 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. 19 The burden of proof is on the party who will
be defeated if no evidence is 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. In other words,
damages cannot be presumed and courts, in making an award, must point
out specific facts that can afford a basis for measuring whatever
compensatory or actual damages are borne.
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.
In the instant case, the actual damages were proven through the sole
testimony of Themistocles Ruguero, the vice president for administration of
Panacor. In his testimony, the witness affirmed that Panacor incurred losses,
specifically, in terms of training and seminars, leasehold acquisition,
procurement of vehicles and office equipment without, however, adducing
receipts to substantiate the same. The documentary evidence marked as
exhibit “W”, which was an ordinary private writing allegedly itemizing the
capital expenditures and losses from the failed operation of Panacor, was
not testified to by any witness to ascertain the veracity of its contents.
Although the lower court fixed the sum of P4,520,000.00 as the total
expenditures incurred by Panacor, it failed to show how and in what manner
the same were substantiated by the claimant with reasonable certainty.
Hence, the claim for actual damages should be admitted with extreme
caution since it is only based on bare assertion without support from
independent evidence. Premiere’s failure to prove actual expenditure
consequently conduces to a failure of its claim. 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 evidence obtainable regarding the actual amount of loss. 20
Even if not recoverable as compensatory damages, Panacor may still be
awarded damages in the concept of temperate or moderate damages.
When the court finds that some pecuniary loss has been suffered but the
amount cannot, from the nature of the case, be proved with certainty,
temperate damages may be recovered. Temperate damages may be
allowed in cases where from the nature of the case, definite proof of
pecuniary loss cannot be adduced, although the court is convinced that the
aggrieved party suffered some pecuniary loss.
The Code Commission, in explaining the concept of temperate damages
under Article 2224, makes the following comment: 21
In some States of the American Union, temperate
damages are allowed. There are cases where from the
nature of the case, definite proof of pecuniary loss cannot
be offered, although the court is convinced that there has
been such loss. For instance, injury to ones commercial
credit or to the goodwill of a business firm is often hard to
show with certainty in terms of money. Should damages
be denied for that reason? The judge should be
empowered to calculate moderate damages in such
cases, rather than that the plaintiff should suffer, without
redress from the defendant's wrongful act.
It is obvious that the wrongful acts of Premiere Bank adversely affected, in
one way or another, the commercial credit 22 of Panacor, greatly
contributed to, if not, decisively caused the premature stoppage of its
business operations and the consequent loss of business opportunity. Since
these losses are not susceptible to pecuniary estimation, temperate
damages may be awarded. Article 2216 of the Civil Code:
No proof of pecuniary loss is necessary in order that
moral, nominal, temperate, liquidated or exemplary
damages may be adjudicated. The assessment of such
damages, except liquidated ones, is left to the discretion
of the Court, according to the circumstances of each
case.
Under the circumstances, the sum of P200,000.00 as temperate damages is
reasonable.
WHEREFORE, the petition is DENIED. The Decision dated June 18, 2003 of
the Court of Appeals in CA-G.R. CV No. 60750, ordering Premiere Bank to
pay Panacor Marketing Corporation P500,000.00 as exemplary damages,
P100,000.00 as attorney’s fees, and costs, is AFFIRMED, with the
MODIFICATION that the award of P4,520,000.00 as actual damages is
DELETED for lack of factual basis. In lieu thereof, Premiere Bank is ordered
to pay Panacor P200,000.00 as temperate damages.
SO ORDERED. ESDcIA
Davide, Jr., C .J ., Panganiban, Carpio and Azcuna, JJ ., concur.
||| (Premiere Development Bank v. Court of Appeals, G.R. No. 159352, [April
14, 2004], 471 PHIL 704-720)
THIRD DIVISION
[G.R. No. 112576. October 26, 1994.]
METROPOLITAN BANK AND TRUST
COMPANY, petitioner, vs. THE HON. COURT OF
APPEALS, RURAL BANK OF PADRE GARCIA, INC. and
ISABEL R. KATIGBAK, respondents.
DECISION
ROMERO, J p:
This petition for certiorari seeks to annul the decision of
respondent Court of Appeals dated October 29, 1992 in CA — GR
CV No. 26571 affirming the decision of the Regional Trial Court of
Lipa, Batangas — Branch XIII for damages, and the Resolution
dated November 11, 1993 denying petitioner's motion for
reconsideration of the aforesaid decision.
The case emanated from a dispute between the Rural
Bank of Padre Garcia, Inc. (RBPG) and Metropolitan Bank and
Trust Company (MBTC) relative to a credit memorandum dated
April 5, 1982 from the Central Bank in the amount of P304,000.00
in favor of RBPG.
The records show that Isabel Katigbak is the president
and director of RBPG, owning 65% of the shares thereof.
Metropolitan Bank and Trust Company (MBTC) is the rural bank's
depository bank, where Katigbak maintains current accounts with
MBTC's main office in Makati as well as its Lipa City
branch. cdrep
On April 6, 1982, MBTC received from the Central Bank a
credit memo dated April 5, 1982 that its demand deposit account
was credited with P304,000.00 for the account of RBPG,
representing loans granted by the Central Bank to RBPG. On the
basis of said credit memo, Isabel Katigbak issued several checks
against its account with MBTC in the total amount of
P300,000.00, two (2) of which (Metrobank Check Nos. 0069 and
0070) were payable to Dr. Felipe C. Roque and Mrs. Eliza Roque
for P25,000.00 each. Said checks issued to Dr. and Mrs. Roque
were deposited by the Roques with the Philippine Banking
Corporation, Novaliches Branch in Quezon City. When these
checks were forwarded to MBTC on April 12, 1982 for payment
(six (6) days from receipt of the Credit Memo), the checks were
returned by MBTC with the annotations "DAIF — TNC" (Drawn
Against Insufficient Funds — Try Next Clearing) so they were
redeposited on April 14, 1982. These were however again
dishonored and returned unpaid for the following reasons: "DAIF
— TNC — NO ADVICE FROM CB."
After the second dishonor of the two (2) checks, Dr. Felipe
Roque, a member of the Board of Directors of Philippine Banking
Corporation, allegedly went to the Office of Antonio katigbak, an
officer of RBPG, chiding him for the bouncing checks. In order to
appease the doctor, RBPG paid Dr. Roque P50,000.00 in cash to
replace the aforesaid checks.
On April 13, 1982, Isabel Katigbak who was in Hongkong
on a business-vacation trip together with her sons Alfredo and
Antonio, both of whom were also officers of RBPG, received
overseas phone calls from Mrs. Maris Katigbak-San Juan at her
residence in San Lorenzo Village, Makati, informing Isabel
Katigbak that a certain Mr. Rizal Dungo, Assistant Cashier of
MBTC insisted on talking to her (Mrs. San Juan), berating her
about the checks which bounced, saying "Nag-issue kayo ng
tseke, wala namang pondo," even if it was explained to Mr.
Dungo that Mrs. San Juan was not in any way connected with
RBPG.
Mrs. Katigbak testified that she informed Mrs. San Juan
to request defendant MBTC to check and verify the records
regarding the aforementioned Central Bank credit memo for
P304,000.00 in favor of RBPG as she was certain that the checks
were sufficiently covered by the CB credit memo as early as April
6, 1994, but the following day, Mrs. San Juan received another
insulting call from Mr. Dungo ("Bakit kayo nag-issue ng tseke na
wala namang pondo, Three Hundred Thousand na.") 1 When Mrs.
San Juan explained to him the need to verify the records
regarding the Central Bank memo, he merely brushed it aside,
telling her sarcastically that he was very sure that no such credit
memo existed. Mrs. San Juan was constrained to place another
long distance call to Mrs. Katigbak in Hongkong that evening.
Tense and angered, the Katigbaks had to cut short their
Hongkong stay with their respective families and flew back to
Manila, catching the first available flight on April 15, 1982.
Immediately upon arrival, Mrs. Katigbak called up MBTC,
through a Mr. Cochico, for a re-examination of the records of
MBTC regarding the Central Bank credit memo dated April 5,
1982 for P304,000.00. Mr. Dungo, to whom Cochico handed over
the phone, allegedly arrogantly said: "Bakit kayo magagalit, wala
naman kayong pondo?" These remarks allegedly so shocked Mrs.
Katigbak that her blood pressure rose to a dangerous level and
she had to undergo medical treatment at the Makati Medical
Center for two (2) days.
Metrobank not only dishonored the checks issued by
RBPG, the latter was issued four (4) debit memos representing
service and penalty charges for the returned checks.
RBPG and Isabel Katigbak filed Civil Case No. V-329 in
the RTC of Lipa, Batangas — Branch XIII against the Metropolitan
Bank and Trust Company for damages on April 26, 1983.
The ultimate facts as alleged by the defendant MBTC in
its answer are as follows: that on April 6, 1982, its messenger,
Elizer Gonzales, received from the Central Bank several credit
advices on rural bank accounts, which included that of plaintiff
RBPG in the amount of P304,000.00; that due to the inadvertence
of said messenger, the credit advice issued in favor of plaintiff
RBPG was not delivered to the department in charge of
processing the same; consequently, when MBTC received from
the clearing department the checks in question, the stated
balance in RBPG's account was only P5,498.58 which excluded
the unprocessed credit advice of P304,000.00 resulting in the
dishonor of the aforementioned checks; that as regards the
P304,000.00 which was a re-discounting loan from the Central
Bank, the same was credited only on April 15, 1982 after the
Central Bank finally confirmed that a credit advice was indeed
issued in favor of RBPG; that after the confirmation, MBTC
credited the amount of the credit advice to plaintiff RBPG's
account and thru its officers, allegedly conveyed personally on
two occasions its apologies to plaintiffs to show that the bank and
its officers acted with no deliberate intent on their part to cause
injury or damage to plaintiffs, explaining the circumstances that
gave rise to the bouncing checks situation. Metrobank's
negligence arising from their messenger's misrouting of the credit
advice resulting in the return of the checks in question, despite
daily reporting of credit memos and a corresponding daily radio
message confirmation, (as shown by Exhibit "I," the Investigation
Report of the bank's Mr. Valentino Elevado) and Mr. Dungo's
improper handling of clients led to the messenger's dismissal
from service and Mr. Dungo's transfer from Metro Manila to
Mindoro.
The threshold issue was whether or not, under the facts
and circumstances of the case, plaintiff may be allowed to recover
actual, moral and exemplary damages, including attorney's fees,
litigation expenses and the costs of the suit. On August 25, 1989,
the RTC of Lipa City rendered a decision 2 in favor of plaintiffs and
against the defendant MBTC, ordering the latter to:
1. pay plaintiff Isabel Katigbak P50,000.00 as temperate damages;
2. pay P500,000.00 as moral damages, considering that RBPG's
credit standing and business reputation were damaged by the
wrongful acts of defendant's employees, coupled with the rude
treatment received by Isabel Katigbak at the hands of Mr. Dungo, all
of which impelled her to seek medical treatment;
3. pay P100,000.00 as attorney's fees and litigation expenses; and
4. pay the costs of suit.
The lower court did not award actual damages in the
amount of P50,000.00 representing the amount of the two (2)
checks payable to Dr. Felipe C. Roque and Mrs. Elisa Roque for
P25,000.00 each, as it found no showing that Mr. Antonio
Katigbak who allegedly paid the amount was actually reimbursed
by plaintiff RBPG. Moreover, the court held that no actual
damages could have been suffered by plaintiff RBPG because on
April 15, 1982, the Central Bank credit advice in the amount of
P304,000 which included the two (2) checks issued to the Roque
spouses in the sum of P50,000.00 were already credited to the
account of RBPG and the service, as well as penalty charges,
were all reversed.
MBTC appealed from the decision to the Court of Appeals
in CA — GR CV No. 26571, alleging that the trial court erred in
awarding temperate and moral damages, as well as attorney's
fees, plus costs and expenses of litigation without factual or legal
basis therefor.
On October 29, 1992, the Court of Appeals rendered a
decision 3 affirming that of the trial court, except for the deletion
of the award of temperate damages, the reduction of moral
damages from P500,000.00 to P50,000.00 in favor of RBPG and
P100,000.00 for Isabel Katigbak and P50,000.00, as attorney's
fees. Plaintiffs-appellees filed a motion for reconsideration of the
decision, questioning the deletion of the award of temperate
damages and the reduction of the award of moral damages and
attorney's fees. The motion was denied.
 MBTC filed this petition, presenting the following issues
for resolution:
1. whether or not private respondents RBPG and Isabel Rodriguez
are legally entitled to moral damages and attorney's fees, and.
2. assuming that they are so entitled, whether or not the amounts
awarded are excessive and unconscionable. prcd
The petition is devoid of merit.
The case at bench was instituted to seek damages
caused by the dishonor through negligence of respondent bank's
checks which were actually sufficiently funded, and the insults
from petitioner bank's officer directed against private respondent
Isabel R. Katigbak. The presence of malice and the evidence of
besmirched reputation or loss of credit and business standing, as
well as a reappraisal of its probative value, involves factual
matters which, having been already thoroughly discussed and
analyzed in the courts below, are no longer reviewable here. While
this rule admits of exceptions, this case does not fall under any of
these.
There is no merit in petitioner's argument that it should
not be considered negligent, much less be held liable for
damages on account of the inadvertence of its bank employee
as Article 1173 of the Civil Code only requires it to exercise the
diligence of a good pater familias.
As borne out by the records, the dishonoring of the
respondent's checks committed through negligence by the
petitioner bank on April 6, 1982 was rectified only on April 15,
1992 or nine (9) days after receipt of the credit memo. Clearly,
petitioner bank was remiss in its duty and obligation to treat
private respondents' account with the highest degree of care,
considering the fiduciary nature of their relationship. The bank is
under obligation to treat the accounts of its depositors with
meticulous care, whether such account consists only of a few
hundred pesos or of millions. It must bear the blame for failing to
discover the mistake of its employee despite the established
procedure requiring bank papers to pass through bank personnel
whose duty it is to check and countercheck them for possible
errors. 4 Responsibility arising from negligence in the performance
of every kind of obligation is demandable. 5 While the bank's
negligence may not have been attended with malice and bad
faith, nevertheless, it caused serious anxiety, embarrassment and
humiliation to private respondents for which they are entitled to
recover reasonable moral damages. 6
As the records bear out, insult was added to injury by
petitioner bank's issuance of debit memoranda representing
service and penalty charges for the returned checks, not to
mention the insulting remarks from its Assistant Cashier.
In the case of Leopoldo Araneta v. Bank of America, 7 we
held that:
"The financial credit of a businessman is a
prized and valuable asset, it being a significant part
of the foundation of his business. Any adverse
reflection thereon constitutes some financial loss to
him. As stated in the case of Atlanta National Bank
vs. Davis, 96 Ga 334, 23 SE 190, citing 2 Morse
Banks, Sec. 458, 'it can hardly be possible that a
customer's check can be wrongfully refused
payment without some impeachment of his credit,
which must in fact be an actual injury, though he
cannot, from the nature of the case, furnish
independent, distinct proof thereof'."
It was established that when Mrs. Katigbak learned that
her checks were not being honored and Mr. Dungo repeatedly
made the insulting phone calls, her wounded feelings and the
mental anguish suffered by her caused her blood pressure to rise
beyond normal limits, necessitating medical attendance for two (2)
days at a hospital.
The damage to private respondents' reputation and social
standing entitles them to moral damages. Moral damages include
physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injury. 8Temperate or moderate damages
which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be proved with certainty. 9 Temperate
damages may be allowed in cases where from the nature of the
case, definite proof of pecuniary loss cannot be adduced,
although the court is convinced that there has been such loss.
The appellate court, however, justified its deletion when MBTC
reasoned out that the amount of P50,000.00 is not part of the
relief prayed for in the complaint, aside from the fact that the
amount allegedly suffered by Mrs. Katigbak is susceptible of
proof. 10
 Moral and temperate damages which are not susceptible
of pecuniary estimation are not awarded to penalize the petitioner
but to compensate the respondents for injuries suffered as a
result of the former's fault and negligence, taking into account the
latter's credit and social standing in the banking community,
particularly since this is the very first time such humiliation has
befallen private respondents. The amount of such losses need not
be established with exactitude, precisely due to their nature. 11
The carelessness of petitioner bank, aggravated by the
lack of promptness in repairing the error and the arrogant attitude
of the bank officer handling the matter, justifies the grant of moral
damages, which are clearly not excessive and
unconscionable. prLL
Moreover, considering the nature and extent of the
services rendered by private respondent's counsel, both in the
trial and appellate courts, the Court deems it just and equitable
that attorney's fees in the amount of P50,000.00 be awarded.
WHEREFORE, the decision of respondent Court of
Appeals is AFFIRMED in all respects.
SO ORDERED.
Bidin, Melo and Vitug, JJ., concur.
Feliciano, J., is on Leave.
||| (Metropolitan Bank and Trust Co. v. Court of Appeals, G.R. No. 112576,
[October 26, 1994], 307 PHIL 785-794)
THIRD DIVISION
[G.R. No. 190521. January 12, 2011.]
LETICIA TAN, MYRNA MEDINA, MARILOU SPOONER,
ROSALINDA TAN, and MARY JANE TAN, MARY LYN
TAN, CELEDONIO TAN, JR., MARY JOY TAN, and
MARK ALLAN TAN, represented herein by their
mother, LETICIA TAN, petitioners, vs. OMC CARRIERS,
INC. and BONIFACIO ARAMBALA, respondents.
RESOLUTION
BRION, J p:
We resolve the motion for reconsideration 1 — filed by Leticia
Tan, Myrna Medina, Marilou Spooner, Rosalinda Tan, Mary Jane Tan,
Mary Lyn Tan, Celedonio Tan, Jr., Mary Joy Tan, and Mark Allan
Tan (petitioners), all heirs of the late Celedonio Tan — asking us to
reverse and set aside our Resolution of February 17, 2010. 2 We denied
in this Resolution their petition for review on certiorari for failing to show
any reversible error in the assailed Court of Appeals (CA) decision of
June 22, 2009 3 sufficient to warrant the exercise of our discretionary
appellate jurisdiction.
