Torts

CIVIL CODE OF THE PHILIPPINES
Chapter 2
QUASI-DELICTS
Art. 2176. Whoever by act or omission causes damage

to another, there being fault or negligence, is obliged to
pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provision of
this Chapter.
COMMENT:
(1) Requisites for a Quasi-Delict (Culpa Aquiliana)
(a) Act or omission.
(b) Presence of fault or negligence (lack of due care).
[NOTE: In the absence of fault or negligence, there
can be NO award for damages. Mere suspicion or specula-
tion without proof cannot be the basis of such an award.
(Rebullida v. Estrella, C.A., L-15256-R, Jun. 24, 1959).]
LRT v. Navidad
GR 145804, Feb. 6, 2003
ISSUE: Once fault is established, can on employer

be made liable on the basis of the presumption juris
tantum that the employer failed to exercise diligentis-
simi patris families in the selection and supervision of
its employees?
HELD: Yes. The premise for the employer’s liability
is negligence or fault on the part of the employee. The
liability is primary and can only be negated by show-
ing due diligence in the selection and supervision of the
employee, a factual matter that must be shown.
1173
Art. 2176 CIVIL CODE OF THE PHILIPPINES
Absent such a showing, one might ask further, how

then must the liability of the common carrier, on the one
hand, and independent contractor, upon the other hand,
be described? It would be solidary.
(c) Damage to another.
(d) Causal connection between the fault or negligence and
the damage.
Phoenix Construction, Inc. v. IAC

GR 65295, Mar. 10, 1987
Courts distinguish between the active “cause” of
the harm and the existing “conditions” upon which the
cause operated. If the defendant has created only a pas-
sive static condition which made the damage possible,
the defendant is said not to be liable. But so far as the
fact of causation is concerned, in the sense of necessary
antecedents which have played an important part in
producing results, it is quite impossible to distinguished
between active forces and passive situations, particularly
since, as is invariably the case, the latter are the result
of the other active forces which have gone before.
Example:
The defendant who spills gasoline about the premises
creates “a condition; but the act may be culpable because
of the danger of fire. When a spark ignites the gasoline,
the condition has gone quite as much as to bring about
the fire as the spark. Since that is the very risk which
the defendant has created, the defendant will not escape
responsibility. Even the lapse of a considerable time
during which the “condition” remains static will not
necessarily affect liability: one who digs a trench on the
highway may still be liable to another who falls into it
a month afterward.
“Cause” and “condition” still find occasional men-
tion in the decisions. But the distinction is now almost
entirely discredited. So far as it has any validity at all,
it must refer to the type of case where the forces set in
operation by the defendant have come to rest in a posi-
tion of apparent safety, and some new force intervenes.
1174
CIVIL CODE OF THE PHILIPPINES Art. 2176
But even in such cases, it is not the distinction between

“cause” and “condition” which is important, but the nature
of the risk and the character of the intervening cause.
(e) No pre-existing contractual relation. (12 Manresa 613-614;
Algara v. Sandejas, 27 Phil. 284). Indeed, quasi-delict or
culpa aquiliana is an independent source of obligation
between two persons not so formerly bound by juridical
tie. (Batangas Laguna Tayabas Co., Inc., et al. v. Court
of Appeals, et al., L-33138-39, Jun. 27, 1975). Of course,
it has been ruled that tort liability can exist even if
there are already contractual relations (Air France v.
Carrascoso, L-21438, Sep. 28, 1966), BUT this should
be interpreted to mean that the tort liability itself does
not arise because of the contract, but because of some
other fact.
[NOTE: The person responsible (tortfeasor) is li-
able even if he does not know the identity of the victim.
(Gilchrist v. Cuddy, 29 Phil. 542).]
Teague v. Fernandez
51 SCRA 181
If an ordinance requires certain building to provide

two stairways, failure to comply with the same consti-
tutes an act of negligence. Even if another agency had
intervened, the negligent entity would still be liable if
the occurrence of the accident, in the manner in which
it happened, was the very thing sought to be prevented
by the statute or ordinance.
People’s Bank and Trust Co. v.

Dahican Lumber Co.
L-17500, May 16, 1967
FACTS: A person induced another to violate the

latter’s contract with a third person. Is the inducer liable
for the commission of a tort (quasi-delict)?
HELD: Yes, because a quasi-delict or tort can arise
because of negligence OR fault. In this case, we have
1175
more or less the tort referred to as “interference with

contractual relations.”
Penullar v. Philippine National Bank

GR 32762, Jan. 27, 1983
If one of two innocent parties has to suffer thru the
act of a third person, he who made possible the injury
(or was negligent) should bear the loss.
Prima Malipol v. Lily Lim Tan, et al.

L-27730, Jan. 21, 1974
FACTS: Defendants were not able to file their an-
swer in civil case against them for a quasi-delict because
of the error or negligence of their original counsel. Are
said defendants bound by said error or negligence?
HELD: Yes. Clients are generally bound by the er-
ror or negligence of their counsel, who failed to file their
ANSWER to the complaint within the time given by the
Rules. Thus, the order of the trial court declaring in default
is proper.
People v. Capillas
L-38756, Nov. 13, 1984
In delicts and quasi-delicts, not only actual dam-
ages may be recovered but also moral and exemplary
damages.

GR 65295, Mar. 10, 1987
Our law on quasi-delicts seeks to reduce the risks
and burdens of living in society and to allocate them
among the members of society.
Valenzuela v. CA
68 SCAD 113
1996
The liability of an employer for the negligence of
his employee is not based on the principal of respondeat
1176
superior but that of pater familias. Where no allegations

were made as to whether or not the company took the
steps necessary to determine or ascertain the driving
proficiency and history of its employee to whom it gave
full and unlimited use of a company car, said company,
based on the principle of bonus pater familias, ought to
be jointly and severally liable with the former for the
injuries caused to third persons.
Once evidence is introduced showing that the em-
ployer exercised the required amount of care in selecting
its employees, half of the employer’s burden is overcome,
but the question of diligent supervision depends on
the circumstances of employment. Ordinarily, evidence
demonstrating that the employer has exercised diligent
supervision of its employee during the performance of
the latter’s assigned tasks would be enough to relieve
him of the liability imposed by Art. 2180 in relation to
Art. 2176 of the Civil Code.
(2) ‘Culpa Aquiliana’ Distinguished from ‘Culpa Contractual’

and ‘Culpa Criminal’
CULPA CULPA CULPA

CONTRACTUAL AQUILIANA CRIMINAL
(a) Negligence is (a) Negligence here (a) Negligence here

merely inci- is direct substan- is direct, substan-
dental to the tive, independent. tive, independent
performance of (Rakes v. Atlantic of a contract.
an obligation Gulf & Pacific, 7
already exist- Phil. 395).
ing because of a
contract. (Rakes
v. Atlantic Gulf
& Pacific Co., 7
Phil. 395).
(b) There is a pre- (b) No pre-existing ob- (b) No pre-existing
existing obliga- ligation (except of obligation (except
tion (a contract, course the duty to the duty never to
either express or be careful in all hu- harm others.)
implied). (Rakes man actuations).
Case) (Rakes Case).
1177
(c) Proof needed — (c) Proof needed — (c) Proof needed in a

preponderance preponderance of crime — proof of
of evidence. (Bar- evidence. (Barre- guilt beyond rea-
redo v. Garcia, do v. Garcia, 73 sonable doubt.
73 Phil. 607). Phil. 607). (Barredo v. Gar-
cia, 73 Phil. 607).
(d) D e f e n s e o f (d) Defense of “good (d) T h i s i s n o t a
“good father of father, etc.,” is a proper defense in
a family” in the proper and com- culpa criminal.
selection and plete defense (in- Here the employ-
supervision of sofar as employee’s guilt is auto-
employees is ers or guardians matically the em-
n o t a p r o per are concerned) in ployer’s civil guilt,
complete defense culpa aquiliana. if the former is
in culpa con- (Cangco and De insolvent. (See M.
tractual (though Guia Cases). Luisa Martinez v.
this may MITI- Barredo).
GATE damages.)
[Cangco v. MRR,
38 Phil. 769 and
De Guia v. Me-
ralco, 40 Phil.
769]. Here we
follow the rule of
RESPONDEAT
SUPERIOR or
COMMAND
RESPONSIBIL-
ITY or the MAS-
TER AND SER-
VANT RULE.)
(e) As long as it is (e) Ordinarily, the (e) Accused is pre-
proved that there victim has to sumed innocent
was a contract prove the negli- until the contrary
and that it was gence of the de- is proved, so pros-
not carried out, it fendant. This is ecution has the
is presumed that because his action burden of proving
the debtor is at is based on al- the negligence of
fault, and it is his leged negligence the accused.
duty to prove that on the part of the
there was no neg- defendant.
ligence in carry- (Cangco Case; 8
ing out the terms Manresa 71).
of the contract.
(Cangco Case; 8
Manresa 71).
1178
Syquia, et al. v. CA and Manila

Memorial Park Cemetery, Inc.
GR 98695, Jan. 27, 1993
In the case at bar, it has been established that the Syquias

and the Manila Memorial Park Cemetery, Inc., entered into
a contract entitled “Deed of Sale and Certificate of Perpetual
Care.” That agreement governed the relations of the parties
and defined their respective rights and obligations.
Hence, has there been actual negligence on the part of
the Manila Memorial Park Cemetery, Inc., it would be held
liable not for a quasi-delict or culpa aquiliana, but for culpa
contractual.
(3) Necessity of Proving Negligence

Negligence must be proved in a suit on a quasi-delict, so
that the plaintiff may recover. However, since negligence may
in some cases be hard to prove, we may apply the doctrine of
RES IPSA LOQUITOR (the thing speaks for itself). This means
that in certain instances, the presence of facts or circumstances
surrounding the injury clearly indicate negligence on the part of
the defendant — as when the defendants was on the WRONG
side of the street. (See U.S. v. Crame, 30 Phil. 2). The presump-
tion is however rebuttable. (See U.S. v. Bonifacio, 34 Phil. 65).
Bernabe Africa, et al. v. Caltex, et al.

