ACTUAL / COMPENSATORY (Arts.

2199-2215)
ADA ABELLERA
EDGARDO CARIAGA, ET AL., plaintiffs-appellants,
vs.
LAGUNA TAYABAS BUS COMPANY, defendant-appellant.
MANILA RAILROAD COMPANY, defendant-appellee.

FACTS:

In 1952, Bus No. 133 of the Laguna Tayabas Bus

Co. (LTB) driven by Alfredo Moncada, left its station at Azcarraga St., Manila, for
Lilio, Laguna, with Edgardo Cariaga, a fourth-year medical student of the University of
Santo Tomas, as one of its passengers.

The bus bumped against the engine of a train then passing by with such terrific force that
the first six wheels of the latter were derailed, the engine and the front part of the body of
the bus was wrecked, the driver of the bus died instantly, while many of its passengers,
Edgardo among them, were severely injured. Edgardo was confined to different hospitals.
He was unconscious during the first 35 days after the accident; at the De los Santos Clinic
Dr. Gustilo removed the fractured bones which lacerated the right frontal lobe of his brain
and at the University of Santo Tomas Hospital Dr. Gustilo performed another operation to
cover a big hole on the right frontal part of the head with a tantalum plate.

The LTB paid the sum of P16,964.45 for all the hospital, medical and miscellaneous
expenses incurred up to the time Edgardo stayed in a private house in Quezon, City, the
LTB having agreed to give him a subsistence allowance of P10.00 daily during his
convalescence, having spent in this connection the total sum of P775.30 in addition to the
amount already referred to.

An was filed to recover for Edgardo Cariaga, from the LTB and the MRR Co., and total sum
of P312,000.00 as actual, compensatory, moral and exemplary damages, and for his
parents, the sum of P18,00.00 in the same concepts.

The LTB disclaimed liability claiming that the accident was due to the negligence of its co-
defendant, the Manila Railroad Company and filed a cross-claim against the latter for the
expenses paid to Edgardo Cariaga. The Manila Railroad Company, in turn, denied liability
upon the complaint and cross-claim alleging that it was the reckless negligence of the bus
driver that caused the accident.

LOWER COURT:

It was the negligence of the bus driver that caused the accident and, as a result, rendered
judgment sentencing the LTB to pay Edgardo Cariaga the sum of P10,490.00 as
compensatory damages, with interest at the legal rate from the filing of the complaint, and
dismissing the cross-claim against the Manila Railroad Company. From this decision the
Cariagas and the LTB appealed.

ISSUE: WON Edgardo and his parents may claim for all the damages they asked for.

HELD: No, not all.

The SC agreed with the trial court.

COMPENSATORY DAMAGES (AND OF COURSE ACTUAL DAMAGES)

The Cariagas, as appellants, claim that the award of P10,000.00 compensatory damages to
Eduardo is inadequate considering the nature and the after effects of the physical injuries
suffered by him. After a careful consideration of the evidence on this point we find
their contentions to be well-founded.

From the deposition of Dr. Romeo Gustilo, a neurosurgeon, it appears that, as a result of
the injuries suffered by Edgardo, his right forehead was fractured necessitating the removal
of practically all of the right frontal lobe of his brain. From the testimony of Dr. Jose A.
Fernandez, a psychiatrist, it may be gathered that, because of the physical injuries suffered
by Edgardo, his mentality has been so reduced that he can no longer finish his studies as a
medical student; that he has become completely misfit for any kind of work; that he can
hardly walk around without someone helping him, and has to use a brace on his left leg and
feet.

Upon the whole evidence on the matter, the lower court found that the removal of the right
frontal lobe of the brain of Edgardo reduced his intelligence by about 50%; that due to the
replacement of the right frontal bone of his head with a tantalum plate Edgardo has to lead
a quite and retired life because "if the tantalum plate is pressed in or dented it would cause
his death."

The impression one gathers from this evidence is that, as a result of the physical injuries
suffered by Edgardo Cariaga, he is now in a helpless condition, virtually an invalid, both
physically and mentally.

Appellant LTB admits that under Art. 2201 of the Civil Code the damages for which the
obligor, guilty of a breach of contract but who acted in good faith, is liable shall be
those that are the natural and probable consequences of the breach and which the
parties had forseen or could have reasonably forseen at the time the obligation was
constituted, provided such damages, according to Art. 2199 of the same Code, have
been duly proved.