The CA decision, in turn, affirmed with modification the decision
of the Regional Trial Court (RTC) of Muntinlupa City in Civil Case No. 96-
186, finding the respondents — OMC Carriers, Inc. (OMC) and Bonifacio
Arambala — guilty of gross negligence and awarding damages to the
petitioners.
THE FACTS
On September 27, 1996, the petitioners filed a complaint for
damages with the RTC against OMC and Bonifacio Arambala. 4 The
complaint states that on November 24, 1995, at around 6:15 a.m.,
Arambala was driving a truck 5 with a trailer 6 owned by OMC, along
Meralco Road, Sucat, Muntinlupa City. When Arambala noticed that the
truck had suddenly lost its brakes, he told his companion to jump out.
Soon thereafter, he also jumped out and abandoned the truck.
Driverless, the truck rammed into the house and tailoring shop owned
by petitioner Leticia Tan and her husband Celedonio Tan, instantly killing
Celedonio who was standing at the doorway of the house at the time. 7
The petitioners alleged that the collision occurred due to OMC's
gross negligence in not properly maintaining the truck, and to
Arambala's recklessness when he abandoned the moving truck. Thus,
they claimed that the respondents should be held jointly and severally
liable for the actual damages that they suffered, which include the
damage to their properties, the funeral expenses they incurred for
Celedonio Tan's burial, as well as the loss of his earning capacity. The
petitioners also asked for moral and exemplary damages, and attorney's
fees. 8
The respondents denied any liability for the collision, essentially
claiming that the damage to the petitioners was caused by a fortuitous
event, since the truck skidded due to the slippery condition of the road
caused by spilled motor oil. 9
THE RTC DECISION
 After trial, the RTC found OMC and Arambala jointly and
severally liable to the petitioners for damages. 10 Relying on the
doctrine of res ipsa loquitur, the RTC held that it was unusual for a truck
to suddenly lose its brakes; the fact that the truck rammed into the
petitioners' house raised the presumption of negligence on the part of
the respondents. These, the respondents failed to refute. 11 TDEASC
The RTC did not agree with the respondents' claim of a
fortuitous event, pointing out that even with oil on the road, Arambala
did not slow down or take any precautionary measure to prevent the
truck from skidding off the road. The alleged oil on the road did not also
explain why the truck lost its brakes. Had OMC done a more rigid
inspection of the truck before its use, the defective brake could have
been discovered. The RTC, thus, held OMC jointly and severally liable
with Arambala for the damage caused to the petitioners, based on the
principle of vicarious liability embodied in Article 2180 12 of the Civil
Code.13
The dispositive portion of the decision stated:
WHEREFORE, in view of the foregoing, judgment is
hereby rendered in favor of the plaintiffs and against the
defendants ordering:
1. The defendants to pay the plaintiffs jointly and severally
the amount of P50,000.00 for the death of
Celedonio Tan;
2. The defendants to pay the plaintiffs jointly and severally
the amount of P500,000.00 for the loss of earning
capacity of Celedonio Tan, plus interest thereon
from the date of death of Celedonio Tan;
3. The defendants to pay the plaintiff Leticia Tan jointly
and severally the amount of P355,895.00 as
actual damages;
4. The defendants to pay the plaintiffs jointly and severally
the amount of P500,000.00 as moral damages;
5. The defendants to pay the plaintiffs jointly and severally
the amount of P500,000.00 as exemplary
damages; and
6. The defendants to pay the plaintiffs jointly and solidarily
the amount of P500,000.00 as attorney's fees.
Costs against the defendants.
SO ORDERED. 14
THE COURT OF APPEALS DECISION
On appeal, the CA affirmed the RTC's findings on the issues of
the respondents' negligence and liability for damages. However, the CA
modified the damages awarded to the petitioners by reducing the actual
damages award from P355,895.00 to P72,295.00. The CA observed that
only the latter amount was duly supported by official receipts. 15
The CA also deleted the RTC's award for loss of earning
capacity. The CA explained that the petitioners failed to substantiate
Celedonio Tan's claimed earning capacity with reasonable certainty; no
documentary evidence was ever presented on this point. Instead, the
RTC merely relied on Leticia Tan's testimony regarding Celedonio Tan's
income. The CA characterized this testimony as self-serving. 16
The CA further reduced the exemplary damages from
P500,000.00 to P200,000.00, and deleted the award of attorney's fees
because the RTC merely included the award in the dispositive portion of
the decision without discussing its legal basis. 17
THE PETITION
In the petition for review on certiorari before us, 18 the
petitioners assert that the CA erred when it modified the RTC's awarded
damages. The petitioners submit the reasons outlined below. aIAcCH
First, the CA erred when it reduced the RTC's award of actual
damages from P355,895.00 to P72,295.00. The petitioners claim that
they sought compensation for the damage done to petitioner Leticia
Tan's house, tailoring shop, sewing machines, as well as other
household appliances. Since the damages primarily refer to the value of
their destroyed property, and not the cost of repairing or replacing them,
the value cannot be evidenced by receipts. Accordingly, the RTC
correctly relied on petitioner Leticia Tan's testimony and the
documentary evidence presented, consisting of pictures of the
damaged property, to prove their right to recover actual damages for the
destroyed property.
Second, the petitioners are entitled to actual damages for the
loss of Celedonio Tan's earning capacity. While they admit that they did
not submit any documentary evidence to substantiate this claim, the
petitioners point out that Celedonio Tan was undisputably a self-
employed tailor who owned a small tailor shop; in his line of work, no
documentary evidence is available.
Third, the petitioners maintain that they are entitled to exemplary
damages in the amount of P500,000.00 because the RTC and the CA
consistently found that the collision was caused by the respondents'
gross negligence. Moreover, the respondents acted with bad faith when
they fabricated the "oil slick on the road" story to avoid paying damages
to the petitioners. As observed by the CA, the Traffic Accident
Investigation Report did not mention any motor oil on the road at the
time of the accident. SPO4 Armando Alambro, the Investigation Officer,
likewise testified that there was no oil on the road at the time of the
accident. For the public good and to serve as an example, the
respondents should be made to pay P500,000.00 as exemplary
damages.
Lastly, the petitioners are entitled to attorney's fees based on
Article 2208 of the Civil Code which provides, among others, that
attorney's fees can be recovered when exemplary damages are
awarded, and when the defendant acted in gross and evident bad faith
in refusing to satisfy the plaintiff's plainly valid, just and demandable
claim.
We initially denied the petition in our Resolution of February 17,
2010, for the petitioners' failure to show any reversible error in the CA
decision sufficient to warrant the exercise of our discretionary appellate
jurisdiction. In our Resolution of August 11, 2010, we reinstated the
petition on the basis of the petitioners' motion for reconsideration.
OUR RULING
Finding merit in the petitioners' arguments, we partly grant the
petition.
Procedural Issue
As both the RTC and the CA found that the respondents' gross
negligence led to the death of Celedonio Tan, as well as to the
destruction of the petitioners' home and tailoring shop, we see no
reason to disturb this factual finding. We, thus, concentrate on the sole
issue of what damages the petitioners are entitled to.
We are generally precluded from resolving a Rule 45 petition
that solely raises the issue of damages, an essentially factual question,
because Section 1, Rule 45 of the Rules of Court, expressly states that
— convinced that the aggrieved party suffered some pecuniary loss. 23 As
Section 1. Filing of petition with Supreme Court. — A
party desiring to appeal by certiorari from a judgment or
final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must
be distinctly set forth.
In light, however of the RTC's and the CA's conflicting findings
on the kind and amount of damages suffered which must be
compensated, we are compelled to consider the case as one of the
recognized exceptions. 19 We look into the parties' presented evidence
to resolve this appeal.
Temperate damages in lieu
of actual damages
We begin by discussing the petitioners' claim for actual
damages arising from the damage inflicted on petitioner Leticia Tan's
house and tailoring shop, taking into account the sewing machines and
various household appliances affected. Our basic law tells us that to
recover damages there must be pleading and proof of actual damages
suffered. 20 As we explained in Viron Transportation Co., Inc. v. Delos
Santos: 21 IcEaST
Actual damages, to be recoverable, must not only be
capable of proof, but must actually 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. 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. 22
The petitioners do not deny that they did not submit any receipt
to support their claim for actual damages to prove the monetary value of
the damage caused to the house and tailoring shop when the truck
rammed into them. Thus, no actual damages for the destruction to
petitioner Leticia Tan's house and tailoring shop can be awarded.
Nonetheless, absent competent proof on the actual damages
suffered, a party still has the option of claiming temperate damages,
which may be allowed in cases where, from the nature of the case,
definite proof of pecuniary loss cannot be adduced although the court is
defined in Article 2224 of the Civil Code:
Article 2224. Temperate or moderate damages, which are
more than nominal but less than compensatory damages,
may be recovered when the court finds that some
pecuniary loss has been suffered but its amount can not,
from the nature of the case, be proved with certainty.
 In Canada v. All Commodities Marketing Corporation, 24 we
disallowed the award of actual damages arising from breach of contract,
where the respondent merely alleged that it was entitled to actual
damages and failed to adduce proof to support its plea. In its place, we
awarded temperate damages, in recognition of the pecuniary loss
suffered.
The photographs the petitioners presented as evidence show
the extent of the damage done to the house, the tailoring shop and the
petitioners' appliances and equipment. 25 Irrefutably, this damage was
directly attributable to Arambala's gross negligence in handling OMC's
truck. Unfortunately, these photographs are not enough to establish the
amount of the loss with certainty. From the attendant circumstances
and given the property destroyed, 26 we find the amount of
P200,000.00 as a fair and sufficient award by way of temperate
damages.
Temperate damages in lieu of
loss of earning capacity
Similarly, the CA was correct in disallowing the award of actual
damages for loss of earning capacity. Damages for loss of earning
capacity are awarded pursuant to Article 2206 of the Civil Code, which
states that:
Article 2206. The amount of damages for death caused by
a crime or quasi-delict shall be at least three thousand
pesos, even though there may have been mitigating
circumstances. In addition:
(1) The defendant shall be liable for the loss of the
earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter;
such indemnity shall in every case be assessed
and awarded by the court, unless the deceased
on account of permanent physical disability not
caused by the defendant, had no earning capacity
at the time of his death[.]
As a rule, documentary evidence should be presented to
substantiate the claim for loss of earning capacity. 27 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. 28
According to the petitioners, prior to his death, Celedonio was a
self-employed tailor who earned approximately P156,000.00 a year, or
P13,000.00 a month. At the time of his death in 1995, the prevailing daily
minimum wage was P145.00, 29 or P3,770.00 per month, provided the
wage earner had only one rest day per week. Even if we take judicial
notice of the fact that a small tailoring shop normally does not issue
receipts to its customers, and would probably not have any
documentary evidence of the income it earns, Celedonio's alleged
monthly income of P13,000.00 greatly exceeded the prevailing monthly
minimum wage; thus, the exception set forth above does not
apply. DaAETS
In the past, we awarded temperate damages in lieu of actual
damages for loss of earning capacity where earning capacity is plainly
established but no evidence was presented to support the allegation of
the injured party's actual income.
In Pleno v. Court of Appeals, 30 we sustained the award of
temperate damages in the amount of P200,000.00 instead of actual
damages for loss of earning capacity because the plaintiff's income was
not sufficiently proven.
We did the same in People v. Singh, 31 and People v.
Almedilla, 32 granting temperate damages in place of actual damages
for the failure of the prosecution to present sufficient evidence of the
deceased's income.
Similarly, in Victory Liner, Inc. v. Gammad, 33 we deleted the
award of damages for loss of earning capacity for lack of evidentiary
basis of the actual extent of the loss. Nevertheless, because the
income-earning capacity lost was clearly established, we awarded the
heirs P500,000.00 as temperate damages.
In the present case, the income-earning capacity of the
deceased was never disputed. Petitioners Mary Jane Tan, Mary Lyn
Tan, Celedonio Tan, Jr., Mary Joy Tan and Mark Allan Tan were all
minors at the time the petition was filed on February 4, 2010, 34 and
they all relied mainly on the income earned by their father from his
tailoring activities for their sustenance and support. Under these facts
and taking into account the unrebutted annual earnings of the
deceased, we hold that the petitioners are entitled to temperate
damages in the amount of P300,000.00 [or roughly, the gross income for
two (2) years] to compensate for damages for loss of the earning
capacity of the deceased.
Reduction of exemplary damages proper
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. 35 In quasi-delicts,
exemplary damages may be granted if the defendant acted with gross
negligence. 36
Celedonio Tan's death and the destruction of the petitioners'
home and tailoring shop were unquestionably caused by the
respondents' gross negligence. The law allows the grant of exemplary
damages in cases such as this to serve as a warning to the public and
as a deterrent against the repetition of this kind of deleterious
actions. 37 The grant, however, should be tempered, as it is not
intended to enrich one party or to impoverish another. From this
perspective, we find the CA's reduction of the exemplary damages
awarded to the petitioners from P500,000.00 to P200,000.00 to be
proper.
Attorney's fees in order
In view of the award of exemplary damages, we find it also
proper to award the petitioners attorney's fees, in consonance with
Article 2208 (1) of the Civil Code.38 We find the award of attorney's
fees, equivalent to 10% of the total amount adjudged the petitioners, to
be just and reasonable under the circumstances.
Interests due
Finally, we impose legal interest on the amounts awarded, in
keeping with our ruling in Eastern Shipping Lines, Inc. v. Court of
Appeals, 39 which held that:
I. When an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on "Damages" of the Civil
Code govern in determining the measure of recoverable
damages.
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. ASHaTc
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 the discretion 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 the 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.
Accordingly, legal interest at the rate of 6% per annum on the
amounts awarded starts to run from May 14, 2003, when the trial court
rendered judgment. From the time this judgment becomes final and
executory, the interest rate shall be 12% per annum on the judgment
amount and the interest earned up to that date, until the judgment is
wholly satisfied.
 WHEREFORE, premises considered, we PARTIALLY
GRANT the petition. The June 22, 2009 decision of the Court of Appeals
in CA-G.R. CV. No. 84733, which modified the decision of the Regional
Trial Court of Muntinlupa City, Branch 256, in Civil Case No. 96-186,
is AFFIRMED with MODIFICATION. As modified, respondents OMC
Carriers, Inc. and Bonifacio Arambala are ordered to jointly and severally
pay the petitioners the following:
(1) P50,000.00 as indemnity for the death of Celedonio
Tan;
(2) P72,295.00 as actual damages for funeral expenses;
(3) P200,000.00 as temperate damages for the damage
done to petitioner Leticia's house, tailoring shop,
household appliances and shop equipment;
(4) P300,000.00 as damages for the loss of Celedonio
Tan's earning capacity;
(5) P500,000.00 as moral damages;
(6) P200,000.00 as exemplary damages; and
(7) 10% of the total amount as attorney's fees; and costs
of suit.
In addition, the total amount adjudged shall earn interest at the
rate of 6% per annum from May 14, 2003, and at the rate of 12% per
annum, from the finality of this Resolution on the balance and interest
due, until fully paid.
SO ORDERED.
Carpio Morales, Bersamin, Villarama, Jr. and Sereno, JJ., concur.
||| (Tan v. OMC Carriers, Inc., G.R. No. 190521 (Resolution), [January 12,
2011], 654 PHIL 443-460)
FIRST DIVISION
[G.R. No. 135644. September 17, 2001]
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. SPOUSES
GONZALO and MATILDE LABUNG-DEANG, respondents.
DECISION
PARDO, J.:
The petitioner in the case is the Government Service Insurance System
(hereafter, GSIS). Having lost the case in the trial court and the Court of Appeals, it
now comes to this Court for redress.
At the onset, we state that the issue is not suability or whether GSIS may be
sued despite the doctrine of state immunity from suit, but liability, whether or not
GSIS may be liable to pay damages to respondent spouses given the applicable law
and the circumstances of the case.[1]
The Case
The case is a petition[2] for review on certiorari of the decision of the Court of
Appeals[3] affirming the decision of the Regional Trial Court, Angeles
City[4] ordering GSIS to pay respondents Gonzalo (now deceased)[5] and Matilde
Labung-Deang (hereafter, spouses Deang) temperate damages, attorneys fees, legal
interests and costs of suit for the loss of their title to real property mortgaged to the
GSIS.
The Facts
Sometime in December 1969, the spouses Deang obtained a housing loan from
the GSIS in the amount of eight thousand five hundred pesos (P8,500.00). Under the
agreement, the loan was to mature on December 23, 1979. The loan was secured by a
real estate mortgage constituted over the spouses property covered by Transfer
Certificate of Title No. 14926-R issued by the Register of Deeds of Pampanga.[6] As
required by the mortgage deed, the spouses Daeng deposited the owners duplicate
copy of the title with the GSIS.[7]
On January 19, 1979, eleven (11) months before the maturity of the loan, the
spouses Deang settled their debt with the GSIS[8] and requested for the release of the
owners duplicate copy of the title since they intended to secure a loan from a private
lender and use the land covered by it as collateral security for the loan of fifty
thousand pesos (P50,000.00)[9] which they applied for with one Milagros
Runes.[10] They would use the proceeds of the loan applied for the renovation of the
spouses residential house and for business.[11]
However, personnel of the GSIS were not able to release the owners duplicate
of the title as it could not be found despite diligent search.[12] As stated earlier, the
spouses as mortgagors deposited the owners duplicate copy of the title with the GSIS
located at its office in San Fernando, Pampanga.[13]
Satisfied that the owners duplicate copy of the title was really lost, in 1979,
GSIS commenced the reconstitution proceedings with the Court of First Instance of
Pampanga for the issuance of a new owners copy of the same.[14]
On June 22, 1979, GSIS issued a certificate of release of mortgage.[15]
On June 26, 1979, after the completion of judicial proceedings, GSIS finally
secured and released the reconstituted copy of the owners duplicate of Transfer
Certificate of Title No. 14926-R to the spouses Deang.[16]
On July 6, 1979, the spouses Deang filed with the Court of First Instance,
Angeles City a complaint against GSIS for damages, claiming that as result of the
delay in releasing the duplicate copy of the owners title, they were unable to secure a
loan from Milagros Runes, the proceeds of which could have been used in defraying
the estimated cost of the renovation of their residential house and which could have
been invested in some profitable business undertaking.[17]
In its defense, GSIS explained that the owners duplicate copy of the title was
released within a reasonable time since it had to conduct standard pre-audit and post-
audit procedures to verify if the spouses Deangs account had been fully settled.[18]
On July 31, 1995, the trial court rendered a decision ruling for the spouses
Deang. The trial court reasoned that the loss of the owners duplicate copy of the title
in the possession of GSIS as security for the mortgage... without justifiable cause
constitutes negligence on the part of the employee of GSIS who lost it, making GSIS
liable for damages.[19] We quote the dispositive portion of the decision:[20]
IN VIEW OF THE FOREGOING, the Court renders judgment ordering the GSIS:
a) To pay the plaintiffs-spouses the amount of P20,000.00 as temperate
damages;
b) To pay plaintiffs-spouses the amount of P15,000.00 as attorneys fees;
c) To pay legal interest on the award in paragraphs a) and b) from the
filing of the complaint; and,
d) To pay cost of the suit.
