#1 SPS. SANTOS VS. CA G.R. No. 116100 February 9, 1996 REGALADO, J.

PETITIONER: SPOUSES CRISTINO and RESPONDENT: COURT OF APPEALS, HEIRS OF PACIFICO

BRIGIDA CUSTODIO and SPOUSES LITO and C. MABASA and REGIONAL TRIAL COURT OF PASIG,
MARIA CRISTINA SANTOS METRO MANILA, BRANCH 181

NATURE OF THE CASE: Petition for Review on Certiorari (Civil Case for the Grant of an Easement of Right of
Way)

DOCTRINE: To warrant the recovery of damages, there must be both a right of action for a legal wrong inflicted by
the defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or damage without wrong,
does not constitute a cause of action, since damages are merely part of the remedy allowed for the injury caused by
a breach or wrong. No. 47466

FACTS:
Plaintiff, Pacifico Mabasa, owns a parcel of land with a two-door apartment erected thereon situated at Interior P.
Burgos St., Palingon, Tipas, Tagig, Metro Manila. He was able to acquire said property through a contract of sale
with Sps. Mamerto Rayos and Teodora Quintero as vendors last September 1981. Said property may be described
to be surrounded by other immovables pertaining to defendants, Cristino Custodio, Brigida R. Custodio, Rosalina R.
Morato, Lito Santos and Maria Cristina C. Santos.

Taking P. Burgos Street as the point of reference, On the left side, going to plaintiff's property, the row of houses will
be as follows: That of defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina Santos and then
that of Ofelia Mabasa. On the right side (is) that of defendant Rosalina Morato and then a Septic Tank. As an access
to P. Burgos Street from plaintiff's property, there are two possible passageways. The first passageway is
approximately one meter wide and is about 20 meters distant from Mabasa's residence to P. Burgos Street. Such
path is passing in between the previously mentioned row of houses. The second passageway is about 3 meters in
width and length from plaintiff Mabasa's residence to P. Burgos Street; it is about 26 meters. In passing thru said
passageway, a less than a meter wide path through the septic tank and with 5-6 meters in length, has to be
traversed.

When the property was purchased by Mabasa, there were tenants occupying the premises and who were
acknowledged by him as tenants. However, sometime in February 1982, one of said tenants vacated the apartment
and when Mabasa went to see the premises, he saw that there had been built an adobe fence in the first
passageway making it narrower in width. Said adobe fence was first constructed by Sps. Santos along their property
which is also along the first passageway. Defendant Morato constructed her adobe fence and even extended said
fence in such a way that the entire passageway was enclosed. It was then that the remaining tenants of said
apartment vacated the area.

On August 26, 1982, Pacifico Mabasa filed a civil case for the grant of an easement of right of way against the
defendants before the RTC of Pasig, Branch 22. Mabasa died during the pendency of the case and was substituted
by Ofelia Mabasa, his surviving spouse [and children].

Defendant Ma. Cristina Santos testified that she constructed said fence because there was an incident when her
daughter was dragged by a bicycle pedalled by a son of one of the tenants in said apartment along the first
passageway. She mentioned other inconveniences of having a pathway at the front of her house such as when
some of the tenants were drunk and would bang their doors and windows. Some of their footwear were even lost.

On February 27, 1990, the RTC Pasig rendered its decision (1) Ordering defendants Custodios and Santoses to
give plaintiff permanent access ingress and egress, to the public street and (2) Ordering the plaintiff to pay
defendants Custodios and Santoses the sum of Eight Thousand Pesos (P8,000) as indemnity for the permanent use
of the passageway.

Not satisfied therewith, therein plaintiff, represented by his heirs, went to the CA raising the sole issue of whether or
not the lower court erred in not awarding damages in their favor. On November 10, 1993, the CA affirmed the
judgment of the trial court with modification. Moreover, the CA ordered defendants-appellees to pay plaintiffs-
appellants the sum of Sixty Five Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos
as Moral Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The CA likewise denied
petitioner's motion for reconsideration.

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ISSUE: 1. Whether or not the grant of right of way to herein private respondents is proper.
2. Whether or not the award of damages is in order.

HELD:
1. Petitioners are already barred from raising the issue on the grant of right of way. Petitioners did not
appeal from the decision of the court a quo granting private respondents the right of way, hence they are
presumed to be satisfied with the adjudication therein. With the finality of the judgment of the trial court as
to petitioners, the issue of propriety of the grant of right of way has already been laid to rest.

For failure to appeal the decision of the trial court to the CA, petitioners cannot obtain any affirmative relief other
than those granted in the decision of the trial court. That decision of the court below has become final as against
them and can no longer be reviewed, much less reversed, by this Court. The rule in this jurisdiction is that whenever
an appeal is taken in a civil case, an appellee who has not himself appealed may not obtain from the appellate court
any affirmative relief other than what was granted in the decision of the lower court. The appellee can only advance
any argument that he may deem necessary to defeat the appellant's claim or to uphold the decision that is being
disputed, and he can assign errors in his brief if such is required to strengthen the views expressed by the court a
quo. These assigned errors, in turn, may be considered by the appellate court solely to maintain the appealed
decision on other grounds, but not for the purpose of reversing or modifying the judgment in the appellee's favor and
giving him other affirmative reliefs.

2. No. The SC agrees with petitioners that the Court of Appeals erred in awarding damages in favor of
private respondents. The award of damages has no substantial legal basis. A reading of the decision
of the CA will show that the award of damages was based solely on the fact that the original plaintiff
Mabasa, incurred losses in the form of unrealized rentals when the tenants vacated the leased premises by
reason of the closure of the passageway.

However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover damages. To
warrant the recovery of damages, there must be both a right of action for a legal wrong inflicted by the
defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or damage without wrong,
does not constitute a cause of action, since damages are merely part of the remedy allowed for the injury caused by
a breach or wrong.

There is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is
the loss, hurt, or harm which results from the injury; and damages are the recompense or compensation awarded for
the damage suffered. Thus, there can be damage without injury in those instances in which the loss or harm was not
the result of a violation of a legal duty. These situations are often called damnum absque injuria.

In order that a plaintiff may maintain an action for the injuries of which he complains, he must establish that such
injuries resulted from a breach of duty which the defendant owed to the plaintiff a concurrence of injury to the
plaintiff and legal responsibility by the person causing it. The underlying basis for the award of tort damages is
the premise that an individual was injured in contemplation of law. Thus, there must first be the breach of
some duty and the imposition of liability for that breach before damages may be awarded; it is not sufficient to state
that there should be tort liability merely because the plaintiff suffered some pain and suffering.

Many accidents occur and many injuries are inflicted by acts or omissions which cause damage or loss to another
but which violate no legal duty to such other person, and consequently create no cause of action in his favor. In
such cases, the consequences must be borne by the injured person alone. The law affords no remedy for damages
resulting from an act which does not amount to a legal injury or wrong.

In other words, in order that the law will give redress for an act causing damage, that act must be not only hurtful,
but wrongful. There must be damnum et injuria. If, as may happen in many cases, a person sustains actual
damage, that is, harm or loss to his person or property, without sustaining any legal injury, that is, an act or omission
which the law does not deem an injury, the damage is regarded as damnum absque injuria.

In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of private
respondents, petitioners could not be said to have violated the principle of abuse of right. In order that the principle
of abuse of right provided in Article 21 of the Civil Code can be applied, it is essential that the following requisites
concur: (1) The defendant should have acted in a manner that is contrary to morals, good customs or public policy;

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(2) The acts should be willful; and (3) There was damage or injury to the plaintiff.

The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners, hence not
contrary to morals, good customs or public policy. The law recognizes in the owner the right to enjoy and dispose of
a thing, without other limitations than those established by law. It is within the right of petitioners, as owners, to
enclose and fence their property. Article 430 of the Civil Code provides that "(e)very owner may enclose or fence his
land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to
servitudes constituted thereon."

At the time of the construction of the fence, the lot was not subject to any servitudes. There was no easement of
way existing in favor of private respondents, either by law or by contract. The fact that private respondents had
no existing right over the said passageway is confirmed by the very decision of the trial court granting a
compulsory right of way in their favor after payment of just compensation. It was only that decision which
gave private respondents the right to use the said passageway after payment of the compensation and imposed a
corresponding duty on petitioners not to interfere in the exercise of said right.

Hence, prior to said decision, petitioners had an absolute right over their property and their act of fencing and
enclosing the same was an act which they may lawfully perform in the employment and exercise of said right. To
repeat, whatever injury or damage may have been sustained by private respondents by reason of the rightful use of
the said land by petitioners is damnum absque injuria.

A person has a right to the natural use and enjoyment of his own property, according to his pleasure, for all the
purposes to which such property is usually applied. As a general rule, therefore, there is no cause of action for
acts done by one person upon his own property in a lawful and proper manner, although such acts
incidentally cause damage or an unavoidable loss to another, as such damage or loss is damnum absque
injuria. When the owner of property makes use thereof in the general and ordinary manner in which the property is
used, such as fencing or enclosing the same as in this case, nobody can complain of having been injured, because
the incovenience arising from said use can be considered as a mere consequence of community life.

The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie, although the act
may result in damage to another, for no legal right has been invaded. One may use any lawful means to accomplish
a lawful purpose and though the means adopted may cause damage to another, no cause of action arises in the
latter's favor. An injury or damage occasioned thereby is damnum absque injuria. The courts can give no redress for
hardship to an individual resulting from action reasonably calculated to achieve a lawful means.

WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of respondent Court of
Appeals is hereby REVERSED and SET ASIDE and the judgment of the trial court is correspondingly
REINSTATED.

#2 ESTOLAS V. ACENA G.R. No. 157070 JAN 14, 2005 CHICO-NAZARIO, J.:

PETITIONER: JOSEFINA ESTOLAS RESPONDENT: RAYMUNDO ACENA

and RICARDO SALVADOR

NATURE OF THE CASE: PETITION FOR REVIEW ON CERTIORARI

DOCTRINE: In order that one can have redress for an act which caused him damage, the act must not only be
hurtful, it must also be wrongful.There must be damnum et enjuria.

FACTS:
Then RTC President Lydia N. Profeta issued an appointment to Mr. Acena as Associate Professor. Mr. Acena
wrote RTC President Profeta that he prefers to remain as Administrative Officer because this Commission might
approve his appointment as temporary because he does not possess a masteral degree. He asked that his
appointment as Associate Professor be withdrawn and that he will refund whatever he received as salary of
Associate Professor in excess of his salary as Administrative Officer. In a letter dated January 13, 1986, RTC
President Profeta wrote Mr. Acena that his appointment as Associate Professor was withdrawn. On March 26,
1986, appellant-defendant Dr. Josefina Estolas (now petitioner) is designated as Officer-in-charge of RTC in place

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of Dr. Profeta. She later issued Memorandum Order No. 30, Series of 1986, revoking the designation of
respondent Acena as Acting Administrative Officer effective on even date and designating appellant-defendant
(now petitioner) Ricardo Salvador in his stead. Respondent Acena instituted Civil Case No. 53327 for Injunction
and Damages enjoining petitioner Estolas from implementing and enforcing Memorandum Order No. 30 claiming
that the same violated his rights to security of tenure. In fact, when he sought the opinion of of the CSC regarding
his appointment and status as Administrative Officer of the RTC. Chairperson of the CSC, Celerina Gotladera,
issues an opinion in favor of respondent Acena holding that the latter is still the administrative officer as he was
appointed thereto under permanent status and as his appointment as Associate Professor had been withdrawn.
The trial court rendered a decision in favor of Acena, by ordering Estolas to pay Acena moral and exemplary
damages. The Court of Appeals affirmed in toto the Decision of the trial court.

ISSUE:
1. Whether or not respondent Acena suffered damages from petitioner Estolas’ wrongful act of issuing
Memorandum Order No. 30 and from her acts of bad faith as discussed above?

2. Whether or not petitioner Salvador is liable for damages considering that there is no adequate proof of
conspiracy with petitioner Estolas nor is there evidence of bad faith on his part?

HELD:
The lower court, as well as the Court of Appeals, missed out one very crucial fact, i.e., damages are not
presumed; the first requisite for the recovery of moral damages is that there must be an injury, whether physical,
mental or psychological, clearly sustained by the claimant. There must be proof of physical suffering, mental
anguish, fright, serious anxiety, etc. The claimant must satisfactorily prove the factual basis and causal connection
thereof with the defendant’s acts.

NOTE: The law on damages prescribes that in order that one can have redress for an act which caused him
damage, the act must not only be hurtful, it must also be wrongful.There must be damnum et enjuria. All in all, in
order to recover moral damages, the claimant must prove the following: (1) there must be an injury, whether
physical, mental or psychological, clearly sustained by the claimant; (2) there must be a culpable act or omission
factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury
sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219
of the Civil Code.

HENCE:

1. The evidence supports respondent Acenas claim for moral damages against petitioner Estolas. The actuations
of petitioner Estolas in booting-out respondent Acena as Administrative Officer, which the latter held in a
permanent capacity, and in forcing the position of Associate Professor undisputedly a temporary position down his
throat, fall squarely within Article 21 of the Civil Code on human relations. On the witness stand, respondent Acena
testified that as a direct result of petitioner Estolas’ actuations, he felt insulted, embarrassed and humiliated. He
suffered serious anxiety, moral shock, sleepness nights and even had to resort to minimum tanquilizer.
Considering respondent Acenas high position in the RTC community and the long drawn out feud between him
and the president of the college, we find his claim of having suffered moral damages credible. The award of
exemplary damages in the amount of P10,000 is likewise justified to set an example for the public good and as a
form of deterrent to the repetition of the same act by others.

2. Quite the contrary, petitioner Salvador cannot be made liable for moral damages as it was not proved that he
conspired with petitioner Estolas in issuing Memorandum Order No. 30. Neither was it proved that he acted in bad
faith during all time material to the case. Invariably, in order that a plaintiff (respondent Acena herein) may
maintain an action for the injuries of which he complains, he must establish that such injuries resulted from a
breach of duty which the defendant owed to the plaintiff a concurrence of injury to the plaintiff and legal
responsibility by the person causing it.
Considering that petitioner Salvador cannot be made liable for moral damages, neither can he answer for
exemplary damages, the latter being allowed only in addition to moral, temperate, liquidated or compensatory
damages.

WHEREFORE, premises considered the Decision of the Court of Appeals dated 30 May 2002 and its Resolution
dated 22 January 2003 are hereby AFFIRMED with the MODIFICATION that only petitioner Josefina V. Estolas is
ordered to pay respondent Raymundo Acena the amount of Seventy-Five Thousand Pesos (P75,000) as moral
damages and Ten Thousand Pesos (P10,000) as exemplary damages. With costs.

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#3 BPI EXPRESS CREDIT CARD vs CA GR No. 120639 Sept 25, 1998 KAPUNAN, J

PETITIONER: BPI Express Card RESPONDENT: Court of Appeals and Ricardo J. Marasigan

NATURE OF THE CASE: Petition for review on certiorari under rule 65

DOCTRINE: There is a material distinction between damages and injury. Injury is the illegal invasion of a legal
right; damage is the loss, hurt, or harm which results from the injury; and damages are the recompense or
compensation awarded for the damage suffered. Thus, there can be damage without injury in those instances in
which the loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must be
borne by the injured person alone, the law affords no remedy for damages resulting from an act which does not
amount to a legal injury or wrong. These situations are often called damnum absque injuria

FACTS:
The private respondent in this case, Atty. Ricardo J. Marasigan, was a complimentary member of the BPI Express
Credit Card Corp (BECC for brevity) from February 1988 to February 1989 and was issued Credit Card no. 100-
012-5534 with a credit limit of P3,000 and with a monthly billing every 27 th of the month, subject to the terms and
conditions stipulated in the contract. His membership was renewed for another year until February 1990 and the
credit limit was increased to P5,000. During the existence of his membership, the private respondent oftentimes
exceeded his credit limit, but the same was never taken against him by the BECC. Their contractual relations went
on smoothly until his statement of account for October 1989 amounting to P8,987.84 was not paid in due time. The
private respondent admitted having inadvertently failed to pay his account for the said month because he was in
Quezon province attending some professional and personal commitments. Thereafter, he was informed by his
secretary that BECC was demanding immediate payment of his outstanding account, and was requiring him to
issue a check for P15,000.00 which would include his future bills. He was also informed, that if he fails to comply
with such, BECC will suspend the privileges of his credit card. As such, private respondent issued a check in the
amount of P15,000, postdated December 1989. The said check was received on November 23, 1989 by Tess
Lorenzo, and employee of BECC, who in turn gave the said check to Jen Angeles, a co-employee who handles the
account of the private respondent. The said check remained with Jeng Angeles for a week before informing the
head of the collection department of BECC. On November 28, 1989, BECC served Atty. Marasigan a letter by
ordinary mail informing him of the temporary suspension of the privileges of his credit card and the inclusion of his
account number in their Caution List. He was also told to refrain from further use to avoid any inconvenience and
embarrassment and that unless he settles his outstanding account with the defendant within 5 days from the
receipt of the letter, his membership will be permanently cancelled. There is no showing that the private
respondent received the same before December 8, 1989.
Confident that he had settled his account with the issuance of the postdated check, he invited some guests on
December 8, 1989 at Café Adriatico. When he presented his credit card for payment, the same was dishonored.
As such, one of the guests used her own credit card to pay for the bill. The said incident prompted the private
respondent from filing a case for damages against BECC, for arbitrarily cancelling his card despite their
agreement. The trial Court and the Court of Appeals both agreed that BECC abused its rights in contravention of
Article 19 of the Civil Code, which warrants an award of moral damages, exemplary damages, and attorney’s fees.