Upon this premise it claims that only the actual damages suffered by Edgardo Cariaga
consisting of medical, hospital and other expenses in the total sum of P17,719.75 are within
this category.

The court is of the opinion, however, that the income which Edgardo Cariaga could
earn if he should finish the medical course and pass the corresponding board
examinations must be deemed to be within the same category because they could
have reasonably been foreseen by the parties at the time he boarded the bus No. 133
owned and operated by the LTB.

At that time he was already a fourth-year student in medicine in a reputable university.

While his scholastic may not be first rate, it is, nevertheless, sufficient to justify the
assumption that he could have passed the board test in due time. As regards the income
that he could possibly earn as a medical practitioner, it appears that, according to Dr.
Amado Doria, a witness for the LTB, the amount of P300.00 could easily be expected as the
minimum monthly income of Edgardo had he finished his studies.

Upon consideration of all the facts mentioned heretofore this Court is of the opinion,
and so holds, that the compensatory damages awarded to Edgardo Cariaga should
be increased to P25,000.00.

MORAL DAMAGES AND ATTORNEY'S FEES

The SC also agreed with the trial court.

The pertinent portion of its decision reading as follows:

Plaintiffs' claim for moral damages cannot also be granted. Article 2219 of the
Civil Code enumerates the instances when moral damages may be covered and the
case under consideration does not fall under any one of them. The present action
cannot come under paragraph 2 of said article because it is not one of the quasi-
delict and cannot be considered as such because of the pre-existing contractual
relation between the Laguna Tayabas Bus Company and Edgardo Cariaga. Neither
could defendant Laguna Tayabas Bus Company be held liable to pay moral
damages to Edgardo Cariaga under Article 2220 of the Civil Code on account of
breach of its contract of carriage because said defendant did not act fraudulently or
in bad faith in connection therewith. Defendant Laguna Tayabas Bus Company had
exercised due diligence in the selection and supervision of its employees like the
drivers of its buses in connection with the discharge of their duties and so it must be
considered an obligor in good faith.

The plaintiff Edgardo Cariaga is also not entitled to recover for attorney's fees,
because this case does not fall under any of the instances enumerated in Article
2208 of the Civil Code.

Also citing the SCs ruling in the case of Cachero vs. Manila Yellow Taxicab Co., Inc.(101
Phil., 523, 530, 533):

A mere perusal of plaintiff's complaint will show that this action against the defendant
is predicated on an alleged breach of contract of carriage, i.e., the failure of the
defendants to bring him "safely and without mishaps" to his destination, and it is to
be noted that the chauffeur of defendant's taxicab that plaintiff used when he
received the injuries involved herein, Gregorio Mira, has not even made a party
defendant to this case.
Considering, therefore, the nature of plaintiff's action in this case, is he entitled to
compensation for moral damages? Article 2219 of the Civil Code says the following:

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

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

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

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

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

(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.

xxx xxx xxx

Of course enumerated in the just quoted Article 2219 only the first two may have any
bearing on the case at bar. We find, however, with regard to the first that the
defendant herein has not committed in connection with this case any "criminal
offense resulting in physical injuries".

For discussion purposes:

In the case of Cangco, vs. Manila Railroad, 38 Phil. 768, We established the
distinction between obligation derived from negligence and obligation as a
result of a breach of contract. Thus, we said:

It is important to note that the foundation of the legal liability of the defendant is the
contract of carriage, and that the obligation to respond for the damage which plaintiff
has suffered arises, if at all, from the breach of that contract by reason of the failure
of defendant to exercise due care in its performance. That is to say, its liability is
direct and immediate, differing essentially in the legal viewpoint from the
presumptive responsibility for the negligence of its servants, imposed by Article 1903
of the Civil Code (Art. 2180 of the new), which can be rebutted by proof of the
exercise of due care in their selection of supervision. Article 1903 is not applicable to
obligations arising EX CONTRACTU, but only to extra-contractual obligations or
 to use the technical form of expression, that article relates only to CULPA
AQUILIANA' and not to CULPA CONTRACTUAL. lawphil.net

The decisions in the cases of Castro vs. Acro Taxicab Co., (82 Phil., 359; 46 Off.
Gaz., No. 5, p. 2023); Lilius, et al. vs. Manila Railroad, 59 Phil., 758) and others,
wherein moral damages were awarded to the plaintiffs, are not applicable to the
case at bar because said decision were rendered before the effectivity of the
new Civil Code (August 30, 1950) and for the further reason that the
complaints filed therein were based on different causes of action.