SO ORDERED.
On August 30, 1995, GSIS appealed the decision to the Court of Appeals.[21]
On September 21, 1998, the Court of Appeals promulgated a decision affirming
the appealed judgment, ruling: First, since government owned and controlled
corporations (hereafter, GOCCs) whose charters provide that they can sue and be
sued have a legal personality separate and distinct from the government, GSIS is not
covered by Article 2180[22] of the Civil Code, and it is liable for damages caused by
their employees acting within the scope of their assigned tasks. Second, the GSIS is
liable to pay a reasonable amount of damages and attorneys fees, which the appellate
court will not disturb. We quote the dispositive portion:[23]
WHEREFORE, finding no reversible error in the appealed judgment, the same is
hereby AFFIRMED.
SO ORDERED.
Hence, this appeal.[24]
The Issue
Whether the GSIS, as a GOCC primarily performing governmental functions, is
liable for a negligent act of its employee acting within the scope of his assigned
tasks.[25]
The Courts Ruling
We rule that the GSIS is liable for damages. We deny the petition for lack of
merit.
GSIS, citing the sixth paragraph of Article 2180 of the Civil Code argues that
as a GOCC, it falls within the term State and cannot be held vicariously liable for
negligence committed by its employee acting within his functions.[26]
Article 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
Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
not engaged in any business of industry.
The State is responsible in like manner when it acts though a special agent, but not
when the damage has been caused by the official to whom the task was done
properly pertains, in which case what is provided in Article 2176 shall be applicable.
xxx (underscoring ours)
The argument is untenable. The cited provision of the Civil Code is not
applicable to the case at bar. However, the trial court and the Court of Appeals erred
in citing it as the applicable law. Nonetheless, the conclusion is the same. As
heretofore stated, we find that GSIS is liable for damages.
The trial court and the Court of Appeals treated the obligation of GSIS as one
springing from quasi-delict.[27] We do not agree. Article 2176 of the Civil Code
defines quasi-delict as follows:
Whoever by act or omission causes damages 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 (underscoring ours).
Under the facts, there was a pre-existing contract between the parties. GSIS and
the spouses Deang had a loan agreement secured by a real estate mortgage. The duty
to return the owners duplicate copy of title arose as soon as the mortgage was
released.[28] GSIS insists that it was under no obligation to return the owners
duplicate copy of the title immediately. This insistence is not warranted. Negligence
is obvious as the owners duplicate copy could not be returned to the owners. Thus,
the more applicable provisions of the Civil Code are:
Article 1170. 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.
Article 2201. In contracts and quasi-contracts, the damages for which the obligor
who acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the obligation was constituted xxx.
Since good faith is presumed and bad faith is a matter of fact which should be
proved,[29] we shall treat GSIS as a party who defaulted in its obligation to return the
owners duplicate copy of the title. As an obligor in good faith, GSIS is liable for all
the natural and probable consequences of the breach of the obligation. The inability
of the spouses Deang to secure another loan and the damages they suffered thereby
has its roots in the failure of the GSIS to return the owners duplicate copy of the
title.
We come now to the amount of damages. In a breach of contract, moral
damages are not awarded if the defendant is not shown to have acted fraudulently or
with malice or bad faith.[30] The fact that the complainant suffered economic
hardship[31] or worries and mental anxiety[32] is not enough.
There is likewise no factual basis for an award of actual damages. Actual
damages to be compensable must be proven by clear evidence.[33] A court can not
rely on speculation, conjecture or guess work as to the fact and amount of damages,
but must depend on actual proof.[34]
However, it is also apparent that the spouses Deang suffered financial damage
because of the loss of the owners duplicate copy of the title. Temperate damages may
be granted.
Article 2224. Temperate or moderate damages, which are more than nominal but less
than compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of the case,
be proved with certainty.
GSIS submits that there must be proof of pecuniary loss. This is untenable. The
rationale behind temperate damages is precisely that from the nature of the case,
definite proof of pecuniary loss cannot be offered. When the court is convinced that
there has been such loss, the judge is empowered to calculate moderate damages,
rather than let the complainant suffer without redress from the defendants wrongful
act.[35]
The award of twenty thousand pesos (P20,000.00) in temperate damages is
reasonable considering that GSIS spent for the reconstitution of the owners duplicate
copy of the title.
Next, the attorneys fees. Attorneys fees which are granted as an item of
damages are generally not recoverable.[36] The award of attorneys fees is the
exception rather than the rule and counsels fees are not to be awarded every time a
party wins a suit. The award of attorneys fees demands factual, legal and equitable
justification; its basis cannot be left to speculation or conjecture.[37]
We find no circumstance to justify the award of attorneys fees. We delete the
same.
The Fallo
WHEREFORE, we DENY the petition. We AFFIRM the decision of the
Court of Appeals in CA-G.R. CV No. 51240 with the MODIFICATION that award
of attorneys fees is DELETED.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, and Ynares-Santiago, JJ., concur.
Puno, J., on official leave.

SECOND DIVISION
[G.R. No. 138980. September 20, 2005.]
FILINVEST LAND, INC., petitioner, vs. HON. COURT OF
APPEALS, PHILIPPINE AMERICAN GENERAL
INSURANCE COMPANY, and PACIFIC EQUIPMENT
CORPORATION, respondents.
Buñag Kapunan Migallos & Perez for petitioner.
Arturo D. Vallar and Antonio C. Pesigan for Pacific Equipment
Corp.
Reloj Law Office for Phil. American Gen. Ins. Co.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; APPEALS; PETITION FOR REVIEW
ON CERTIORARI UNDER RULE 45 OF THE RULES OF COURT; LIMITED
TO REVIEW OF QUESTIONS OF LAW; CASE AT BAR. — Section 1, Rule 45
of the 1997 Rules of Court states in no uncertain terms that this Court's
jurisdiction in petitions for review on certiorari is limited to "questions of law
which must be distinctly set forth." By assigning only one legal issue,
Filinvest has effectively cordoned off any discussion into the factual issue
raised before the Court of Appeals. In effect, Filinvest has yielded to the
decision of the Court of Appeals, affirming that of the trial court, in deferring
to the factual findings of the commissioner assigned to the parties' case.
Besides, as a general rule, factual matters cannot be raised in a petition for
review on certiorari. This Court at this stage is limited to reviewing errors of
law that may have been committed by the lower courts. We do not perceive
here any of the exceptions to this rule; hence, we are restrained from
conducting further scrutiny of the findings of fact made by the trial court
which have been affirmed by the Court of Appeals. Verily, factual findings of
the trial court, especially when affirmed by the Court of Appeals, are binding
and conclusive on the Supreme Court.
2. CIVIL LAW; OBLIGATIONS AND CONTRACTS; OBLIGATIONS WITH A
PENAL CLAUSE; PENAL CLAUSE; FUNCTIONS. — A penal clause is an
accessory undertaking to assume greater liability in case of breach. It is
attached to an obligation in order to insure performance and has a double
function: (1) to provide for liquidated damages, and (2) to strengthen the
coercive force of the obligation by the threat of greater responsibility in the
event of breach. Article 1226 of the Civil Code states: "Art. 1226. 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. Nevertheless, damages shall be paid if the
obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the
obligation. The penalty may be enforced only when it is demandable in
accordance with the provisions of this Code."
3. ID.; ID.; ID.; PENALTY, WHEN MAY BE EQUITABLY REDUCED BY
COURTS. — As a general rule, courts are not at liberty to ignore the
freedom of the parties to agree on such terms and conditions as they see fit
as long as they are not contrary to law, morals, good customs, public order
or public policy. Nevertheless, courts may equitably reduce a stipulated
penalty in the contract in two instances: (1) if the principal obligation has
been partly or irregularly complied; and (2) even if there has been no
compliance if the penalty is iniquitous or unconscionable in accordance with
Article 1229 of the Civil Code which provides: "Art. 1229. The judge shall
equitably reduce the penalty when the principal obligation has been partly or
irregularly complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the courts if it is iniquitous
or unconscionable."
4. ID.; ID.; ID.; A DISTINCTION BETWEEN A PENALTY CLAUSE IMPOSED
AS PENALTY IN CASE OF BREACH AND A PENALTY CLAUSES IMPOSED
AS INDEMNITY FOR DAMAGES SHOULD BE MADE IN CASES WHERE
THERE HAVE BEEN NEITHER PARTIAL NOR IRREGULAR COMPLIANCE
WITH THE TERMS OF THE CONTRACT. — The Supreme Court in Laureano
instructed that a distinction between a penalty clause imposed essentially as
penalty in case of breach and a penalty clause imposed as indemnity for
damages should be made in cases where there has been neither partial nor
irregular compliance with the terms of the contract. In cases where there has
been partial or irregular compliance, as in this case, there will be no
substantial difference between a penalty and liquidated damages insofar as
legal results are concerned. . . . Thus, we lamented in one case that "(t)here
is no justification for the Civil Code to make an apparent distinction between
a penalty and liquidated damages because the settled rule is that there is no
difference between penalty and liquidated damages insofar as legal results
are concerned and that either may be recovered without the necessity of
proving actual damages and both may be reduced when proper."
5. ID.; ID.; ID.; FACTORS IN DETERMINING WHETHER A PENALTY IS
REASONABLE OR INIQUITOUS. — In Ligutan v. Court of Appeals, we
pointed out that the question of whether a penalty is reasonable or
iniquitous can be partly subjective and partly objective as its "resolution
would depend on such factors as, but not necessarily confined to, the type,
extent and purpose of the penalty, the nature of the obligation, the mode of
breach and its consequences, the supervening realities, the standing and
relationship of the parties, and the like, the application of which, by and
large, is addressed to the sound discretion of the court."
DECISION
CHICO-NAZARIO, J p:
This is a petition for review on certiorari of the Decision 1 of the Court of
Appeals dated 27 May 1999 affirming the dismissal by the Regional Trial
Court of Makati, Branch 65, 2 of the complaint for damages filed by Filinvest
Land, Inc. (Filinvest) against herein private respondents Pacific Equipment
Corporation (Pecorp) and Philippine American General Insurance Company.
The essential facts of the case, as recounted by the trial court, are as
follows:
On 26 April 1978, Filinvest Land, Inc. ("FILINVEST", for
brevity), a corporation engaged in the development and
sale of residential subdivisions, awarded to defendant
Pacific Equipment Corporation ("PACIFIC", for brevity) the
development of its residential subdivisions consisting of
two (2) parcels of land located at Payatas, Quezon City,
the terms and conditions of which are contained in an
"Agreement". (Annex A, Complaint). To guarantee its
faithful compliance and pursuant to the agreement,
defendant Pacific posted two (2) Surety Bonds in favor of
plaintiff which were issued by defendant Philippine
American General Insurance ("PHILAMGEN", for brevity).
(Annexes B and C, Complaint). TADIHE
Notwithstanding three extensions granted by plaintiff to
defendant Pacific, the latter failed to finish the contracted
works. (Annexes G, I and K, Complaint). On 16 October
1979, plaintiff wrote defendant Pacific advising the latter
of its intention to takeover the project and to hold said
defendant liable for all damages which it had incurred and
will incur to finish the project. (Annex "L", Complaint).
On 26 October 1979, plaintiff submitted its claim against
defendant Philamgen under its performance and
guarantee bond (Annex M, Complaint) but Philamgen
refused to acknowledge its liability for the simple reason
that its principal, defendant Pacific, refused to
acknowledge liability therefore. Hence, this action.
In defense, defendant Pacific claims that its failure to
finish the contracted work was due to inclement weather
and the fact that several items of finished work and
change order which plaintiff refused to accept and pay for
caused the disruption of work. Since the contractual
relation between plaintiff and defendant Pacific created a
reciprocal obligation, the failure of the plaintiff to pay its
progressing bills estops it from demanding fulfillment of
what is incumbent upon defendant Pacific. The
acquiescence by plaintiff in granting three extensions to
defendant Pacific is likewise a waiver of the former's right
to claim any damages for the delay. Further, the unilateral
and voluntary action of plaintiff in preventing defendant
Pacific from completing the work has relieved the latter
from the obligation of completing the same.
On the other hand, Philamgen contends that the various
amendments made on the principal contract and the
deviations in the implementation thereof which were
resorted to by plaintiff and co-defendant Pacific without
its (defendant Philamgen's) written consent thereto, have
automatically released the latter from any or all liability
within the purview and contemplation of the coverage of
the surety bonds it has issued. Upon agreement of the
parties to appoint a commissioner to assist the court in
resolving the issues confronting the parties, on 7 July
1981, an order was issued by then Presiding Judge
Segundo M. Zosa naming Architect Antonio Dimalanta as
Court Commissioner from among the nominees submitted
by the parties to conduct an ocular inspection and to
determine the amount of work accomplished by the
defendant Pacific and the amount of work done by
plaintiff to complete the project.
On 28 November 1984, the Court received the findings
made by the Court Commissioner. In arriving at his
findings, the Commissioner used the construction
documents pertaining to the project as basis. According
to him, no better basis in the work done or undone could
be made other than the contract billings and payments
made by both parties as there was no proper procedure
followed in terminating the contract, lack of inventory of
work accomplished, absence of appropriate record of
work progress (logbook) and inadequate documentation
and system of construction management.
Based on the billings of defendant Pacific and the
payments made by plaintiff, the work accomplished by the
former amounted to P11,788,282.40 with the exception of
the last billing (which was not acted upon or processed by
plaintiff) in the amount of P844,396.42. The total amount
of work left to be accomplished by plaintiff was based on
the original contract amount less value of work
accomplished by defendant Pacific in the amount of
P681,717.58 (12,470,000-11,788,282.42).
As regards the alleged repairs made by plaintiff on the
construction deficiencies, the Court Commissioner found
no sufficient basis to justify the same. On the other hand,
he found the additional work done by defendant Pacific in
the amount of P477,000.00 to be in order.
On 01 April 1985, plaintiff filed its objections to the
Commissioner's Resolution on the following grounds:
a) Failure of the commissioner to conduct a joint survey
which according to the latter is indispensable to arrive at
an equitable and fair resolution of the issues between the
parties;
b) The cost estimates of the commissioner were based on
pure conjectures and contrary to the evidence; and,
c) The commissioner made conclusions of law which were
beyond his assignment or capabilities.
In its comment, defendant Pacific alleged that the failure
to conduct joint survey was due to plaintiff's refusal to
cooperate. In fact, it was defendant Pacific who initiated
the idea of conducting a joint survey and inventory dating
back 27 November 1983. And even assuming that a joint
survey were conducted, it would have been an exercise in
futility because all physical traces of the actual conditions
then obtaining at the time relevant to the case had already
been obliterated by plaintiff.
On 15 August 1990, a Motion for Judgment Based on the
Commissioner's Resolution was filed by defendant
Pacific.
On 11 October 1990, plaintiff filed its opposition thereto
which was but a rehash of objections to the
commissioner's report earlier filed by said plaintiff. 3
On the basis of the commissioner's report, the trial court dismissed
Filinvest's complaint as well as Pecorp's counterclaim. It held:
In resolving this case, the court observes that the
appointment of a Commissioner was a joint undertaking
among the parties. The findings of facts of the
Commissioner should therefore not only be conclusive but
final among the parties. The court therefore agrees with
the commissioner's findings with respect to
1. Cost to repair deficiency or defect —
P532,324.02
2. Unpaid balance of work done by defendant —
P1,939,191.67
3. Additional work/change order (due to
defendant) — P475,000.00
The unpaid balance due defendant therefore is
P1,939,191.67. To this amount should be added
additional work performed by defendant at plaintiff's
instance in the sum of P475,000.00. And from this total of
P2,414,191.67 should be deducted the sum of
P532,324.01 which is the cost to repair the deficiency or
defect in the work done by defendant. The commissioner
arrived at the figure of P532,324.01 by getting the average
between plaintiff's claim of P758,080.37 and defendant's
allegation of P306,567.67. The amount due to defendant
per the commissioner's report is therefore P1,881,867.66.
Although the said amount of P1,881,867.66 would be
owing to defendant Pacific, the fact remains that said
defendant was in delay since April 25, 1979. The third
extension agreement of September 15, 1979 is very clear
in this regard. The pertinent paragraphs read:
a) You will complete all the unfinished works not
later than Oct. 15, 1979. It is agreed and
understood that this date shall
 DEFINITELY be the LAST and FINAL
extension & there will be no further
extension for any cause whatsoever.
b) We are willing to waive all penalties for delay
which have accrued since April 25,
1979 provided that you are able to finish
all the items of the contracted works as
per revised CPM; otherwise you shall
continue to be liable to pay the penalty up
to the time that all the contracted works
shall have been actually finished, in
addition to other damages which we may
suffer by reason of the delays incurred.
Defendant Pacific therefore became liable for delay when
it did not finish the project on the date agreed on October
15, 1979. The court however, finds the claim of
P3,990,000.00 in the form of penalty by reason of delay
(P15,000.00/day from April 25, 1979 to Jan. 15, 1980) to
be excessive. A forfeiture of the amount due defendant
from plaintiff appears to be a reasonable penalty for the
delay in finishing the project considering the amount of
work already performed and the fact that plaintiff
consented to three prior extensions.