ISSUE: Whether or not the private respondent can recover moral damages arising from the cancellation of his
credit card by petitioner credit card corporation-

HELD:
NO. The Supreme Court ruled in favor of BECC. The Court opined that under the terms and conditions of the card,
signed by the private respondent, any card with outstanding balances after thirty days from the original billing/
statement shall automatically be suspended. The terms and conditions of the card cannot be any clearer. By his
own admission, private respondent made no payment within thirty days for his original billing/statement dated 27
September 1989. Neither did he make payment for his original billing/statement dated 27 October 1989.
Consequently, as early as 28 October 1989, thirty days from the non-payment of his billing dated 27 September
1989, petitioner corporation could automatically suspend his credit card.
The next issue is whether prior to the suspension of private respondent’s credit card on the 28 th of November
1989, the parties entered into an agreement whereby the card could still be used and would be duly honored by
duly accredited establishments. The Court agreed with the findings of the respondent Court, that there was an
agreement between the parties. However, the Court ruled that the principal purpose of the said agreement was for
the IMMEDIATE PAYMENT of the private respondent’s outstanding account in order that his credit card would not
be suspended. Thus, the issuance by the private respondent of the postdated check was not effective payment. It

6
did not comply with his obligation under the arrangement with Miss Lorenzo. Petitioner corporation was therefore
justified in suspending his credit card.
Lastly the Court ruled that there was no legal and factual basis for private respondent's assertion that in canceling
the credit card of the private respondent, petitioner abused its right under the terms and conditions of the contract.
To find the existence of an abuse of right under Article 19 the following elements must be present: (1) There is a
legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. The
Court did not dispute the findings of the lower court that private respondent suffered damages as a result of the
cancellation of his credit card. However, the Court opined that there is a material distinction between damages and
injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury;
and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. In such
cases, the consequences must be borne by the injured person alone, the law affords no remedy for damages
resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum
absque injuria.
IN VIEW OF THE FOREGOING, the decision of the Court of Appeals ordering petitioner to pay private
respondent P100,000.00 as moral damages, P50,000.00 as exemplary damages and P20,000.00 as attorney's
fees, is SET ASIDE. Private respondent is DIRECTED to pay his outstanding obligation with the petitioner in the
amount of P14,439.41.
SO ORDERED.

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#4 PEOPLE vs. JUGUETA G.R. No. 202124. April 5, 2016.* PERALTA, J.:

PETITIONER: People of the Philippines RESPONDENT: Ireneo Jugueta

NATURE OF THE CASE: Appeal from the Decision of the CA

DOCTRINE: Civil indemnity is awarded to the offended party as a kind of monetary restitution or compensation to
the victim for the damage or infraction that was done to the latter by the accused, which in a sense only covers the
civil aspect.

Moral damages may be awarded to compensate one for manifold injuries such as physical suffering, mental
anguish, serious anxiety, besmirched reputation, wounded feelings and social humiliation.

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.

FACTS:
In Criminal Case No. 7698-G, appellant was charged with Double Murder. On June 6, 2002, at about 9:00
o'clock in the evening, at Barangay Caridad Ilaya, Atimonan, Quezon the above-named accused, armed with a
caliber.22 firearm, shot with said firearm Mary Grace Divina, a minor, 13 years old, and Claudine Divina, a minor, 3
½ years of age.

In Criminal Case No. 7702-G, appellant, together with Gilbert Estores and Roger San Miguel, was charged
with Multiple Attempted Murder. On or about 9:00 o’clock in the evening of June 6, 2002, at Barangay Caridad
Ilaya, Atimonan, Quezon, the above-named accused, conspiring and confederating together and mutually helping
one another, armed with short firearms shot the house occupied by the family of Norberto Divina, thereby
commencing the commission of the crime of Murder, but the occupants Norberto Divina, his wife Maricel Divina
and children Elizabeth Divina and Judy Ann Divina, both elementary pupils and who are minors, were not hit.

The case for Attempted Murder against Gilbert Estores and Roger San Miguel was dismissed, and trial
proceeded only as to appellant.

Norberto recounted that in the evening of June 6, 2002, as his entire family lay down on the floor of their nipa
hut to sleep, the "sack" walling of their hut was suddenly stripped off. The three (3) men responsible for the deed
came into view. Norberto identified the 3 men as appellant, Gilbert Estores and Roger San Miguel.

The 3 men ordered Norberto to come down from his house, but he refused to do so. Despite pleading for
mercy, a gunshot was fired. Thereafter, he heard successive gunshots being fired in the direction where his family
huddled together in their hut.

When the volley of shots ceased and the three (3) men left, Norberto saw that his two (2) young daughters
were wounded. His daughter Mary Grace died on the way to the hospital, while Claudine expired at the hospital
despite the doctors' attempts to revive her.

Norberto stated that he had a previous altercation with appellant who was angered by the fact that he
(Norberto) filed a case against appellant's two other brothers for molesting his daughter.

Appellant testified that he was just watching TV at the house of Isidro San Miguel, where he had been living
for several years, at the time the shooting incident occurred. However, said house was a mere five-minute walk
away from the crime scene.

Finding appellant’s defense to be weak, the trial court ruled that the evidence clearly established that
appellant, together with two other assailants, conspired to shoot and kill the family of Norberto. Appellant
was then convicted of Double Murder in Criminal Case No. 7698-G and Multiple Attempted Murder in
Criminal Case No. 7702-G.

The dispositive portion of the trial court’s judgment in Criminal Case No. 7698-G reads:

WHEREFORE and in view of all the foregoing, the Court finds accused Ireneo Jugueta guilty beyond

8
reasonable doubt for Double Murder defined and punished under Article 248 of the Revised Penal Code and is
hereby sentenced to suffer Reclusion Perpetua for the death of Mary Grace Divina and to indemnify her heirs in
the amount of Php50,000.00 and another to suffer Reclusion Perpetua for the death of Claudine Divina and
accused is further ordered to indemnify the heirs of Claudine Divina in the sum of Php50,000.00. In addition, he is
hereby ordered to pay the heirs of the victims actual damages in the amount of Php16,150.00 and to pay for
the costs.

On the other hand, the dispositive portion of the trial court’s judgment in Criminal Case No. 7702-G, reads:

WHEREFORE and in view of all the foregoing, the Court finds accused Ireneo Jugueta guilty beyond
reasonable doubt for Multiple Attempted Murder defined and penalized under Article 248 in relation to Article 51 of
the Revised Penal Code and is hereby sentenced to suffer the penalty of FOUR (4) YEARS and TWO (2)
MONTHS of Prision Correccional as minimum to EIGHT (8) YEARS and ONE (1) DAY of Prision Mayor as
maximum for each of the offended parties; Norberto Divina, Maricel Divina, Elizabeth Divina and Judy Ann Divina.
Further, accused is ordered to pay for the costs of the suit.

Upon appeal, the CA rendered a Decision affirming appellant's conviction for the crimes charged.

ISSUE:
1. WON Norberto's testimony, such as his failure to state from the beginning that all three assailants had guns,
and to categorically identify appellant as the one holding the gun used to kill Norberto’s children,were inconsistent?
NO
2. Discussion of Damages; Modification by the SC of the damages to be awarded

HELD:

The appeal is unmeritorious.

1. The evidence on record fully supports the trial court's factual finding, as affirmed by the CA, that appellant
acted in concert with two other individuals, all three of them carrying firearms and simultaneously firing at Norberto
and his family, killing his two young daughters.

The trial court correctly ruled that appellant is liable for murder because treachery attended the killing of Norberto’s
two children. Verily, the presence of treachery qualified the killing of the hapless children to murder.

As to the charge of multiple attempted murder, the prosecution has clearly established the intent to kill on the part
of appellant as shown by the use of firearms, the words uttered during, as well as the manner of, the commission
of the crime. The Court thus approved the trial court’s finding that appellant is liable for attempted murder.

Meanwhile, the supposed inconsistencies in Norberto's testimony, are too trivial and inconsequential to
put a dent on said witness's credibility. "[m]inor inconsistencies and discrepancies pertaining to trivial matters
do not affect the credibility of witnesses, as well as their positive identification of the accused as the perpetrators of
the crime."

However, the Court must make a clarification as to the nomenclature used by the trial court. There is some
confusion caused by the trial court's use of the terms "Double Murder" and "Multiple Attempted Murder" in
convicting appellant, and yet imposing penalties which nevertheless show that the trial court meant to penalize
appellant for two (2) separate counts of Murder and four (4) counts of Attempted Murder.

The facts show that appellant is guilty of 2 counts of the crime of Murder and not Double Murder, as the killing of
the victims was not the result of a single act but of several acts of appellant and his cohorts. In the same vein,
appellant is also guilty of 4 counts of the crime of Attempted Murder and not Multiple Attempted Murder in
Criminal Case No. 7702-G.

Not having moved to quash this defect amounts to its waiver, appellant can therefore be held liable for all the
crimes alleged in the Informations.

2. Generally, in these types of criminal cases, there are three kinds of damages awarded by the Court;
namely: civil indemnity, moral, and exemplary damages. Likewise, actual damages may be awarded or temperate
damages in some instances.

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First, civil indemnity ex delicto is the indemnity authorized in our criminal law for the offended party, in the
amount authorized by the prevailing judicial policy and apart from other proven actual damages, which
itself is equivalent to actual or compensatory damages in civil law. This award stems from Article 100 of the
RPC which states, "Every person criminally liable for a felony is also civilly liable."

Civil indemnity is, technically, not a penalty or a fine; hence, it can be increased by the Court when
appropriate. Article 2206 of the Civil Code provides:

Art. 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;

(2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient who is not
an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support
from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the
court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased.

Civil indemnity is awarded to the offended party as a kind of monetary restitution or compensation to the
victim for the damage or infraction that was done to the latter by the accused, which in a sense only
covers the civil aspect. Thus, in a crime where a person dies, in addition to the penalty of imprisonment imposed
to the offender, the accused is also ordered to pay the victim a sum of money as restitution. Also, it is apparent
from Article 2206 that the law only imposes a minimum amount for awards of civil indemnity, which is ₱3,000.00.
The law did not provide for a ceiling. Thus, although the minimum amount for the award cannot be changed,
increasing the amount awarded as civil indemnity can be validly modified and increased when the present
circumstance warrants it.

The second type of damages are moral damages, which are also compensatory in nature.

Moral damages 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.

Rationale for awarding moral damages: "[T]he award of moral damages is aimed at a restoration, within the
limits possible, of the spiritual status quo ante; and therefore, it must be proportionate to the suffering
inflicted."

Moral damages under Article 2220 of the Civil Code also does not fix the amount of damages that can be
awarded. It is discretionary upon the court, depending on the mental anguish or the suffering of the private
offended party. The amount of moral damages can be adjusted so long as it does not exceed the award of civil
indemnity.

Finally, the Civil Code of the Philippines provides, in respect to exemplary damages, thus:

ART. 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.

ART. 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.

10
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 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.

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. 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.

Being corrective in nature, exemplary damages, therefore, can be awarded, not only due to the presence of
an aggravating circumstance, but also where the circumstances of the case show the highly reprehensible
or outrageous conduct of the offender. In much the same way as Article 2230 prescribes an instance when
exemplary damages may be awarded, Article 2229, the main provision, lays down the very basis of the award.

Existing jurisprudence pegs the award of exemplary damages at ₱30,000.00, despite the lack of any aggravating
circumstance. The Court finds it proper to increase the amount to ₱50,000.00 in order to deter similar conduct.

If, however, the penalty for the crime committed is death, which cannot be imposed because of the provisions of
R.A. No. 9346, prevailing jurisprudence sets the amount of ₱100,000.00 as exemplary damages.

Before awarding any of the above mentioned damages, the Court, however, must first consider the penalty
imposed by law.

In order to impose the proper penalty, especially in cases of indivisible penalties, the court has the duty to
ascertain the presence of any mitigating or aggravating circumstances. Accordingly, in crimes where the
imposable penalty is reclusion perpetua to death, the court can impose either reclusion perpetua or death,
depending on the mitigating or aggravating circumstances present.

But with the enactment of RA 9346 or An Act Prohibiting the Imposition of Death Penalty in the Philippines, the
imposition of death penalty is now prohibited. It provides that in lieu of the death penalty, the penalty of reclusion
perpetua shall be imposed when the law violated makes use of the nomenclature of the penalties of the
RPC. Despite this, the principal consideration for the award of damages, is "the penalty provided by law or
imposable for the offense because of its heinousness, not the public penalty actually imposed on the offender."

The Court also awards temperate damages in certain cases. The award of ₱25,000.00 as temperate damages
in homicide or murder cases is proper when no evidence of burial and funeral expenses is presented in the trial
court. Under Article 2224 of the Civil Code, temperate damages may be recovered, as it cannot be denied that the
heirs of the victims suffered pecuniary loss although the exact amount was not proved. In this case, the Court now
increases the amount to be awarded as temperate damages to ₱50,000.00.

In the case at bar, the crimes were aggravated by dwelling, and the murders committed were further made
atrocious by the fact that the victims are innocent, defenseless minors – one is a mere 3½-year-old toddler, and
the other a 13-year-old girl. The increase in the amount of awards for damages is befitting to show not only
the Court's, but all of society's outrage over such crimes and wastage of lives.

In summary:

11
I. For those crimes like, Murder, Parricide, Serious Intentional Mutilation,109 Infanticide,110 and other crimes
involving death of a victim where the penalty consists of indivisible penalties:

1.1 Where the penalty imposed is death but reduced to reclusion perpetua because of RA 9346:

a. Civil indemnity – ₱100,000.00

b. Moral damages – ₱100,000.00

c. Exemplary damages – ₱100,000.00

1.2 Where the crime committed was not consummated:

xxx

b. Attempted:

i. Civil indemnity – ₱50,000.00

ii. Exemplary damages – ₱50,000.00

iii. Exemplary damages – ₱50,000.00

XXX (See full text for amount of damages to be awarded depending on the nature of the crime)

Prescinding from the foregoing, for the two (2) counts of murder, attended by the ordinary aggravating
circumstance of dwelling, appellant should be ordered to pay the heirs of the victims the following damages: (1)
₱100,000.00 as civil indemnity for each of the two children who died; (2) ₱100,000.00 as moral damages for
each of the two victims; (3) another ₱100,000.00 as exemplary damages for each of the two victims; and (4)
temperate damages in the amount of ₱50,000.00 for each of the two deceased. For the four (4) counts of
Attempted Murder, appellant should pay ₱50,000.00 as civil indemnity, ₱50,000.00 as moral damages and
₱50,000.00 as exemplary damages for each of the four victims. In addition, the civil indemnity, moral
damages, exemplary damages and temperate damages payable by the appellant are subject to interest at the rate
of six percent (6%) per annum from the finality of this decision until fully paid.

WHEREFORE, the instant appeal is DISMISSED. The Decision of the Court of Appeals dated January 30,
2012 in CA-G.R. CR HC No. 03252 is AFFIRMED with the following MODIFICATIONS:

(1) In Criminal Case No. 7698-G, the Court finds accused-appellant Ireneo Jugueta GUILTY beyond reasonable
doubt of two (2) counts of the crime of murder defined under Article 248 of the Revised Penal Code, attended by
the aggravating circumstance of dwelling, and hereby sentences him to suffer two (2) terms of reclusion perpetua
without eligibility for parole under R.A. 9346. He is ORDERED to PAY the heirs of Mary Grace Divina and
Claudine Divina the following amounts for each of the two victims: (a) ₱100,000.00 as civil indemnity; (b)
₱100,000.00 as moral damages; (c) ₱100,000.00 as exemplary damages; and (d) ₱50,000.00 as temperate
damages.