L-12986, Mar. 31, 1966
FACTS: A fire broke out at a Caltex service station. It
started while gasoline was being hosed from a tank trunk into
the underground storage, right at the opening of the receiv-
ing tank where the nozzle of the hose had been inserted. The
fire destroyed several houses. Caltex and the station manager
were sued. Issue: Without proof as to the cause and origin
of the fire, would the doctrine of res ipsa loquitor apply such
that the defendants can be presumed negligent?
HELD: Yes, for the gasoline station was under the care
of the defendant, who gave no explanation at all regarding
the fire. It is fair to reasonably infer that the incident hap-
pened because of their want of care.
1179
Republic v. Luzon Stevedoring Corporation

L-21749, Sep. 29, 1967
FACTS: A barge belonging to the Luzon Stevedoring
Company rammed against one of the wooden supports of the
old Nagtahan Bridge (a stationary object). What presumption
arises?
HELD: There arises the presumption that the barge was
negligent (doctrine of res ipsa loquitor, meaning the thing
speaks for itself). This is evident because the bridge (at that
time) was an immovable, stationary object, adequately provided
with openings for the passage of watercraft). The doctrine can
indeed be applied, for in the ordinary course of events, such
a ramming would not occur if proper care is used.
NIA, et al. v. IAC, et al.

GR 73919, Sep. 18, 1992
On the issue of negligence, plaintiffs thru the testimonies
of Andres Ventura, Florentino Ventura, and Prudencio Martin
showed that the NIA constructed irrigation canals on the
landholding[s] of the plaintiffs by scraping away the surface
of the landholding[s] to raise the embankment of the canal. As
a result of the said construction, in 1967, the landholdings of
the plaintiffs were inundated with water. Although it cannot
be denied that the irrigation canal of the NIA is a boon to the
plaintiffs, the delay of almost 7 years in installing the safety
measures such as the check gates, drainage[s], ditches, and
paddy drains has caused substantial damage to the annual
harvest of the plaintiffs. In fact, Engineer Carlitos, witness
for the defendant declared that these improvements were
made only after the settlement of the claim of Mrs. Virginia
Tecson, which was sometime in 1976 or 1977, while the ir-
rigation canal was constructed in 1976.
The testimonies of the plaintiffs essentially corrobo-
rated by a disinterested witness in the person of Barangay
Captain Prudencio Martin, proved that the landholdings of
the complainants were inundated when the NIA irrigation
canal was constructed without safety devices thereby reduc-
ing their annual harvest of 30 cavans per hectare (portions
flooded). The failure, therefore, of the NIA to provide the
1180
necessary safeguards to prevent the inundation of plaintiffs’

land-holding[s] is the proximate cause of the damages to the
poor farmers.
Upon the other hand, the defendant maintains that the
cause of inundation of plaintiffs’ landholdings was the check
gate of the Cinco-cinco creek, known as Tombo check gate.
However, evidence showed that this check gate existed long
before the NIA irrigation canal was constructed and there
were no complaints from the plaintiffs until the canal of the
NIA was built. The uncontested testimony of barrio captain
Prudencio Martin that the former name of the sitio where the
plaintiffs’ landholdings were located was “Hilerang Duhat” but
was changed to Sitio Dagat-dagatan because of the inundation
was not without justification.
Leah Alesna Reyes, et al. v.

Sisters of Mercy Hospital, et al.
GR 130547, Oct. 3, 2000
FACTS: Petitioner’s husband died while undergoing

treatment for typhoid fever at respondent hospital. Petitioner,
thus, filed a complaint for negligence and damages against
respondents on account of the wrongful administration of the
drug chloromycetis. The trial court rendered a decision in favor
of respondents, which was affirmed by the Court of Appeals
(CA). On appeal, the Supreme Court affirmed the CA.
HELD: Respondents were not guilty of medical malprac-
tice as they were able to establish thru expert testimony that
the physicians who attended to petitioner’s husband exercised
the necessary care, within the reasonable average merit among
ordinarily good physicians, in treating him under circumstances
pertaining at that time.
Further, the doctrine of res ipsa loquitur does not apply
in a suit against a physician or surgeon which involves the
merit of diagnosis or a scientific treatment. It is generally
restricted to situations in malpractice cases where a layman
is able to say, as a matter of common knowledge and observa-
tion, that the consequences of professional care were not as
such as would ordinarily have followed if due care had been
exercised. (Ramos v. CA, 321 SCRA 584 [1999]).
1181
(4) Damnum Absque Injuria

This means that “although there was physical damage,
there was no legal injury.” Hence, if a carefully driven car
hurts a pedestrian because lightning temporarily blinded the
driver, the pedestrian cannot recover damages, for legally
while he has been DAMAGED, there was NO INJURY or
NO FAULT in view of the fortuitous event. (See Board of
Liquidators v. Kalaw, GR 18805, Aug. 14, 1967, where the
Court ruled that while the National Coconut Corporation was
not able to deliver the copra it had promised to deliver, and
therefore caused damage to the buyers, still nobody can legally
be blamed because the non-delivery was caused by typhoon.
This is a case of damnum absque injuria.)
Farolan v. Solmac Marketing Corp.

GR 83589, Mar. 13, 1991
FACTS: Farolan was then the Acting Commissioner of

Customs, while Parayno was then the Acting Chief, Customs
Intelligence and Investigation Division. They were sued in their
official capacities as officers in the government. Nevertheless,
they were both held personally liable for the awarded dam-
ages “since the detention of the goods by defendants (Farolan
and Parayno) was irregular and devoid of legal basis, hence,
not done in the regular performance of official duty.” Solmac
Marketing was the assignee and owner of an importation
of Clojus Recycling Plastic Products of 202,204 kilograms of
what is technically known as polypropylene film, valued at
US$69,250.05. The importation, consisting of 17 containers,
arrived in December 1981. Upon application for entry, the
Bureau of Customs asked Solmac for its authority from any
government agency to import the goods described in the Bill
of Lading. Solmac presented a Board of Investment Authority
for polypropylene film scrap. However, upon examination of
the shipment by the National Institute of Science and Tech-
nology, it turned out that the fibers of the importation were
oriented in such a way that the materials were stronger than
OPP film scrap. The Clojus shipment was not OPP film scrap,
as declared by Solmac to the Bureau of Customs and BOI
Governor Bautista, but oriented polypropylene the importa-
1182
tion of which is restricted, if not prohibited, under Letter of

Instruction 658-B. Considering the shipment was different from
what had been authorized by the BOI and by law, Parayno
and Farolan withheld the release of the importation. Parayno
wrote the BOI asking for the latter’s advice on whether or
not the importation may be released. Thereafter, Solmac filed
the action for mandamus and injunction with the trial court,
which ordered Farolan and Parayno to release the importation.
Solmac appealed only insofar as the denial of the award of
damages is concerned. Parayno and Farolan did not appeal.
The Court of Appeals ordered Farolan and Parayno solidar-
ily liable in their personal capacity to pay Solmac temperate
damages in the sum of P100,000, exemplary damages in the
sum of the P100,000 and P50,000 as attorney’s fees and ex-
penses of litigation.
HELD: The Supreme Court set aside and annulled the
decision of the Court of Appeals, and held that there is no
convincing proof showing the alleged bad faith of Farolan
and Parayno. On the contrary, the evidence bolstered their
claim of good faith. First, there was the report of the NIST
that, contrary to what Solmac claimed, the importation was
not OPP film scraps but oriented polypropylene, a plastic
product of stronger material, whose importation to the Philip-
pines was restricted, if not prohibited. It was on the strength
of this finding that they withheld release of the importation
for being contrary to law. Second, on many occasions, the
Bureau of Customs sought the advice of the BOI on whether
the subject importation might be released. Third, up to the
time of the trial there was no clear-cut policy on the part of
the BOI regarding the entry into the Philippines of oriented
polypropylene. Even the highest officers of the BOI were not
in agreement as to what proper course to take on the subject
of the various importations of Oriented Polypropylene (OPP)
and Polypropylene (PP) withheld by the Bureau of Customs.
The conflicting recommendations of the BOI prompted pe-
titioners to seek final clarification from the former with
regard of its policy on the importations. The confusion over
the disposition of the importation obviates bad faith. When
a public officer takes his oath of office, he binds himself to
perform the duties of his office faithfully and to use reason-
able skill and diligence, and to act primarily for the benefit of
1183
the public. Thus, in the discharge of his duties, he is to use

that prudence, caution, and attention which careful men use
in the management of their affairs. That petitioners acted in
good faith in not immediately releasing the imported goods
is supported by substantial evidence, independent of the pre-
sumption of good faith, which was not successfully rebutted.
Here, prudence dictated that petitioners first obtain from the
BOI the latter’s definite guidelines regarding the disposition
of the various importations of oriented polypropylene and
polypropylene then being withheld at the Bureau of Customs.
These cellophane film products were competing with locally
manufactured polypropylene and oriented polypropylene as
raw materials which were then already sufficient to meet lo-
cal demands. Hence, their importation were restricted, if not
prohibited. Thus, petitioners could not be said to have acted
in bad faith in not immediately releasing the imported goods
without obtaining the necessary clarificatory guidelines from
the BOI. As public officers, petitioners had the duty to see
to it that the law they were tasked to implement, i.e., LOI
658-B, was faithfully complied with. But even if petitioners
committed a mistake in withholding the release of the impor-
tation because it was composed of film scraps, nonetheless,
it is the duty of the Court to see it that public officers are
not hampered in the performance of their duties or in mak-
ing decisions for fear of personal liability for damages due to
honest mistake. Whatever damages they may have caused as
a result of such an erroneous interpretation, if any at all, is
in the nature of a damnum absque injuria.
(5) Last Clear Chance