The foregoing considered, this case is dismissed. The
counterclaim is likewise dismissed.
No Costs. 4
The Court of Appeals, finding no reversible error in the appealed decision,
affirmed the same.
Hence, the instant petition grounded solely on the issue of whether or not
the liquidated damages agreed upon by the parties should be reduced
considering that: (a) time is of the essence of the contract; (b) the liquidated
damages was fixed by the parties to serve not only as penalty in case
Pecorp fails to fulfill its obligation on time, but also as indemnity for actual
and anticipated damages which Filinvest may suffer by reason of such
failure; and (c) the total liquidated damages sought is only 32% of the total
contract price, and the same was freely and voluntarily agreed upon by the
parties.
At the outset, it should be stressed that as only the issue of liquidated
damages has been elevated to this Court, petitioner Filinvest is deemed to
have acquiesced to the other matters taken up by the courts below. Section
1, Rule 45 of the 1997 Rules of Court states in no uncertain terms that this
Court's jurisdiction in petitions for review on certiorari is limited to
"questions of law which must be distinctly set forth." 5 By assigning only
one legal issue, Filinvest has effectively cordoned off any discussion into the
factual issue raised before the Court of Appeals. 6 In effect, Filinvest has
yielded to the decision of the Court of Appeals, affirming that of the trial
court, in deferring to the factual findings of the commissioner assigned to
the parties' case. Besides, as a general rule, factual matters cannot be
raised in a petition for review on certiorari. This Court at this stage is limited
to reviewing errors of law that may have been committed by the lower
courts. 7 We do not perceive here any of the exceptions to this rule; hence,
we are restrained from conducting further scrutiny of the findings of fact
made by the trial court which have been affirmed by the Court of Appeals.
Verily, factual findings of the trial court, especially when affirmed by the
Court of Appeals, are binding and conclusive on the Supreme Court. 8 Thus,
it is settled that:
(a) Based on Pecorp's billings and the payments made by
Filinvest, the balance of work to be accomplished
by Pecorp amounts to P681,717.58 representing
5.47% of the contract work. This means to say
that Pecorp, at the time of the termination of its
contract, accomplished 94.53% of the contract
work;
(b) The unpaid balance of work done by Pecorp amounts
to P1,939,191.67;
(c) The additional work/change order due Pecorp amounts
to P475,000.00;
(d) The cost to repair deficiency or defect, which is for the
account of Pecorp, is P532,324.02; and
(e) The total amount due Pecorp is P1,881,867.66.
Coming now to the main matter, Filinvest argues that the penalty in its
entirety should be respected as it was a product of mutual agreement and it
represents only 32% of the P12,470,000.00 contract price, thus, not
shocking and unconscionable under the circumstances. Moreover, the
penalty was fixed to provide for actual or anticipated liquidated damages
and not simply to ensure compliance with the terms of the contract; hence,
pursuant to Laureano v. Kilayco, 9 courts should be slow in exercising the
authority conferred by Art. 1229 of the Civil Code.
We are not swayed.
There is no question that the penalty of P15,000.00 per day of delay was
mutually agreed upon by the parties and that the same is sanctioned by law.
A penal clause is an accessory undertaking to assume greater liability in
case of breach. 10 It is attached to an obligation in order to insure
performance 11and has a double function: (1) to provide for liquidated
damages, and (2) to strengthen the coercive force of the obligation by the
threat of greater responsibility in the event of breach. 12 Article 1226 of the
Civil Code states:
Art. 1226. 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. Nevertheless, damages
shall be paid if the obligor refuses to pay the penalty or is
guilty of fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is demandable
in accordance with the provisions of this Code.
As a general rule, courts are not at liberty to ignore the freedom of the
parties to agree on such terms and conditions as they see fit as long as they
are not contrary to law, morals, good customs, public order or public
policy. 13 Nevertheless, courts may equitably reduce a stipulated penalty in
the contract in two instances: (1) if the principal obligation has been partly or
irregularly complied; and (2) even if there has been no compliance if the
penalty is iniquitous or unconscionable in accordance with Article 1229 of
the Civil Code which provides:
Art. 1229. The judge shall equitably reduce the penalty
when the principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.
In herein case, the trial court ruled that the penalty charge for delay —
pegged at P15,000.00 per day of delay in the aggregate amount of
P3,990,000.00 — was excessive and accordingly reduced it to
P1,881,867.66 "considering the amount of work already performed and the
fact that [Filinvest] consented to three (3) prior extensions." The Court of
Appeals affirmed the ruling but added as well that the penalty was
unconscionable "as the construction was already not far from completion."
Said the Court of Appeals:
Turning now to plaintiff's appeal, We likewise agree with
the trial court that a penalty interest of P15,000.00 per day
of delay as liquidated damages or P3,990,000.00
(representing 32% penalty of the P12,470,000.00 contract
price) is unconscionable considering that the construction
was already not far from completion. Penalty interests are
in the nature of liquidated damages and may be equitably
reduced by the courts if they are iniquitous or
unconscionable (Garcia v. Court of Appeals, 167 SCRA
815, Lambert v. Fox, 26 Phil. 588). The judge shall
equitably reduce the penalty when the principal obligation
has been partly or irregularly complied with by the debtor.
Even if there has been no performance, the penalty may
also be reduced by the courts if it is iniquitous or
unconscionable (Art. 1229, New Civil Code). Moreover,
plaintiff's right to indemnity due to defendant's delay has
been cancelled by its obligations to the latter consisting of
unpaid works.
This Court finds no fault in the cost estimates of the court-
appointed commissioner as to the cost to repair
deficiency or defect in the works which was based on the
average between plaintiff's claim of P758,080.37 and
defendant's P306,567.67 considering the following
factors: that "plaintiff did not follow the standard practice
of joint survey upon take over to establish work already
accomplished, balance of work per contract still to be
done, and estimate and inventory of repair" (Exhibit "H").
As for the cost to finish the remaining works, plaintiff's
estimates were brushed aside by the commissioner on the
reasoned observation that "plaintiff's cost estimate for
work (to be) done by the plaintiff to complete the project is
based on a contract awarded to another contractor (JPT),
the nature and magnitude of which appears to be
inconsistent with the basic contract between defendant
PECORP and plaintiff FILINVEST." 14
We are hamstrung to reverse the Court of Appeals as it is rudimentary that
the application of Article 1229 is essentially addressed to the sound
discretion of the court. 15 As it is settled that the project was already
94.53% complete and that Filinvest did agree to extend the period for
completion of the project, which extensions Filinvest included in computing
the amount of the penalty, the reduction thereof is clearly
warranted. cCHETI
Filinvest, however, hammers on the case of Laureano v. Kilayco, 16 decided
in 1915, which cautions courts to distinguish between two kinds of penalty
clauses in order to better apply their authority in reducing the amount
recoverable. We held therein that:
 . . . [I]n any case wherein there has been a partial or
irregular compliance with the provisions in a contract for
special indemnification in the event of failure to comply
with its terms, courts will rigidly apply the doctrine of
strict construction against the enforcement in its
entirety of the indemnification, where it is clear from
the terms of the contract that the amount or character of
the indemnity is fixed without regard to the probable
damages which might be anticipated as a result of a
breach of the terms of the contract; or, in other words,
where the indemnity provided for is essentially a mere
penalty having for its principal object the enforcement of
compliance with the contract. But the courts will be slow
in exercising the jurisdiction conferred upon them
in article 1154 17 so as to modify the terms of an agreed
upon indemnification where it appears that in fixing such
indemnification the parties had in mind a fair and
reasonable compensation for actual damages anticipated
as a result of a breach of the contract, or, in other words,
where the principal purpose of the indemnification agreed
upon appears to have been to provide for the payment of
actual anticipated and liquidated damages rather than the
penalization of a breach of the contract. (Emphases
supplied)
Filinvest contends that the subject penalty clause falls under the second
type, i.e., the principal purpose for its inclusion was to provide for payment
of actual anticipated and liquidated damages rather than the penalization of
a breach of the contract. Thus, Filinvest argues that had Pecorp completed
the project on time, it (Filinvest) could have sold the lots sooner and earned
its projected income that would have been used for its other projects.
Unfortunately for Filinvest, the above-quoted doctrine is inapplicable to
herein case. The Supreme Court in Laureano instructed that a distinction
between a penalty clause imposed essentially as penalty in case of breach
and a penalty clause imposed as indemnity for damages should be made in
cases where there has been neither partial nor irregular compliance with the
terms of the contract. In cases where there has been partial or irregular
compliance, as in this case, there will be no substantial difference between a
penalty and liquidated damages insofar as legal results are
concerned. 18 The distinction is thus more apparent than real especially in
the light of certain provisions of the Civil Code of the Philippines which
provides in Articles 2226 and Article 2227 thereof:
Art. 2226. Liquidated damages are those agreed upon by
the parties to a contract to be paid in case of breach
thereof.
Art. 2227. Liquidated damages, whether intended as an
indemnity or a penalty, shall be equitably reduced if they
are iniquitous or unconscionable. ISHCcT
Thus, we lamented in one case that "(t)here is no justification for the Civil
Code to make an apparent distinction between a penalty and liquidated
damages because the settled rule is that there is no difference between
penalty and liquidated damages insofar as legal results are concerned and
that either may be recovered without the necessity of proving actual
damages and both may be reduced when proper." 19
Finally, Filinvest advances the argument that while it may be true that courts
may mitigate the amount of liquidated damages agreed upon by the parties
on the basis of the extent of the work done, this contemplates a situation
where the full amount of damages is payable in case of total breach of
contract. In the instant case, as the penalty clause was agreed upon to
answer for delay in the completion of the project considering that time is of
the essence, "the parties thus clearly contemplated the payment of
accumulated liquidated damages despite, and precisely because of, partial
performance." 20 In effect, it is Filinvest's position that the first part of Article
1229 on partial performance should not apply precisely because, in all
likelihood, the penalty clause would kick in situations where Pecorp had
already begun work but could not finish it on time, thus, it is being penalized
for delay in its completion.
The above argument, albeit sound, 21 is insufficient to reverse the ruling of
the Court of Appeals. It must be remembered that the Court of Appeals not
only held that the penalty should be reduced because there was partial
compliance but categorically stated as well that the penalty was
unconscionable. Otherwise stated, the Court of Appeals affirmed the
reduction of the penalty not simply because there was partial
compliance per se on the part of Pecorp with what was incumbent upon it
but, more fundamentally, because it deemed the penalty unconscionable in
the light of Pecorp's 94.53% completion rate. TaCDcE
In Ligutan v. Court of Appeals, 22 we pointed out that the question of
whether a penalty is reasonable or iniquitous can be partly subjective and
partly objective as its "resolution would depend on such factors as, but not
necessarily confined to, the type, extent and purpose of the penalty, the
nature of the obligation, the mode of breach and its consequences, the
supervening realities, the standing and relationship of the parties, and the
like, the application of which, by and large, is addressed to the sound H.L. CARLOS CONSTRUCTION, INC., petitioner, vs.
discretion of the court." 23 MARINA PROPERTIES CORPORATION, JESUS K.
TYPOCO SR. and TAN YU, respondents.
In herein case, there has been substantial compliance in good faith on the
part of Pecorp which renders unconscionable the application of the full force
of the penalty especially if we consider that in 1979 the amount of
P15,000.00 as penalty for delay per day was quite steep indeed. Nothing in DECISION
the records suggests that Pecorp's delay in the performance of 5.47% of
the contract was due to it having acted negligently or in bad faith. Finally, we
factor in the fact that Filinvest is not free of blame either as it likewise failed
to do that which was incumbent upon it, i.e., it failed to pay Pecorp for work PANGANIBAN, J p:
actually performed by the latter in the total amount of P1,881,867.66. Thus,
all things considered, we find no reversible error in the Court of Appeals' There is unjust enrichment when a building contractor is denied payment for
exercise of discretion in the instant case. increased labor cost validly incurred and additional work validly rendered
with the owner's express or implied agreement.
Before we write finis to this legal contest that had spanned across two and a
half decades, we take note of Pecorp's own grievance. From its Comment The Case
and Memorandum, Pecorp, likewise, seeks affirmative relief from this Court The Petition for Review 1 before the Court, filed under Rule 45, seeks the
by praying that not only should the instant case be dismissed for lack of reversal of the Decision 2 dated March 29, 2001, issued by the Court of
merit, but that Filinvest should likewise be made to pay "what the Court Appeals 3in CA-GR CV No. 60975. The assailed Decision disposed as
Commissioner found was due defendant" in the "total amount of follows:
P2,976,663.65 plus 12% interest from 1979 until full payment thereof plus
attorneys fees." 24 Pecorp, however, cannot recover that which it seeks as "WHEREFORE, the judgment appealed from is hereby
we had already denied, in a Resolution dated 21 June 2000, its own petition REVERSED and SET ASIDE, and a new one entered
for review of the 27 May 1999 decision of the Court of Appeals. Thus, as far DISMISSING the [petitioner's] Complaint, AND
as Pecorp is concerned, the ruling of the Court of Appeals has already PARTIALLY GRANTING THE [RESPONDENT-
attained finality and can no longer be disturbed. CORPORATION'S] COUNTERCLAIM, IN THAT THE
[PETITIONER] IS DIRECTED TO PAY UNTO THE
WHEREFORE, premises considered, the Decision of the Court of Appeals [RESPONDENT-CORPORATION] THE SUM OF
dated 27 May 1999 is AFFIRMED. No pronouncement as to costs. P4,604,579.00 in ACTUAL DAMAGES PLUS
SO ORDERED. P3,549,416.00 AS AND FOR LIQUIDATED DAMAGES." 4

Puno, Austria-Martinez, Callejo, Sr. and Tinga, JJ., concur. The Facts
The facts of the case, summarized by the Court of Appeals (CA), are as
||| (Filinvest Land Inc. v. Court of Appeals, G.R. No. 138980, [September 20,
follows:
2005], 507 PHIL 259-273)
"[Respondent] MARINA PROPERTIES CORPORATION
(MPC for brevity) is engaged in the business of real estate
development. On May 10, 1988, MPC entered into a
FIRST DIVISION contract 5 with [Petitioner] H.[L.] CARLOS
CONSTRUCTION, INC. (HLC) to construct Phase III of a
[G.R. No. 147614. January 29, 2004.] 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
latter's 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 HLC's 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 attorney's 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]
[petitioner's] 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 attorney's 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 attorney's 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 latter's 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)
attorney's fees
(2) Whether Typoco and Tan are solidarily liable with MPC
(3) Whether petitioner is liable for actual and liquidated
damages
The Court's 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 CA's denial of petitioner's
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 . .
.." 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 1-15, 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 latter's 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 petitioner's claim for change
orders and extra work were premature. Limneo P. Miranda, respondent's
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 petitioner's
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 petitioner's 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 portion of the contract price automatically deducted from
the contractor's 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 CONTRACTOR'S 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 CA's ruling, the only proof
that MPC detained materials belonging to petitioner was the denial of the
request, contained in the latter's 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. Laureta's 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.
Attorney's Fees
Petitioner argues that it is entitled to attorney's 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. Attorney's 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 Tan's 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 . . . 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, petitioner's project manager. Supposedly, the former verbally
agreed therein to guarantee the payment of the latter's progress billings. We
find no satisfactory evidence to show respondent's 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 non-compliance by the
other part 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 MPG 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 CONTRACTOR's
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. DIEACH
SO ORDERED.
Davide, Jr., C.J., Ynares-Santiago and Carpio, JJ., concur.
Azcuna, J., is on official leave.
||| (H.L. Carlos Construction Inc. v. Marina Properties Corp., G.R. No.
147614, [January 29, 2004], 466 PHIL 182-206)
EN BANC
[G.R. No. 137842. August 23, 2001.]
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.
DANILO CATUBIG y HORIO, accused-appellant.
The Solicitor General for plaintiff-appellee.
Public Attorney's Office for accused-appellant.
SYNOPSIS
Danilo Catubig was charged with the crime of rape before the Regional Trial
Court, Branch 78 of Malolos, Bulacan. Prosecution evidence showed that on
November 27, 1997, at around 4:00 o'clock in the afternoon, 12-year old
Dannilyn Catubig and her four younger siblings were watching television in
the sala of their house. When Dannilyn's father, Danilo Catubig, arrived, the
latter told Dannilyn's sibling to go to her aunt's house which is just located
nearby. Thereafter, Danilo told Dannilyn to go inside the room and to lie
down on the bed. After Dannilyn had complied, Danilo removed Dannilyn's
shorts and panty. Danilo, after removing his brief and t-shirt, laid on top of
Dannilyn and succeeded in inserting his penis to her vagina. Dannilyn did
not resist because she is afraid her father who beat and raped her in the
past. However, Dannilyn's aunt who got suspicious of what Danilo was
doing to Dannilyn, informed the latter's mother. Thus, when confronted by
her mother, Dannilyn was forced to reveal that she was indeed raped by her
father. Contrarily, Danilo denied the accusation against him. He claimed that
the rape charge was brought about because of the ill will between him and
his wife and daughter Dannilyn, following a quarrel. Thus, the trial court
convicted Danilo of the crime charged and the penalty of death was
imposed upon him. Hence, this automatic review.
The Court ruled that Dannilyn had given her testimony in a plain, categorical,
spontaneous and frank manner, remaining consistent throughout, and there
was hardly anything on record that can cast doubt on her sincerity. The
revelations of an innocent child whose chastity had been abused, coupled
with her willingness to face police investigation and to undergo the trouble
and humiliation of a public trial, should merit credence unless strong
justifications dictate otherwise. Indeed, it would take a most senseless kind
of depravity for a young daughter to just make up a story which could put
her own father to an undeserved indictment and even to possibly face death
in the hands of the law. However, the information failed to state the minority
of the victim and her relationship with the offender, both special qualifying
circumstances under Republic Act No. 7659, and for want of such
allegations, the trial court erred in imposing the death penalty on the
accused. Appellant could only thus be convicted under Article 335 of the
Revised Penal Code, as amended, of simple rape punishable by reclusion
perpetua. HCEcAa
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; CREDIBILITY OF WITNESSES;
REVELATIONS OF INNOCENT, CHILD MERIT CREDENCE. — Dannilyn has
given her testimony in a plain, categorical, spontaneous and frank manner,
remaining consistent throughout, and there is hardly, anything on record
that can cast doubt on her sincerity. The revelations of an innocent child
whose chastity has been abused, coupled with her willingness to face police
investigation and to undergo the trouble and humiliation of a public trial,
should merit credence unless strong justifications dictate otherwise. Indeed,
it would take a most senseless kind of depravity for a young daughter to just
make up a story which could put her own father to an undeserved
indictment and to even possibly face death in the hands of the law.