(2) In Criminal Case No. 7702-G, the Court finds accused-appellant Ireneo Jugueta GUILTY beyond reasonable
doubt of four (4) counts of the crime of attempted murder defined and penalized under Article 248 in relation to
Article 51 of the Revised Penal Code, attended by the aggravating circumstance of dwelling, and sentences him to
suffer the indeterminate penalty of four (4) years, two (2) months and one (1) day of prision correccional, as
minimum, to ten (10) years and one (1) day of prision mayor, as maximum, for each of the four (4) counts of
attempted murder. He is ORDERED to PAY moral damages in the amount of P50,000.00, civil indemnity of
P50,000.00 and exemplary damages of PS0,000.00 to each of the four victims, namely, Norberto Divina, Maricel
Divina, Elizabeth Divina and Judy Ann Divina.

(3) Accused-appellant Ireneo Jugueta is also ORDERED to PAY interest at the rate of six percent (6%) per annum
from the time of finality of this decision until fully paid, to be imposed on the civil indemnity, moral damages,
exemplary damages and temperate damages.

(4) Let the Office of the Prosecutor General, through the Department of Justice, be FURNISHED a copy of this

12
Decision. The Prosecutor General is DIRECTED to immediately conduct a REINVESTIGATION on the possible
criminal liability of Gilbert Estores and Roger San Miguel regarding this case. Likewise, let a copy of this Decision
be furnished the Secretary of Justice for his information and guidance.

SO ORDERED.

13
#5 Oceaneering Contractors (Phils.), Inc. vs. Barreto G.R. No. 184215 February 9, 2011 Perez, J.

PETITIONER: Oceaneering Contractors (Phils.), Inc. RESPONDENT: Nestor N. Barreto doing business as
N.N.B. Ligtherage

NATURE OF THE CASE: Petition for Review filed under Rule 45

DOCTRINE: Actual or compensatory damages are those damages which the injured party is entitled to recover for
the wrong done and injuries received when none were intended. Pertaining as they do to such injuries or losses
that are actually sustained and susceptible of measurement, they are intended to put the injured party in the
position in which he was before he was injured. Insofar as actual or compensatory damages are concerned, Article
2199 of the Civil Code of the Philippines provides as follows:

Art. 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.

Conformably with the foregoing provision, the rule is long and well settled that there must be pleading and proof of
actual damages suffered for the same to be recovered. In addition to the fact that the amount of loss must be
capable of proof, it must also be actually proven with a reasonable degree of certainty, premised upon competent
proof or the best evidence obtainable.

FACTS:
Respondent Nestor N. Barretto (Barretto), doing business under the name and style of N.N. B. Lighterage, is the
owner of the Barge Antonieta which was last licensed and permitted to engage in coastwise trading for a period of
one year expiring on 21 August 1998. On 27 November 1997, Barretto and petitioner Oceaneering Contractors
(Phils.), Inc. (Oceaneering) entered into a Time Charter Agreement whereby, for the contract price of P306,000.00,
the latter hired the aforesaid barge for a renewable period of thirty calendar days, for the purpose of transporting
construction materials from Manila to Ayungon, Negros Oriental. Brokered by freelance ship broker Manuel
Velasco, the agreement included Oceaneerings acknowledgment of the seaworthiness of the barge.

The barge eventually left Manila for Negros Oriental, towed by the tug-boat Ayalit" which, for said purpose, was
likewise chartered by Oceaneering from Lea Mer Industries, Inc. Barretto’s Bargeman, Eddie La Chica, executed a
Marine Protest, reporting circumstances under which the barge reportedly capsized in the vicinity of Cape
Santiago, Batangas.

Barretto apprised Oceaneering of the supposed fact that the mishap was caused by the incompetence and
negligence of the latter’s personnel in loading the cargo and that it was going to proceed with the salvage,
refloating and repair of the barge. In turn contending that the barge tilted because of the water which seeped
through a hole in its hull, Oceaneering caused its counsel to serve Barretto a demand letter for the return of the
unused portion of the charter payment amounting to P224,400.00 as well as the expenses in the sum of
P125,000.00 it purportedly incurred in salvaging its construction materials.

Barretto filed the instant suit for damages against Oceaneering, before Branch 255 of the Regional Trial Court
(RTC) of Las Pinas City. Contending that the accident was attributable to the incompetence and negligence which
attended the loading of the cargo by Oceaneerings hired employees, Barretto sought indemnities for expenses
incurred and lost income in the aggregate sum of P2,750,792.50 and attorney’s fees equivalent to 25% of said
sum. Oceaneering, on the other hand, denied the allegations and averred that the accident was caused by the
negligence of Barretto’s employees and the dilapidated hull of the barge which rendered it unseaworthy. As a
consequence, Oceaneering prayed for the grant of its counterclaims for the value of its cargo in the sum of
P4,055,700.00, salvaging expenses in the sum of P125,000.00, exemplary damages, attorneys fees and litigation
expenses.

The RTC dismissed both Barrettos complaint and Oceaneerings counterclaims for lack of merit. While finding that
Barretto failed to adduce sufficient and convincing evidence to prove that the accident was due to the negligence
of Oceaneerings employees. Oceaneerings claim for the value of its cargo was likewise denied on the ground,
among other matters, that the same was not included in the demand letters it served Barretto; and, that it has no
one but itself to blame for failing to insure its cargo against all risks, as provided in the parties agreement. With its
claims for exemplary damages and attorneys fees further denied for lack of showing of bad faith on the part of
Barretto. Oceaneerings motion for partial reconsideration was denied due to the absence of bad faith on the part of
Barretto.

14
Oceaneering appealed to the Court of Appeals, which was partially granted upon the finding, among others, that
the agreement executed by the parties, by its express terms, was a time charter where the possession and control
of the barge was retained by Barretto; that the latter is, therefore, a common carrier legally charged with
extraordinary diligence in the vigilance over the goods transported by him; and, that the sinking of the vessel
created a presumption of negligence and/or unseaworthiness which Barretto failed to overcome and gave rise to
his liability for Oceaneerings lost cargo despite the latter’s failure to insure the same. Applying the rule, however,
that actual damages should be proved with a reasonable degree of certainty, the CA denied Oceaneerings claim
for the value of its lost cargo and merely ordered the refund of the P306,000.00 it paid for the time charter, with
indemnity for attorneys fees in the sum of P30,000.

Oceaneerings filed a motion for reconsideration, which was denied. Hence, this petition.

ISSUE: Whether Oceaneerings is entitled to the actual damages prayed for

HELD:
YES.
Actual or compensatory damages are those damages which the injured party is entitled to recover for the wrong
done and injuries received when none were intended. Pertaining as they do to such injuries or losses that are
actually sustained and susceptible of measurement, they are intended to put the injured party in the position in
which he was before he was injured. Insofar as actual or compensatory damages are concerned, Article 2199 of
the Civil Code of the Philippines provides as follows:
Art. 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.

Conformably with the foregoing provision, the rule is long and well settled that there must be pleading and proof of
actual damages suffered for the same to be recovered. In addition to the fact that the amount of loss must be
capable of proof, it must also be actually proven with a reasonable degree of certainty, premised upon competent
proof or the best evidence obtainable. The burden of proof of the damage suffered is, consequently, imposed on
the party claiming the same who should adduce the best evidence available in support thereof. In the absence of
corroborative evidence, it has been held that self-serving statements of account are not sufficient basis for an
award of actual damages. Corollary to the principle that a claim for actual damages cannot be predicated on
flimsy, remote, speculative, and insubstantial proof, courts are, likewise, required to state the factual bases of the
award.

In this case, Oceaneering correctly fault the CA for not granting its claim for actual damages or, more specifically,
the portions thereof which were duly pleaded and adequately proved before the RTC. While concededly not
included in the demand letters, Oceaneering served Barretto, the former’s counterclaims for the value of its lost
cargo in the sum of P4,055,700.00 and salvaging expenses in the sum of P125,000.00 were distinctly pleaded and
prayed for in its answer. Rather than the entire P4,055,700.00 worth of construction materials reflected in the
inventory which Engr. Oracion claims to have prepared on 29 November 1997, based on the delivery and official
receipts from Oceaneerings suppliers, we are, however, inclined to grant only the following items which were duly
proved by the vouchers and receipts on record, viz.: (a) P1,720,850.00 worth of spiral welded pipes with coal tar
epoxy procured on 22 November 1997; (b) P629,640.00 worth of spiral welded steel pipes procured on 28 October
1997; (c) P155,500.00 worth of various stainless steel materials procured on 27 November 1997; (d) P66,750.00
worth of gaskets and shackles procured on 20 November 1997; and, (e) P4,880.00 worth of anchor bolt procured
on 27 November 1997.

The foregoing sums all add up to of P2,577,620.00 from which should be deducted the sum of P351,000.00
representing the value of the nine steel pipes salvaged by Oceaneering, or a total of P2,226,620.00 in actual
damages representing the value of the latters lost cargo.

Tested alongside the twin requirements of pleading and proof for the grant of actual damages, on the other hand,
we find that the CA also erred in awarding the full amount of P306,000.00 in favor of Oceaneering, as and by way
of refund of the consideration it paid Barretto for the Time Charter Agreement. Aside from not being clearly
pleaded in the answer it filed a quo, said refund was claimed in Oceaneerings demand letters only to the extent of

15
the unused charter payment in the reduced sum of P224,400.00 which, to our mind, should be the correct
measure of the award.

For lack of sufficient showing of bad faith on the part of Barretto, we find that the CA, finally, erred in granting
Oceaneering’s claim for attorney’s fees, albeit in the much reduced sum of P30,000.00. In the absence of
stipulation, after all, the rule is settled that there can be no recovery of attorney’s fees and expenses of litigation
other than judicial costs except in the instances enumerated under Article 2208 of the Civil Code. 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, as here, no sufficient showing of bad faith can be reflected in the party’s persistence
in a case other than an erroneous conviction of the righteousness of his cause.

16
#6 MAGAT vs. MEDIALDEA G.R. No. L-37120 April 20, 1983 ESCOLIN, J.:

PETITIONER: VICTORINO D. MAGAT RESPONDENT: HON. LEO D. MEDIALDEA and SANTIAGO A.

GUERRERO

NATURE OF THE CASE: Petition for Review on Certiorari

DOCTRINE: Damages cover not only actual loss (daño emergente), but also profits that may be lost (lucro
cesante). An averment that plaintiff stand, to lose expected profits, goodwill, etc. due to defendant’s breach of
contract sufficiently states a cause of action.

FACTS:
In 1972, Guerrero and Magat entered into a contract to purchase taximeters for the taxicabs that are being
operated by Guerrero, at $77,620.59 FOB, Yokohoma, through Magat’s Japanese business associates.
Guerrero’s agent, Isidro Q. Aligada were able to import from Japan with the assistance of the plaintiff and his
Japanese business associates the necessary taximeters for defendant’s taxicabs in partial fulfillment of
defendant’s commitments with the U.S. Navy Exchange, Subic Bay, Philippines. Thereafter, Aligada told Magat
that Guerrero also needed radio transmitters to be imported. As such, a firm offer to sell in writing was obtained
with a price of $77,620.59 [U.S. dollars] FOB Yokohama, the goods or articles therein offered for sale by the
plaintiff to the defendant to be delivered sixty to ninety [60-90] days after receipt of advice from the defendant of
the radio frequency assigned to the defendant by the proper authorities. Magat received an acceptance of the offer
through a signed conformity. In the belief that Guerrero will fulfil his obligations, Magat already informed his
Japanese business associates that the contract has been perfected and that advice with regards to radio
frequency would follow as soon as same is received by the plaintiff from the defendant. Guerrero informed Magat
that the U.S. Navy provided Guerrero with the radio frequency of 34.2 MHZ [Megahertz], and told him to proceed
with the contract with an instruction to proceed only upon receipt of Guerrero’s letter of credit. it being normal
business practice in case of foreign importation that the buyer opens a letter of credit in favor of the foreign
supplier before delivery of the goods sold, Magat awaited the opening of such a letter of credit by the defendant.

However, despite assurances made to Magat of Guerrero’s financial abilities, Guerrero subsequently instructed
his banker not to give due course to his application for a letter of credit and that for reasons only known to the
defendant, he fails and refuses to open the necessary letter of credit to cover payment of the goods ordered by
him. It came to the knowledge of Magat that Guerrero has been operating taxicabs without radio transreceivers
and that when the US Navy pressed Guerrero for compliance, he laid the blame on Magat. As such, Magat
demanded Guerrero for compliance of the contract, but the latter failed. Magat suffered damages.

[a] As the radio transceivers ordered by the defendant are now in the hands of the plaintiff’s Japanese
representative, the plaintiff will have to pay for them, thus he will have to suffer as total loss to him the amount of
P523,938.98 (converting the amount of $77,620.59 to pesos at the rate of P6.75 to the dollar) as said radio
transceivers were purposely made or manufactured solely for the use of the defendant herein and cannot possibly
be marketed by the plaintiff herein to the general public;
[b] The amount of P52,393.89 or 10% of the purchase price by way of loss of expected profits from the transaction
or contract between plaintiff and the defendant;
[c] Loss of confidence in him and goodwill of the plaintiff which will result in the impairment of his business
dealings with Japanese firms, thereby resulting also in loss of possible profits in the future which plaintiff assess at
no less than P200,000.00;
[d] That in view of the defendant’s bad faith in inducing plaintiff to enter into the contract with him as set forth
hereinabove, defendant should be assessed by this Honorable Court in favor of the plaintiff the sum of
P200,000.00 as moral and exemplary damages;
[e] That in view of the defendant’s fault and to protect his interests, plaintiff herein is constrained to retain the
services of counsel with whom he agreed to pay by way of attorney’s fees the sum of P50,000.00”.

Respondent Guerrero filed a motion to dismiss said complaint for lack of cause of action, his contention being that
plaintiff’s right of recovery under his cause of action is premised not on any loss or damage actually suffered by
him but on a non-existing loss or damage which he is expecting to incur in the near future. Plaintiff’s right therefore
under his cause of action is not yet fixed or vested.

The respondent judge, over petitioner’s opposition, issued a minute order dismissing the complaint.

ISSUE: Whether or not the judge erred in dismissing the complaint

17
HELD:
We find the test of legal sufficiency of the cause of action adequately satisfied.

Private respondent failed to comply with his correlative obligation by refusing to open a letter of credit to cover
payment of the goods ordered by him, and that consequently, petitioner suffered not only loss of his expected
profits, but moral and exemplary damages as well. From these allegations, the essential elements of a cause of
action are present, to wit: [1] the existence of a legal right to the plaintiff; [2] a correlative duty of the defendant and
[3] an act or omission of the defendant in violation of the plaintiff’s right, with consequent injury or damage to the
latter for which he may maintain an action for recovery of damages or other appropriate relief.

Indisputably, the parties, both businessmen, entered into the aforesaid contract with the evident intention of
deriving some profits therefrom. Upon breach of the contract by either of them, the other would necessarily suffer
loss of his expected profits. Since the loss comes into being at the very moment of breach, such loss is real, “fixed
and vested” and, therefore, recoverable under the law.
Article 1170 of the Civil Code provides:
“Those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof are liable for damages.”
The phrase “in any manner contravene the tenor” of the obligation includes any illicit act or omission which impairs
the strict and faithful fulfillment of the obligation and every kind of defective performance.

The damages which the obligor is liable for includes not only the value of the loss suffered by the obligee [daño
emergente] but also the profits which the latter failed to obtain [lucro cesante]. If the obligor acted in good faith, he
shall be liable for those damages 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;
and in case of fraud, bad faith, malice or wanton attitude, he shall be liable for all damages which may be
reasonably attributed to the nonperformance of the obligation.
The same is true with respect to moral and exemplary damages. The applicable legal provisions on the matter,
Articles 2220 and 2232 of the Civil Code, allow the award of such damages in breaches of contract where the
defendant acted in bad faith. To Our mind, the complaint sufficiently alleges bad faith on the part of the defendant.
In fine, We hold that on the basis of the facts alleged in the complaint, the court could render a valid judgment in
accordance with the prayer thereof.