MORAL DAMAGES CLAIMED BY EDGARDOS PARENTS ARE LIKEWISE CANNOT BE

GRANTED.

The claim made by said spouses for actual and compensatory damages is likewise
without merits. As held by the trial court, in so far as the LTB is concerned, the present
action is based upon a breach of contract of carriage to which said spouses were not a
party, and neither can they premise their claim upon the negligence or quasi-delictof the
LTB for the simple reason that they were not themselves injured as a result of the collision
between the LTB bus and train owned by the Manila Railroad Company.

JOHN C. QUIRANTE and DANTE CRUZ, petitioners,

vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT, MANUEL C. CASASOLA, and ESTRELLITA C.
CASASOLA, respondents.

FACTS:

Dr. Indalecio Casasola (father of respondents) had a contract with a building contractor named Norman
GUERRERO. The Philippine American General Insurance Co. Inc. (PHILAMGEN, for short) acted as bondsman for
GUERRERO. In view of GUERRERO'S failure to perform his part of the contract within the period specified, Dr.
Indalecio Casasola, thru his counsel, Atty. John Quirante, sued both GUERRERO and PHILAMGEN for damages,
with PHILAMGEN filing a cross-claim against GUERRERO for indemnification.

RTC:

Ruled in favor of the Casasola by rescinding the contract; ordering GUERRERO and PHILAMGEN to pay the
plaintiff actual damages in the amount of P129,430.00, moral damages in the amount of P50,000.00, exemplary
damages in the amount of P40,000.00 and attorney's fees in the amount of P30,000.00; ordering Guerrero alone
to pay liquidated damages of P300.00 a day from December 15, 1978 to July 16, 1979; and ordering PHILAMGEN
to pay the plaintiff the amount of the surety bond equivalent to P120,000.00. 5 A motion for reconsideration
filed by PHILAMGEN was denied by the trial court on November 4, 1982.

Not satisfied with the decision of the trial court, PHILAMGEN filed a notice of appeal but the same was not given
due course because it was allegedly filed out of time. The trial court thereafter issued a writ of execution.
In the meantime, on November 16, 1981, Dr. Casasola died leaving his widow and several children as survivors.

Quirante filed a motion in the trial court for the confirmation of his attorney's fees. According to him, there was
an oral agreement between him and the late Dr. Casasola with regard to his attorney's fees, which agreement
was allegedly confirmed in writing by the widow, Asuncion Vda. de Casasola, and the two daughters of the
deceased, namely Mely C. Garcia and Virginia C. Nazareno. Petitioner avers that pursuant to said agreement, the
attorney's fees would be computed as follows:

A. In case of recovery of the P120,000.00 surety bond, the attorney's fees of the undersigned counsel (Atty.
Quirante) shall be P30,000.00.

B. In case the Honorable Court awards damages in excess of the P120,000.00 bond, it shall be divided equally
between the Heirs of I. Casasola, Atty. John C. Quirante and Atty. Dante Cruz.

The trial court granted the motion for confirmation in an order, despite an opposition thereto. It also denied
the motion for reconsideration of the order of confirmation in its second order.

ISSUE: WON the confirmation of the attorneys fees of the petitioner is proper.

HELD: NO

Well settled is the rule that counsel's claim for attorney's fees may be asserted either in the very action in
which the services in question have been rendered, or in a separate action. If the first alternative is chosen, the
Court may pass upon said claim, even if its amount were less than the minimum prescribed by law for the
jurisdiction of said court, upon the theory that the right to recover attorney's fees is but an incident of the case
in which the services of counsel have been rendered ." It also rests on the assumption that the court trying the
case is to a certain degree already familiar with the nature and extent of the lawyer's services. The rule against
multiplicity of suits will in effect be subserved.

What is being claimed here as attorney's fees by petitioners is, however, different from attorney's fees as an
item of damages provided for under Article 2208 of the Civil Code, wherein the award is made in favor of the
litigant, not of his counsel, and the litigant, not his counsel, is the judgment creditor who may enforce the
judgment for attorney's fees by execution. Here, the petitioner's claims are based on an alleged contract for
professional services, with them as the creditors and the private respondents as the debtors.