2. CRIMINAL LAW; RAPE; INCESTUOUS RAPE; MORAL ASCENDANCY
AND INFLUENCE OF THE FATHER SUBSTITUTE THE REQUISITE FOR
VIOLENCE AND INTIMIDATION. — When rape is committed against one's
own daughter, the moral ascendancy and influence of the father, that
necessarily flows from his parental authority, can sufficiently cow the child to
submission and can rightly be held to substitute for the requisite "violence or
intimidation" that, normally, would be characterized by physical acts and
uttered threats made on the victim.
3. REMEDIAL LAW; EVIDENCE; ALIBI AND DENIAL; CANNOT PREVAIL
OVER POSITIVE AND CATEGORICAL STATEMENTS OF PRIVATE
COMPLAINANT. — The trite defenses of alibi and denial proferred by
appellant cannot prevail over the positive and categorical statements of
private complainant. Alibi is often viewed with suspicion and received with
caution not only because it is inherently weak and unreliable but also
because it is easy to fabricate. In order that this defense can prosper, it
must be convincing to preclude any doubt on the physical impossibility of
the presence of the accused at the locus criminis at the time of the incident.
These conditions have not been met in the case at bar.
4. ID.; ID.; CREDIBILITY OF WITNESSES; MERE RESENTMENT OF A WIFE
AND DAUGHTER IS NOT SO COMPELLING TO MOTIVATE THEM TO
WRONGLY LODGE A COMPLAINT FOR A MORE SERIOUS CRIME THAN
EXPECTED. — The contention of appellant that his wife and daughter
Dannilyn have accused him merely because of his violent ways is much too
flimsy to be believed. The mere resentment of a wife and daughter is not so
compelling as to have motivated them to wrongly lodge a complaint for a
crime much more serious than might, if at all, be expected.
5. ID.; ID.; ID.; ASSESSMENT MADE BY THE TRIAL COURT DESERVES
GREAT REGARD AND WEIGHT ON APPEAL. — It is likewise a settled
doctrine that the assessment made by the trial court on the credibility of
witnesses deserves great regard and weight on appeal. The rule is not
without reason; the trial judge has a unique position of hearing first hand the
witnesses and observing their deportment, conduct and attitude during the
course of the testimony in open court. There is no valid reason to now
ignore this long accepted jurisprudence in this instance.
6. CRIMINAL LAW; RAPE; FOR IMPOSITION OF DEATH PENALTY,
SPECIAL QUALIFYING CIRCUMSTANCES MUST BE ALLEGED IN THE
COMPLAINT OR INFORMATION. — The concurrence of the minority of the
victim and her relationship to the offender are special qualifying
circumstances that are needed to be alleged in the complaint or information
for the penalty of death to be decreed. The Constitution guarantees to be
inviolable the, right of an accused to be informed of the nature and cause of
the accusation against him. It is a requirement that renders it essential for
every element of the offense with which he is charged to be properly alleged
in the complaint or information.
7. ID.; ID.; ID.; NOT COMPLIED WITH IN CASE AT BAR. — [T]he information
failed to state the minority of the victim and her relationship with the
offender, both special qualifying circumstances under Republic Act No.
7659, and for want of such allegations, the trial court erred in imposing the
death penalty on the accused. Appellant could only thus be convicted under
Article 335 of the Revised Penal Code, as amended, of simple rape
punishable by reclusion perpetua.
8. CRIMINAL LAW; RAPE; CIVIL LIABILITY; P50,000.00 AS MORAL
DAMAGES, P50,000.00 AS CIVIL INDEMNITY, COMPENSATORY
DAMAGES AND P25,000.00 AS EXEMPLARY DAMAGES. — Anent the
award of damages, the trial court has correctly awarded P50,000.00 moral
damages, an award that rests on the jural foundation that the crime of rape
necessarily brings with it shame, mental anguish, besmirched reputation,
moral shock and social humiliation to the offended party. In addition, the
offended party deserves to receive the amount of P50,000.00 civil
indemnity, the equivalent of compensatory damages, and exemplary
damages in the amount of P25,000.00.
9. CIVIL LAW; DAMAGES; EXEMPLARY DAMAGES; ATTENDANCE OF
AGGRAVATING CIRCUMSTANCES IN THE PERPETRATION OF CRIME
JUSTIFY AN AWARD THEREOF. — The attendance of aggravating
circumstances in the perpetration of the crime serves to increase the penalty
(the criminal liability aspect), as well as to justify an award of exemplary or
corrective damages (the civil liability aspect), moored on the greater
perversity of the offender manifested in the commission of the felony such
as may be shown by (1) the motivating power itself, (2) the place of
commission, (3) the means and ways employed, (4) the time, or (5) the
personal circumstances of the offender or the offended party or both. There
are various types of aggravating circumstances, among them, the ordinary
and the qualifying. Relationship is an alternative circumstance under Article
15 of the Revised Penal Code. . . . As a rule, relationship is held to be
aggravating in crimes against chastity, such as rape and acts of
lasciviousness, whether the offender is a higher or a lower degree relative of
the offended party.
10. ID.; ID.; ID.; ID.; "AGGRAVATING CIRCUMSTANCES," TO BE
UNDERSTOOD IN ITS BROAD OR GENERIC SENSE. — The term
"aggravating circumstances" used by the Civil Code, the law not having
specified otherwise, is to be understood in its broad or generic sense. The
commission of an offense has a two-pronged effect, one on the public as it
breaches the social order and the other upon the private victim as it causes
personal sufferings, each of which is addressed by, respectively, the
prescription of heavier punishment for the accused and by an award of
additional damages to the victim. The increase of the penalty or a shift to a
graver felony underscores the exacerbation of the offense by the attendance
of aggravating circumstances, whether ordinary or qualifying, in its
commission. Unlike the criminal liability which is basically a State concern,
the award of damages, however, is likewise, if not primarily, intended for the
offended party who suffers thereby. It would make little sense for an award
of exemplary damages to be due the private offended party when the
aggravating circumstance is ordinary but to be withheld when it is qualifying.
Withal, the ordinary or qualifying nature of an aggravating circumstance is a
distinction that should only be of consequence to the criminal, rather than to
the civil, liability of the offender. In fine, relative to the civil aspect of the
case, an aggravating circumstance, whether ordinary or qualifying, should
entitle the offended party to an award of exemplary damages within the
unbridled meaning of Article 2230 of the Civil Code.
11. ID.; ID.; ID.; PURPOSE. — Also known as "punitive" or "vindictive"
damages, exemplary or corrective damages are intended to serve as a
deterrent to serious wrongdoings, and as a vindication of undue sufferings
and wanton invasion of the rights of an injured or a punishment for those
guilty of outrageous conduct.
12. ID.; ID.; ID.; DIFFERENTIATED FROM PUNITIVE OR VINDICTIVE
DAMAGES. — These terms are generally, but not always, used
interchangeably. In common law, there is preference in the use of exemplary
damages when the award is to account for injury to feelings and for the
sense of indignity and humiliation suffered by a person as a result of an
injury that has been maliciously and wantonly inflicted, the theory being that
there should be compensation for the hurt caused by the highly
reprehensible conduct of the defendant — associated with such
circumstances as willfulness; wantonness; malice, gross negligence or
recklessness, oppression, insult or fraud or gross fraud — that intensifies
the injury. The terms punitive or vindictive damages are often used to refer
to those species of damages that may be awarded against a person to
punish him for his outrageous conduct. In either case, these damages are
intended in good measure to deter the wrongdoer and other like him from
similar conduct in the future.
13. REMEDIAL LAW; REVISED RULES ON CRIMINAL PROCEDURE;
REQUIRED AGGRAVATING CIRCUMSTANCES TO BE STATED IN THE
COMPLAINT OR INFORMATION. — [T]he Revised Rules on Criminal
Procedure, made effective on 01 December 2000, requires aggravating
circumstances, whether ordinary or qualifying, to be stated in the complaint
or information. . . . A court would thus be precluded from considering in its
judgment the attendance of "qualifying or aggravating circumstances" if the
complaint or information is bereft of any allegation of the presence of such
circumstances.
14. ID.; ID; CIVIL LIABILITY INCURRED BY ACCUSED PRIOR TO THE
EFFECTIVITY THEREOF REMAINS UNAFFECTED; CASE AT BAR. — The
retroactive application of procedural rules, nevertheless, cannot adversely
affect the rights of the private offended party that have become vested prior
to the effectivity of said rules. Thus, in the case at bar, although relationship
has not been alleged in the information, the offense having been committed,
however, prior to the effectivity of the new rules, the civil liability already
incurred by appellant remains unaffected thereby.
DECISION
VITUG, J p:
In an information, dated 29 January 1998, the accused, Danilo Catubig y
Horio, was charged with the crime of rape before the Regional Trial Court,
Branch 78, of Malolos, Bulacan; viz:
"The undersigned Asst. Provincial Prosecutor on
complaint of the offended party Dannilyn Catubig y Lazaro
accuses Danilo Catubig y Horio of the crime of rape,
penalized under the provisions of Art. 335 of the Revised
Penal Code, committed as follows:
"That on or about the 27th day of November, 1997, in the
municipality of San Jose del Monte, province of Bulacan,
Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused, did then and there
wilfully, unlawfully and feloniously, by means of force,
threats and intimidation and with lewd design have carnal
knowledge of the said offended party against her will." 1
When arraigned on 16 July 1998, accused Catubig, represented by counsel
de oficio, pleaded "not guilty" to the offense charged; forthwith, trial ensued.
The case for the prosecution was laid bare in Appellee's Brief submitted by
the Office of the Solicitor General.
"On November 27, 1997, at around 4:00 o'clock in the
afternoon, private complainant Dannilyn Catubig, who was
born on August 9, 1985, and her four (4) younger siblings
were watching television in the sala of their house located
at Sunlife Subdivision, San Jose del Monte, Bulacan.
 "After an hour, Dannilyn's father, herein appellant Danilo
Catubig, arrived and told Dannilyn's siblings to proceed,
as in fact they did proceed, to her aunt's house which is
just located nearby. Thereafter, appellant told Dannilyn to
go inside a room and to lie down on the bed. After
Dannilyn had complied, appellant removed Dannilyn's
shorts and panty, while appellant, after removing his brief
and t-shirt, [laid] on top of Dannilyn. Afraid of appellant
who beat and raped her in the past, Dannilyn was not able
to resist appellant who succeeded in inserting his penis
into Dannilyn's vagina.
"However, Dannilyn's aunt, who got suspicious of what
appellant was doing to Dannilyn, informed the latter's
mother, Jocelyn Catubig, about the said suspicion. Thus,
when confronted by her mother, Dannilyn was forced to
reveal that she was indeed raped by appellant. The sexual
assault was reported to the San Jose del Monte Police
Station where Dannilyn's sworn statement was
subsequently taken on December 3, 1997.
"Upon the request of the police authorities, Dannilyn was
examined on December 1, 1997 by Dr. Wilfredo E. Tiera,
Medico-Legal Officer of the National Bureau of
Investigation, who found out that Dannilyn's healed
laceration in the hymen was caused by sexual
intercourse." 2
The accused denied the accusation against him. He claimed that the rape
charge was brought about only because of the ill-will between him, on the
one hand, and his wife and daughter Dannilyn, on the other hand, following
a quarrel. On 27 November 1997, he asseverated, he had fought with his
wife, hitting her and his daughter. His wife then threatened him that it was
the last time that she would allow him to harm her and that he would regret
what he did. True to her foreboding, the next day, he was arrested and a
complaint for rape was filed against him. ICHcTD
On 11 December 1998, the Regional Trial Court rendered a decision holding
the accused guilty of the crime of rape; it adjudged:
"WHEREFORE, in view of the foregoing, the Court hereby
finds accused DANILO CATUBIG Y HORIO GUILTY
beyond reasonable doubt of the crime of Rape defined
and penalized under Article 335 of the Revised Penal
Code, as amended by Republic Act No. 7659, and hereby
sentences him to suffer the penalty of DEATH, and to pay
private complainant Dannilyn Catubig the amount of Fifty
Thousand Pesos (P50,000.00) as moral damages." 3
With the imposition of the death penalty by the trial court, the records were
elevated to this Court for automatic review.
In his brief, appellant submitted thusly:
"1. The lower court erred in finding the accused guilty of
the crime of rape in violation of Article 335 of the Revised
Penal Code as amended by Republic Act 7659.
"2. The lower court erred in not taking into consideration
the fact that the information was defective for failure to
state that the accused is the father of the victim and that
the victim was under 18 years [of] age at the time of the
commission of the alleged rape." 4
Private complainant Dannilyn Catubig narrated how she was repeatedly
abused by her own father; she testified:
"Q Now, after your sisters and brother [went] to the house
of your aunt, what did your father do?
"A He instructed me to go inside the room.
"Q How many rooms were there in your house? IDaCcS
"A Only one.
"Q Did you go to the room per instruction?
"A Yes, sir.
"Q And what happened inside the room?
"A My father entered the room.
"Q And when your father entered the room, what did he
do next?
"A He removed my short [pants] and my panty.
"Q What was your position at that time when your father
removed your short pants and panty?
"A I was lying.
"Q When you entered the room, did you lie immediately?
"A No, I just sat.
"Q How come as you claimed a while ago, you were lying
when your father removed your short pants and
panty?
"A Once I entered the room, I was sitting then he removed
my short [pants] and panty.
"Q You said upon entering the room, you sat and while
sitting, all of a sudden your father removed your
short pants and panty while already lying at that
time, how come you were lying when according to
you, you were sitting inside the room?
"A I was sitting first and he instructed me to lie down.
"Q While you were sitting inside the room and you were
instructed by your father to lie, what comes to
your mind?
"A That he will rape me.
"Q How did you come to know that?
"A He was raping me before, doing that before.
"Q In other words, that was not the first time your father
raped you on that particular date?
"A No, sir.
"Q When was the first time, if you remember? CTAIDE
"A When I was still in grade 1.
"Q How many times were you raped by your father?
"A I can no longer remember how many it was — several.
"Q When was the last time your father raped you?
"A November 27.
"Q Now, when your father removed your short pants and
panty, what did he do next?
"A He removed his brief and shirt.
"Q After removing his brief and shirt, what did he do?
"A He [laid] on top me.
"Q When your father [laid] on top of you, what did he do?
"A He was inserting his penis to my vagina.
"Q At this juncture, may we make of record that witness
starts to cry.
"Q How did you know your father inserted his penis to
your vagina?
"A I can feel it and it is painful.
"Q That was the time when your father was already lying
on top of you?
"A Yes, sir.
"Q And what was the movement of the body of your father
while he was lying on top of you?
"A Push and pull movement.
"Q For how long did your father stay on top of you doing
that push and pull movement?
"A That must be about 1 hour, but my aunt arrived.
"Q Aside from the pain, what else did you feel? AacSTE
"A Mahapdi at parang may pumipitik sa loob ng ari ko.
"Q Did you not try to resist?
"A No, because I am afraid of him.
"Q You are afraid of your father?
"A Yes, sir.
"Q Afraid of what?
"A Because he was beating us, hitting us.
"Q Why, what was the reason why your father was hitting
you?
"A To threaten us.
"Q For what purpose?
"A Whenever my mother sided with us, my father and
mother engaged in a fight.
 "Q In this case, you were raped and sexually abused by
your father, what made you afraid of
him? CSIHDA
"A Because we were afraid of my father since
childhood." 5
Dannilyn has given her testimony in a plain, categorical, spontaneous and
frank manner, remaining consistent throughout, and there is hardly anything
on record that can cast doubt on her sincerity. The revelations of an
innocent child whose chastity has been abused, coupled with her
willingness to face police investigation and to undergo the trouble and
humiliation of a public trial, should merit credence unless strong
justifications dictate otherwise. Indeed, it would take a most senseless kind
of depravity for a young daughter to just make up a story which could put
her own father to an undeserved indictment and to even possibly face death
in the hands of the law. 6
When rape is committed against one's own daughter, the moral ascendancy
and influence of the father, that necessarily flows from his parental authority,
can sufficiently cow the child to submission and can rightly be held to
substitute for the requisite "violence or intimidation" that, normally, would be
characterized by physical acts and uttered threats made on the victim.
The trite defenses of alibi and denial proferred by appellant cannot prevail
over the positive and categorical statements of private complainant. Alibi is
often viewed with suspicion and received with caution not only because it is
inherently weak and unreliable but also because it is easy to fabricate. In
order that this defense can prosper, it must be convincing to preclude any
doubt on the physical impossibility of the presence of the accused at
the locus criminis at the time of the incident. These conditions have not
been met in the case at bar.
The contention of appellant that his wife and daughter Dannilyn have
accused him merely because of his violent ways is much too flimsy to be
believed. The mere resentment of a wife and daughter is not so compelling
as to have motivated them to wrongly lodge a complaint for a crime much
more serious than might, if at all, be expected.
It is likewise a settled doctrine that the assessment made by the trial court
on the credibility of witnesses deserves great regard and weight on appeal.
The rule is not without reason; the trial judge has a unique position of
hearing first hand the witnesses and observing their deportment, conduct
and attitude during the course of the testimony in open court. There is no
valid reason to now ignore this long accepted jurisprudence in this instance.
This Court, however, finds the second assignment of error impressed with
merit.
Article 335 of the Revised Penal Code, as amended by Section 11
of Republic Act No. 7659, at times also referred to as the Death Penalty
Law, states in part:
"ARTICLE 335. When and how rape is committed. . . .