18
#7 GATCHALIAN vs DELIM G.R. No. L-56487 October 21, 1991 FELICIANO, J

PETITIONER: REYNALDA GATCHALIAN RESPONDENT: ARSENIO DELIM and the HON. COURT OF
APPEALS

NATURE OF THE CASE: Petition for Review

DOCTRINE:A person is entitled to the physical integrity of his or her body; if that integrity is violated or diminished,
actual injury is suffered for which actual or compensatory damages are due and assessable.
The long-established rule is that moral damages may be awarded where gross negligence on the part of the
common carrier is shown.

FACTS:
At noon time on 11 July 1973, petitioner Reynalda Gatchalian boarded, as a paying passenger, respondent's
"Thames" mini bus at a point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province. On the
way, while the bus was running along the highway in Barrio Payocpoc, Bauang, Union, "a snapping sound" was
suddenly heard at one part of the bus and, shortly thereafter, the vehicle bumped a cement flower pot on the side
of the road, went off the road, turned turtle and fell into a ditch. Several passengers, including petitioner
Gatchalian, were injured. They were promptly taken to Bethany Hospital at San Fernando, La Union, for medical
treatment. Upon medical examination, petitioner was found to have sustained physical injuries on the leg, arm and
forehead, specifically described as follows: lacerated wound, forehead; abrasion, elbow, left; abrasion, knee, left;
abrasion, lateral surface, leg, left. 1
On 14 July 1973, while injured. passengers were confined in the hospital, Mrs. Adela Delim, wife of
respondent, visited them and later paid for their hospitalization and medical expenses. She also gave petitioner
P12.00 with which to pay her transportation expense in going home from the hospital. However, before Mrs. Delim
left, she had the injured passengers, including petitioner, sign an already prepared Joint Affidavit which stated,
among other things:
That we were passengers of Thames with Plate No. 52-222 PUJ Phil. 73 and victims after the said Thames
met an accident at Barrio Payocpoc Norte, Bauang, La Union while passing through the National Highway No. 3;
That after a thorough investigation the said Thames met the accident due to mechanical defect and went off
the road and turned turtle to the east canal of the road into a creek causing physical injuries to us;
xxx xxx xxx
That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the
said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the
extent of helping us to be treated upon our injuries.
xxx xxx xxx 2
(Emphasis supplied)
Notwithstanding this document, petitioner Gathalian filed with the then Court of First Instance of La Union an
action extra contractu to recover compensatory and moral damages. She alleged in the complaint that her injuries
sustained from the vehicular mishap had left her with a conspicuous white scar measuring 1 by 1/2 inches on the
forehead, generating mental suffering and an inferiority complex on her part; and that as a result, she had to retire
in seclusion and stay away from her friends. She also alleged that the scar diminished her facial beauty and
deprived her of opportunities for employment. She prayed for an award of: P10,000.00 for loss of employment and
other opportunities; P10,000.00 for the cost of plastic surgery for removal of the scar on her forehead; P30,000.00
for moral damages; and P1,000.00 as attorney's fees.
In defense, respondent averred that the vehicular mishap was due to force majeure, and that petitioner had
already been paid and moreover had waived any right to institute any action against him (private respondent) and
his driver, when petitioner Gatchalian signed the Joint Affidavit on 14 July 1973.

ISSUE: Whether the petitioner is entitled to actual and moral damages

HELD:
The first item in that claim relates to revenue which petitioner said she failed to realize because of the effects of
the vehicular mishap. Petitioner maintains that on the day that the mini-bus went off the road, she was supposed
to confer with the district supervisor of public schools for a substitute teacher's job, a job which she had held off
and on as a "casual employee." The Court of Appeals, however, found that at the time of the accident, she was no
longer employed in a public school since, being a casual employee and not a Civil Service eligible, she had been
laid off. Her employment as a substitute teacher was occasional and episodic, contingent upon the availability of
vacancies for substitute teachers. In view of her employment status as such, the Court of Appeals held that she
could not be said to have in fact lost any employment after and by reason of the accident. Such was the factual

19
finding of the Court of Appeals, a finding entitled to due respect from this Court. Petitioner Gatchalian has not
submitted any basis for overturning this finding of fact, and she may not be awarded damages on the basis of
speculation or conjecture.
Petitioner's claim for the cost of plastic surgery for removal of the scar on her forehead, is another matter. A
person is entitled to the physical integrity of his or her body; if that integrity is violated or diminished, actual injury is
suffered for which actual or compensatory damages are due and assessable. Petitioner Gatchalian is entitled to be
placed as nearly as possible in the condition that she was before the mishap. A scar, especially one on the face of
the woman, resulting from the infliction of injury upon her, is a violation of bodily integrity, giving raise to a
legitimate claim for restoration to her conditio ante. If the scar is relatively small and does not grievously disfigure
the victim, the cost of surgery may be expected to be correspondingly modest.
Petitioner estimated that the cost of having her scar surgically removed was somewhere between P10,000.00
to P15,000.00. Upon the other hand, Dr. Fe Tayao Lasam, a witness presented as an expert by petitioner, testified
that the cost would probably be between P5,000.00 to P10,000.00. In view of this testimony, and the fact that a
considerable amount of time has lapsed since the mishap in 1973 which may be expected to increase not only the
cost but also very probably the difficulty of removing the scar, we consider that the amount of P15,000.00 to
cover the cost of such plastic surgery is not unreasonable.
Turning to petitioner's claim for moral damages, the long-established rule is that moral damages may be
awarded where gross negligence on the part of the common carrier is shown. Since we have earlier concluded
that respondent common carrier and his driver had been grossly negligent in connection with the bus mishap
which had injured petitioner and other passengers, and recalling the aggressive manuevers of respondent, through
his wife, to get the victims to waive their right to recover damages even as they were still hospitalized for their
injuries, petitioner must be held entitled to such moral damages. Considering the extent of pain and anxiety
which petitioner must have suffered as a result of her physical injuries including the permanent scar on her
forehead, we believe that the amount of P30,000.00 would be a reasonable award. Petitioner's claim for P1,000.00
as atttorney's fees is in fact even more modest.

20
#8 REGALA v. CARIN G.R. No. 188715 April 6, 2011 CARPIO MORALES, J.:

PETITIONER: RODOLFO N. REGALA RESPONDENT: FEDERICO P. CARIN

NATURE OF THE CASE: Petition for review

DOCTRINE: 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.

FACTS: Petitioner and respondent are adjacent neighbors at Spirig Street, BF Resort Village, Las Pias City. When
petitioner decided to renovate his one storey residence by constructing a second floor, he under the guise of
merely building an extension to his residence, approached respondent sometime in May 1998 for permission to
bore a hole through a perimeter wall shared by both their respective properties, to which respondent verbally
consented on condition that petitioner would clean the area affected by the work.
As earlier indicated, petitioners real intention was to build a second floor, in fact with a terrace atop the dividing
wall. In the course of the construction of the second floor, respondent and his wife Marietta suffered from the dust
and dirt which fell on their property. As petitioner failed to address the problem to respondents satisfaction,
respondent filed a letter-complaint[3] with the Office of the City Engineer and Building Official of Las Pias City on
June 9, 1998.
In his letter-complaint, respondent related that, despite the lack of a building permit for the construction of a
second floor, petitioner had demolished the dividing wall, failed to clean the debris falling therefrom, allowed his
laborers to come in and out of his (respondents) property without permission by simply jumping over the wall, and
trampled on his vegetable garden; and that despite his protestations, petitioner persisted in proceeding with the
construction, he claiming to be the owner of the perimeter wall.
Several sumbongs[4] (complaints) were soon lodged by respondent before the Office of Barangay Talon Dos
against petitioner for encroachment, rampant invasion of privacy and damages arising from the construction, and
for illegal construction of scaffoldings inside his (respondents) property.
As no satisfactory agreement was reached at the last barangay conciliation proceedings in December 1998, and
petitioner having continued the construction work despite issuance of several stop-work notices from the City
Engineers Office for lack of building permit, respondent filed on March 1999 a complaint[5] for damages against
petitioner before the RTC of Las Pias City.
In his complaint, respondent alleged in the main that, instead of boring just one hole as agreed upon, petitioner
demolished the whole length of the wall from top to bottom into five parts for the purpose of constructing a second
floor with terrace; and that debris and dust piled up on respondents property ruining his garden and forcing him to,
among other things, shut some of the windows of his house. Respondent thus prayed for the award of moral and
exemplary damages.
Petitioner, denying respondents allegations, claimed in his Answer[6] that he was the sole and exclusive owner of
the wall referred to as a perimeter wall, the same having been built within the confines of his property and being
part and parcel of the house and lot package he purchased from the developer, BF Homes, Inc., in 1981; that the
issue of its ownership has never been raised by respondent or his predecessor; and that securing the consent of
respondent and his neighbors was a mere formality in compliance with the requirements of the Building Official to
facilitate the issuance of a building permit, hence, it should not be taken to mean that he (petitioner) acknowledges
respondent to be a co-owner of the wall. He added that he eventually secured the requisite building permit[7] in
March 1999 and had duly paid the administrative fine.[8]
Further, petitioner, denying that a demolition of the whole length of the wall took place, claimed that he and his
contractors laborers had been diligently cleaning respondents area after every days work until respondent
arrogantly demanded the dismantling of the scaffoldings, and barred the workforce from, and threatening to shoot
anyone entering the premises; and that the complaint was instituted by respondent as leverage to force him to
withdraw the criminal case for slander and light threats[9] which he had earlier filed against respondent

RTC Ruling: Ruled in favor or respondents, awarding moral damages in the sum of P100,000, exemplary damages
of P100,000 and attorneys fees of P50,000 plus costs of suit.
CA Ruling: Affirmed RTC Ruling, with modification by reducing the award of moral and exemplary damages to
P50,000 and P25,000, respectively.

ISSUE: Whether or not the Respondent is entitled to moral and/or exemplary damages.

21
HELD: No. 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[19] and 2220[20] 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.
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.

In the present case, respondent failed to establish by clear and convincing evidence that the injuries he sustained
were the proximate effect of petitioners act or omission. It thus becomes necessary to instead look into the manner
by which petitioner carried out his renovations to determine whether this was directly responsible for any distress
respondent may have suffered since the law requires that a wrongful or illegal act or omission must have preceded
the damages sustained by the claimant.

It bears noting that petitioner was engaged in the lawful exercise of his property rights to introduce renovations to
his abode. While he initially did not have a building permit and may have misrepresented his real intent when he
initially sought respondents consent, the lack of the permit was inconsequential since it only rendered petitioner
liable to administrative sanctions or penalties.

Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or
moral obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state
of mind affirmatively operating with furtive design or ill will.[27] While the Court harbors no doubt that the incidents
which gave rise to this dispute have brought anxiety and anguish to respondent, it is unconvinced that the damage
inflicted upon respondents property was malicious or willful, an element crucial to merit an award of moral
damages under Article 2220 of the Civil Code.

Petitioner, however, cannot steer clear from any liability whatsoever. Respondent and his familys rights to the
peaceful enjoyment of their property have, at the very least, been inconvenienced from the incident borne of
petitioners construction work. Any pecuniary loss or damage suffered by respondent cannot be established as the
records are bereft of any factual evidence to establish the same. Nominal damages may thus be adjudicated in
order that a right of the plaintiff, respondent herein, which has been violated or invaded by the defendant,
petitioner herein, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.

WHEREFORE, the petition is GRANTED. The May 26, 2009 Decision of the Court of Appeals is VACATED. The
Court orders petitioner to pay respondent the sum of P25,000 as nominal damages.

#9 EXPERTRAVEL & TOURS, INC. v. CA G.R. No. 130030 June 25, 1999 Vitug, J.

PETITIONER: EXPERTRAVEL & TOURS, INC RESPONDENTS: THE HON. COURT OF APPEALS and
RICARDO LO

NATURE OF THE CASE: Petition for review on certiorari

DOCTRINE: An injury, whether physical, mental or psychological, clearly sustained by the claimant may be a
ground for the award of moral damages.

Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of
attorney's fees, such filing, however, has almost invariably been held not to be a ground for an award of moral
damages.

22
FACTS: Expertravel & Tours, Inc., ("Expertravel"), a domestic corporation engaged in the travel agency business,
issued to private respondent Ricardo Lo four round-trip plane tickets for Hongkong, together with hotel
accommodations and transfers, for a total cost of P39,677.20. Alleging that Lo had failed to pay the amount due,
Expertravel caused several demands to be made. Since the demands were ignored by Lo, Expertravel filed a court
complaint for recovery of the amount claimed plus damages.

Respondent Lo explained, in his answer, that his account with Expertravel had already been fully paid.The
outstanding account was remitted to Expertravel through its then Chairperson, Ms. Ma. Rocio de Vega, who was
theretofore authorized to deal with the clients of Expertravel. The payment was evidenced by a Monte de Piedad
Check No. 291559, dated 06 October 1987, for P42,175.20 for which Ms. de Vega, in turn, issued City Trust
Check No. 417920 in favor of Expertravel for the amount of P50,000.00, with the notation "placement advance for
Ricardo Lo, etc." Per its own invoice, Expertravel received the sum on 10 October 1987.

The trial court, affirmed by the appellate court, held that the payment made by Lo was valid and binding on
petitioner Expertravel. Even on the assumption that Ms. de Vega had not been specifically authorized by
Expertravel, both courts said, the fact that the amount "delivered to the latter remain(ed) in its possession up to the
present, mean(t) that the amount redounded to the benefit of petitioner Expertravel, in view of the second
paragraph of Article 1241 of the Civil Code to the effect that payment made to a third person shall also be valid in
so far as it has redounded to the benefit of the creditor.

ISSUES:
a. Whether or not moral damages can be awarded for negligence or quasi-delict that did not result to physical
injury to the offended party

b. Whether or not moral damages can be recovered in a clearly unfounded suit

HELD:
a. YES. Moral damages are not punitive in nature but are designed to compensate and alleviate in some
way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury unjustly caused to a person. Although
incapable of pecuniary computation, moral damages, nevertheless, must somehow be proportional to and
in approximation of the suffering inflicted. Such damages, to be recoverable, must be the proximate result
of a wrongful act or omission the factual basis for which is satisfactorily established by the aggrieved
party. 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 a 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. Under the provisions of this law, in
culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in
bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his
contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort
resulting in physical injuries. By special rule in Article 1764, in relation to Article 2206, of the Civil Code,
moral damages may also be awarded in case the death of a passenger results from a breach of carriage.
In culpa aquiliana, or quasi-delict, (a) when an act or omission causes physical injuries, or (b) where the
defendant is guilty of intentional tort,moral damages may aptly be recovered. This rule also applies, as
aforestated, to contracts when breached by tort. In culpa criminal, moral damages could be lawfully due
when the accused is found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or
arbitrary detention, illegal arrest, illegal search, or defamation. Malicious prosecution can also give rise to
a claim for moral damages. The term "analogous cases," referred to in Article 2219, following the
ejusdem generis rule, must be held similar to those expressly enumerated by the law.

b. NO. Although the institution of a clearly unfounded civil suit can at times be a legal justification for an
award of attorney's fees, such filing, however, has almost invariably been held not to be a ground for an
award of moral damages. The rationale for the rule is that the law could not have meant to impose a
penalty on the right to litigate. The anguish suffered by a person for having been made a defendant in a
civil suit would be no different from the usual worry and anxiety suffered by anyone who is haled to court,
a situation that cannot by itself be a cogent reason for the award of moral damages. If the rule were
otherwise, then moral damages must every time be awarded in favor of the prevailing defendant against
an unsuccessful plaintiff.

23
#10 ENERVIDA v. DELA TORRE G.R. No. L-38037 January 28, 1974 ESGUERRA, J.

PETITIONER: ROQUE ENERVIDA RESPONDENT: LAURO DE LA TORRE and ROSA DE LA TORRE

NATURE OF THE CASE: Appeal from Decision of CA

DOCTRINE:

FACTS:
Plaintiff-appellant, now petitioner Roque Enervida, filed a complaint against the defendant-spouses Lauro de
la Torre and Rosa de la Torre, praying that the deed of sale executed on December 3, 1957, by his deceased
father, Ciriaco Enervida, over a parcel of land covered by a Homestead Patent be declared null and void for having
been executed within the prohibited period of five years, in violation of the provision, of Section 118 of
Commonwealth Act 141, otherwise known as the Public Land Law. He further prayed that he be allowed to
repurchase said parcel of land for being the legitimate son and sole heir of his deceased father.
In due time, defendants filed their answer, stating among others that the plaintiff has no cause of action
against them as his father, Ciriaco Enervida, is still living; that it is not true that plaintiff is the only son of Ciriaco
Enervida as he has also other living children, namely, Juan, Filomena, Nieves and Antonio, all surnamed
"Enervida"; and that the sale of the property in question did not take place within the prohibited period provided for
in Section 118 of the Public Land Law, the sale having taken place on November 20, 1957, although ratified and
acknowledged on December 3, 1957, before a Notary Public.