The doctrine of “last clear chance” is to the effect that
even if the injured party was originally at fault (as when
he was on the wrong side of a street) still if the person who
finally caused the accident had the “last clear opportunity” to
avoid striking him, he who could have prevented the injury is
still liable if he did not take advantage of such opportunity
or chance.
Other names for the doctrine of “last clear chance” in-
clude “doctrine of discovered peril”; “doctrine of supervening
negligence”; “the humanitarian doctrine.”
1184
In the case of Ong v. Metropolitan Water District (104

Phil. 398), the Court applying 38 Am. Jur. 900, said that ac-
cording to third doctrine “the negligence of the plaintiff does
not preclude (or prevent) a recovery for the negligence of the
defendant where it appears that the defendant by exercising
reasonable care and prudence might have avoided injurious
consequences to the plaintiff notwithstanding the plaintiff’s
negligence.”
Ong v. Metropolitan Water District

104 Phil. 398
FACTS: A visitor was drowned in a swimming resort
due to his own negligence and despite measures on the part
of the resort authorities to save him. Is the resort liable?
HELD: No, the resort is NOT liable. While it is duty
bound to provide for safety measures, still it is not an absolute
insurer of the safety of its customers or visitors. The doctrine
of “last clear chance” cannot apply if the:
(a) negligence of the plaintiff is concurrent with the negli-
gence of the defendant;
(b) party charged is required to act instantaneously;
(c) injury cannot be avoided despite the application at all
times of all the means to avoid the injury (after the
peril is or should have been discovered), at least in all
instances where the previous negligence of the party
charged can not be said to have contributed to the injury
at all.
Picart v. Smith
37 Phil. 809
FACTS: A person driving an automobile on a bridge saw
a man on horseback riding towards him but on the wrong
side of the bridge. The driver sounded his horn several times;
the horse-rider made no move to go to the correct side; the
driver continued in his original direction until it was too late
to avoid a collision. Is the auto driver liable?
HELD: Yes, for although the horse-rider was originally at
fault, it was the auto driver who had the last clear chance to
1185
avoid the injury by merely swerving, while still some distance

away, to the other part of the bridge. “Where both parties are
guilty of negligence, but the negligent act of one succeeds that
of the other by an appreciable interval of time, the one who
has the last reasonable opportunity to avoid the impending
harm and fails to do so, is chargeable with the consequences,
without reference to the prior negligence of the other party.”
That is the doctrine known as the “last clear chance.”
[NOTE: The contributory negligence of the victim may of
course be considered as a circumstance to mitigate the other’s
liability. (Del Prado v. Manila Electric Co., 53 Phil. 906).]

GR 65295, Mar. 10, 1987
The last clear chance doctrine of the common law was

imported into our jurisdiction, but it is a matter for debate
whether, or to what extent, if has found its way into the
Civil Code of the Philippines. The historical function of that
doctrine in the common law was to mitigate the harshness of
another common law doctrine or rule — that of contributory
negligence.
The common-law rule of contributory negligence prevented
any recovery at all by the plaintiff who was also negligent, even
if the plaintiff’s negligence was relatively minor as compared
with the wrongful act or omission of the defendant. The com-
mon-law notion of last clear chance permitted courts to grant
recovery to a plaintiff who had also been negligent, provided,
that the defendant had the last clear chance to avoid the
casualty and failed to do so. It is difficult to see what role, if
any, the common-law has clear chance doctrine has to play in
a jurisdiction where the common-law concept of contributory
negligence as an absolute bar to recover by the plaintiffs, has
itself been rejected, as it has been in Art. 2179.
In a civil law jurisdiction like ours, there is no general
concept of “last clear chance” that may be extracted from its
common-law matrix and used as a general rule in negligence
cases. Under Art. 2179, the task of a court, in technical terms,
is to determine whose negligence — the plaintiff’s or defend-
1186
ant’s — was the legal or proximate cause of the injury. The

task is not simply or even primarily an exercise in chronology
or physics, as one may imply by the use of terms like “last”
or “intervening.” The relative location in the continuum of
time of the plaintiff’s and the defendant’s negligent acts or
omissions, is only one of the relevant factors that may be
taken into account. Of more fundamental importance are the
nature of the negligent act or omission of each party and
the character and gravity of the risks created by such act or
omission for the rest of the community.
(6) Tort Liability May Still Exist Despite Presence of Con-

tractual Relations
Air France v. Carrascoso

L-21438, Sep. 28, 1966
FACTS: An airplane passenger despite his first class

ticket, was illegally ousted from his first-class accommodation,
and was compelled to take a seat in the tourist compartment.
Issue: May he recover damages from the carrier on the ground
of tort?
HELD: Yes, because although the relation between a
passenger and a carrier is contractual both in origin and
nature, the act that breaks the contract may also be a tort.
[NOTE: It would seem here that the Court has in a sense
modified somehow Art. 2176 which defines “quasi-delict,” for
under said article, it is important that “there is no pre-existing
contractual relation between the parties.” Be it noted however
that in this case, the Court referred to the liability as one aris-
ing from tort, and not one arising from a contract.]
Julian C. Singson and Ramona del Castillo v.

Bank of the Philippine Islands
and Santiago Freixas
L-24837, Jun. 27, 1968
FACTS: Because of a mistake committed by a clerk in
the Bank of the Philippine Islands, the current or checking
account of Julian Singson was frozen by said Bank, and the
depositor’s checks were dishonored. Singson complained. When
1187
the Bank realized it had committed a mistake, it apologized

to Singson, and restored the checking account. Singson,
however, sued for damages. It was alleged by the Bank that
there would be no liability for the negligence or quasi-delict
in view of the existence of contractual relations between the
Bank and Singson; that moreover, the Bank had immediately
corrected its error. Issue: Can Singson recover?
HELD: Yes, damages may be recovered by Singson,
despite the existence of contractual relations because the act
that breaks the contract may also be a tort or a quasi-delict,
as in this case. However, considering the rectification im-
mediately made by the Bank, an award of nominal damages
— the amount of which need not be proved — in the amount
of P1,000 in addition of attorney’s fees in the sum of P500,
will suffice to vindicate plaintiff’s rights. (See Arts. 2208 and
2221, Civil Code).
(7) Non-Liability
Ng v. Republic
L-31935, Jan. 24, 1980
If a person’s registered name is “Baby Ng (Ng Kong Ding)”

he cannot be said to have violated the Anti-Alias Law, for
the registered name already contains the supposed alias.
(8) An Unregistered Deed of Sale
Equitable Leasing Corp v. Lucita Suyom, et al.

GR 143360, Sep. 5, 2002
ISSUE: Can the petitioner, a registered owner of a motor

vehicle be held liable for the acts of the driver employed by
its former lessee who has become the owner of that vehicle
by virtue of an unregistered Deed of Sale?
HELD: Yes. In an action based on quasi-delict, the regis-
tered owner of a motor vehicle is solidarily liable for injuries
and damages caused by the negligence of the driver, inspite
of the fact that the vehicle may have already been the subject
of an unregistered Deed of Sale in favor of another person.
1188
Unless registered with the Land Transportation Office

(LTO), the sale, while valid and binding between the parties,
does not affect third parties, especially the victims of accidents
involving the said transport equipment.
Art. 2177. Responsibility for fault or negligence under

the preceding article is entirely separate and distinct from
the civil liability arising from negligence under the Penal
Code. But the plaintiff cannot recover damages twice for
the same act or omission of the defendant.
COMMENT:
(1) Culpa Aquiliana Distinguished From Civil Liability
Arising From a Crime
See Table under the preceding Article.
(2) Effect of Acquittal in a Criminal Case

Acquittal from an accusation of criminal negligence
whether on reasonable doubt or not, shall not be a bar to a
subsequent civil action. (Report of the Code Com., p. 62 and
Chan v. Yatco, L-11163, Apr. 30, 1958). (Reason: The evidence
in the criminal case may not be sufficient for a conviction,
but sufficient for a civil liability, where mere preponderance
of evidence is sufficient. Moreover, the basis of liability is
different in the two cases: in a criminal case, the liability is
subsidiary to the criminal case, the liability is subsidiary to
the criminal punishment; in a case of culpa aquiliana, the
liability is primary. (TS, Nov. 22, 1940 and See Calo, et al. v.
Peggy, L-10756, Mar. 29, 1958].) However, under the Revised
Rules of Court, the civil action must have been RESERVED,
otherwise the civil case will NOT prosper. (Rule 111).
Marcia v. Court of Appeals

GR 34529, Jan. 27, 1983
If in a criminal case for reckless imprudence resulting in

physical injuries, the accused is acquitted because he was not
negligent and the incident was a “pure accident,” a separate
civil action should be dismissed.
1189
[NOTE: Here, the court said that Art. 33 of the Civil

Code speaks only of intentional or malicious acts. It forgot
that Art. 2177 read together with Art. 2176 provides for an
independent civil action for negligent acts. However, the con-
clusions reached by the court may be justified on the ground
that there was also no negligence in this present case.]
(3) Query
If a hurt pedestrian files a criminal case against the
driver of a common carrier, is he allowed at the same time
(or at any stage during the pendency of the criminal case) to
bring a civil action based on culpa aquiliana?
ANS.: It would seem that the correct answer to this
problem is YES provided that a RESERVATION to bring the
civil case had been set up in the criminal case. (See Rule 111,
Revised Rules of Court). In other words, in a case like this it
is not essential to first terminate the criminal case before the
civil case of quasi-delict is brought. Indeed, the civil liability
that may arise from culpa aquiliana was never intended by
the law to be merged in the criminal action. The criminal
prosecution is not a condition precedent to the enforcement
of the civil right. (Batangas, Laguna, Tayabas Bus Co., Inc.,
et al. v. Court of Appeals, et al., L-33138-9, Jun. 27, 1975).
Batangas, Laguna, Tayabas, Bus Co., Inc. v.