"xxx xxx xxx
"The death penalty shall also be imposed if the crime of
rape is committed with any of the following attendant
circumstances:
"1. When the victim is under eighteen (18) years of age
and the offender is a parent, ascendant, step-parent,
guardian, relative by consanguinity or affinity within the
third civil degree, or the common-law spouse of the
parent of the victim."
The concurrence of the minority of the victim and her relationship to the
offender are special qualifying circumstances that are needed to be
alleged in the complaint or information for the penalty of death to be
decreed. 7 The Constitution guarantees to be inviolable the right of an
accused to be informed of the nature and cause of the accusation
against him. 8 It is a requirement that renders it essential for every
element of the offense with which he is charged to be properly alleged in
the complaint or information.
Here, the information failed to state the minority of the victim and her
relationship with the offender, both special qualifying circumstances
under Republic Act No. 7659, and for want of such allegations, the trial court
erred in imposing the death penalty on the accused. 9 Appellant could only
thus be convicted under Article 335 of the Revised Penal Code, as
amended, of simple rape punishable by reclusion perpetua.
Anent the award of damages, the trial court has correctly awarded
P50,000.00 moral damages, an award that rests on the jural foundation that
the crime of rape necessarily brings with it shame, mental anguish,
besmirched reputation, moral shock and social humiliation to the offended
party. 10 In addition, the offended party deserves to receive the amount of
P50,000.00 civil indemnity, 11 the equivalent of compensatory damages,
and exemplary damages in the amount of P25,000.00.
An apparent discord in the award of exemplary damages in simple and
qualified rape cases perhaps deserves more than just a passing remark.
The Civil Code of the Philippines provides, in respect to exemplary or
corrective damages, thusly:
"ARTICLE 2229. Exemplary or corrective damages are
imposed, by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or
compensatory damages. DTAcIa
"ARTICLE 2230. In criminal offenses, exemplary damages
as a part of the civil liability may be imposed when the
crime was committed with one or more aggravating
circumstances. Such damages are separate and distinct
from fines and shall be paid to the offended party.
"ARTICLE 2231. In quasi-delicts, exemplary damages may
be granted if the defendant acted with gross negligence.
"ARTICLE 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.
"ARTICLE 2233. Exemplary damages cannot be
recovered as a matter of right; the court will decide
whether or not they should be adjudicated.
"ARTICLE 2234. 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. In
case liquidated damages have been agreed upon,
although no proof of loss is necessary in order that such
liquidated damages may be recovered, nevertheless,
before the court may consider the question of granting
exemplary in addition to the liquidated damages, the
plaintiff must show that he would be entitled to moral,
temperate or compensatory damages were it not for the
stipulation for liquidated damages. DIEACH
"ARTICLE 2235. A stipulation whereby exemplary
damages are renounced in advance shall be null and
void."
The attendance of aggravating circumstances in the perpetration of the
crime serves to increase the penalty (the criminal liability aspect), 12 as well
as to justify an award of exemplary or corrective damages (the civil liability
aspect), 13 moored on the greater perversity of the offender manifested in
the commission of the felony such as may be shown by (1) the motivating
power itself, (2) the place of commission, (3) the means and ways employed,
(4) the time, or (5) the personal circumstances of the offender or the
offended party or both. There are various types of aggravating
circumstances, among them, the ordinary and the qualifying. Relationship is
an alternative circumstance under Article 15 of the Revised Penal Code.
"ARTICLE 15. Their concept. — Alternative circumstances
are those which must be taken into consideration as
aggravating or mitigating according to the nature and
effects of the crime and other conditions attending its
commission. They are relationship, intoxication, and
degree of instruction and education of the offender.
"The alternative circumstance of relationship shall be
taken into consideration when the offended party is the
spouse, ascendant, descendant, legitimate, natural, or
adopted brother or sister, or relative by affinity in the same
degree of the offender."
As a rule, relationship is held to be aggravating in crimes against
chastity, such as rape and acts of lasciviousness, whether the offender
is a higher or a lower degree relative of the offended party. 14
Under Section 11 of Republic Act No. 7659, amending Article 335 of the
Revised Penal Code, the death penalty is to be imposed in rape cases
"when the victim is under eighteen (18) years of age and the offender is a
parent, ascendant, step-parent, guardian, relative by consanguinity or
affinity within the third civil degree, or the common-law spouse of the parent
of the victim." The Court has since held that the circumstances enumerated
by the amendatory law are to be regarded as special qualifying (aggravating)
circumstances. Somehow doubts linger on whether relationship may then
be considered to warrant an award for exemplary damages where it is used
to qualify rape as a heinous crime, thereby becoming an element thereof, as
would subject the offender to the penalty of death. Heretofore, the Court has
not categorically laid down a specific rule, preferring instead to treat the
issue on a case to case basis.
In People vs. Fundano, 15 People vs. Ramos, 16 People
vs. Medina, 17 People vs. Dimapilis, 18 People vs. Calayca, 19 People
vs. Tabion, 20 People vs. Bayona, 21 People vs. Bayya, 22 and People
vs. Nuñez, 23 along with still other cases, the Court has almost invariably
appreciated relationship as an ordinary aggravating circumstance in simple
rape and thereby imposed exemplary damages upon the offender whether
or not the offense has been committed prior to or after the effectivity
of Republic Act No. 7659. Exceptionally, as in People vs. Decena, 24 People
vs. Perez, 25 People vs. Perez, 26 and People vs.Ambray, 27 the Court has
denied the award of exemplary damages following the effectivity of that law.
In qualified rape cases, such as in People vs.Magdato, 28 People
vs. Arizapa, 29 and People vs. Alicante, 30 the Court decreed the payment
of exemplary damages to the offended party but it did not so do as
in People vs. Alba, 31 People vs. Mengote, 32 and People vs. Maglente. 33
It may be time for the Court to abandon its pro hac vice stance and provide,
for the guidance of the bar and the bench, a kind of standard on the
matter. caTESD
Also known as "punitive" or "vindictive" damages, exemplary or corrective
damages are intended to serve as a deterrent to serious wrongdoings and
as a vindication of undue sufferings and wanton invasion of the rights of an
injured or a punishment for those guilty of outrageous conduct. These terms
are generally, but not always, used interchangeably. In common law, there is
preference in the use of exemplary damages when the award is to account
for injury to feelings and for the sense of indignity and humiliation suffered
by a person as a result of an injury that has been maliciously and wantonly
inflicted, 34 the theory being that there should be compensation for the hurt
caused by the highly reprehensible conduct of the defendant — associated
with such circumstances as willfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult or fraud or gross fraud 35 —
that intensifies the injury. The terms punitive or vindictive damages are often
used to refer to those species of damages that may be awarded against a
person to punish him for his outrageous conduct. In either case, these
damages are intended in good measure to deter the wrongdoer and others
like him from similar conduct in the future. 36
The term "aggravating circumstances" used by the Civil Code, the law not
having specified otherwise, is to be understood in its broad or generic
sense. The commission of an offense has a two-pronged effect, one on the
public as it breaches the social order and the other upon the private victim
as it causes personal sufferings, each of which is addressed by,
respectively, the prescription of heavier punishment for the accused and by
an award of additional damages to the victim. The increase of the penalty or
a shift to a graver felony underscores the exacerbation of the offense by the
attendance of aggravating circumstances, whether ordinary or qualifying, in
its commission. Unlike the criminal which is basically a State concern, the
award of damages, however, is likewise, if not primarily, intended for the
offended party who suffers thereby. It would make little sense for an award
of exemplary damages to be due the private offended party when the
aggravating circumstance is ordinary but to be withheld when it is qualifying.
Withal, the ordinary or qualifying nature of an aggravating circumstance is a
distinction that should only be of consequence to the criminal, rather than to
the civil, liability of the offender. In fine, relative to the civil aspect of the
case, an aggravating circumstance, whether ordinary or qualifying, should
entitle the offended party to an award of exemplary damages within the
unbridled meaning of Article 2230 of the Civil Code. TaCDcE
Relevantly, the Revised Rules on Criminal Procedure, made effective on 01
December 2000, requires aggravating circumstances, whether ordinary or
qualifying, to be stated in the complaint or information. Sections 8 and 9 of
Rule 110 of the Rules of Court now provide:
"SECTION 8. Designation of the offense. — The complaint
or information shall state the designation of the offense
given by the statute, aver the acts or omissions
constituting the offense, and specify its qualifying and
aggravating circumstances. If there is no designation of
the offense, reference shall be made to the section or
subsection of the statute punishing it.
"SECTION 9. Cause of the accusation. — The acts or
omissions complained of as constituting the offense
and the qualifying and aggravating circumstances must be
stated in ordinary and concise language and not
necessarily in the language used in the statute but in
terms sufficient to enable a person of common
understanding to know what offense is being charged as
well as its qualifying and aggravating circumstances and
for the court to pronounce judgment."
A court would thus be precluded from considering in its judgment the
attendance of "qualifying or aggravating circumstances" if the complaint
or information is bereft of any allegation on the presence of such
circumstances.
The retroactive application of procedural rules, nevertheless, cannot
adversely affect the rights of the private offended party that have become
vested prior to the effectivity of said rules. Thus, in the case at bar, although
relationship has not been alleged in the information, the offense having been
committed, however, prior to the effectivity of the new rules, the civil liability
already incurred by appellant remains unaffected thereby.
WHEREFORE, the decision of the court a quo is AFFIRMED with
MODIFICATION in that appellant Danilo Catubig y Horio is found guilty only
of simple rape and not in its qualified form, and he is hereby sentenced to
suffer the penalty of reclusion perpetua and to pay complainant Dannilyn
Catubig P50,000.00 civil indemnity, P50,000.00 moral damages and
P25,000.00 exemplary damages. Costs de oficio.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Melo, Kapunan, Mendoza, Panganiban,
Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, De Leon, Jr.,
and Sandoval-Gutierrez, JJ., concur.
Puno, J., concurs in the result.
||| (People v. Catubig y Horio, G.R. No. 137842, [August 23, 2001], 416 PHIL
102-121)
THIRD DIVISION
[G.R. No. 206806. June 25, 2014.]
ARCO PULP AND PAPER CO., INC. and CANDIDA A.
SANTOS, petitioners, vs. DAN T. LIM, doing business
under the name and style of QUALITY PAPERS &
PLASTIC PRODUCTS ENTERPRISES, respondent.
DECISION
LEONEN, J p:
Novation must be stated in clear and unequivocal terms to extinguish an
obligation. It cannot be presumed and may be implied only if the old and
new contracts are incompatible on every point.
Before us is a petition for review on certiorari 1 assailing the Court of
Appeals' decision 2 in CA-G.R. CV No. 95709, which stemmed from a
complaint 3 filed in the Regional Trial Court of Valenzuela City, Branch 171,
for collection of sum of money.
The facts are as follows:
Dan T. Lim works in the business of supplying scrap papers, cartons, and
other raw materials, under the name Quality Paper and Plastic Products,
Enterprises, to factories engaged in the paper mill business. 4 From
February 2007 to March 2007, he delivered scrap papers worth
PhP7,220,968.31 to Arco Pulp and Paper Company, Inc. (Arco Pulp and
Paper) through its Chief Executive Officer and President, Candida A.
Santos. 5 The parties allegedly agreed that Arco Pulp and Paper would
either pay Dan T. Lim the value of the raw materials or deliver to him their
finished products of equivalent value. 6
Dan T. Lim alleged that when he delivered the raw materials, Arco Pulp and
Paper issued a post-dated check dated April 18, 2007 7 in the amount of
PhP1,487,766.68 as partial payment, with the assurance that the check
would not bounce. 8 When he deposited the check on April 18, 2007, it was
dishonored for being drawn against a closed account. 9 aHESCT
On the same day, Arco Pulp and Paper and a certain Eric Sy executed a
memorandum of agreement 10 where Arco Pulp and Paper bound
themselves to deliver their finished products to Megapack Container
Corporation, owned by Eric Sy, for his account. According to the
memorandum, the raw materials would be supplied by Dan T. Lim, through
his company, Quality Paper and Plastic Products. The memorandum of
agreement reads as follows:
Per meeting held at ARCO, April 18, 2007, it has been
mutually agreed between Mrs. Candida A. Santos and Mr.
Eric Sy that ARCO will deliver 600 tons Test Liner 150/175
GSM, full width 76 inches at the price of P18.50 per kg. to
Megapack Container for Mr. Eric Sy's account. Schedule
of deliveries are as follows: cDCaTH
xxx xxx xxx
It has been agreed further that the Local OCC materials to
be used for the production of the above Test Liners will be
supplied by Quality Paper & Plastic Products Ent., total of
600 Metric Tons at P6.50 per kg. (price subject to change
per advance notice). Quantity of Local OCC delivery will
be based on the quantity of Test Liner delivered to
Megapack Container Corp. based on the above
production schedule. 11
On May 5, 2007, Dan T. Lim sent a letter 12 to Arco Pulp and Paper
demanding payment of the amount of PhP7,220,968.31, but no payment
was made to him. 13
Dan T. Lim filed a complaint 14 for collection of sum of money with prayer
for attachment with the Regional Trial Court, Branch 171, Valenzuela City,
on May 28, 2007. Arco Pulp and Paper filed its answer 15 but failed to have
its representatives attend the pre-trial hearing. Hence, the trial court allowed
Dan T. Lim to present his evidence ex parte. 16
On September 19, 2008, the trial court rendered a judgment in favor of Arco
Pulp and Paper and dismissed the complaint, holding that when Arco Pulp
and Paper and Eric Sy entered into the memorandum of agreement,
novation took place, which extinguished Arco Pulp and Paper's obligation to
Dan T. Lim. 17
Dan T. Lim appealed 18 the judgment with the Court of Appeals. According
to him, novation did not take place since the memorandum of agreement
between Arco Pulp and Paper and Eric Sy was an exclusive and private
agreement between them. He argued that if his name was mentioned in the
contract, it was only for supplying the parties their required scrap papers,
where his conformity through a separate contract was indispensable. 19
On January 11, 2013, the Court of Appeals 20 rendered a
decision 21 reversing and setting aside the judgment dated September 19,
2008 and ordering Arco Pulp and Paper to jointly and severally pay Dan T.
Lim the amount of PhP7,220,968.31 with interest at 12% per annum from
the time of demand; PhP50,000.00 moral damages; PhP50,000.00
exemplary damages; and PhP50,000.00 attorney's fees. 22 TIEHSA
The appellate court ruled that the facts and circumstances in this case
clearly showed the existence of an alternative obligation. 23 It also ruled that
Dan T. Lim was entitled to damages and attorney's fees due to the bad faith
exhibited by Arco Pulp and Paper in not honoring its undertaking. 24
Its motion for reconsideration 25 having been denied, 26 Arco Pulp and
Paper and its President and Chief Executive Officer, Candida A. Santos,
bring this petition for review on certiorari.
On one hand, petitioners argue that the execution of the memorandum of
agreement constituted a novation of the original obligation since Eric Sy
became the new debtor of respondent. They also argue that there is no legal
basis to hold petitioner Candida A. Santos personally liable for the
transaction that petitioner corporation entered into with respondent. The
Court of Appeals, they allege, also erred in awarding moral and exemplary
damages and attorney's fees to respondent who did not show proof that he
was entitled to damages. 27
Respondent, on the other hand, argues that the Court of Appeals was
correct in ruling that there was no proper novation in this case. He argues
that the Court of Appeals was correct in ordering the payment of
PhP7,220,968.31 with damages since the debt of petitioners remains
unpaid. 28 He also argues that the Court of Appeals was correct in holding
petitioners solidarily liable since petitioner Candida A. Santos was "the
prime mover for such outstanding corporate liability." 29
In their reply, petitioners reiterate that novation took place since there was
nothing in the memorandum of agreement showing that the obligation was
alternative. They also argue that when respondent allowed them to deliver
the finished products to Eric Sy, the original obligation was novated. 30
A rejoinder was submitted by respondent, but it was noted without action in
view of A.M. No. 99-2-04-SC dated November 21, 2000. 31 aDTSHc
The issues to be resolved by this court are as follows:
1. Whether the obligation between the parties was
extinguished by novation
2. Whether Candida A. Santos was solidarily liable with
Arco Pulp and Paper Co., Inc.
3. Whether moral damages, exemplary damages, and
attorney's fees can be awarded
The petition is denied.
The obligation between the
parties was an alternative
obligation
The rule on alternative obligations is governed by Article 1199 of the Civil
Code,which states:
Article 1199. A person alternatively bound by different
prestations shall completely perform one of them.
The creditor cannot be compelled to receive part of one
and part of the other undertaking.
"In an alternative obligation, there is more than one object, and the
fulfillment of one is sufficient, determined by the choice of the debtor who
generally has the right of election." 32 The right of election is extinguished
when the party who may exercise that option categorically and
unequivocally makes his or her choice known. 33 The choice of the debtor
must also be communicated to the creditor who must receive notice of it
since:
The object of this notice is to give the creditor . . .
opportunity to express his consent, or to impugn the
election made by the debtor, and only after said notice
shall the election take legal effect when consented by the
creditor, or if impugned by the latter, when declared
proper by a competent court. 34
According to the factual findings of the trial court and the appellate court,
the original contract between the parties was for respondent to deliver scrap
papers worth PhP7,220,968.31 to petitioner Arco Pulp and Paper. The
payment for this delivery became petitioner Arco Pulp and Paper's
obligation. By agreement, petitioner Arco Pulp and Paper, as the debtor,
had the option to either (1) pay the price or (2) deliver the finished products
of equivalent value to respondent. 35
The appellate court, therefore, correctly identified the obligation between the
parties as an alternative obligation, whereby petitioner Arco Pulp and Paper,
after receiving the raw materials from respondent, would either pay him the
price of the raw materials or, in the alternative, deliver to him the finished
products of equivalent value.
When petitioner Arco Pulp and Paper tendered a check to respondent in
partial payment for the scrap papers, they exercised their option to pay the
price. Respondent's receipt of the check and his subsequent act of
depositing it constituted his notice of petitioner Arco Pulp and Paper's
option to pay.