ISSUE: Whether or not the defendants are also entitled to moral damages?

HELD: NO.
This Court, through then Associate, now Chief Justice, Makalintal, previously ruled that where the vendor is still
living, it is he alone who has the right of redemption. 1 It is clear, therefore, that the complaint is without basis
and there is no cause of action and the plaintiff-appellant has no legal capacity to sue. On this score alone,
the petition should be denied.

As to the issue of MORAL DAMAGES, the plaintiff-appellant assailed the award of damages and attorney's fees by
the court a quo to respondents. Article 2208 of the New Civil Code on attorney's fees specifically provides:
Article 2208 — In the absence of stipulation, attorney's fees and expenses of litigation, other
than judicial costs, can not be recovered, except:
xxx xxx xxx
xxx xxx xxx
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
xxx xxx xxx

As the case at bar is clearly an unfounded civil action, the respondents may recover attorney's fees. In Deogracias
Malonzo vs. Gregoria Galang,5 this Court, applying the above doctrine, said:
As to attorney's fees, the award is correct and proper, in view of the finding of the trial court and
of the Court of Appeals that petitioner's action against respondents is clearly unfounded, since
Article 2208, par. (4), of the New Civil Code authorizes the recovery of attorney's fees "in case of
a clearly unfounded civil action or proceeding against the plaintiff." This provision applies equally
in favor of a defendant under a counter-claim for attorney's fees (as in this case), considering
that a counter-claim is a complaint by the defendant against the original plaintiff (Pongos vs.
Hidalgo Enterprises, Inc., et al., 84 Phil. 499) wherein the defendant is the plaintiff and the
original plaintiff the defendant.

However, with regard to the award of TWO THOUSAND PESOS "in concept of actual, moral and exemplary
damages ...", the same is not proper for it would ran counter to the decision of this Court in the case aforecited
where it was ruled:
Finally, with respect to moral damages, we are inclined to agree with petitioner that these
damages are not recoverable herein, notwithstanding the finding of the trial court and the Court

24
 of Appeals that his complaint against respondents were clearly unfounded or unreasonable. It
will be observed that unlike compensatory or actual damages which are generally recoverable in
tort cases as long as there is satisfactory proof thereof (Art. 2202), the Code has chosen to
enumerate the cases in which moral damages, may be recovered (Art. 2219). A like
enumeration is made in regard to the recovery of attorney's fees as an item of damage (Art.
2208). But the two enumerations differ in the case of a clearly unfounded suit, which is expressly
mentioned in Art. 2208 (par. 4), as justifying an award of attorney's fees, but is not included in
the enumeration of Art. 2219 in respect to moral damages. It is true that Art. 2219 also
provides that moral damages may be awarded in "analogous cases" to those enumerated, but
we do not think the Code intended" a clearly unfounded civil action or proceedings" to be one of
these analogous cases wherein moral damages may be recovered, or it would have expressly
mentioned it in Art. 2219, as it did in Art. 2208; or else incorporated Art. 2208 by reference in Art.
2219. Besides, Art. 2219 Specifically mentions "quasi-delicts causing physical injuries", as an
instance when moral damages may be allowed, thereby implying that all other quasi-delicts not
resulting in physical injuries are excluded (Strebel vs. Figueras, 96 Phil. 321), excepting, of
course, the special torts referred to in Art. 309, par. 9, Art. 2219) and in Arts. 21, 26, 27, 28, 29,
30, 32, and 34, 35 on the chapter on human relations (par. 10, Art. 2219).
Furthermore, while no proof of pecuniary loss is necessary in order that moral damages may be
awarded, the amount of indemnity being left to the discretion of the court (Art. 2216), it is,
nevertheless, essential that the claimant satisfactorily prove the existence of the factual basis of
the damage (Art. 2217) and its causal relation to defendant's acts. This is so because moral
damages, though incapable of pecuniary estimation, are in the category of an award
designed to compensate the claimant for actual injury suffered and not to impose a
penalty on the wrongdoer (Algara vs. Sandejas, 27 Phil. 294). The trial court and the Court of
Appeals both seem to be of the opinion that the mere fact that respondent were sued without
any legal foundation entitled them to an award of moral damages, hence they made no definite
finding as to what the supposed moral damages suffered consist of. Such a conclusion would
make of moral damages a penalty, which they are not, rather than a compensation for actual
injury suffered, which they are intended to be. Moral damages, in other words, are not
corrective or exemplary damages.

WHEREFORE, the dismissal order is hereby affirmed with the modification that only attorney's fees in the amount
of P1,500 are hereby awarded to the respondents. No Costs.

25
#11 KIERULF V. CA G.R. No. 99301 March 13, 1997 Panganiban, J.

PETITIONER: VICTOR KIERULF, LUCILA H. RESPONDENT: COURT OF APPEALS and PANTRANCO

KIERULF and PORFIRIO LEGASPI NORTH EXPRESS, INCORPORATED

NATURE OF THE CASE:

DOCTRINE: Moral damages are awarded to enable the injured part 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. Its
award is aimed at restoration, as much as possible, of the spiritual status quo ante

FACTS: At about 7:45 p.m. of 28 February 1987, the Pantranco bus driven by Jose Malanum, was traveling along
EDSA from Congressional Avenue towards Clover Leaf, Balintawak. Before it reached the corner of Oliveros
Drive, the driver lost control of the bus, causing it to swerve to the left, and then to fly over the center island
occupying the east-bound lane of EDSA. The front of the bus bumped the front portion of an Isuzu pickup driven
by Legaspi, which was moving along Congressional Avenue heading towards Roosevelt Avenue. As a result, the
points of contact of both vehicles were damaged and physical injuries were inflicted on Legaspi and his passenger
Lucila Kierulf, both of whom were treated at the Quezon City General Hospital. The bus also hit and injured a
pedestrian who was then crossing EDSA.

Despite the impact, said bus continued to move forward and its front portion rammed against a Caltex gasoline
station, damaging its building and gasoline dispensing equipment.

As a consequence of the incident, Lucila suffered injuries. The injuries sustained by Lucila required major
surgeries like "tracheotomy, open reduction, mandibular fracture, intermaxillary repair of multiple laceration" and
prolonged treatment by specialists. Per medical report of Dr. Alex L. Castillo, Legaspi also suffered injuries.

The front portion of the pickup truck, owned by Spouses Kierulf, bearing plate number UV PGS 798, was smashed
to pieces.

While cruising along EDSA, a used engine differential accidentally and suddenly dropped from a junk truck in front
of the bus. Said differential hit the underchassis of the bus, throwing Malanum off his seat and making him lose
control of said bus. The bus swerved to the left, hit the center island, and bumped the pickup of the spouses.

Under the first cause of action, the defendant is hereby ordered to pay Lucila H. Kierulf. Under the second cause
of action, to pay Victor Kierulf, by way of indemnification damage to the Isuzu Carry All and under the third cause
of action, to pay Porfirio Legaspi.

ISSUE: Whether or not moral damages should be awarded to Lucia and Legaspi.

HELD: Complainants aver that the moral damages awarded by Respondent Court are "clearly and woefully not
enough." The established guideline in awarding moral damages takes into consideration several factors, some of
which are the social and financial standing of the injured parties and their wounded moral feelings and personal
pride. The Kierulf spouses add that the Respondent Court should have considered another factor: the loss of their
conjugal fellowship and the impairment or destruction of their sexual life.

The spouses aver that the disfigurement of Lucila's physical appearance cannot but affect their marital right to
"consortium" which would have remained normal were it not for the accident. Thus the moral damages awarded in
favor of Lucila should be increased to P1,000,000.00, not only for Lucila but also for her husband Victor who also
suffered "psychologically."A California case, Rodriguez vs. Bethlehem Steel Corporation, is cited as authority for
the claim of damages by reason of loss of marital consortium, i.e. loss of conjugal fellowship and sexual relations

Pantranco rebuts that Victor's claim of moral damages on alleged loss of consortium is without legal basis. Article
2219 of the Civil Code provides that only the person suffering the injury may claim moral damages. Additionally, no
evidence was adduced to show that the consortium had indeed been impaired and the Court cannot presume that
marital relations disappeared with the accident.

The Courts notes that the Rodriguez case clearly reversed the original common law view first enunciated in the

26
case of Deshotel vs. Atchison\ that a wife could not recover for the loss of her husband's services by the act of a
third party. Rodriguez ruled that when a person is injured to the extent that he/she is no longer capable of giving
love, affection, comfort and sexual relations to his or her spouse, that spouse has suffered a direct and real
personal loss. The loss is immediate and consequential rather than remote and unforeseeable; it is personal to the
spouse and separate and distinct from that of the injured person.

Rodriguez involved a couple in their early 20s, who were married for only 16 months and full of dreams of building
a family of their own, when the husband was struck and almost paralyzed by a falling 600-pound pipe. The wife
testified how her life had deteriorated because her husband became a lifelong invalid, confined to the home,
bedridden and in constant need of assistance for his bodily functions; and how her social, recreational and sexual
life had been severely restricted. It also deprived her of the chance to bear their children. As a constant witness to
her husband's pain, mental anguish and frustration, she was always nervous, tense, depressed and had trouble
sleeping, eating and concentrating. Thus, the California court awarded her damages for loss of consortium.

Whether Rodriguez may be cited as authority to support the award of moral damages to Victor and/or
Lucila Kierulf for "loss of consortium," however, cannot be properly considered in this case.

Victor's claim for deprivation of his right to consortium, although argued before Respondent Court, is not supported
by the evidence on record. His wife might have been badly disfigured, but he had not testified that, in consequence
thereof, his right to marital consortium was affected. Clearly, Victor (and for that matter, Lucila) had failed to make
out a case for loss of consortium, unlike the Rodriguez spouse. Again, we emphasize that this claim is factual in
origin and must find basis not only in the evidence presented but also in the findings of the Respondent Court. For
lack of factual basis, such claim cannot be ruled upon by this Court at this time.

27
#12 BARZAGA vs CA G.R. No. 115129 February 12, 1997 BELLOSILLO, J.

PETITIONER: IGNACIO BARZAGA RESPONDENTS: COURT OF APPEALS and ANGELITO ALVIAR

NATURE OF THE CASE:

DOCTRINE: The law expressly provides that those who in the performance of their obligation are guilty of fraud,
negligence, or delay and those who in any manner contravene the tenor thereof, are liable for damages.

FACTS:
On Dec. 19, 1990, Ignacio Barzaga's wife succumbed to a debilitating ailment after prolonged pain and suffering.
Forewarned by her attending physicians of her impending death, she expressed her wish to be laid to rest before
Christmas day to spare her family from keeping lonely vigil over her remains while the whole of Christendom
celebrate the Nativity of their Redeemer. Barzaga set out to arrange for her interment on the twenty-fourth of
December in obedience semper fidelis to her dying wish.

On Dec. 21, at about three o`clock in the afternoon, he went to the hardware store of respondent Angelito Alviar to
inquire about the availability of certain materials to be used in the construction of a niche for his wife. He also
asked if the materials could be delivered at once. Marina Boncales, Alviar's storekeeper, replied that she had yet to
verify if the store had pending deliveries that afternoon because if there were then all subsequent purchases would
have to be delivered the following day.

Barzaga returned to Alviar's hardware store the next morning to follow up his purchase of construction materials.
He told the store employees that the materials he was buying would have to be delivered at the Memorial
Cemetery in Dasmarinas, Cavite, by eight o'clock that morning since his hired workers were already at the burial
site and time was of the essence. The storekeeper agreed to deliver the items at the designated time, date and
place. With this assurance, Barzaga purchased the materials and paid in full the amount of P2,110.00. Thereafter
he joined his workers at the cemetery, which was only a kilometer away, to await the delivery.

The construction materials did not arrive on time as promised, so Barzaga returned to the hardware store to inquire
about the delay. Boncales assured him that although the delivery truck was not yet around it had already left the
garage and that as soon as it arrived the materials would be brought over to the cemetery in no time at all. After
hours of waiting, Barzaga decided to dismiss his laborers for the day. He proceeded to the police station, which
was just nearby, and lodged a complaint against Alviar. He had his complaint entered in the police blotter. When
he returned again to the store he saw the delivery truck already there but the materials he purchased were not yet
ready for loading. Distressed that Alviar's employees were not the least concerned, despite his impassioned pleas,
Barzaga decided to cancel his transaction with the store and look for construction materials elsewhere.

He was able to purchase the materials from another store, but he was only able to start the project on the 23rd of
December. The niche was completed in the afternoon and Barzaga's wife was finally laid to rest. However, it was
two-and-a-half (2-1/2) days behind schedule.

Tormented perhaps by his inability to fulfill his wife's dying wish, Barzaga wrote private respondent Alviar
demanding recompense for the damage he suffered. Alviar did not respond. Consequently, petitioner sued him
before the Regional Trial Court.

Contention of Respondent: legal delay could not be validly ascribed to him because no specific time of delivery
was agreed upon between them.
- the invoices evidencing the sale did not contain any stipulation as to the exact time of delivery
- that assuming that the materials were not delivered within the period desired by petitioner, the delivery
truck suffered a flat tire on the way to the store to pick up the materials
- his men were ready to make the delivery by ten-thirty in the morning of 22 December but petitioner
refused to accept them
- it was this obstinate refusal of petitioner to accept delivery that caused the delay in the
construction of the niche and the consequent failure of the family to inter their loved one on the
twenty-fourth of December, and that, if at all, it was petitioner and no other who brought about all
his personal woes.

Decision of RTC: ordered respondent Alviar to pay petitioner

(a) P2,110.00 as refund for the purchase price of the materials with interest per annum computed at the legal rate
from the date of the filing of the complaint,

28
(b) P5,000.00 as temperate damages,
(c) P20,000.00 as moral damages,
(d) P5,000.00 as litigation expenses, and
(e) P5,000.00 as attorney's fees.

CA reversed the ruling of the lower court and ruled that there was no contractual commitment as to the exact time
of delivery since this was not indicated in the invoice receipts covering the sale. The arrangement to deliver the
materials merely implied that delivery should be made within a reasonable time but that the conclusion that since
petitioner's workers were already at the graveyard the delivery had to be made at that precise moment, is non-
sequitur.

ISSUE: WHETHER OR NOT ALVIAR HAS INCURRED DELAY?

HELD: YES
Angelito Alviar was negligent and incurred in delay in the performance of his contractual obligation. This
sufficiently entitles petitioner Ignacio Barzaga to be indemnified for the damage he suffered as a consequence of
delay or a contractual breach.

Contrary to the appellate court's factual determination, there was a specific time agreed upon for the delivery of the
materials to the cemetery. The argument that the invoices never indicated a specific delivery time must fall in the
face of the positive verbal commitment of respondent's storekeeper. Consequently it was no longer necessary to
indicate in the invoices the exact time the purchased items were to be brought to the cemetery. In fact,
storekeeper Boncales admitted that it was her custom not to indicate the time of delivery whenever she prepared
invoices.

We also find unacceptable respondent's justification that his truck had a flat tire, for this event, if indeed it
happened, was forseeable according to the trial court, and as such should have been reasonably guarded against.
The nature of private respondent's business requires that he should be ready at all times to meet contingencies of
this kind. One piece of testimony by respondent's witness Marina Boncales has caught our attention - that the
delivery truck arrived a little late than usual because it came from a delivery of materials in Langcaan, Dasmarinas,
Cavite. Significantly, this information was withheld by Boncales from petitioner when the latter was negotiating with
her for the purchase of construction materials. The deliberate suppression of this information by itself manifests a
certain degree of bad faith on the part of respondent's storekeeper.

This case is clearly one of non-performance of a reciprocal obligation. In their contract of purchase and sale,
petitioner had already complied fully with what was required of him as purchaser, i.e., the payment of the purchase
price of P2,110.00. It was incumbent upon respondent to immediately fulfill his obligation to deliver the goods
otherwise delay would attach.

Awarding of Moral Damages (O)

We therefore sustain the award of moral damages. It cannot be denied that petitioner and his family suffered
wounded feelings, mental anguish and serious anxiety while keeping watch on Christmas day over the remains of
their loved one who could not be laid to rest on the date she herself had chosen. There is no gainsaying the
inexpressible pain and sorrow Ignacio Barzaga and his family bore at that moment caused no less by the
ineptitude, cavalier behavior and bad faith of respondent and his employees in the performance of an obligation
voluntarily entered into.