Court of Appeals, et al.
L-33138-39, Jun. 27, 1975
FACTS: As a result of the recklessness of a driver (Ila-
gan) of a bus of BLTB Company in overtaking a cargo truck,
the bus crashed into an automobile coming from the opposite
direction, resulting to death and physical injuries to the pas-
sengers of the automobile. A criminal case was brought, but
during its pendency, a civil case based on culpa aquiliana
under Art. 2177 of the Civil Code was filed. Issue: Can the
civil action of culpa aquiliana proceeds independently of the
pending criminal case, or must the judgment in the criminal
case be first awaited before proceeding with the civil case?
HELD: The civil case of culpa aquiliana can proceed
independently of the pending criminal case. This is expressly
allowed under Art. 2176 and Art. 2177 of the Civil Code, be-
1190
cause culpa aquiliana is an independent source of obligations.

The case of Corpus v. Paje, L-26737, Jul. 31, 1969 does not
apply because the statement therein that no independent civil
action lies in a case of culpa aquiliana or reckless imprudence
(because Art. 33 of the Civil Code does not mention reckless
imprudence) is really not doctrinal in character, lacking as it
does, one vote to make it an expression of the court opinion.
[NOTE: In fact, while it is true that Art. 33 makes no
mention of negligence, Art. 2177 refers to negligence or culpa
aquiliana and makes the suit an independent civil action.]
(4) Rule under the 1985 Rule of Court, as Amended in

1988
While Art. 2177 gives an independent civil action, still
the Revised Rules of Court required that if a criminal case
be instituted first, the independent civil action is also auto-
matically instituted unless there is an express reservation or
waiver. (Rule 111). If, on the other hand, the civil case of
culpa aquiliana is first brought, the subsequent institution of
the criminal case will NOT SUSPEND the civil action — oth-
erwise, it cannot then be called independent. Moreover, the
very institution of the civil case ahead of the criminal action
satisfied the requirement of “reservation.”
Garcia v. Florido
L-35095, Aug. 31, 1973
FACTS: After a vehicular accident, the victims were
brought to the hospital for treatment. In the meantime, the
police authorities filed a criminal case of reckless imprudence
resulting in physical injuries, WITHOUT making a reservation
as to the civil aspect. When the victims became well enough
to go to court, they decided to file a civil case despite the
pendency of the criminal case.
ISSUE: Should the civil case be allowed, despite the
pendency of the criminal proceedings?
HELD: Yes, for while it is true that a reservation should
have been made under Rule 111 of the Revised Rules of Court
(through such rule has been assailed by SOME in this respect
as virtually eliminating or amending the “substantive” right
1191
of allowing an “independent civil action,” as ordained by the

Civil Code) still the Rule does not state when the reservation
is supposed to be made. Here, the victims had no chance to
make the reservation (for they were still at the hospital);
moreover, the trial has not even begun. It is therefore not yet
too late to make the reservation; in fact, the actual filing of
the civil case, though at this stage, is even better than the
making of the reservation.
Crispin Abellana and Francisco Abellana v.

Hon. Geronimo R. Maraue
and Geronimo Companer, et al.
L-27760, May 29, 1974
FACTS: Francisco Abellana was driving a cargo truck
when he hit a motorized pedicab. Four of the passengers of
the pedicab were injured. He was accused in the City Court
of Ozamis for his reckless imprudence (no reservation was
made as to any civil action that might be instituted); he was
convicted. He then appealed to the Court of First Instance
(Regional Trial Court). During the pendency of the appeal (and
in fact, before trial in the CFI [RTC]) the victims decided to
make a waiver re claim for damages in the criminal case, and
RESERVATION with respect to the civil aspects. The victims
then in another Branch of the CFI (RTC) allowed the FILING
of the civil case. The accused objected to the allowance on
the theory that in the City Court (original court), no reserva-
tion had been made, thus the civil aspect should be deemed
included in the criminal suit, conformably with Rule 111 of
the Revised Rules of Court. The CFI (RTC) maintained that
the civil case should be allowed, because with the appeal the
judgment of the City Court had become vacated (said court
was then not a court of record) and in the CFI (RTC) the case
was to be tried anew (trial de novo). This ruling of the CFI
(RTC) was elevated to the Supreme Court on certiorari.
ISSUE: May a civil case still be brought despite the
appeal in the criminal case?
HELD: Yes, for three reasons.
(a) Firstly, with the appeal, the original judgment of con-
viction was VACATED; there will be a trial de novo in
1192
the CFI. A trial that has not even began, therefore, a

reservation can still be made and a civil action can still
be allowed.
(b) Secondly, to say that the civil action is barred because
no reservation (pursuant to Rule 111) had been made
in the City Court when the criminal suit was filed is to
present a grave constitutional question, namely, can the
Supreme Court, in Rule 111 amend or restrict a SUB-
STANTIVE right granted by the Civil Code? This cannot
be done. The apparent literal import of the Rule cannot
prevail. A judge “is not to fall prey,” as admonished by
Justice Frankfurter, “to the vice of literalness.”
(c) Thirdly, it would be UNFAIR, under the circumstances
if the victims would not be allowed to recover any civil
liability, considering the damage done to them.
Escueta v. Fandialan
L-39675, Nov. 29, 1974
ISSUE: One of the questions presented in this case

was — when a criminal case is filed, is there a need of
making a reservation if it is desired to sue later on an
independent civil action?
HELD: There is NO NEED, because the civil case
is one considered as an “independent civil action.”
[NOTE: How about Rule 111, Revised Rules of Court,
which requires the reservation, even if an independent
civil action is involved?]
(5) No Double Recovery
Padua, et al. v. Robles, et al.

L-40486, Aug. 29, 1975
FACTS: Because of the recklessness of a taxi-driver, a

boy (Padua) was killed. A criminal case was instituted against
Punzalan, the taxi-driver. At the same time, a civil action for
damages was filed against both the driver and the owner of
the taxi (Robles). The two cases were raffled off to the same
1193
judge for decision. In the civil case, the taxi-cab owner (com-
pany) was not made to pay anything (ostensibly because it was
able to prove due diligence in the selection and supervision of
employees) but the taxi-driver, who was found negligent, was
held liable for damages (P12,000 for actual damages, P5,000
for moral and exemplary damages, and P10,000 for attorney’s
fees). In the criminal case, the judge convicted the taxi-driver,
but with reference to his civil liability, the court did not fix
any sum, stating only that the “civil liability of the accused
is already determined and assessed in the civil case.” When
the judgment in the civil case became final and executory,
the parents of the victim sought its execution, but the writ
issued against the driver was returned unsatisfied because of
his insolvency. The parents now sued the employer to enforce
his subsidiary liability under the Revised Penal Code because
of the driver’s conviction. Robles, the employer pleaded res
judicata. Issue: Can the employer still be held liable?
HELD: Yes, the employer can still be held liable be-
cause the judgment in the criminal case, in talking of the
driver’s civil liability, made reference to the decision in the
civil case, relative to the driver’s financial accountability. It
is this amount for which the employer is subsidiarily liable
under Art. 103 of the Revised Penal Code. Further, there is
no res judicata because the responsibility of an employer in
culpa aquiliana (the civil case) is different from his liability
in culpa criminal (the subsidiary civil liability in the criminal
case). The only limitation is that while it is possible that in
both cases the employer can be held liable, actual recovery
for damages can be availed of only once.
(6) Dec. 1, 2000 Amended Rules
Avelino Casupanan & Roberto Capitulo v.