This choice was also shown by the terms of the memorandum of agreement,
which was executed on the same day. The memorandum declared in clear
terms that the delivery of petitioner Arco Pulp and Paper's finished products
would be to a third person, thereby extinguishing the option to deliver the
finished products of equivalent value to respondent.
The memorandum of
agreement did not constitute
a novation of the original
contract
The trial court erroneously ruled that the execution of the memorandum of
agreement constituted a novation of the contract between the parties. When
petitioner Arco Pulp and Paper opted instead to deliver the finished
products to a third person, it did not novate the original obligation between
the parties.
The rules on novation are outlined in the Civil Code,thus: STECDc
Article 1291. Obligations may be modified by:
(1) Changing their object or principal conditions;
(2) Substituting the person of the debtor;
(3) Subrogating a third person in the rights of the creditor.
(1203)
Article 1292. In order that an obligation may be
extinguished by another which substitute the same, it is
imperative that it be so declared in unequivocal terms, or
that the old and the new obligations be on every point
incompatible with each other. (1204) CcTIAH
Article 1293. Novation which consists in substituting a
new debtor in the place of the original one, may be made
even without the knowledge or against the will of the
latter, but not without the consent of the creditor.
Payment by the new debtor gives him the rights
mentioned in Articles 1236 and 1237. (1205a)
Novation extinguishes an obligation between two parties when there is a
substitution of objects or debtors or when there is subrogation of the
creditor. It occurs only when the new contract declares so "in unequivocal
terms" or that "the old and the new obligations be on every point
incompatible with each other." 36
Novation was extensively discussed by this court in Garcia v. Llamas: 37
Novation is a mode of extinguishing an obligation by
changing its objects or principal obligations, by
substituting a new debtor in place of the old one, or by
subrogating a third person to the rights of the creditor.
Article 1293 of the Civil Code defines novation as follows:
"Art. 1293. Novation which consists in substituting a new
debtor in the place of the original one, may be made even
without the knowledge or against the will of the latter, but
not without the consent of the creditor. Payment by the
new debtor gives him rights mentioned in articles 1236
and 1237."
In general, there are two modes of substituting the person
of the debtor: (1) expromision and (2) delegacion.
In expromision, the initiative for the change does not
come from — and may even be made without the
knowledge of — the debtor, since it consists of a third
person's assumption of the obligation. As such, it logically
requires the consent of the third person and the creditor.
In delegacion, the debtor offers, and the creditor accepts,
a third person who consents to the substitution and
assumes the obligation; thus, the consent of these three
persons are necessary. Both modes of substitution by
the debtor require the consent of the creditor. IHTASa
Novation may also be extinctive or modificatory. It is
extinctive when an old obligation is terminated by the
creation of a new one that takes the place of the former. It
is merely modificatory when the old obligation subsists to
the extent that it remains compatible with the amendatory
agreement. Whether extinctive or modificatory, novation is
 made either by changing the object or the principal
conditions, referred to as objective or real novation; or by
substituting the person of the debtor or subrogating a
third person to the rights of the creditor, an act known as
subjective or personal novation. For novation to take
place, the following requisites must concur:
1) There must be a previous valid obligation.
2) The parties concerned must agree to a new
contract.
3) The old contract must be extinguished.
4) There must be a valid new contract. SaCDTA
Novation may also be express or implied. It is express
when the new obligation declares in unequivocal terms
that the old obligation is extinguished. It is implied when
the new obligation is incompatible with the old one on
every point. The test of incompatibility is whether the
two obligations can stand together, each one with its
own independent existence. 38 (Emphasis supplied)
Because novation requires that it be clear and unequivocal, it is never
presumed, thus:
In the civil law setting, novatio is literally construed as to
make new. So it is deeply rooted in the Roman Law
jurisprudence, the principle —novatio non
praesumitur — that novation is never presumed. At
bottom, for novation to be a jural reality, its animus must
be ever present, debitum pro debito — basically
extinguishing the old obligation for the new
one. 39 (Emphasis supplied) DcaCSE
There is nothing in the memorandum of agreement that states that with its
execution, the obligation of petitioner Arco Pulp and Paper to respondent
would be extinguished. It also does not state that Eric Sy somehow
substituted petitioner Arco Pulp and Paper as respondent's debtor. It merely
shows that petitioner Arco Pulp and Paper opted to deliver the finished
products to a third person instead.
The consent of the creditor must also be secured for the novation to be
valid:
Novation must be expressly consented to. Moreover,
the conflicting intention and acts of the parties underscore
the absence of any express disclosure or circumstances
with which to deduce a clear and unequivocal intent by
the parties to novate the old agreement. 40 (Emphasis
supplied)
In this case, respondent was not privy to the memorandum of agreement,
thus, his conformity to the contract need not be secured. This is clear from
the first line of the memorandum, which states: HCISED
Per meeting held at ARCO, April 18, 2007, it has been
mutually agreed between Mrs. Candida A. Santos and Mr.
Eric Sy. . . . 41
If the memorandum of agreement was intended to novate the original
agreement between the parties, respondent must have first agreed to the
substitution of Eric Sy as his new debtor. The memorandum of agreement
must also state in clear and unequivocal terms that it has replaced the
original obligation of petitioner Arco Pulp and Paper to respondent. Neither
of these circumstances is present in this case.
Petitioner Arco Pulp and Paper's act of tendering partial payment to
respondent also conflicts with their alleged intent to pass on their obligation
to Eric Sy. When respondent sent his letter of demand to petitioner Arco
Pulp and Paper, and not to Eric Sy, it showed that the former neither
acknowledged nor consented to the latter as his new debtor. These acts,
when taken together, clearly show that novation did not take place.
Since there was no novation, petitioner Arco Pulp and Paper's obligation to
respondent remains valid and existing. Petitioner Arco Pulp and Paper,
therefore, must still pay respondent the full amount of PhP7,220,968.31.
Petitioners are liable for
damages
Under Article 2220 of the Civil Code,moral damages may be awarded in
case of breach of contract where the breach is due to fraud or bad faith:
Art. 2220. Willfull injury to property may be a legal ground
for awarding moral damages if the court should find that,
under the circumstances, such damages are justly
due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith.
(Emphasis supplied) SaHTCE
Moral damages are not awarded as a matter of right but only after the party
claiming it proved that the breach was due to fraud or bad faith. As this
court stated:
 Moral damages are not recoverable simply because a
contract has been breached. They are recoverable only if
the party from whom it is claimed acted fraudulently or in
bad faith or in wanton disregard of his contractual
obligations. The breach must be wanton, reckless,
malicious or in bad faith, and oppressive or abusive. 42
Further, the following requisites must be proven for the recovery of moral
damages:
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.43
Here, the injury suffered by respondent is the loss of PhP7,220,968.31 from
his business. This has remained unpaid since 2007. This injury undoubtedly
was caused by petitioner Arco Pulp and Paper's act of refusing to pay its
obligations.
When the obligation became due and demandable, petitioner Arco Pulp and
Paper not only issued an unfunded check but also entered into a contract
with a third person in an effort to evade its liability. This proves the third
requirement. THaAEC
As to the fourth requisite, Article 2219 of the Civil Code provides that moral
damages may be awarded in the following instances:
Article 2219. Moral damages may be recovered in the
following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28,
29, 30, 32, 34, and 35.
Breaches of contract done in bad faith, however, are not specified within
this enumeration. When a party breaches a contract, he or she goes against
Article 19 of the Civil Code,which states:
Article 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. SHacCD
Persons who have the right to enter into contractual relations must exercise
that right with honesty and good faith. Failure to do so results in an abuse of
that right, which may become the basis of an action for damages. Article 19,
however, cannot be its sole basis:
Article 19 is the general rule which governs the conduct of
human relations. By itself, it is not the basis of an
actionable tort. Article 19 describes the degree of care
required so that an actionable tort may arise when it is
alleged together with Article 20 or Article 21. 44
Articles 20 and 21 of the Civil Code are as follows:
Article 20. Every person who, contrary to law, wilfully or
negligently causes damage to another, shall indemnify the
latter for the same.
Article 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.
To be actionable, Article 20 requires a violation of law, while Article 21 only
concerns with lawful acts that are contrary to morals, good customs, and
public policy:
Article 20 concerns violations of existing law as basis for
an injury. It allows recovery should the act have been
willful or negligent. Willful may refer to the intention to do
the act and the desire to achieve the outcome which is
considered by the plaintiff in tort action as injurious.
Negligence may refer to a situation where the act was
 consciously done but without intending the result which
the plaintiff considers as injurious.
Article 21, on the other hand, concerns injuries that may
be caused by acts which are not necessarily proscribed
by law. This article requires that the act be willful, that is,
that there was an intention to do the act and a desire to
achieve the outcome. In cases under Article 21, the legal
issues revolve around whether such outcome should be
considered a legal injury on the part of the plaintiff or
whether the commission of the act was done in violation
of the standards of care required in Article 19. 45 CSaITD
When parties act in bad faith and do not faithfully comply with their
obligations under contract, they run the risk of violating Article 1159 of
the Civil Code:
Article 1159. Obligations arising from contracts have the
force of law between the contracting parties and should
be complied with in good faith.
Article 2219, therefore, is not an exhaustive list of the instances where moral
damages may be recovered since it only specifies, among others, Article 21.
When a party reneges on his or her obligations arising from contracts in bad
faith, the act is not only contrary to morals, good customs, and public
policy; it is also a violation of Article 1159. Breaches of contract become the
basis of moral damages, not only under Article 2220, but also under Articles
19 and 20 in relation to Article 1159.
Moral damages, however, are not recoverable on the mere breach of the
contract. Article 2220 requires that the breach be done fraudulently or in bad
faith. In Adriano v. Lasala: 46
To recover moral damages in an action for breach of
contract, the breach must be palpably wanton, reckless
and malicious, in bad faith, oppressive, or abusive. Hence,
the person claiming bad faith must prove its existence by
clear and convincing evidence for the law always
presumes good faith.
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. It is,
therefore, a question of intention, which can be
inferred from one's conduct and/or contemporaneous
statements. 47 (Emphasis supplied) TAIDHa
Since a finding of bad faith is generally premised on the intent of the doer, it
requires an examination of the circumstances in each case.
When petitioner Arco Pulp and Paper issued a check in partial payment of
its obligation to respondent, it was presumably with the knowledge that it
was being drawn against a closed account. Worse, it attempted to shift their
obligations to a third person without the consent of respondent.
Petitioner Arco Pulp and Paper's actions clearly show "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." 48 Moral damages may, therefore, be awarded.
Exemplary damages may also be awarded. Under the Civil Code,exemplary
damages are due in the following circumstances: DSEIcT
Article 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.
Article 2233. Exemplary damages cannot be recovered as
a matter of right; the court will decide whether or not they
should be adjudicated.
Article 2234. While the amount of the exemplary damages
need not be proven, 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.
In Tankeh v. Development Bank of the Philippines, 49 we stated that:
The purpose of exemplary damages is to serve as a
deterrent to future and subsequent parties from the
commission of a similar offense. The case of People v.
Rante citing People v. Dalisay held that:
Also known as 'punitive' or 'vindictive'
damages, exemplary or corrective damages
are intended to serve as a deterrent to serious
wrong doings, and as a vindication of undue
sufferings and wanton invasion of the rights of
an injured or a punishment for those guilty of
outrageous conduct. These terms are generally,
 but not always, used interchangeably. In common
law, there is preference in the use of exemplary
damages when the award is to account for injury
to feelings and for the sense of indignity and
humiliation suffered by a person as a result of an
injury that has been maliciously and wantonly
inflicted, the theory being that there should be
compensation for the hurt caused by the highly
reprehensible conduct of the defendant —
associated with such circumstances as
willfulness, wantonness, malice, gross negligence
or recklessness, oppression, insult or fraud or
gross fraud — that intensifies the injury. The terms
punitive or vindictive damages are often used to
refer to those species of damages that may be
awarded against a person to punish him for his
outrageous conduct. In either case, these
damages are intended in good measure to deter
the wrongdoer and others like him from similar
conduct in the future. 50(Emphasis supplied;
citations omitted) HaEcAC
The requisites for the award of exemplary damages are as follows:
(1) they may be imposed by way of example in addition to
compensatory damages, and only after the
claimant's right to them has been established;
(2) that they cannot be recovered as a matter of right, their
determination depending upon the amount of
compensatory damages that may be awarded to
the claimant; and
(3) the act must be accompanied by bad faith or done in a
wanton, fraudulent, oppressive or malevolent
manner. 51 TcSICH
Business owners must always be forthright in their dealings. They cannot be
allowed to renege on their obligations, considering that these obligations
were freely entered into by them. Exemplary damages may also be awarded
in this case to serve as a deterrent to those who use fraudulent means to
evade their liabilities.
Since the award of exemplary damages is proper, attorney's fees and cost
of the suit may also be recovered. Article 2208 of the Civil Code states:
Article 2208. In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial costs,
cannot be recovered, except:
(1) When exemplary damages are awarded[.]
Petitioner Candida A. Santos
is solidarily liable with
petitioner corporation
Petitioners argue that the finding of solidary liability was erroneous since no
evidence was adduced to prove that the transaction was also a personal
undertaking of petitioner Santos. We disagree.
In Heirs of Fe Tan Uy v. International Exchange Bank, 52 we stated that:
Basic is the rule in corporation law that a corporation is a
juridical entity which is vested with a legal personality
separate and distinct from those acting for and in its
behalf and, in general, from the people comprising it.
Following this principle, obligations incurred by the
corporation, acting through its directors, officers and
employees, are its sole liabilities. A director, officer or
employee of a corporation is generally not held
personally liable for obligations incurred by the
corporation. Nevertheless, this legal fiction may be
disregarded if it is used as a means to perpetrate fraud or
an illegal act, or as a vehicle for the evasion of an existing
obligation, the circumvention of statutes, or to confuse
legitimate issues.
xxx xxx xxx
Before a director or officer of a corporation can be
held personally liable for corporate obligations,
however, the following requisites must concur: (1) the
complainant must allege in the complaint that the
director or officer assented to patently unlawful acts
of the corporation, or that the officer was guilty of
gross negligence or bad faith; and (2) the complainant
must clearly and convincingly prove such unlawful
acts, negligence or bad faith.
While it is true that the determination of the existence of
any of the circumstances that would warrant the piercing
of the veil of corporate fiction is a question of fact which
cannot be the subject of a petition for review
on certiorari under Rule 45, this Court can take
 cognizance of factual issues if the findings of the lower
court are not supported by the evidence on record or are
based on a misapprehension of facts. 53 (Emphasis
supplied)
As a general rule, directors, officers, or employees of a corporation cannot
be held personally liable for obligations incurred by the corporation.
However, this veil of corporate fiction may be pierced if complainant is able
to prove, as in this case, that (1) the officer is guilty of negligence or bad
faith, and (2) such negligence or bad faith was clearly and convincingly
proven.
Here, petitioner Santos entered into a contract with respondent in her
capacity as the President and Chief Executive Officer of Arco Pulp and
Paper. She also issued the check in partial payment of petitioner
corporation's obligations to respondent on behalf of petitioner Arco Pulp
and Paper. This is clear on the face of the check bearing the account name,
"Arco Pulp & Paper, Co., Inc." 54 Any obligation arising from these acts
would not, ordinarily, be petitioner Santos' personal undertaking for which
she would be solidarily liable with petitioner Arco Pulp and Paper.
We find, however, that the corporate veil must be pierced. In Livesey v.
Binswanger Philippines: 55 CTaSEI
Piercing the veil of corporate fiction is an equitable
doctrine developed to address situations where the
separate corporate personality of a corporation is abused
or used for wrongful purposes. Under the doctrine, the
corporate existence may be disregarded where the
entity is formed or used for non-legitimate
purposes, such as to evade a just and due obligation,
or to justify a wrong, to shield or perpetrate fraud or to
carry out similar or inequitable considerations, other
unjustifiable aims or intentions, in which case, the
fiction will be disregarded and the individuals
composing it and the two corporations will be treated
as identical. 56 (Emphasis supplied)
According to the Court of Appeals, petitioner Santos was solidarily liable
with petitioner Arco Pulp and Paper, stating that: aEIADT
In the present case, We find bad faith on the
part of the [petitioners] when they unjustifiably
refused to honor their undertaking in favor of the
[respondent]. After the check in the amount of
PhP1,487,766.68 issued by [petitioner] Santos
was dishonored for being drawn against a
closed account, [petitioner] corporation denied
any privity with [respondent]. These acts
prompted the [respondent] to avail of the
remedies provided by law in order to protect his
rights. 57
We agree with the Court of Appeals. Petitioner Santos cannot be allowed to
hide behind the corporate veil. When petitioner Arco Pulp and Paper's
obligation to respondent became due and demandable, she not only issued
an unfunded check but also contracted with a third party in an effort to shift
petitioner Arco Pulp and Paper's liability. She unjustifiably refused to honor
petitioner corporation's obligations to respondent. These acts clearly
amount to bad faith. In this instance, the corporate veil may be pierced, and
petitioner Santos may be held solidarily liable with petitioner Arco Pulp and
Paper.
The rate of interest due on
the obligation must be
reduced in view of Nacar v.
Gallery Frames 58
In view, however, of the promulgation by this court of the decision dated
August 13, 2013 in Nacar v. Gallery Frames, 59 the rate of interest due on
the obligation must be modified from 12% per annum to 6% per annum
from the time of demand.
Nacar effectively amended the guidelines stated in Eastern Shipping v. Court
of Appeals, 60 and we have laid down the following guidelines with regard to
the rate of legal interest:
To recapitulate and for future guidance, the guidelines
laid down in the case of Eastern Shipping Lines are
accordingly modified to embody BSP-MB Circular No.
799, as follows:
I. When an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on "Damages" of the Civil
Code govern in determining the measure of recoverable
damages.
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 2007, when respondent sent his letter of demand to petitioners. This interest
the payment of a sum of money, i.e., a loan or shall continue to be due from the finality of this decision until its full
forbearance of money, the interest due should be that satisfaction.
which may have been stipulated in writing.