Awarding of Exemplary Damages (O)

The lackadaisical and feckless attitude of the employees of respondent over which he exercised supervisory
authority indicates gross negligence in the fulfillment of his business obligations. Respondent Alviar and his
employees should have exercised fairness and good judgment in dealing with petitioner who was then grieving
over the loss of his wife. Instead of commiserating with him, respondent and his employees contributed to
petitioner's anguish by causing him to bear the agony resulting from his inability to fulfill his wife's dying wish.

Awarding of Temperate Damages (X)

Under Art. 2224 of the Civil Code, temperate damages are more than nominal but less than compensatory, and
may be recovered 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. In this case, the trial court found that plaintiff suffered damages in
the form of wages for the hired workers for 22 December 1990 and expenses incurred during the extra two (2)
days of the wake. While petitioner may have indeed suffered pecuniary losses, these by their very nature could be
established with certainty by means of payment receipts. As such, the claim falls unequivocally within the realm of

29
actual or compensatory damages.

We affirm the award of attorney's fees and litigation expenses. Award of damages, attorney's fees and litigation
costs is left to the sound discretion of the court, and if such discretion be well exercised, as in this case, it will not
be disturbed on appeal.

WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE except insofar as it
GRANTED on a motion for reconsideration the refund by private respondent of the amount of P2,110.00 paid by
petitioner for the construction materials. Consequently, except for the award of P5,000.00 as temperate damages
which we delete, the decision of the Regional Trial Court granting petitioner (a) P2,110.00 as refund for the value
of materials with interest computed at the legal rate per annum from the date of the filing of the case; (b)
P20,000.00 as moral damages; (c) P10,000.00 as exemplary damages; (d) P5,000.00 as litigation expenses; and
(4) P5,000.00 as attorney's fees, is AFFIRMED. No costs.

30
#13 Francisco vs. Ferrer GR No. 142029 Feb. 28, 2001 Pardo, J.

PETITIONER: Erlinda Francisco doing business RESPONDENT: Ricardo Ferrer, Jr., Annette Ferrer, Ernesto
in the name and style of Cebu Fountainhead Lo, and Rebecca Lo
Bakeshop and Juliana Pamaong

NATURE OF THE CASE: Appeal via Certiorari

DOCTRINE: To recover moral damages in an action for breach of contract, the breach must be palpably wanton,
reckless, malicious, in bad faith, oppressive or abusive.

FACTS:
Rebecca Lo and her daughter Annette Ferrer ordered a three-layered cake from Fountainhead Bakeshop. The
parties agreed that the wedding cake shall be delivered at 5pm at the Cebu Country Club, Cebu City, stating
clearly that the wedding is scheduled on December 14, 1992. The order was fully paid

On the day of wedding, respondents arrives at the Country Club at 6pm but the cake was not there. They called
the bakeshop for follow up at 7pm and was informed that the cake was probably late because of the traffic. By 8pm
there were informed that no cake will be delivered because the order slip got lost. Respondents were compelled to
buy the only available cake at the Country Club which is a sansrival only to comply with the tradition of cutting of
the cake. At 10pm a 2-layered cake was delivered but the respondents refused to receive the same.

Petitioner then sent a letter of apology with a check amounting to Php 5,000 but these were refused by the
respondents believing such to be inadequate compensation. Two weeks after, petitioner called Rebecca to
apologize.

An action for breach of contract with damages was filed by respondents against petitioner. The RTC rendered a
decision in favor of respondents directing the petitioner to pay the following:
1. Wedding cake P3,175.00
2. Moral damages P30,000.00
3. Attorneys fees P10,000.00
4. Cost of litigation

On appeal of petitioners, the CA modified RTC's ruling. Petitioners are ordered to pay the following increased
amounts:
1. moral damages P250,000.00
2. exemplary damages P100,000.00
3. wedding cake P3,175.00
4. attorney's fees P10,000.00
5. cost of litigation

ISSUE: Whether the CA erred in affirming the award of moral damages, increasing the amount thereof, and
awarding additional exemplary damages.

HELD:
In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad
faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation
and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries. 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.
An award of moral damages would require certain conditions to be met, to wit: (1) there must be an injury, whether
physical, mental or psychological, clearly sustained by the claimant; (2) there must be culpable act or omission
factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury
sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219
of the Civil Code. The award for damages must not be excessive because its purpose is not to penalize the
defendant but to compensate the plaintiff.

There being no fraud nor bad faith in this case, the award for moral damages was not proper. Neither is the award

31
for exemplary damages. The petitioners are however liable for nominal damages in the amount of Php 10,000.

Note:
Basis for NOMINAL DAMAGES
"The facts show that when confronted with their failure to deliver on the wedding day the wedding cake ordered
and paid for, petitioners gave the lame excuse that delivery was probably delayed because of the traffic, when in
truth, no cake could be delivered because the order slip got lost. For such prevarication, petitioners must be held
liable for nominal damages for insensitivity, inadvertence or inattention to their customers anxiety and need of the
hour. Nominal damages are recoverable where a legal right is technically violated and must be vindicated against
an invasion that has produced no actual present loss of any kind or where there has been a breach of contract and
no substantial injury or actual damages whatsoever have been or can be shown. Nominal damages may be
awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or
recognizing that right, not for indemnifying the plaintiff for any loss suffered."

32
#15 SEVEN BROTHERS SHIPPING G.R. No. November 26, 2014 SERENO, CJ:
CORPORATION vs. DMC-CONSTRUCTION 193914
RESOURCES, INC.

PETITIONER: Seven Brothers Shipping Corporation RESPONDENT: DMC-Construction Resources

NATURE OF THE CASE: Rule 45 appeal

DOCTRINE: Nominal damages may be awarded in order that the plaintiffs right, 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.

FACTS:
Petitioner is the owner of the cargo ship M/V Diamond Rabbit while respondent is the owner of coal-conveyer
facility. Petitioner’s vessel was at the PICOP Pier in Surigao Del Sur to dock there. The weather was windy with a
wind force of 10-20 knots and the sea condition was rough with waves 6-8ft high.

The vessel was anchored at the causeway of the port of Bislig where it was safe from inclement weather. The
vessel left the causeway in order to dock at the PICOP pier, pulled by a lifeboat with a heaving line attached to the
vessel’s mooring rope, when suddenly the heaving line broke loose, causing the mooring rope to drift freely. The
mooring rope got entangled in the vessel’s propeller, disabling it and preventing maneuvering. To stop the vessel
from further drifting, the Master dropped her anchor and the forward mooring rope sent ashore to secure the
vessel. However, because of the strong winds, those cannot hold the vessel. Consequently, the uncontrollable drift
of the vessel hit several structures at the Pier including respondent’s coal conveyer facility.

Respondent sent a formal demand letter to petitioner claiming damages. Upon default, respondent filed with RTC
a complaint for damages. RTC ruled in favor of respondent, rewarding actual damages in the amount of
P3,523,175.92, on the ground that no force majeure existed because petitioner’s captain was negligence in that
she had knowledge of the bad weather and yet still proceeded. CA affirmed the decision with modification that
nominal damages instead of actual damages on the ground that actual damages had not been proved.
Respondent merely relied on estimates to prove the cost of replacing the structures destroyed by the vessel, as no
actual receipt was presented.

Petitioner argues that under Arts. 2221 and 2223 of the Civil Code, nominal damages are only awarded to
vindicate or recognize a right that has been violated, and not to indemnify a party for any loss suffered by the
latter. Respondent alleges that nominal damages were rightly assessed.

ISSUE: Whether or not the CA erred in awarding nominal damages to respondent after having ruled that the actual
damages awarded by the RTC was unfounded

HELD: Yes. The Court ruled that that temperate, and not nominal, damages should be awarded to respondent in
the amount of P3,523,175.92, for the reason that it was established that respondent suffered a loss caused by
petitioner; and that respondent failed to sufficiently establish the amount due to him, as no actual receipt was
presented.

Under Art. 2224, temperate or moderate damages may be recovered when the court finds that some pecuniary
loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty. On the other
hand, under Article 2221 of the Civil Code, nominal damages may be awarded in order that the plaintiffs right,
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.

The amount of temperate damages to be awarded is usually left to the discretion of the courts, but such amount
must be reasonable. The amount of temperate damages to be awarded is usually left to the discretion of the
courts, but such amount must be reasonable.

#14 Tan et al vs OMC Carrier, Inc. G.R. No. 190521 January 12, 2011 J. Brion

33
PETITIONER: Leticia Tan, Myrna Medina, Marilou Spooner, RESPONDENT: Tan et al vs OMC Carriers, Inc.
Rosalinda Tan and Mary Jane Tan, Mary Lyn Tan, Celedonio and Bonifacio Arambala
Tan Jr., Mary Joy Tan and Mark Allan Tan, represented
herein by their mother, Leticia Tan

NATURE OF THE CASE: MOTION FOR RECONSIDERATION of a decision of the Supreme Court. The case was
initially denied by the Supreme Court in its January 17, 2010 Resolution, for the petitioners’ failure to show
reversible error on the part of the Court of Appeals.

DOCTRINE:
CODAL PROVISION:
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.
DOCTRINES:
1. Temperate Damages in lieu of Actual Damages
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 convinced that the aggrieved party suffered some pecuniary loss.
2. Temperate Damages in lieu of actual damages for loss of earning capacity
This may be awarded where earning capacity is plainly established but no evidence was presented to support
the allegation of the injured party’s actual income.

FACTS:
Petitioners filed a COMPLAINT FOR DAMAGES with the RTC against respondents. The complaint states that on
November 24, 19995 at 6 a.m., Arambala was driving a truck with a trailer owned by OMC, along Meralco Road,
Sucat, Muntinlupa City. When Arambala noticed that the truck 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. 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. On the other hand, the respondents denied liability because it was a
fortuitous event, since the truck skidded due to the slippery condition of the road caused by spilled motor oil.
RTC Ruling: The court, invoking the principle of Res ipsa loquitor, stated that even though there is an oil spill,
it doesn’t explain how the truck lost its brakes. (In their petition, Tan et al stated that there is no oil spill, as found in
the Traffic Investigation Report). The Court awarded the following amounts:
50,000 for the death of Celedonio Tan; 500,000 for the loss of earning capacity plus interests;
355, 895 for actual damages; 500,000 for moral damages; 500,000 For exemplary damages; and
500,000 For attorney’s fees
C.A. Ruling: The Court modified the award as follows:
From 355,895 for actual damages it was reduced to 72, 295 because it was only this amount that was
supported by receipts; the award of 500,000 for the loss of earning capacity plus interests was deleted because
the only basis thereof was Leticia’s testimony which was self-serving; Exemplary damages of 500,000 was
reduced to 200,000; and the award of attorney’s fees was likewise deleted because the trial court did not
discussed its legal basis.

ISSUE: What damages are the petitioners entitled to?

HELD:
RULING:
The petition is partly granted. The final award is as follows:
50,000 for the death of Celedonio Tan;
300,000 for the loss of earning capacity plus interests (a reduction from 500,000 of RTC Ruling –
TEMPERATE DAMAGES);
72,295 for actual damages for funeral expenses (a reduction from 355,895)
200,000 for TEMPERATE DAMAGES (NEW) for the damage done to petitioner’s house, tailoring shop,
household appliances and shop equipment;
500,000 for moral damages;
200,000 For exemplary damages (a reduction from 500,000);
10% of the total amount for attorney’s fees and costs of suit (from 500,000)

34
 Discussion:
Temperate Damages in Lieu of Actual Damages
In Viron Transportation Co. Inc., vs De Los Santos (2000), the Supreme Court stated that:
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.

Petitioners do not deny that they did not submit receipts in support of their claim but nonetheless, they can still
be awarded with temperate damages. The photographs the petitioners presented as evidence show extent of the
damage done to the house, tailoring shop and the petitioner’s appliance and equipment. 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 loss with certainty. The Court ruled that 200, 000 is a fair
and sufficient award.

Temperate Damages in Lieu of loss of earning capacity

As a rule, documentary evidence should be presented to substantiate the claim for loss of earning capacity.
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 duly employed as a daily wage worker earning less than the minimum wage under
current labor laws.
According to petitioners, Celedonio was earning approximately 156,000 a year or 13,000 a month. At the time
of his death, the minimum wage was 145 pesos or 3,750 a month and therefore, the exception does not apply. In
the present case, the income-earning capacity of the deceased was not disputed Petitioners Mary Jane Tan et al
were all minors are all relying on the income earned by their father for their sustenance and support. Under these
circumstances, the Court held that petitioners are entitled to 300,000 or roughly 2 years of gross income as
temperate damages.

The reduction of exemplary damages is 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. In quasi-delicts, exemplary damages may be granted if
the defendant acted with gross negligence. The grant however should be tempered, as it is not intended to enrich
one party or to impoverish another.

Attorney’s fees in order

In view of the awarding of exemplary damages, the award attorney’s fees is proper, pursuant to Article 2208
(1).

Interests due
The 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.

35
#16 Ventanilla v. Centeno G.R. No. L-14333 January 28, 1961 Padilla, J.

PETITIONER: Oscar Ventanilla RESPONDENT: Gregorio Centeno

NATURE OF THE CASE:

DOCTRINE: Moral damages are recoverable only when physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shocks, social humiliation, and similar injury are the proximate
result of a criminal offense resulting in physical injuries, quasi-delicts causing physical injuries, seduction,
abduction, rape or other lascivious acts, adultery or concubinage, illegal or arbitrary detention or arrest, illegal
search, libel, slander or any other form of defamation, malicious prosecution, disrespect for the dead or wrongful
interference with funerals, violation of specific provisions of the Civil Code on human relations, and willful injury to
property.

FACTS: This is an action to recover damages claimed to have been suffered by the plaintiff due to the defendant's
neglect in perfecting within the reglementary period his appeal from an adverse judgment rendered by the Court of
First Instance of Manila, attorney's fees and costs (Court of First Instance of Nueva Ecija). After trial, the Court
rendered judgment in favor of the plaintiff and against the defendant, ordering the latter to pay the former the sum
of P200 as nominal damages and the costs. The plaintiff appealed to the Court of Appeals, which certified the
case to this Court on the ground that only questions of law are raised. The defendant did not appeal.

In Civil Case No. 18833 of the Court of First Instance of Manila, entitled Oscar Ventanilla vs. Edilberto Alejandrino
and Aida G. Alejandrino, plaintiff retained the service of Atty. Gregorio Centeno to represent him and prosecute the
case. Civil Case No. 19833 was an action for the recovery of P4,000.00 together with damages. Decision
unfavorable to the plaintiff was received by Atty. Gregorio Centeno on July 21, 1955, and a notice of appeal was
filed by Atty. Centeno on July 25, 1955. On July 30, 1955, Atty. Centeno wrote to the plaintiff the letter, enclosing
copies of the decision and that notice of appeal, and stating that he was not conformable to the decision and had
not hesitated to file the notice of appeal. Plaintiff Oscar Ventanilla after receiving the letter and copy of the decision
went to see Atty. Centeno in his office in Manila about August 5, 1955. Atty. Centeno informed him that he
intended to appeal and plaintiff agreed. Plaintiff, however, did not leave with Atty. Centeno at that time the amount
for the appeal bond. About the middle of Aug. 1955, Atty. Centeno wrote a letter to the plaintiff enclosing therein
forms for an appeal bond. The plaintiff Ventanilla, however, instead of executing an appeal bond, and because use
of his reluctance to pay the premium on the appeal bond, decided to file a cash appeal bond of P60.00. He went to
the office of Atty. Centeno at about 4 o'clock on August 18,1955, but was informed by the clerk, Leonardo
Sanchez, that Atty. Centeno was in Laguna campaigning for his candidacy as member of the Provincial Board.
Plaintiff then issued the check, for P60.00 as appeal bond and delivered the same to Leonardo Sanchez with
instruction to give the same to Atty. Centeno upon his arrival. The Court does not believe plaintiff's testimony that
Sanchez had contacted Atty. Centeno by telephone and that he issued the cheek upon instruction of Atty.
Centeno. Leonardo Sanchez had informed the plaintiff that Atty. Centeno was in Laguna, and if he were in Manila,
Sanchez could not have known the whereabouts of Atty, Centeno. It was therefore improbable that he could
contact Atty. Centeno that afternoon. On August 17, Atty. Centeno prepared the motion for extension of time to file
the record on appeal, Exhibit D, which was filed only on August 20, 1955. Atty. Centeno returned to Manila and
went to his office at about 10 o'clock in the morning of August 22. He cash the check, with the Marvel Building
Corporation and then went to the office of the Clerk of Court to file the appeal bond. According to Atty. Centeno it
was not accepted because the period of appeal had already expired, and that it was only at that time he came to
know that the period of appeal had expired. The court does not likewise believe the testimony of Atty. Centeno.
Neither the Clerk of Court, or any of the employees had the right to refuse an appeal bond that is being filed, for it
is not in his power to determine whether or not the appeal bond has been filed within the time prescribed by law. In
fact the record on appeal was accepted and filed on September 5, 1955, but no appeal bond has been filed by
Atty. Centeno. The fact that the record on appeal was admitted for filing is the best evidence that Atty. Centeno
had not in fact filed any appeal bond. The record on appeal was disapproved because it was filed out of time and
no appeal bond had been filed by the plaintiff.