In filing the motion for confirmation of attorney's fees, petitioners chose to assert their claims in the same
action. This is also a proper remedy under our jurisprudence.

Nevertheless, the confirmation of attorney's fees is premature. As it correctly pointed out, the petition for
review on certiorari filed by PHILAMGEN in this Court "may or may not ultimately result in the granting to the
Isasola (sic) family of the total amount of damages" awarded by the trial court. This is especially true in the light
of subsequent developments in the other case.

Since the main case from which the petitioner's claims for their fees may arise has not yet become final, the
determination of the propriety of said fees and the amount thereof should be held in abeyance. This procedure
gains added validity in the light of the rule that the remedy for recovering attorney's fees as an incident of the
main action may be availed of only when something is due to the client. Thus, it was ruled that:

... an attorney's fee cannot be determined until after the main litigation has been decided and the
subject of recovery is at the disposition of the court. The issue over attorney's fee only arises when something
has been recovered from which the fee is to be paid.

It is further observed that the supposed contract alleged by petitioners as the basis for their fees provides that
the recovery of the amounts claimed is subject to certain contingencies. It is subject to the condition that the fee
shall be P30,000.00 in case of recovery of the P120,000.00 surety bond, plus an additional amount in case the
award is in excess of said P120,000.00 bond, on the sharing basis hereinbefore stated.

With regard to the effect of the alleged confirmation of the attorney's fees by some of the heirs of the
deceased. We are of the considered view that the orderly administration of justice dictates that such issue be
likewise determined by the court a quo inasmuch as it also necessarily involves the same contingencies in
determining the propriety and assessing the extent of recovery of attorney's fees by both petitioners herein. The
court below will be in a better position, after the entire case shall have been adjudicated, inclusive of any
liability of PHILAMGEN and the respective participations of the heirs of Dr. Casasola in the award, to determine
with evidentiary support such matters like the basis for the entitlement in the fees of petitioner Dante Cruz and
as to whether the agreement allegedly entered into with the late Dr. Casasola would be binding on all his heirs,
as contended by petitioner Quirante.

We, therefore, take exception to and reject that portion of the decision of the respondent court which holds
that the alleged confirmation to attorney's fees should not adversely affect the non-signatories thereto, since it
is also premised on the eventual grant of damages to the Casasola family, hence the same objection of
prematurity obtains and such a holding may be pre-emptive of factual and evidentiary matters that may be
presented for consideration by the trial court.

Reformina vs. Tomol Jr., No.

FACTS:

How much, by way of legal interest, should a judgment debtor pay the judgment creditor- is the issue raised by
the REFORMINAS (herein petitioners) in this Petition for Review on certiorari of the Resolution of the Hon.
respondent Judge Valeriano P. Tomol, Jr. of the then Court of First Instance of Cebu-Branch XI, issued in Civil
Case No.
R-11279, an action for Recovery of Damages for injury to Person and Loss of Property.

The dispositive portion of the assailed Resolution reads as follows

In light (sic) of the foregoing, the considered view here that by legal interest is meant six (6%) percent as
provided for by Article 2209 of the Civil Code. Let a writ of execution be issued.
SO ORDERED. 1

Petitioners' motion for the reconsideration of the questioned Resolution having been denied, they now come
before Us through the instant petition praying for the setting aside of the said Resolution and for a declaration
that the judgment in their favor should bear legal interest at the rate of twelve (12%) percent per annum
pursuant to Central Bank Circular No. 416 dated July 29, 1974.

Hereunder are the pertinent antecedents:

FACTS:

A judgment was rendered by the CFI of Cebu in a Civil Case whereby a judgment is hereby rendered in favor of
the plaintiffs and third party defendants and against the defendants and third party plaintiffs ordering the
defendants and third party plaintiffs Shell and Michael, Incorporated to pay jointly and severally the following
persons which among other includes the Reforminas for the sum of P131,084.00 which is the value of the boat F
B Pacita Ill 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.