WHEREFORE, the petition is DENIED in part. The decision in CA-G.R. CV
Furthermore, the interest due shall itself earn legal interest
No. 95709 is AFFIRMED. aATHIE
from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 6% per Petitioners Arco Pulp & Paper Co., Inc. and Candida A. Santos are hereby
annum to be computed from default, i.e., from judicial ordered solidarily to pay respondent Dan T. Lim the amount of
or extrajudicial demand under and subject to the P7,220,968.31 with interest of 6% per annum at the time of demand until
provisions of Article 1169 of the Civil Code. AIcECS finality of judgment and its full satisfaction, with moral damages in the
amount of P50,000.00, exemplary damages in the amount of P50,000.00,
2. When an obligation, not constituting a loan or
and attorney's fees in the amount of P50,000.00.
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at SO ORDERED.
the discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated Peralta, * Villarama, Jr., ** Mendoza and Reyes, *** JJ., concur.
claims or damages, except when or until the demand can
||| (Arco Pulp and Paper Co., Inc. v. Lim, G.R. No. 206806, [June 25, 2014],
be established with reasonable certainty. Accordingly,
737 PHIL 133-159)
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 FIRST DIVISION
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 the quantification of [G.R. No. L-52358. May 30, 1983.]
damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal INHELDER CORPORATION, petitioner, vs. COURT OF
interest shall, in any case, be on the amount finally APPEALS, DANIEL PANGANIBAN and PAULA RAMIREZ
adjudged.
PANGANIBAN, respondents.
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 Ozaeta, Romulo, De Leon, Mabanta, Buenaventura, Sayoc & De
paragraph 2, above, shall be 6% per annum from such los Angeles for petitioner.
finality until its satisfaction, this interim period being Mario de la Cruz for private respondents.
deemed to be by then an equivalent to a forbearance of
credit.
And, in addition to the above, judgments that have SYLLABUS
become final and executory prior to July 1, 2013, shall not
be disturbed and shall continue to be implemented 1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; MALICIOUS
applying the rate of interest fixed therein. 61 (Emphasis PROSECUTION, ELEMENTS OF. — Malicious prosecution, to be the basis
supplied; citations omitted.) of a suit, requires the elements of malice and want of probable cause. There
must be proof that the prosecution was prompted by a sinister design to vex
According to these guidelines, the interest due on the obligation of
and humiliate a person, and that it was initiated deliberately knowing that
P7,220,968.31 should now be at 6% per annum, computed from May 5,
the charge was false and groundless.
2. ID.; ID.; ID.; COMPLAINT FOR COLLECTION; NOT AN UNFOUNDED
CIVIL ACTION WHERE IT IS NOT CLEAR THAT PAYMENT HAS BEEN
MADE AT THE TIME ACTION WAS FILED. — It is not clear that the account
of the PANGANIBANS had already been paid as of February 12, 1975, the
day the case was filed in court. Under Article 1249 of the Civil Code,
payment should be held effective only when PNB Check No. 32058 was
actually cashed by, or credited to the account of, INHELDER. If that did not
eventuate on or before February 12, 1975, and there is no proof that it did,
the account would still be unpaid, and the complaint in the COLLECTION
CASE, technically, could not be considered as substantially unfounded.
3. ID.; ID.; ID.; NOT A CASE OF MALICIOUS PROSECUTION WHERE
THERE IS NO PROOF OF MALICE AND WANT OF PROBABLE CAUSE. —
In the present case, there is no evident on record, clearly establishing the
two elements of malicious prosecution. Although there may be want of
probable cause, there is no proof that petitioner deliberately initiated the
COLLECTION CASE knowing that the same was false and groundless. Nor
can malice be inferred from want of probable cause.
4. ID.; ID.; ID.; NO PREMIUM PLACED ON THE RIGHT TO LITIGATE. — The
mere filing of a suit does not render a person liable for malicious prosecution
should he be unsuccessful. The law would not have meant to impose a
penalty on the right to litigate [Barreto vs. Arevalo, 99 Phil. 771 (1956)].
Sound principles of justice and public policy demand that persons shall
have free resort to Courts of law for redness of wrongs and vindication of
their rights without fear of later on standing trial for damages should their
lose ground (Buenaventura vs. Sto. Domingo, 103 Phil. 239).
5. ID.; ID.; ID.; AWARD OF DAMAGES; COURTS TO GUARD AGAINST
AWARD OF EXHORBITANT DAMAGES. — It may not be amiss to remind
Trial Courts to guard against the award of exhorbitant damages that are way
out of proportion to the environmental circumstances of a case and which,
time and again, this Court has reduced or eliminated. Judicial discretion
granted to the Courts in the assessment of damages must always be
exercised with balanced restraint and measured objectivity.
DECISION
MELENCIO-HERRERA, J p:
What commenced the instant proceedings is a case (hereinafter referred to
as the DAMAGE CASE) instituted by private respondents (hereinafter
referred to as the PANGANIBANS), residents of Calapan, Oriental Mindoro,
against petitioner (hereinafter referred to as INHELDER), domiciled in
Mandaluyong, Rizal, before the Court of First Instance of Oriental Mindoro
(hereinafter referred to as the MINDORO COURT). The Complaint alleged
that INHELDER had filed a case (hereinafter referred to as the COLLECTION
CASE) against the PANGANIBANS before the Municipal Court of
Mandaluyong, Rizal (hereinafter referred to as MANDALUYONG COURT),
which was subsequently dismissed; that the COLLECTION CASE (Civil Case
No. 5582), was clearly unfounded; and that the PANGANIBANS were
entitled, as against INHELDER, to quantified damages totaling P169,550.00.
The prayer in the complaint was: llcd
"WHEREFORE, it is most respectfully prayed:
1. That defendant be ordered to pay plaintiffs the amount
of FOUR THOUSAND FIVE HUNDRED FIFTY PESOS
(P4,550.00), as actual damages spent by plaintiffs in Civil
Case No. 5582 of the Municipal Court of Mandaluyong,
Rizal;
2. That defendant be ordered to pay plaintiffs the amount
of FIVE THOUSAND PESOS (P5,000.00) as attorney's fees
in Civil Case No. 5582;
3. That defendant be ordered to pay plaintiffs the amount
of FIFTY THOUSAND PESOS (P50,000.00) as
compensatory damages for injury to plaintiffs' business
standing or commercial credit pursuant to Art. 2205, par.
2 of the New Civil Code in relation to Art. 2201 and 2202
of the same Code;
4. That defendant be ordered to pay plaintiffs the amount
of FIFTY THOUSAND PESOS (P50,000.00) as moral
and/or compensatory damages due to the nervous
breakdown suffered by plaintiff Dra. Paula R. Panganiban,
pursuant to Arts. 2201, 2202 and 2217 of the New Civil
Code;
5. That defendant be ordered to pay plaintiffs the amount
of FIFTY THOUSAND PESOS (P50,000.00) as moral
damages suffered by plaintiffs due to the mental anguish,
social humiliation, besmirched reputation and similar
injury;
6. That defendant be ordered to pay plaintiffs the amount
of TEN THOUSAND PESOS (P10,000.00) as attorney's
fees in prosecuting this claim;
 7. That defendant be ordered to pay plaintiffs any amount
that may be determined by this Honorable Court as
exemplary or corrective damages pursuant to Art. 2229 of
the New Civil Code;
8. And for such other relief as may be deemed just and
equitable in the premises."
As will be seen, the complaint of the PANGANIBANS was essentially for
actual and compensatory damages, moral damages and exemplary
damages, based on the alleged clearly unfounded COLLECTION CASE.
After declaring INHELDER in default in the DAMAGE CASE, the MINDORO
COURT rendered judgment in favor of the PANGANIBANS as follows:
"WHEREFORE, judgment is hereby rendered in favor of
the plaintiffs and against the defendant Inhelder
Corporation, as follows:
1. Ordering defendant to pay plaintiffs the sum of
P4,550.00 as actual damages spent by plaintiffs in Civil
Case No. 5582 of the Municipal Court of Mandaluyong,
Rizal, as well as the sum of P3,000.00 as attorney's fees
in said Civil Case No. 5582;
2. Ordering defendant to pay plaintiffs the sum of
P50,000.00 as compensatory damages for injury to
plaintiffs business standing;
3. Ordering defendant to pay plaintiff the sum of
P50,000.00 as compensatory damages due to the
nervous breakdown suffered by plaintiff Paula R.
Panganiban and the additional amount of P50,000.00 for
moral damages plaintiffs sublined due to mental anguish,
social humiliation, besmirched reputation and other similar
injuries;
4. Ordering defendant to pay plaintiffs the sum of
P50,000.00 as exemplary damages;
5. Ordering defendant to pay plaintiffs the sum of
P5,000.00 in the form of attorney's fees.
With costs against defendant corporation."
It will be noted that the P5,000.00 claim for attorney's fees corresponding to
the COLLECTION CASE was reduced from P5,000.00 to P3,000.00, and
attorney's fees corresponding to the DAMAGE CASE was reduced from
P10,000.00 to P5,000.00. But the prayed-for P50,000.00 "as moral and/or
compensatory demanded due to the nervous break-down suffered by
plaintiff Dra. Paula R. Panganiban" was increased to P100,000.00, that is,
P50,000.00 compensatory and P50,000.00 moral. Thus, the total damages
granted to the PANGANIBANS by the MINDORO COURT amounted to
P169,550.00 minus P7,000.00 plus P50,000.00, or P212,550.00. cdll
On appeal by INHELDER, the Appellate Court * reduced the total damages
awarded to the PANGANIBANS from P212,550.00 to P41,550.00 by
modifying the judgment of the MINDORO COURT as follows:
"WHEREFORE, judgment is hereby rendered in favor of
the plaintiff and against the defendant Inhelder
Corporation as follows:.
1. Ordering defendant to pay plaintiffs the sum of
P4,550.00 as actual damages spent by plaintiffs in Civil
Case No. 5582 of the Municipal Court of Mandaluyong,
Rizal as well as the sum of P2,000.00 as attorney's fees in
Civil Case No. 5582;
2. Ordering defendant to pay plaintiffs the sum
of P10,000.00 as compensatory damages for injury to
plaintiffs' business standing;
3. Ordering defendant to pay plaintiffs the sum
of P10,000.00 as compensatory damages due to the
nervous breakdown suffered by plaintiff Paula R.
Panganiban;
4. Ordering defendant to pay plaintiffs the sum
of P10,000.00 as exemplary damages:
5. Ordering defendant to pay plaintiffs the sum of
P5,000.00 in the form of attorney's fees for the
prosecution of this case."
The background facts and circumstances of the COLLECTION CASE can be
stated as follows:
1. (a) INHELDER is engaged in the manufacture and sale of medicines and
drug. Its principal office is at No. 41 Pioneer Street, Mandaluyong, Rizal
(now Metro Manila).
(b) McGaw Baxter Laboratories, Inc. appears to be another Company also
having its principal office at No. 41 Pioneer Street.
(c) INHELDER's lawyer, both in the COLLECTION CASE and in the DAMAGE
CASE is Atty. Maximo M. Fajardo, Jr. He appears to have offices both at
INHELDER (Annex "C", Petition for Review) and at McGaw Baxter
Laboratories, Inc. 1
2. The PANGANIBANS, physicians, are the owners of the DOCTOR's
CLINIC in Calapan.
3. On December 29, 1972, DOCTOR's CLINIC purchased medicines and
drugs from INHELDER in the amount of P1,385.10, payable in installments.
The PANGANIBANS were able to pay the amount of P824.10 for that
purchase, leaving a balance of P561.00 which had remained unpaid for
approximately two years.
4. On December 2, 1974, Atty. Fajardo sent a letter to the PANGANIBANS
requesting settlement of the said amount of P561.00. In their reply, the
PANGANIBANS requested a statement of account which was sent to them
on January 17, 1975 with a follow-up letter, again, requesting remittance of
the outstanding balance of P561.00.
5. (a) On January 28, 1975, the PANGANIBANS, as stated by them, "sent
PNB Check No. 32058 to (INHELDER) in the amount of P561.00, dated
January 28, 1975, and said check was received by (INHELDER) on or before
February 5, 1975". 2
(b) The check must have been sent by mail. If it was personally delivered,
the PANGANIBANS would know the specific date when the check was
received, which then would not be "on or before February 5, 1975".
(c) It can be presumed that the PNB Check was drawn on the PNB Branch
in Calapan.
6. On February 8, 1975, Atty. Fajardo prepared the complaint in the
COLLECTION CASE, which was filed with the MANDALUYONG COURT on
February 12, 1975.
7. (a) On February 19, 1975, INHELDER sent a letter to the PANGANIBANS
"acknowledging the receipt of the PNB Check No. 32058 in the amount of
P561.00 representing full payment of the (`PANGANIBANS') account with
INHELDER". 3
(b) For the payment made by the PANGANIBANS to be effective, the PNB
Check must first be cleared with the PNB Branch in Calapan, which could
have been completed only on February 19, 1975.
8. The records do not disclose the written Answer to the complaint in the
COLLECTION CASE. In regards to the hearing thereof on May 14, 1975, the
PANGANIBANS have alleged:
"22. That during the hearing of the instant case before the
Municipal Court of Mandaluyong, undersigned counsel
showed to the Court plaintiffs' receipts to the effect that
several days before the malicious and
unfounded complaint was filed before said Court Dr. and
Mrs. Panganiban had already paid their accounts and as a
matter of fact the Inhelder Corporation has acknowledged
receipt of payment, thus, upon motion of the undersigned
counsel, Civil Case No. 5582 was dismissed without the
objection of Atty. Maximo M. Fajardo, Jr., counsel for the
Inhelder Corporation;
23. That the ORDER of dismissal by the Municipal Judge
of Mandaluyong, Rizal dated May 14, 1975, was given in
open court and the written order we sent to the
undersigned counsel later at Calapan, Oriental Mindoro
thru the mails, hence, it is very clear that said ORDER of
dismissal, with the conformity of defendant Inhelder
Corporation, has already become final; insofar as plaintiffs
and defendant and concerned;" 4
On the above facts and circumstances, it should be difficult to conclude that
the COLLECTION CASE was a clearly unfounded civil action. It is not clear
that the account of the PANGANIBANS had already been paid as of
February 12, 1975. Under Article 1249 of the Civil Code, payment should be
held effective only when PNB Check No. 32058 was actually cashed by, or
credited to the account of, INHELDER. If that did not eventuate on or before
February 12, 1975, and there is no proof that it did, the account would still
be unpaid, and the complaint in the COLLECTION CASE, technically, could
not be considered as substantially unfounded.
It is true that when the check of the PANGANIBANS was received on
February 5, 1975, the better procedure would have been to withhold a
complaint pending determination of whether or not the check was good. If
dishonored, that would be the time to file the complaint. That procedure was
not followed because of the failure of the corresponding advice which could
have been given to Atty. Fajardo by the INHELDER Credit and Collection
Manager. But the lack of that advice should not justify qualifying the
COLLECTION CASE as clearly unfounded. If the check had bounced, the
COLLECTION CASE would have been tried and acted upon by the
MANDALUYONG COURT on the merits.
Neither may it be said that the COLLECTION CASE was malicious. Malicious
prosecution, to be the basis of a suit, requires the elements of malice and
want of probable cause. 5 There must be proof that the prosecution was
prompted by a sinister design to vex and humiliate a person, and that it was ". . . Well-worth paraphrasing is the thought expressed in
initiated deliberately knowing that the charge was false and groundless. 6 a United States Supreme Court decision as to the
existence of an abiding and fundamental principle that the
In the present case, there is no evidence on record, clearly establishing expenses and annoyance of litigation form part of the
these two elements. Although there may be want of probable cause, there is social burden of living in a society which seeks to attain
no proof that petitioner deliberately initiated the COLLECTION CASE social control through law." 11
knowing that the same was false and groundless.
At this juncture, it may not be amiss to remind Trial Courts to guard against
And the rule is the same for criminal prosecution and civil suits. the award of exhorbitant damages that are way out of proportion to the
"To support an action for malicious prosecution under environmental circumstances of a case and which, time and again, this
American law the plaintiff must prove, in the first place, Court has reduced or eliminated. Judicial discretion granted to the Courts in
the fact of the prosecution and the fact that the defendant the assessment of damages must always be exercised with balanced
was himself the prosecutor, or that he instigated its restraint and measured objectivity.
commencement, and that it finally terminated in his WHEREFORE, the appealed judgment of the erstwhile Court of Appeals is
acquittal, that, in bringing it, the prosecutor had acted hereby reversed, and the decision of the Court of First Instance of Oriental
without probable cause, and that he was actuated by Mindoro in its Civil Case No. R-2525 is set aside.
legal malice, i.e., by improper or sinister motives. These
three elements must concur; and there is no distinction No costs.
between actions for criminal prosecutions and civil
suits. Both classes require substantially the same SO ORDERED.
essentials. Malice is essential to the maintenance of an Teehankee (Chairman), Plana, Vasquez and Gutierrez, Jr., JJ., concur.
action for malicious prosecution and not merely to the
recovery of exemplary damages. But malice alone does Relova, J., took no part.
not make one liable for malicious prosecution where
||| (Inhelder Corp. v. Court of Appeals, G.R. No. L-52358, [May 30, 1983], 207
probable cause is shown, even where it appears that the
PHIL 507-515)
suit was brought, for the mere purpose of vexing,
harassing and injuring his adversary. In other words,
malice and want of probable cause must both exist in
order to justify the action.' (Buchanan vs. Vda. de
Esteban, 32 Phil. 363)." 7 (Emphasis ours)
Nor can malice be inferred from want of probable cause.
"It would be a harsh rule to hold that, where the evidence
was merely sufficient to make a prima facie showing of
want of probable cause, malice must necessarily be
inferred therefrom." 8
It should also be stressed that the mere filing of a suit does not render
person liable for malicious prosecution should he be unsuccessful. The law
could not have meant to impose a penalty on the right to litigate. 9 Sound
principles of justice and public policy demand that persons shall have free
resort to Courts of law for redress of wrongs and vindication of their rights
without fear of later on standing trial for damages should their actions lose
ground. 10As expressed by Chief Justice Enrique M. Fernando from a
broader perspective: LLphil