ISSUE: Whether or not the trial court erred in declining to award moral damages to the appellant

36
HELD:
NO.

Article 2199 of the new Civil Code provides:

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.

He who claims actual or compensatory damages must establish and prove by competent evidence actual
pecuniary loss. The appellant's bare allegation that by reason of the appellee's indifference, negligence and failure
to perfect within the reglementary period his appeal from an adverse judgment rendered in civil case No. 18833,
by not paying the appeal bond of P60, he lost his chance to recover from the defendants therein the sum of
P4,000 and moral and actual damages, which he could have recovered if the appeal had duly been perfected,
indicates that his claim for actual or compensatory damages is highly speculative. Hence he is not entitled to such
damages.

The appellant claims that he suffered mental anguish upon learning that his appeal had not been perfected within
the reglementary period due to the appellee's negligence; serious anxiety upon learning that his adversary had
won by a mere technicality; besmirched reputation for losing the opportunity to substantiate his claim made while
testifying in open court that he was entitled to collect the sum of P4,000 and damages from the defendants in civil
No. 18833; and wounded feelings for the appellee's failure to remain faithful to his client and worthy of his trust and
confidence. The provisions of the new Civil Code on moral damages state:

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shocks, social humiliation, and similar injury. Though incapable of pecuniary
computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or
omission.

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.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also
recover moral damages.

The spouse, descendants, ascendants, and brothers and sister may bring action mentioned in No. 9 of this article,
in the order named.

Art. 2220. Willful injury to property may be 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.
Moral damages are recoverable only when physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shocks, social humiliation, and similar injury are the proximate result of a
criminal offense resulting in physical injuries, quasi-delicts causing physical injuries, seduction, abduction, rape or
other lascivious acts, adultery or concubinage, illegal or arbitrary detention or arrest, illegal search, libel, slander or
any other form of defamation, malicious prosecution, disrespect for the dead or wrongful interference with funerals,
violation of specific provisions of the Civil Code on human relations, and willful injury to property. To this we may
add that where a mishap occurs resulting in the death of a passenger being transported by a common carrier, the
spouse, descendants and ascendants of the deceased passenger are entitled to demand moral damages for
mental anguish by reason of the passenger's death. In Malonzo vs. Galang, supra, this Court categorically stated
that —

. . .Art. 2219 specifically mentions "quasi-delicts causing physical injuries," as an instance when moral damages

37
may be allowed, thereby implying that all other quasi-delicts not resulting in physical injuries are excluded (Strebel
vs. Figueras, G.R. L-4722, Dec. 29, 1954), excepting, of course, the special torts referred to in Art. 309 (par. 9, Art.
2219) and in Arts. 21, 26, 27, 28, 29, 30, 32, 34 and 35 on the chapter on human relations (par. 10, Art. 2219).

Since the appellant's cause of action for recovery of moral damages is not predicated upon any of those
specifically enumerated, the trial court did not err in declining to award moral damages to him.

Concerning temperate or moderate damages claimed by the appellant, considering that he is not entitled to actual
or compensatory damages but has been awarded nominal damages by the trial court, such award precludes the
recovery of temperate or moderate damages, and so the trial court did not err in refusing to award temperate or
moderate damages to the appellant.

As regards exemplary or corrective damages also claimed by the appellant, since it cannot be recovered as a
matter of right and the court will decide whether or not they should be adjudicated, if the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner, the trial court has judiciously, wisely and correctly
exercised its discretion in not awarding them to the appellant.

Relative to the sufficiency of the sum of P200 as nominal damages awarded by the trial court to the appellant,
article 2221 of the new Civil Code provides:

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.

The assessment of nominal damages is left to the discretion of the court, according to the circumstances of the
case. Considering the circumstances, as found by the trial court, and the degree of negligence committed by the
appellee, a lawyer, in not depositing on time the appeal bond and filing the record on appeal within the extension
period granted by the court, which brought about the refusal by the trial court to allow the record on appeal, the
amount of P200 awarded by the trial court to the appellant as nominal damages may seem exiguous.
Nevertheless, considering that nominal damages are not for indemnification of loss suffered but for the vindication
or recognition of a right violated or invaded; and that even if the appeal in civil case No. 18833 had been duly
perfected, it was not an assurance that the appellant would succeed in recovering the amount he had claimed in
his complaint, the amount of P2,000 the appellant seeks to recover as nominal damages is excessive. After
weighing carefully all the considerations, the amount awarded to the appellant for nominal damages should not be
disturbed.

As regards attorney's fees, since the appellant's claim does not fall under any of those enumerated in article 2208,
new Civil Code, the appellee may not be compelled to satisfy it.

38
#17 PNB v CA G.R. No. 108630 April 2, 1996 ROMERO, J.

PETITIONER: PHILIPPINE NATIONAL BANK RESPONDENT: COURT OF APPEALS and LORETO TAN

NATURE OF THE CASE:

DOCTRINE:
.Jurisprudence has set down the requirements for exemplary damages to be awarded:

1. they may be imposed by way of example in addition to compensatory damages, and only after the claimants
right to them has been established;

2. 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;

3. the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner.

FACTS:
Private respondent Loreto Tan (Tan) is the owner of a parcel of land abutting the national highway in Mandalagan,
Bacolod City. Expropriation proceedings were instituted by the government against private respondent Tan and
other property owners. Tan filed a motion requesting issuance of an order for the release to him of the
expropriation price of P3 2,480.00. Petitioner PNB (Bacolod Branch) was required by the trial court to release to
Tan the amount of P32,480.00 deposited with it by the government.

On May 24, 1978, petitioner, through its Assistant Branch Manager Juan Tagamolila, issued a managers check for
P3 2,480.00 and delivered the same to one Sonia Gonzaga without Tans knowledge, consent or authority. Sonia
Gonzaga deposited it in her account with Far East Bank and Trust Co. (FEBTC) and later on withdrew the said
amount. Private respondent Tan subsequently demanded payment in the amount of P32,480.00 from petitioner,
but the same was refused on the ground that petitioner had already paid and delivered the amount to Sonia
Gonzaga on the strength of a Special Power of Attorney (SPA) allegedly executed in her favor by Tan.

On June 8, 1978, Tan executed an affidavit before petitioners lawyer, Alejandro S. Somo, stating that:
1) he had never executed any Special Power of Attorney in favor of Sonia S. Gonzaga;
2) he had never authorized Sonia Gonzaga to receive the sum of P32,480.00 from petitioner;
3) he signed a motion for the court to issue an Order to release the said sum of money to him and gave the same
to Mr. Nilo Gonzaga (husband of Sonia) to be filed in court. However, after the Order was subsequently issued by
the court, a certain Engineer Decena of the Highway Engineers Office issued the authority to release the funds not
to him but to Mr. Gonzaga.

When he failed to recover the amount from PNB, private respondent filed a motion with the court to require PNB to
pay the same to him. Petitioner filed an opposition contending that Sonia Gonzaga presented to it a copy of the
May 22, 1978 order and a special power of attorney by virtue of which petitioner delivered the check to her.The
matter was set for hearing on July 21, 1978 and petitioner was directed by the court to produce the said special
power of attorney thereat. However, petitioner failed to do so. The court decided that there was need for the matter
to be ventilated in a separate civil action and thus private respondent filed a complaint with the Regional Trial
Court in Bacolod City against petitioner and Juan Tagamolila, PNBs Assistant Branch Manager, to recover the said
amount.

ISSUE:
1. Whether or not the SPA ever existed.
2. Whether or not private respondent is entitled to the award of attorney's fees and exemplary damages.

HELD:
1. No. The burden of proof of such payment lies with the debtor. In the instant case, neither the SPA nor the check
issued by petitioner was ever presented in court. The testimonies of petitioners own witnesses regarding the check
were conflicting. Tagamolila testified that the check was issued to the order of Sonia Gonzaga as attorney-in-fact
of Loreto Tan, while Elvira Tibon, assistant cashier of PNB (Bacolod Branch), stated that the check was issued to
the order of Loreto Tan.

Furthermore, contrary to petitioner’s contention that all that is needed to be proved is the existence of the SPA, it is

39
also necessary for evidence to be presented regarding the nature and extent of the alleged powers and authority
granted to Sonia Gonzaga; more specifically, to determine whether the document indeed authorized her to receive
payment intended for private respondent. However, no such evidence was ever presented.

2. Yes to attorney’s fees but no to exemplary damages.

Art. 2208 of the Civil Code allows attorneys fees to be awarded if the claimant is compelled to litigate with third
persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from
whom it is sought.

As for the award of exemplary damages, we agree with the appellate court that the same should be deleted.

Under Art. 2232 of the Civil Code, exemplary damages may be awarded if a party acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner. However, they cannot be recovered as a matter of right; the court has
yet to decide whether or not they should be adjudicated.8

Jurisprudence has set down the requirements for exemplary damages to be awarded:

1. they may be imposed by way of example in addition to compensatory damages, and only after the claimants
right to them has been established;

2. 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;

3. the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner.

In the case at bench, while there is a clear breach of petitioner’s obligation to pay private respondents, there is no
evidence that it acted in a fraudulent, wanton, reckless or oppressive manner. Furthermore, there is no award to
compensatory damages which is a prerequisite before exemplary damages may be awarded.

40
#18 Titan Construction Corporation vs. Uni-Field G.R. No. 153874 March 1, 2007 CARPIO, J.:
Enterprises, Inc.

PETITIONER: TITAN CONSTRUCTION CORPORATION RESPONDENT: UNI-FIELD ENTERPRISES, INC

NATURE OF THE CASE: Petition for review on certiorari

DOCTRINE: A stipulation on liquidated damages is a penalty clause where the obligor assumes a greater liability
in case of breach of an obligation. The obligor is bound to pay the stipulated amount without need for proof on the
existence and on the measure of damages caused by the breach.

Articles 1229 and 2227 of the Civil Code empower the courts to reduce the penalty if it is iniquitous or
unconscionable.

FACTS:
Petitioner is engaged in the construction business, while respondent is engaged in the business of selling
various construction materials.
This case arose when the petitioner failed to pay a balance of P1,404,637.42 from its transaction worth
P7,620,433.12 despite repeated demands.So, Respondent filed with the trial court a complaint for collection of
sum of moey with damages against petitioner. Petitioner admitted its liability but disputed the amount claimed by
the respondent.
RTC rendered judgment in favor of the respondent. RTC ordered respondent to pay the plaintiff [respondent]
the following:
1. The principal amount of P1,404,114.00;
2. Interest Charges in the amount of P504,114.00 plus accrued interest charges at 24% per annum
compounded yearly reckoned from July, 1995 up to the time of full payment;
3. Liquidated Damages in the amount of P324,147.94;
4. Attorney’s Fees equivalent to 25% of whatever amount is due and payable and accumulated appearance
fees at P1,000.00 per hearing; and Costs of suits.
CA affirmed lower court’s decision.
Petitioner contends that RTC and CA had no legal basis to award interest rate, liquidated damages, and
attorney’s fees because the delivery receipts and sales invoices, were not formally offered by respondent.

ISSUE: Whether or not there is a basis for the court to award the interest rate, liquidated damages and attorney’s
fees even though the delivery receipts and sales invoices are not formally offered by the respondents

HELD:
Yes, while the delivery receipts and sales invoices (documents) are not formally offered by the respondents, it
formed part of petitioner’s evidence, as shown by the records. These documents stipulated the payment of
interest, liquidated damages, and attorney’s fees in case of overdue accounts and collection suits.

Petitioner did not only bind itself to pay the principal amount, it also promised to pay (1) interest of 24% per annum
on overdue accounts, compounded with the principal obligations as they accrue; (2) 25% liquidated damages
based on the outstanding total obligation; and (3) 25% attorney’s fees based on the total claim including liquidated
damages.

The contract between the parties are freely entered into. The stipulations of the contract bind the parties. Thus,
the trial court and the Court of Appeals did not err in using the delivery receipts and sales invoices as basis for the
award of interest, liquidated damages, and attorney’s fees.

However, the Court will reduce the amount of attorney’s fees awarded by the lower courts. In this case, aside from
the award of P324,147.94 as Liquidated damages, the lower courts also ordered petitioner to pay respondent
attorney’s fees “equivalent to 25% of whatever amount is due and payable.

The law also allows parties to stipulate on liquidated damages to be paid in case of breach. A stipulation on
liquidated damages is a penalty clause where the obligor assumes a greater liability in case of breach of an
obligation. The obligor is bound to pay the stipulated amount without need for proof on the existence and on the
measure of damages caused by the breach.

41
 Articles 1229 and 2227 of the Civil Code empower the courts to reduce the penalty if it is iniquitous or
unconscionable. The determination of whether the penalty is iniquitous or unconscionable is addressed to the
sound discretion of the court and depends on several factors such as the type, extent, and purpose of the penalty,
the nature of the obligation, the mode of breach and its consequences.

In the case at bar, the Court finds the award of attorney’s fees “equivalent to 25% of whatever amount is due
and payable” to be exorbitant because it includes (1) the principal of P1,404,114.00; (2) the interest charges of
P504,114.00 plus accrued interest charges at 24% per annum compounded yearly reckoned from July 1995 up to
the time of full payment; and (3) liquidated damages of P324,147.94. Moreover, the liquidated damages and the
attorney’s fees serve the same purpose, that is, as penalty for breach of the contract.

Therefore, we reduce the award of attorney’s fees to 25% of the principal obligation, or P351,028.50.

42
#19 Francisco v. Co GR No. 151339 January 31, 2006 Tinga, J.

PETITIONER: Editha M. Francisco RESPONDENT: Roque Co

NATURE OF THE CASE:

DOCTRINE:

FACTS:
This case involves a parcel of land owned by Pastora Baetiong. The legal controversy was first sparked
after the death of Pastora Baetiong in 1975 by a complaint for accion publiciana filed against the heirs of Baetiong,
including petitioner, by respondents Roque Co and Mariano Co, involving the above-mentioned parcel of land, and
another property, covered by TCT No. 63531 issued by the Caloocan City Register of Deeds. The case was
eventually settled when the parties entered into a Compromise Agreement whereby the parties agreed eirs of
Baetiong as the owner of the subject properties. Further, it was agreed upon that the heirs of Baetiong would lease
to respondents a portion of the properties. The Contract of Lease, was to subsist for 15 years commencing
retroactively from 1 October 1983. However, 5 years after the execution of the Compromise Agreement, the heirs
of Baetiong filed a complaint against Co for allegedly occupying a larger portion of the property than that agreed
upon. They prayed that a commission be constituted for the proper enforcement of the Compromise Agreement.
The RTC granted the motion, but this action was challenged by respondents by way of a Petition for Certiorari and
Prohibition. The Court of Appeals set aside the RTC order constituting a commission, and declared the judgment
by compromise rendered in Civil Case No. Q-38464 as finally terminated and executed. This Decision attained
finality after the Supreme Court declined to give due course to a petition for review filed by the heirs of Baetiong.
Four years thereafter, a case for forcible entry was filed by petitioner against respondents, alleging that
respondents fenced the subject property despite the earlier Compromise Agreement. MTC ruled in favor of the
petitioner. The CA, upon appeal, ruled that complaint for forcible entry was indeed barred by res judicata. It was
held that while there was a difference in the forms of the two actions, there was nonetheless a similarity of causes
of action in the two cases, as the same evidence would support and establish both the former and present causes
of action. The Court of Appeals also concluded that due to malicious prosecution, respondents were liable for
moral damages of P30,000.00, exemplary damages of P20,000.00, and attorney’s fees of P20,000.00.