Mario Llavore Laroya
GR 145391, Aug. 26, 2002
FACTS: The petition premises the legal controversy in

this wise: “In a certain vehicular accident involving two par-
ties, each one of them may think and believe that the accident
was caused by the fault of the other. The first party, believ-
ing himself to be the aggrieved party, opted to file a criminal
1194
case for reckless imprudence against the second party. Upon

the other hand, the second party, together with the operator,
believing themselves to be the real aggrieved parties, opted in
turn to file a civil case for quasi-delict against the first party
who is the very private complainant in the criminal case.”
ISSUE: Whether or not an accused in a pending criminal
case for reckless imprudence can validly filed, simultaneously
and independently, a separate civil action for quasi-delict
against private complainant in the criminal case.
HELD: Par. 6, Sec. 1 of the present Rule III of the
Rules of Court was incorporated in the Dec. 1, 2000 Amended
Rules precisely to address the issue. Under this provision,
the accused is barred from filing a counterclaim, cross-claim,
or third-party complaint in the criminal case. However, the
same provision states that “any cause of action which could
have been the subject (of the counterclaim, cross-claim, or
third party complaint) may be litigated in a separate civil
action.” The present Rule III mandates the accused to file his
counterclaim in a separate civil action which shall proceed
independently of the criminal action, even as the civil action
of the offended party is litigated in the criminal action.
The accused can file a civil action for quasi-delict for the
same act or omission he is accused of in the criminal case. This is
expressly allowed in par. 6, Sec. 1 of the present Rule III which
states that the counterclaim of the accused “may be litigated in
a separate civil action.” This is only fair for two (2) reasons:
1. The accused is prohibited from setting up any counter-
claim in the civil aspect that is deemed instituted in the
criminal case. The accused is, therefore, forced to litigant
separately his counterclaim against the offended party.
If the accused does not file a separate civil action for
quasi-delict, the prescriptive period may set in since the
period continues to run until the civil action for quasi-
delict is filed.
2. The accused, who is presumed innocent, has a right to
invoke Art. 2177, in the same way that the offended
party can avail of this remedy which is independent of
the criminal action. To disallow the accused from filing
a separate civil action for quasi-delict, while refusing
1195
to recognize his counterclaim in the criminal case, is to

deny him due process of law, access to the courts, and
equal protection of the law.
The civil action based on quasi-delict filed separately,
is, thus, proper.
[NOTE: More than half-a-century has passed since
the Civil Code introduced the concept of a civil action
separate and independent from the criminal action
although arising from the same act or omission. The
Supreme Court, however, has yet to encounter a case of
conflicting and irreconcilable decisions of trial courts, one
hearing the criminal case and the other the civil action
for quasi-delict. The fear of conflicting and irreconcilable
decisions may be more apparent than real. In any event,
there are sufficient remedies under the Rules of Court to
deal with such remote possibilities. (Avelino Casupanan
& Roberto Capitulo v. Marioi Llavore Laroya, supra).].
[NOTE: The Revised Rules on Criminal Procedure
took effect on December 1, 2000 while the Municipal
Circuit Trial Court (MCTC) in the Casupanan & Capitulo
case (supra) issued the order of dismissal on Dec. 28,
1999 or before the amendment of the rules. The Revised
Rules on Criminal Procedure must be given retroactive
effect considering the well-settled rule that “statutes
regulating the procedure of the court will be construed
as applicable to actions pending and undetermined at
the time of their passage. Procedural laws are retroactive
in that sense and to that extent.” (People v. Arrojado,
350 SCRA 679 [2001], citing Ocampo v. CA, 180 SCRA
27 [1989], Alday v. Camilon, 120 SCRA 521 [1983], and
People v. Sumilong, 77 Phil. 764 [1946]).]
Art. 2178. The provisions of Articles 1172 to 1174 are

also applicable to a quasi-delict.
COMMENT:
(1) Applicability of Some Provisions on Negligence
(a) Art. 1172 — Responsibility arising from negligence in the
performance of every kind of obligation is also demand-
1196
able, but such liability may be regulated by the courts,

according to the circumstances.
(b) Art. 1173 — The fault or negligence of the obligor con-
sists in the omission of that diligence which is required
by the nature of the obligation and corresponds with
the circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the provisions
of articles 1171 and 2201, paragraph 2 shall apply.
If the law or contract does not state the diligence
which is to be observed in the performance, that which is
expected of a good father of a family shall be required.
(c) Art. 1174 — Except in cases expressly 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.
(2) Cases
Ronquillo, et al. v. Singson

(C.A.) L-22612-R, Apr. 22, 1959
FACTS: A man ordered a ten-year-old boy, Jose Ron-

quillo, to climb a high and rather slippery santol tree, with a
promise to give him part of the fruits. The boy was killed in
the act of climbing. Is the person who ordered him liable?
HELD: Yes, in view of his negligent act in making the
order. He did not take due care to avoid a reasonably fore-
seeable injury to the 10-year-old boy. The tree was a treach-
erous one, a veritable trap. His act was clearly a departure
from the standard of conduct required of a prudent man. He
should have desisted from making the order. Since he failed
to appreciate the predictable danger and aggravated such
negligence by offering part of the fruits as a reward, it is
clear that he should be made to respond in damages for the
actionable wrong committed by him.
1197
Vda. de Imperial, et al. v. Herald Lumber Co.

L-14088-89, L-14112, Sep. 30, 1961
Undertaking an airplane or helicopter flight without
sufficient fuel is a clear case of negligence. Moreover, the
piloting of a helicopter by an unlicensed individual violates
Civil Aviation Regulations.
Art. 2179. When the plaintiff’s own negligence was the

immediate and proximate cause of his injury, he cannot
recover damages. But if his negligence was only contribu-
tory, the immediate and proximate cause of the injury being
the defendant’s lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be
awarded.
COMMENT:
(1) Effect of Sole Cause of Injury is a Person’s Own Neg-
ligence
It is understood that if the sole cause is the plaintiff’s
own fault, there can be no recovery. (TS, May 31, 1932).
(2) Effect of Contributory Negligence of Plaintiff

(a) If this was the PROXIMATE cause of the accident, there
can be no recovery. (Taylor v. Manila Electric Co., 16
Phil. 8).
(b) If the PROXIMATE cause was still the negligence of the
defendant, the plaintiff can still recover damages, BUT
the amount of damages will be mitigated due to his con-
tributory negligence. (Art. 2179). Thus, if he contributes
to the aggravation of the injury, damages in his favor
will be reduced. (Rakes v. Antlantic Gulf and Pacific
Co., 7 Phil. 359; Bernal v. House, 54 Phil. 327 and Del
Rosario v. Manila Electric Co., 57 Phil. 478).
[NOTE: The courts have held that in CRIMES com-
mitted thru reckless imprudence, the defense of contribu-
tory negligence does NOT apply. One cannot allege the
negligence of another to evade the effects of his own negli-
1198
gence. (People v. Orbeta, 43 O.G. 3175; People v. Quiñones,

44 O.G. 1520 and People v. Cabusao, C.A., L-20191-R, Sep.
7, 1958).]
(3) Proximate Cause

It is that adequate and efficient cause which in the natu-
ral order of events, and under the particular circumstances
surrounding the case, would naturally produce the event. (3
Bouvier’s Law Dictionary 434).
Saturnino Bayasen v. Court of Appeals

L-25785, Feb. 28, 1981
While being driven at a moderate speed, a passenger

jeep skidded and fell into a precipice. It was proved that the
proximate cause of the tragedy was the skidding of the rear
wheels of the jeep. Is the driver guilty of negligence?
HELD: No, for there was no negligence. Cars may skid
on greasy or slippery roads without the driver’s fault. Skid-
ding means partial or complete loss of control of the car under
circumstances not necessarily implying negligence. It may
occur without fault.

GR 65295, Mar. 10, 1987
If the intervening cause is one which in ordinary hu-
man experience is reasonably to be anticipated, or one which
the defendant has reason to anticipate under the particular
circumstances, the defendant may be negligent, among other
reasons, because of failure to guard against it; or the defend-
ant may be negligent only for that reason.
Example:
One who sets a fire may be required to foresee that an
ordinary, usual and customary wind arising later will spread
it beyond the defendant’s own property, and therefore to take
precautions to prevent that event. The person who leaves
combustible or explosive material exposed in a public place
may foresee the risk of fire from some independent source.
In all of these cases there is an intervening cause combin-
1199
ing with the defendant’s conduct to produce the result, and

in each case the defendant’s negligence consists in failure to
protect the plaintiff against that very risk.
The defendant cannot be relieved from liability by the
fact that the risk or a substantial and important part of the
risk, to which the defendant has subjected the plaintiff has
indeed come to pass. Foreseeable intervening forces are within
the scope of the original risk, and hence of the defendant’s
agreed negligence. The courts are quite, generally, agreed
the intervening causes which fall fairly in this category will
not supersede defendant’s responsibility. A defendant will
be required to anticipate the usual weather of the vicinity,
including all ordinary forces of nature such as usual wind
or rain, or snow or frost or fog or even lightning. One who
leaves an obstruction on the road or a railroad track should
foresee that a vehicle or a train will run into it.
The risk created by the defendant may include the inter-
vention of the foreseeable negligence of others. The standard
of reasonable conduct may require the defendant to protect
the plaintiff against “that occasional negligence which is one
of the ordinary incidents of human life, and therefore to be
anticipated.”
Example:
A defendant who blocks the sidewalk and forces the
plaintiff to walk in a street where the plaintiff will be exposed
to the risks of heavy traffic becomes liable when the plain-
tiff is run down by a car, even though the car is negligently
driven. One who parks an automobile on the highway without
lights at night is not relieved of responsibility when another
negligently drives into it.