On appeal to the then Court of Appeals, the trial court's judgment was modified to reads as follows

That defendants-appellants Shell Refining Co. (Phils.), Inc. and Michael, Incorporated are hereby ordered to pay
... The two (2) defendants- appellants are also directed to pay P100,000.00 with legal interests from the filing of
the complaint until paid as compensatory and moral damages and P41,000.00 compensation for the value of the
lost boat with legal interest from the filing of the complaint until fully paid to Pacita F. Reformina and the heirs
of Francisco Reformina. The liability of the two defendants for an the awards is solidary.

xxx xxx xxx

Except as modified above, the rest of the judgment appealed from is affirmed. The defendants-appellants shall
pay costs in favor of the plaintiffs. Appellants Shell and Michael and third party defendant Anita L. Abellanosa
shall shoulder their respective costs.

The said decision having become final, the case was remanded to the lower court for execution and this is where
the controversy started.

In the computation of the "legal interest" decreed in the judgment sought to be executed, petitioners claim
that the "legal interest" should be at the rate of twelve (12%) percent per annum, invoking in support of their
aforesaid submission, Central Bank of the Philippines Circular No. 416.

In support of their stand, petitioners contend that Central Bank Circular No. 416 which provides

By virtue of the authority granted to it under Section 1 of Act 2655, as amended, otherwise known as the
"Usury Law" the 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%) per cent per annum. This
Circular shall take effect immediately. (Italics supplied)

includes the judgment sought to be executed in this case, because it is covered by the phrase 2nd the rate
allowed in judgments in the absence of express contract as to such rate of interest ... " in the aforequoted
circular.

Upon the other hand, private respondents insist that said legal interest should be at the rate of six (6%) percent
per annum only, pursuant to and by authority of Article 2209 of the New Civil Code in relation to Articles 2210
and 2211 thereof.

ISSUE: How much, by way of legal interest, should a judgment debtor pay the judgment creditor?

HELD: 6 %.

Central Bank Circular No. 416 which took effect on July 29, 1974 was issued and promulgated by the Monetary
Board pursuant to the authority granted to the Central Bank by P.D. No. 116, which amended Act No. 2655,
otherwise known as the Usury Law. The amendment from which said authority emanated reads as follows

Section 1-a. The Monetary Board is hereby authorized to prescribe the maximum rate or rates of interest for
the loan or renewal thereof or the forbearance of any money, goods or credits, and to change such rate or rates
whenever warranted by prevailing economic and social conditions: Provided, That such changes shall not be
made oftener than once every twelve months.

In the exercise of the authority herein granted, the Monetary Board may prescribe higher maximum rates for
consumer loans or renewals thereof as well as such loans made by pawnshops, finance companies and other
similar credit institutions although the rates prescribed for these institutions need not necessarily be uniform.
(Italics supplied)

Acting pursuant to this grant of authority, the Monetary Board increased the rate of legal interest from that of
six (6%) percent per annum originally allowed under Section I of Act No. 2655 to twelve (12%) percent per
annum.

It will be noted that Act No. 2655 deals with interest on (1) loans; (2) forbearances of any money, goods, or
credits; and (3) rate allowed in judgments.

The issue now iswhat kind of judgment is referred to under the said law. Petitioners maintain that it covers all
kinds of monetary judgment.

The contention is devoid of merit.

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. The Monetary Board may not tread on forbidden
grounds. It cannot rewrite other laws. That function is vested solely with the legislative authority. It is axiomatic
in legal hermeneutics that statutes should be construed as a whole and not as a series of disconnected articles
and phrases. In the absence of a clear contrary intention, words and phrases in statutes should not be
interpreted in isolation from one another. A word or phrase in a statute is always used in association with other
words or phrases and its meaning may thus be modified or restricted by the latter.

Another formidable argument against the tenability of petitioners' stand are the whereases of PD No. 116 which
brought about the grant of authority to the Central Bank and which reads thus

WHEREAS, the interest rate, together with other monetary and credit policy instruments, performs a vital role in
mobilizing domestic savings and attracting capital resources into preferred areas of investments;

WHEREAS, the monetary authorities have recognized the need to amend the present Usury. Law to allow for
more flexible interest rate ceilings that would be more responsive to the requirements of changing economic
conditions;

WHEREAS, the availability of adequate capital resources is, among other factors, a decisive element in the
achievement of the declared objective of accelerating the growth of the national economy.

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

Art. 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 provision remains untouched despite the grant of authority to the Central Bank by Act No. 2655, as
amended. To make Central Bank Circular No. 416 applicable to any case other than those specifically provided
for by the Usury Law will make the same of doubtful constitutionality since the Monetary Board will be
exercising legislative functions which was beyond the intendment of P.D. No. 116.