ISSUE: Whether or not the award of attorney’s fees, moral and exemplary damages was proper

HELD: NO. The Court ruled in this manner:

“We must reverse the Court of Appeals when it awarded moral and exemplary damages, as well as
attorneys fees to respondents. In ruling that petitioner was in bad faith in filing the instant suit, the appellate court
predicated this conclusion on the observation that respondent was well-aware that the issue involved in this case
has already been settled by the courts. Due to this, petitioners understandably suffered mental anguish and
serious anxiety, thereby entitling them to moral damages.

The Court is not wont to uphold awards of moral damages based on haphazard conjectures on the
awardees resultant mental state. We cannot agree with the appellate court that bad faith on the part of petitioner
had been preponderantly established in this case. Bad faith does not simply connote bad judgment or negligence,
but it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong. It should be
established by clear and convincing evidence since the law always presumes good faith. In ascertaining the
intention of the person accused of acting in bad faith, the courts must carefully examine the evidence as to the
conduct and outward acts from which the inward motive may be determined. Certainly, it does not appear that the
Court of Appeals has conducted the mandated careful examination of evidence that would sustain the award of
moral damages. Nothing in the record establishes any right to moral damages by respondents.

Neither should exemplary damages avail under the circumstances. The plaintiff must show that he is
entitled to moral, temperate or compensatory damages before the court may consider the question of whether
exemplary damages should be awarded. If the court has no proof or evidence upon which the claim for moral
damages could be based, such indemnity could not be outrightly awarded. The same holds true with respect to the
award of exemplary damages where it must be shown that the party acted in a wanton, oppressive or malevolent
manner. Furthermore, this specie of damages is allowed only in addition to moral damages such that no
exemplary damages can be awarded unless the claimant first establishes his clear right to moral damages.

43
 Contrary to the pronouncement of the Court of Appeals, the mere fact that petitioners were constrained to
litigate in order to protect and assert their rights does not ipso facto entitle them to attorneys fees. What Article
2208 (2) of the Civil Code provides, in order that attorneys fees may be awarded, is that the defendants act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. It is
settled that the fact that the party was compelled to litigate and incur expenses to protect and enforce their claim
does not justify the award of attorney's fees. The general rule is that attorney's fees cannot be recovered as part of
damages because of the public policy that no premium should be placed on the right to litigate. The award of
attorney's fees must be deleted where the award of moral and exemplary damages are eliminated”

44
#20 PHILIPPINE COMMUNICATIONS G.R. No. 147334 May 25, 2004 TINGA, J
SATELLITE CORPORATION vs. GLOBE
TELECOM, INC.

PETITIONER: PHILIPPINE RESPONDENT: GLOBE TELECOM, INC. (formerly and Globe

COMMUNICATIONS SATELLITE Mckay Cable and Radio Corporation),
CORPORATION

NATURE OF THE CASE: Petition for Review

DOCTRINE: The award of attorney’s fees is the exception rather than the rule, and must be supported by factual,
legal and equitable justifications. In cases where both parties have legitimate claims against each other and no
party actually prevailed, an award of attorney’s fees would not be warranted.

Exemplary damages may be awarded in cases involving contracts or quasi-contracts, if the erring party acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.

FACTS: Globe Mckay Cable and Radio Corporation, now Globe Telecom, Inc. (Globe), had been engaged in the
coordination of the provision of various communication facilities for the military bases of the United States of
America (US) in Clark Air Base, Pampanga and Subic Naval Base in Cubi Point, Zambales. The US Defense
Communications Agency (USDCA) contracted with American companies, and the latter, in turn, contracted with
Globe for the use of the communication facilities. Globe, on the other hand, contracted with local service providers
such as the Philippine Communications Satellite Corporation (Philcomsat), herein petitioner, for the provision of
the communication facilities.

In 1991, Philcomsat and Globe entered into a 60-month (5 years) Agreement whereby the former obligated itself to
establish, operate and provide an IBS Standard B earth station (earth station) within Cubi Point for the exclusive
use of the USDCA. At the time of the execution of the Agreement, both parties knew that the Military Bases
Agreement between the Republic of the Philippines and the US (RP-US Military Bases Agreement), which was the
basis for the occupancy of the Clark Air Base and Subic Naval Base in Cubi Point, was to expire in 1991. Under
Section 25, Article XVIII of the 1987 Constitution, foreign military bases, troops or facilities, which include those
located at the US Naval Facility in Cubi Point, shall not be allowed in the Philippines unless a new treaty is duly
concurred in by the Senate and ratified by a majority of the votes cast by the people in a national referendum when
the Congress so requires, and such new treaty is recognized as such by the US Government. Nevertheless,
Philcomsat installed and established the earth station at Cubi Point and the USDCA made use of the same.

The Senate passed a senate resolution expressing its decision not to concur in the ratification of the Treaty of
Friendship, Cooperation and Security and its Supplementary Agreements that was supposed to extend the term of
the use by the US of Subic Naval Base, among others. Subsequently, the Philippine Government sent a Note
Verbale to the US Government through the US Embassy, notifying it of the Philippines termination of the RP-US
Military Bases Agreement. In 1992, Globe notified Philcomsat of its intention to discontinue the use of the earth
station effective November of 1992 in view of the withdrawal of US military personnel from Subic Naval Base after
the termination of the RP-US Military Bases Agreement. Globe invoked as basis for the letter of termination a
section of their Agreement, which provides that Neither party shall be held liable or deemed to be in default for any
failure to perform its obligation under this Agreement if such failure results directly or indirectly from force majeure
or fortuitous event xxx force majeure shall mean circumstances beyond the control of the party involved including,
but not limited to, any law, order, regulation, direction or request of the Government of the Philippines, strikes or
other labor difficulties, insurrection riots, national emergencies, war, acts of public enemies, fire, floods, typhoons
or other catastrophies or acts of God.

Philcomsat responded, stating that it expects Globe to know its commitment to pay the stipulated rentals for the
remaining terms of the Agreement even after Globe shall have discontinued the use of the earth station. Petitioner
likewise invoked a section of their Agreement. After the US military forces left Subic Naval Base, Philcomsat
demanded from Globe payment of the latter’s outstanding obligations under the Agreement, plus interest and
attorney’s fees. However, Globe refused to heed Philcomsat’s demand. Hence, Philcomsat filed with the RTC a
complaint against Globe, praying that the latter be ordered to pay liquidated damages under the Agreement, with
legal interest, exemplary damages, attorney’s fees and costs of suit. In its Answer, Globe explained that the
termination of the RP-US Military Bases Agreement and the non-ratification by the Senate of the Treaty of
Friendship and Cooperation are force majeure, exempting it from paying rentals for the remaining period of the
Agreement.

45
RTC rendered its decision, ordering Globe to pay for the rent of the earth station until December of 1992
notwithstanding the fact that Globe terminated the services of Philcomsat November of 1992, and to pay for
attorney’s fees. The trial court, however, found that: 1) Globe is NOT liable for the payment of the rentals for the
remainder of the term of the Agreement, as what Philcomsat demanded; and, 2) Globe is not liable to Philcomsat
for exemplary damages. BOTH parties appealed to the CA. The appellate court dismissed Philcomsat’s appeal for
lack of merit. With respect to Globe’ appeal, CA upheld RTC’s findings, except that CA deleted the award of
attorney’s fees in favor of Philcomsat. Both parties filed their respective Petitions for Review assailing the Decision
of the Court of Appeals. They filed their respective Consolidated Memoranda in the two cases, reiterating their
arguments in their respective petitions.

ISSUES:
(1) Whether the termination of the RP-US Military Bases Agreement, the non-ratification of the Treaty of
Friendship, Cooperation and Security, and the consequent withdrawal of US military forces and personnel from
Cubi Point constitute force majeure which would exempt Globe from complying with its obligation to pay rentals
under its Agreement with Philcomsat;
(2) Whether Globe is liable to pay rentals under the Agreement for the month of December 1992; and (3) Whether
Philcomsat is entitled to attorney’s fees and exemplary damages.

HELD:
(1)YES. Philcomsat contends that under Article 1174 of the Civil Code, an event must be unforeseen in order to
exempt a party to a contract from complying with its obligations therein. It insists that since the expiration of the
RP-US Military Bases Agreement, the non-ratification of the Treaty of Friendship, Cooperation and Security and
the withdrawal of US military forces and personnel from Cubi Point were not unforeseeable, but were possibilities
known to it and Globe at the time they entered into the Agreement, such events cannot exempt Globe from
performing its obligation of paying rentals for the entire five-year term thereof. However, Article 1174, NCC which
exempts an obligor from liability on account of fortuitous events or force majeure, refers not only to events that are
unforeseeable, but also to those which are foreseeable, but inevitable: Art. 1174. Except in cases specified by
the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the
assumption of risk, no person shall be responsible for those events which, could not be foreseen, or which, though
foreseen were inevitable.

The parties enumerated in their Agreement the events which shall be deemed constituting force majeure, and
those mentioned are clearly either unforeseeable, or foreseeable but beyond the control of the parties. There is
nothing in the enumeration that runs contrary to, or expands, the concept of a fortuitous event under Article 1174.
Not being contrary to law, morals, good customs, public order, or public policy, the Section of their Agreement on
what constitutes force majeure, which Philcomsat and Globe freely agreed upon, has the force of law between
them. Accordingly, Philcomsat and Globe had no control over the non-renewal of the term of the RP-US Military
Bases Agreement when the same expired in 1991, because the prerogative to ratify the treaty extending the life
thereof belonged to the Senate. Neither did the parties have control over the subsequent withdrawal of the US
military forces and personnel from Cubi Point in December 1992.

Hence, the SC found defendant to be exempted from paying the rentals for the facility for the remaining term of the
contract.

(2) YES. Although Globe alleged that it terminated the Agreement with Philcomsat effective November of 1992
pursuant to the formal order issued by the US Navy, RTC found that the US military forces and personnel
completely withdrew from Cubi Point only December of 1992. Thus, until that date, the USDCA had control over
the earth station and had the option of using the same. Furthermore, Philcomsat could not have removed or
rendered ineffective said communication facility until after December of 1992 because Cubi Point was accessible
only to US naval personnel up to that time. Hence, the Court of Appeals did not err when it affirmed RTC’s ruling
that Globe is liable for payment of rentals until December 1992.

(3) NO. The award of attorney’s fees is the exception rather than the rule, and must be supported by factual, legal
and equitable justifications. In previously decided cases, the SC awarded attorney’s fees where a party acted in
gross and evident bad faith in refusing to satisfy the other party’s claims and compelled the former to litigate to
protect his rights; when the action filed is clearly unfounded; or, where moral or exemplary damages are awarded.
However, in cases where both parties have legitimate claims against each other and no party actually prevailed,
such as in the present case where the claims of both parties were sustained in part, an award of attorney’s fees
would not be warranted.

46
Exemplary damages may be awarded in cases involving contracts or quasi-contracts, if the erring party acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. In the present case, it was not shown that Globe
acted wantonly or oppressively in not heeding Philcomsat’s demands for payment of rentals. It was established
during the trial of the case before the trial court that Globe had valid grounds for refusing to comply with its
contractual obligations after 1992.

WHEREFORE, the Petitions are DENIED for lack of merit.

47
#21 INDUSTRIAL INSURANCE COMPANY G.R. No. 136722 April 12, 2000 PANGANIBAN, J.:

PETITIONER: INDUSTRIAL INSURANCE RESPONDENT: PABLO BONDAD and LIGORIO BONDAD

COMPANY

NATURE OF THE CASE: Petition under Rule 45

DOCTRINE:
General Rule: No person should be penalized for the exercise of the right to litigate.
Exception: must be exercised in good faith.
In this case: Absence of good faith, petitioner clearly has no cause of action, recklessly filed suit and wantonly
pursued pointless appeals.
Effect: Respondents spent valuable time, money and effort in unnecessarily defending themselves, incurring
damages.

FACTS:
An incident involving three vehicles: a Galant Sigma car driven by Grace Ladaw Morales, a packed passenger
jeepney originally driven by Ligorio Bondad, and a DM Transit Bus driven by Eduardo Mendoza.

Police report:

Coming from Alabang, DM Transit Bus bumped into the rear portion of Bondad's vehicle, which was at a stop
position. The strong impact caused the bus to swerve to the left and hit Morales' car's right portion, which in turn
hit a concrete wall. Vehicles incurred damages and passengers sustained injuries and were brought to the
hospital.

After petitioner paid Morales P29,800 as damages for her insured car, complaint for damages has been filed
against respondents. It asserted that the accident had been caused "solely and proximately" by the "joint gross
and wanton negligence, carelessness and imprudence of both defendant drivers Eduardo Diaz y Mendoza and
Ligorio Bondad y Hernandez, who failed to exercise and observe the diligence required by law in the management
and operation of their respective vehicles and by their defendant employers; D.M. Transit Corporation and Pablo
Bondad, respectively, for their failure to exercise the diligence required of them by law in the selection and
supervision of their employees including their aforementioned involved drivers.

In their counterclaim, it was contended that their vehicle was on full stop due to a flat tire and that it was the bus
who hit them. Moreover, respondents claimed petitioner to be in bad faith in impleading them as no prior demand
was made.

Trial court exculpated the Bondads and ordered petitioner to pay moral and exemplary damages.

CA affirmed RTC decision with reduction of award of damages (50k, moral; 10k exemplary). It stated that police
investigation report was clear that the bus hit the jeep of Bondad. No formal demand was made by petitioner, thus
no cause of action. But the award of costs for attending hearings (from Alaminos to Makati) was deleted as
expenses were not proved.

ISSUE: Whether or not the award of moral and exemplary damages, as well as attorney’s fees was proper

HELD:

Petitioner has no cause of action.

Findings of the RTC and CA as manifestly supported by police investigation report with affidavits must not be
disturbed.

More significantly, petitioner knew that respondents were not the cause of the accident. This is evident from its
failure to even make a prior formal demand on them before initiating the suit. Indeed, the cause of the accident
was the negligence of the DM Transit bus driver.

As to the award of damages:

48
Attorneys fees may be awarded by a court if one who claims it is compelled to litigate with third persons or to incur
expenses to protect ones interests by reason of an unjustified act or omission on the part of the party from whom it
is sought.[17]

In this case, the records show that petitioners suit against respondents was manifestly unjustified. In the first place,
the contact between the vehicles of respondents and of Morales was completely due to the impact of the
onrushing bus. This fact is manifest in the police investigation report and, significantly, in the findings of facts of
both lower courts.

To repeat, even a cursory examination of the police investigation report and other pertinent data at the time would
show that there was no reason to implead respondents. The carelessness and lack of diligence of petitioner
destroy its claim of good faith. Accordingly, the award of attorneys fees should be sustained.

In the same vein, we affirm the award of moral damages. To sustain this award, it must be shown that (1) the
claimant suffered injury, and (2) such injury sprung from any of the cases listed in Articles 2219 and 2220 of the
Civil Code. It is not enough that the claimant alleges mental anguish, serious anxiety, wounded feelings, social
humiliation, and the like as a result of the actof the other party. It is necessary that such acts be shown to have
been tainted with bad faith or ill motive.

In the case at bar, it has been shown that the petitioner acted in bad faith in compelling respondents to litigate an
unfounded claim. As a result, Respondent Ligorio Bondad "could no longer concentrate on his job." Moreover,
Pablo Bondad became sick and even suffered a mild stroke. Indeed, respondents anxiety is not difficult to
understand. They were innocently attending to a flat tire on the shoulder of the road; the next thing they knew, they
were already being blamed for an accident. Worse, they were forced to commute all the way from Laguna to
Makati in order to attend the hearings. Under the circumstances of this case, the award of moral damages is
justified. Sdjad

Likewise, we affirm the award of exemplary damages because petitioners conduct needlessly dragged innocent
bystanders into an unfounded litigation. Indeed, exemplary damages are imposed by way of example or correction
for the public good, in addition to moral, temperate, liquidated or compensatory damages.

In sum, the Court affirms the award of moral damages, exemplary damages, attorneys fees and litigation
expenses. The facts of this case clearly show that petitioner was motivated by bad faith in impleading
respondents. Indeed, a persons right to litigate, as a rule, should not be penalized. This right, however, must be
exercised in good faith.

One final note. Respondents pray that the amount of actual, moral and exemplary damages awarded by the trial
court be reinstated. We cannot do so in this case because they did not appeal the CA Decision. Jurisprudentially,
they are deemed to be satisfied with it and thus cannot be allowed to attack it belatedly in their Memorandum

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