GR 65295, Mar. 10, 1987
FACTS: At about 1:30 a.m., LD was on his way home

from a cocktails-and-dinner meeting with his boss. During
the cocktails, LD had taken a “shot or two” of liquor. LD
was driving his car and had just crossed the intersection, not
far from his home when his headlights suddenly failed. He
1200
switched his headlights on “bright” and thereupon he saw a

Ford dump truck looming some 2-1/2 meters away from his
car. The dump truck, owned by Phoenix Construction, Inc. was
parked on the right hand side of the street (i.e., on the right
hand side of a person facing in the same direction toward
which LD’s car was proceeding), facing the oncoming traffic.
The dump truck was parked askew (not parallel to the street
curb) in such manner as to stick out onto the street, partly
blocking the way of oncoming traffic. There were no lights nor
any so-called “early warning” reflector devices set anywhere
near the dump truck, front or rear. LD tried to avoid a col-
lision by swerving his car to the left but it was too late and
his car smashed into the dump truck. LD suffered physical
injuries including some permanent facial scars, a “nervous
breakdown” and loss of two gold bridge dentures.
LD sued Phoenix and its driver claiming that the legal
and proximate cause of his injuries was the negligent man-
ner in which phoenix’s driver had parked the dump truck.
Phoenix and its driver countered that the proximate cause
of LD’s injuries was his own recklessness in driving fast at
the time of the accident, while under the influence of liquor,
without his headlights on and without a curfew pass. Phoenix
also sought to establish that it had exercised due care in the
selection and supervision of the driver. The trial court rendered
judgment in favor of LD. The Court of Appeals affirmed the
decision but modified the award of damages.
On petition for review, the Supreme Court found that
LD was negligent the night of the accident. He was hurry-
ing home that night and driving faster than he should have
been. Worse, he extinguished his headlights at or near the
intersection, as he approached his residence, and thus did not
see the dump truck that was parked askew and sticking out
onto the road lane. Nevertheless, the Supreme Court agreed
with the trial court and the appellate court that the legal
and proximate cause of the accident and of LD’s injuries was
the wrongful and negligent manner in which the truck was
parked. The Supreme Court —
HELD: There was a reasonable relationship between
the dump truck driver’s negligence on the one hand and the
accident and LD’s injuries on the other hand. The collision of
1201
LD’s car with the dump truck was a natural and foreseeable
consequence of the truck driver’s negligence. The truck driver’s
negligence far from being a “passive and static condition” was
an indispensable and efficient cause. The collision between the
dump truck and LD’s car would in all probability not have
occurred had the dump truck not been parked askew without
any warning lights or reflector devices. The improper parking
of the dump truck created an unreasonable risk of injury for
anyone driving and for having so created this risk the truck
driver must be held responsible. LD’s negligence, although
later in point of time than the truck driver’s negligence, and
therefore closer to the accident, was not an efficient intervening
or independent cause. What Phoenix and its driver describe
as an “intervening cause” was no more than a foreseeable
consequence of the risk created by the negligent manner in
which the truck driver had parked the dump truck. LD’s neg-
ligence was not of an independent and overpowering nature
as to cut, as it were, the chain of causation in fact between
the improper parking of the dump truck and the accident,
nor to sever the juris vinculum of liability. LD’s negligence
was “only contributory.” The immediate and proximate cause
of the injury remained the truck driver’s “lack of due care.”
Hence, LD may recover damages though such damages are
subject to mitigation by the Courts.
The last clear chance doctrine of the common law, imported
into our jurisdiction, has no role to play in a jurisdiction where
the common law concept of contributory negligence as an abso-
lute bar to recovery by the plaintiffs has itself been rejected in
Art. 2179. Our law on quasi-delicts seeks to reduce the risks
and burdens of living in society and to allocate them among
the members of society. The truck driver’s proven negligence
creates a presumption of negligence on the part of his employer
in supervising its employees properly and adequately.
(4) Examples of Proximate Cause

(a) If a passenger boxes a bus driver who subsequently
loses control of the vehicle, the act of the passenger is
the proximate cause.
(b) If the Meralco leaves an exposed live wire, and subse-
quent electrocution follows because somebody touches
1202
the wire, the negligence of the Meralco is the proximate

cause. (TS, Feb. 24, 1928).
(c) If somebody neglects to cover his ditch (filled with hot
water) and a child carelessly falls into it, the negligence
is the proximate cause, though the contributory negligence
of the child would reduce the amount of recoverable dam-
ages. (Bernal and Enverso v. House & Tacloban Electric
and Ice Plant, 54 Phil. 327).
(d) If the damaged vehicle was driven by a reckless driver
who made the vehicle travel at a very high rate of speed
and on the wrong side of the road, it is clear that this
negligence was the proximate cause of the collision.
(Tuason v. Luzon Stevedoring Co., et al., L-13514, Jan.
28, 1961).
(5) Case
Metro Manila Transit Corp. & Apolinario Ajoc

v. CA, etc.
GR 141089, Aug. 1, 2002
FACTS: Petitioners were found liable for the death of

Florentina Sabalburo by the trial court in a vehicular accident
involving a passenger bus owned by petitioner. Metro Manila
Transit Corp. (MMTC) and driven by petitioner Apolinario
Ajoc. Accordingly, petitioners were ordered to pay damages
to private respondents.
Petitioners reasonably appealed to the Court of Appeals
(CA), insisting that the accident was solely the fault of the
victim since she suddenly crossed a very busy street with
complete disregard for her safety and in violation of traffic
rules and regulations designed to protect pedestrians. The CA
affirmed the trial court’s decisions. Petitioners then moved
for reconsideration, but the CA denied their motion in its
resolution of Dec. 10, 1999. Hence, the present petition.
ISSUE: Whether or not Art. 2179 as an exception to
Art. 2176 is applicable in the instant case.
HELD: Records support private respondents’ claim that
the MMTC bus was being driven carelessly. As found by the
1203
trial court and affirmed by the CA, the victim and her com-
panions were standing on the island of Andrew Ave., waiting
for the traffic light to change so they could cross. Upon seeing
the red light, the victim and her companions started to cross.
It was then when petitioner Ajoc, who was trying to beat the
red light, hit the victim. As the court a quo noted, Ajoc’s claim
that “he failed to see the victim and her companions proves
his recklessness and lack of caution in driving his vehicle.”
Findings of fact of the trial court, especially when af-
firmed by the CA, are binding and conclusive on the Supreme
Court. (Austria v. CA, 327 SCRA 668 [2000]). Moreso, as in
the case at bar, where petitioners have not adequately shown
that the courts below overlooked or disregarded certain facts
or circumstances of such import as would have altered the
outcome of the case. Contrary to petitioners’ insistence, the
applicable law in this case is Art. 2176 and not Art. 2179.
Art. 2180. The obligation imposed by Article 2176 is

demandable not only for one’s own act or omissions, but
also for those of persons for whom one is responsible.
The father, and, in case of his death or incapacity,
the mother, are responsible for the damages caused by the
minor children who live in their company.
Guardians are liable for damages caused by the minors
or incapacitated persons who are under their authority and
live in their company.
The owners and managers of an establishment or en-
terprises are likewise responsible for damages caused by
their employees in the service of the branches in which the
latter are employed or on the occasion of their functions.
Employers shall be liable for the damages caused by
their employees and household helpers acting within the
scope of their assigned tasks, even though the former are
not engaged in any business or industry.
The State is responsible in like manner when it acts
through a special agent; but not when the damage has been
caused by the official to whom the task done properly per-
1204
tains, in which case what is provided in article 2176 shall

be applicable.
Lastly, teachers or heads of establishments of arts and
trades shall be liable for damages caused by their pupils
and students or apprentices, so long as they remain in
their custody.
The responsibility treated of in this article shall cease
when the person herein mentioned prove that they observed
all the diligence of a good father of a family to prevent dam-
age.
COMMENT:
(1) Liability for the Acts and Omissions of Another
This Article deals with liability for the acts and omis-
sions of another.
(2) Reason for the Liability

Negligence in supervision. (See Bahia v. Litonjua, 30
Phil. 624).
[NOTE: This negligence is PRESUMED but may be rebut-
ted by proof of diligence. (See last paragraph, Art. 2180).]
(3) Solidarily Liability

The person responsible for the act (like the minor), and
the person exercising supervision (like the parents) are soli-
darily liable. (Art. 2194; Araneta, et al. v. Arreglado, et al.,
104 Phil. 529). Indeed, the liability of the guardian or master
is primary and direct, NOT subsidiary. (Barredo v. Soriano,
73 Phil. 607).
[NOTE: The mother is liable only if the father is dead
or incapacitated, hence, if the father is alive and all right, the
mother should not be joined as party defendant. (Romano, et
al. v. Pariñas, et al., 101 Phil. 140).]
[NOTE: If a minor child negligently operates the family
car, the head of the family and owner of the car can be sued
for liability. (Gutierrez v. Gutierrez, 56 Phil. 177).]
1205
Maria Teresa Cuadra v. Alfonso Monfort

L-24101, Sep. 30, 1970
FACTS: While playing inside a shoolyard, a 13-year-old

girl playfully tossed as a joke a girl’s headband at her 12-year-
old girl classmate. The latter, who was surprised by the act,
turned around only to have her eyes hit. One eye eventually
became blind after unsuccessful surgical operations thereon.
The victim then sued the culprit’s father for damages. Is the
defendant liable.
HELD: No, the culprit’s father is not liable, for he could
not have prevented the damage in any way. The child was at
school, where she ought to be under the supervision of the
school authorities.
(DISSENTING OPINION of Justice Antonio Barredo:
The culprit’s father should be held liable for no proof
was presented that he even warned the child not to play
dangerous jokes on her classmates; the burden of proof of
non-negligence must be on the part of the culprit’s parents
or guardians.)
[NOTE: In the said case, no suit was brought against the
school authorities, the teacher in charge, or the school itself.]
Libi, et al. v. IAC, et al.

GR 70890, Sep. 18, 1992
The civil liability of parents for quasi-delicts of their

minor children, as contemplated in Art. 2180 of the Civil
Code, is primary and not subsidiary. In fact, if we apply Art.
2194 of said code which provides for solidary liability of joint
tortfeasors, the persons responsible for the act or omission,
in this case, the minor and the father and, in case of his
death or incapacity, the mother, are solidarily liable. Accord-
ingly, such parental liability is primary and not subsidiary;
hence, the last paragraph of Art. 2180 provides that “[t]he
responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage.” To
hold that the civil liability under Art. 2180 would apply only
to quasi-delicts and not to criminal offenses would result in
1206
the absurdity that in an act involving mere diligence, the

parents would be liable but not where the damage is caused
with criminal intent. The liability of the parents for felonies
committed by their minor children is likewise primary, not
subsidiary. (See Art. 101 of the Revised Penal Code). It bears
stressing, however, that the Revised Penal Code provides for
subsidiary liability only for persons causing damages under
the compulsion of irresistible force or under the impulse of an
uncontrollable fear; innkeepers, tavernkeepers, and proprietors
of establishments; employers, teachers, persons, and corpora-
tions engaged in industry; and principals, accomplices, and
accessories for the unpaid civil liability of their co-accused in
the other classes.
Under the foregoing considerations, therefore, it is hereby
ruled that the parents are and should be held primarily liable
for the civil liability arising from criminal offenses committed
by their minor children under their legal authority or control,
or who live in their company, unless it is proven that the
former acted with the diligence of a good father of a family to
prevent such damages. In the case at bar, whether the death
of the hapless Julie Ann Gotiong was caused by a felony or
a quasi-delict committed by Wendell Libi, respondent court
did not err in holding petitioners liable for damages arising
therefrom. Subject to the preceding modifications relied upon
by it, therefore, and on the bases of the legal imperatives
herein explained, the Court is conjoined in its findings that
said petitioners failed to duly exercise the requisite diligentis-
simi patris familias to prevent such damages.
(4) Owners and Managers
Phil. Rabbit Bus Lines, Inc., et al. v.

Phil. Am. Forwarders, Inc., et al.
L-25142, Mar. 25, 1975
FACTS: An action for damages was brought against the

Phil. Am. Forwarders, Inc. because of the alleged negligence of
the driver. Included as defendants were the corporation, and
a certain Balingit, the manager of the corporation. A motion
was filed to dismiss the case against the manager Balingit
1207
on the ground that while indeed he was the manager, he was

also a mere employee of the company. Now then, under the
fourth paragraph of Art. 2180, the law speaks of “owners and
managers” as being liable. Issue: Should Balingit be released
from the complaint?
HELD: Yes, because the term ‘manager’ in Art. 2180
(fourth paragraph) is used in the sense of employer, not em-
ployee. Hence, there is no cause of action against Balingit.
(5) Employers
(a) In paragraph 5, note that the employers can be liable
even if “not engaged in any business or industry.” If a
complaint, therefore, makes no reference to such busi-
ness or industry, there is still a cause of action, and the
complaint should NOT be dismissed. (Ortaliz v. Echarri,
101 Phil. 947).
(b) It should be noted, too, that paragraph 5 refers to “em-
ployees and household helpers,” not to strangers. So if a
stranger should drive another’s car without the latter’s
consent, the owner is NOT liable, even if he is engaged
in an industry. (Duquillo v. Bayot, 67 Phil. 131).
(c) One who hires an “independent contractor” but controls
the latter’s work, is responsible also for the latter’s
negligence. (See Cuison v. Norton and Harrison Co., 55
Phil. 18).
(d) The registered owner of a public utility vehicle continues
to be its owner if he leases it to another without the
permission of the Public Service Commission. Therefore,
even if the driver of the lessee is negligent, the registered
owner can still be held liable. (Timbol v. Osias, et al.,
96 Phil. 989; Montoya v. Ignacio, L-5868, Dec. 29, 1953).
Indeed, to exempt from liability the owner of a public
vehicle who operates it under the “boundary system” on
the ground that he merely leases it to the driver would
not only be to abet a flagrant violation of the Public
Service Law but also to place the riding public at the
mercy of reckless and irresponsible drivers: “reckless”
because the measure of their earnings would depend
1208
largely upon the number of trips they make and hence,

the speed at which they drive; and “irresponsible” because
most, if not all of them, are in no position to pay dam-
ages they might cause. (Magboo v. Bernardo, L-16790,
Apr. 30, 1963).
Vinluan v. Court of Appeals

L-21477-81, Apr. 29, 1966
FACTS: A passenger of a bus was hurt because of

the negligence of the driver of the bus as well as the
negligence of the driver of another vehicle. Who should
be liable?
HELD: According to the court, four persons are
liable: the owner of the bus, the driver of the bus, the
owner of the other vehicle, and the driver of said other
vehicle — and their liability is SOLIDARY — notwith-
standing the fact that the liability of the bus company
is predicated on a CONTRACT, while the liability of
the owner and driver of the other vehicle is based on
a QUASI-DELICT. (Observation: The bus driver can be
excused on the basis of culpa contractual for the contract
of common carriage was not with him, but with the bus
company; nonetheless, he can be held liable on the basis
of culpa aquiliana, there being no pre-existing contract
between him and the passenger. Note also that the owner
of the other vehicle can be excused if he can prove due
diligence in the selection and supervision of his driver,
under Art. 2180, last paragraph, unless at the time of
the collision, said owner was also in his vehicle, in which
case, notwithstanding due care in selection and supervi-
sion, he would still be liable, if he could have, by use of
diligence prevented the misfortune. (See Art. 2184).
Ramos v. Pepsi-Cola
L-22533, Feb. 9, 1967
FACTS: A driver of Pepsi-Cola is admittedly neg-

ligent in a vehicular collision. Suit was brought by the
other car owner against both the driver and Pepsi-Cola.
But Pepsi-Cola was able to prove diligence in selection
1209
(no culpa in eligiendo) and supervision (no culpa in

vigilando) of the driver. For instance, it was proved
that Pepsi-Cola had carefully previously examined the
erring driver as to his qualifications, record of service,
and experience. Is Pepsi-Cola still liable?
HELD: No, otherwise it would have been liable
solidarily with the driver. In Philippine torts, we do
not follow the doctrine of respondeat superior (where
the negligence of the servant is the negligence of the
master). Instead, we follow the rule of bonus pater fa-
milias (good father of a family). The negligence of the
employer here indicated in the last paragraph of Art.
2180, is only presumptive; it can therefore be rebutted,
as in this case.
Bernardo Jocson and Maria D. Jocson v.

Redencion Glorioso
L-22686, Jan. 30, 1968
FACTS: For the death of a three-year-old boy who
was run over by a passenger jeepney, two actions were filed
by the parents: the first, against the owner and the driver
for culpa aquiliana, and the other, against the driver for
homicide through reckless imprudence, the criminal action
having been instituted while the civil case was pending
trial. The civil case was dismissed; but the criminal case
resulted in a conviction for homicide through reckless
imprudence. Aside from the prison sentence imposed, the
driver was also ordered to indemnify the heirs of the de-
ceased the sum of P6,000 with subsidiary imprisonment
in case of insolvency. A writ for the execution of the civil
liability was returned unsatisfied due to the insolvency of
the accused. The parents of the victim then sued the owner
of the jeepney, pursuant to Art. 103 of the Revised Penal
Code. The owner claims that the previous dismissal of the
culpa aquiliana case should now prevent the application
of the subsidiary liability of an owner under the Revised
Penal Code. Is this claim correct?
HELD: The claim is not correct. After all, the culpa
aquiliana case had a different cause of action from this
case involving the subsidiary liability of an employer
1210
for an employee’s criminal act. In other words, we have

the controlling rule that once there is a conviction for a
felony, final in character, the employer, according to the
plain and explicit command of Art. 103 of the Revised
Penal Code, is subsidiarily liable, if it be shown that
commission thereof was in the discharge of the duties
of such employee.
Malipol v. Tan
L-27730, Jan. 21, 1974
54 SCRA 202
(1974)
FACTS: Labsan, a driver of a gasoline tanker used
in the business of his employer, Tan, hit a pedestrian,
causing the latter’s death. In the civil action filed by the
heirs of the victim against both Labsan and Tan, no al-
legation was made that a crime had been committed. The
trial court found the driver reckless, and so it held Tan
primarily liable on the basis of a quasi-delict, without
prejudice to the right of Tan to demand reimbursement
from the driver. Issue: Is the imposition of primary li-
ability on Tan proper?
HELD: Yes, the imposition of primary liability on
an employer in the case of a quasi-delict is proper in the
absence of an allegation that a crime had been committed
in which latter case, the liability of the employer would
only be subsidiary.
[NOTE: In a quasi-delict, both employer and em-
ployee are solidarily liable, unless employer is able to
prove due diligence in the selection and supervision of
employees. Here Tan did not present any such defense
since he was declared in default.]
St. Francis High School v. CA

GR 82465, Feb. 25, 1991
FACTS: Ferdinand Castillo, a freshman student
at the St. Francis High School wanted to join a school
picnic at the beach. Ferdinand’s parents, because of short
notice, did not allow their son to join but merely allowed
him to bring food to the teachers for the picnic, with
1211
the directive that he should go back home after doing

so. However, because of the persuasion of the teachers,
Ferdinand went on with them to the beach. During the
picnic and while the students, including Ferdinand, were
in the water, one of the female teachers was apparently
drowning. Some of the students, including Ferdinand,
came to her rescue, but in the process, it was Ferdinand
himself who drowned. Ferdinand’s parents sued the school
and the teachers for damages allegedly incurred from
the death of their 13-year-old son. Contending that the
death of their son was due to the failure of defendants
to exercise the proper diligence of a good father of the
family in preventing their son’s drowning, they (Ferdi-
nand’s parents) prayed for actual moral and exemplary
damages, attorney’s fees and expenses for litigation. The
trial court found in favor of plaintiffs and against the
teachers, ordering all of them to pay plaintiffs P30,000
as actual damages, P20,000 as moral damages, P15,000
as attorney’s fees and to pay the costs. However, the
court dismissed the case against the school. The Court of
Appeals (CA) ruled that the school and the teachers are
guilty of negligence and liable for Ferdinand’s death.
ISSUES:
(1) Whether there was negligence attributable to
the defendants which will warrant the award of damages
to the plaintiffs.
(2) Whether or not Art. 2180, in relation to Art.
2176 of the new Civil Code, is applicable to the case at
bar.
(3) Whether the award of exemplary and moral dam-
ages is proper under the circumstances of the case.
HELD: The Supreme Court set aside the decision
of the Court of Appeals insofar as the school and teach-
ers are concerned, but the portion of the said decision
dismissing their counterclaim there being no merit, is
affirmed. It then held that if at all petitioners are liable
for negligence, this is because of their own negligence or
the negligence of people under them. Here, petitioners
are neither guilty of their own negligence or guilty of
1212
the negligence of those under them. Hence, they cannot

be said that they are guilty at all of any negligence.
Consequently, they cannot be held liable for damages of
any kind. At the outset, Ferdinand’s parents allowed him
to join the excursion. The fact that his father gave him
money to buy food for the picnic even without knowing
where it will be held, is a sign of consent for Ferdinand
to join the same. The CA committed an error in apply-
ing Art. 2180 of the Civil Code in rendering the school
liable for the death of Ferdinand. In the case at bar, the
teachers/petitioners were not in the actual performance of
their assigned tasks. The incident happened not within
the school premises, not on a school day and most im-
portantly while the teachers and students were holding
a purely private affair, a picnic. The incident happened
while some members of the class of the school were
having a picnic at the beach. This picnic had no permit
from the school head or its principal because this picnic
was not a school sanctioned activity, neither is it consid-
ered as an extra-curricular activity. Mere knowledge by
petitioner/principal of the planning of the picnic by the
students and planning of the picnic by the students and
their teachers does not in any way show acquiescence
or consent to the holding of the same. The application,
therefore, of Article 2180 has no basis in law and nei-
ther is it supported by any jurisprudence. If we were to
affirm the findings of the appellate court on this score,
employers will forever be exposed to the risk and danger
of being hailed to court to answer for the misdeeds or
omissions of the employees even if such act or omission
be committed while they were not in the performance of
their duties. No negligence could be attributable to the
teachers to warrant the award of damages to Ferdinand’s
parents. The class adviser of the class where Ferdinand
belonged did her best and exercised diligence of a good
father of a family to prevent any untoward incident or
damages to all the students who joined the picnic. In
fact, she invited the P.E. instructors and scout masters
who have knowledge in first aid application and swim-
ming. Moreover, the petitioners brought life savers in
case of emergency. Petitioners did all what is humanly
1213
possible to save the child. No moral or exemplary dam-

ages may be awarded in favor of Ferdinand’s parents.
The case does not fall under any of the grounds to grant
moral damages. Petitioners are not guilty of any fault
or negligence. Hence, no moral damages can be assessed
against them. While it is true that Ferdinand’s parents
did give their consent to their son to join the picnic, this
does not mean that petitioners were already relieved of
their duty to observe the required diligence of a good
father of a family in ensuring the safety of the children.
But here, petitioners were able to prove that they had
exercised that required diligence. Hence, the claim for
moral or exemplary damages becomes baseless.
Figuracion Vda. de Maglana, et al. v.

Judge Francisco Z. Consolacion &
Afisco Insurance Corp.
GR 60506, Aug. 6, 1992
The liability of AFISCO based on the insurance
contract is direct, but not solidary with that of Destrajo
which is based on Art. 2180 of the Civil Code. As such,
petitioners have the option either to claim the P15,000
from AFISCO and the balance from Destrajo or enforce the
entire judgment from Destrajo, subject to reimbursement
from AFISCO to the extent of the insurance coverage.
While the petition seeks a definitive ruling only on
the nature of AFISCO’s liability, this Court noticed that
the lower court erred in the computation of the prob-
able loss of income. Using the formula: 2/3 of (80-56) x
P12,000, it awarded P28,800. Upon recomputation, the
correct amount is P192,000. Being a “plain error,” this
Court opt to correct the same. (Sec. 7, Rule 51, Rules
of Court). Furthermore, in accordance with prevailing
jurisprudence, the death indemnity is hereby increased
to P50,000.
Go v. IAC
GR 68138, May 13, 1991
FACTS: Floverto Jazmin, an American citizen and
retired employee of the U.S. Federal Government, had
1214
been a visitor in the Philippines since 1972 residing in

Mangatarem, Pangasinan. As a pensionado of the U.S.
Government, he received annuity checks in the amounts
of $67 for disability and $620 for retirement through the
Mangatarem Post Office. On Aug. 22, 1975, Agustin Go,
as branch manager of Solidbank in Baguio City, allowed a
person named “Floverto Jazmin” to open Savings Account
No. BG5206 by depositing two U.S. treasury checks in
the amounts of $1810 and $910 respectively equivalent
to the total amount of P20,565.69 both payable to the
order of Floverto Jazmin of Mangatarem, Pangasinan
and drawn on the First National City Bank, Manila. The
Savings Account was opened in the ordinary course of
business. The bank, thru Go, required the depositor to fill
up the information sheet for new accounts to reflect his
personal circumstances. The depositor indicated therein
that he was Floverto Jazmin with mailing address at
Mangatarem, that he was a Filipino citizen and a security
officer of the US army; that he was married to Milagros
Bautista; and that his initial deposit was P3,565. He
wrote CSA 138134 under remarks or instructions and
left blank the spaces under telephone number, resi-
dence certificate, passport, bank and trade performance
as to who introduced him to the bank. The depositor’s
signature specimens were also taken. Thereafter, the
deposited checks were sent to the drawee bank for clear-
ance. Inasmuch as Solidbank did not receive any word
from the drawee bank, after three (3) weeks it allowed
the depositor to withdraw the amount indicated in the
checks. On Jun. 29, 1976, or more than a year later,
the two dollar checks were returned with notation that
the amounts were altered. So Go reported the matter
to the Philippine Constabulary in Baguio City. On Aug.
3, 1976, Jazmin received radio messages requiring him
to appear before the PC headquarters in Benguet for
investigation regarding the complaint filed by Go against
him for estafa. Initially, Jazmin was investigated by
the constabulary officers in Lingayen, and later in La
Trinidad. Eventually, the investigators found that the
person named “Floverto Jazmin” who made the deposit
and withdrawal with Solidbank was an impostor. Floverto
1215
Jazmin’s name was used by a syndicate to encash the

checks. On Sep. 23, 1976, Jazmin sued Agustin Go and
the Solidbank for moral and exemplary damages in the
amount of P90,000 plus attorney’s fees. The trial court
ordered Go and CBTC to pay Jazmin P6,000 as moral
damages, P3,000 as exemplary damages and P1,000
as attorney’s fees. The appellate court disallowed the
moral and exemplary damages and granted nominal
damages.
HELD: The Supreme Court affirmed the decision of
the Court of Appeals and held that here, the damages
in the form of mental anguish, moral shock and social
humiliation were suffered by Jazmin only after the filing
of Go’s complaint with the PC. It was only then that he
had to bear the incovenience of traveling to Benguet and
Lingayen for the investigation as it was only then that
he was subjected to embarrassment for being a suspect in
the unauthorized alteration of the treasury checks. Hence,
it is understandable why Go appears to have overlooked
the factors antecedent to the filing of the complaint to
the Constabulary authorities and to have to put undue
emphasis on the appellate court’s statement that “denounc-
ing a crime is not negligence.” Although there should be
no penalty on the right to litigate and error alone in
the filing of a case be it before the courts or the proper
police authorities, is not a ground for moral damages,
under the peculiar circumstances of this case, Jazmin is
entitled to an award of damages. It would be unjust to
overlook the fact that Go’s negligence was the root of all
the inconvenience and embarrassment experienced by Jaz-
min, albeit they happened after the filing of the complaint
with the Constabulary authorities. Go’s negligence in fact
led to the swindling of his employer. Had Go exercised
the diligence expected of him as a bank officer he would
have noticed the disparity between the payee’s name and
address on the treasury checks involved and the name of
the depositor appearing in the bank’s records. The situ-
ation would have been different if the treasury checks
were tampered with only as to their amounts because
the alteration would have been unnoticeable and hard
to detect as the herein altered check bearing the amount
1216
of $913 shows. But the error in the name and address

of the payee was patent and could not have escaped the
trained eyes of bank officers and employees. Hence, the
bank thru its employees was grossly negligent in handling
the business transaction herein.
In crimes and quasi-delicts, the defendant shall be
liable for all damages which are the natural and probable
consequences of the act or omission complained of. It is
not necessary that such damages have been foreseen or
could have reasonably been foreseen by the defendant.
As Go’s negligence was the root of the complained in-
convenience and embarrassment, Go is liable to Jazmin
for damages. Under the 5th paragraph of Art. 2180 of
the Civil Code, “employers shall be liable for the dam-
ages caused by their employees acting within the scope
of their assigned tasks. Pursuant to this provision, the
bank is responsible for the acts of its employee, unless
there is proof that it exercised the diligence of a good
father of a family to prevent the damage. Hence, the
burden of proof lies upon the bank and it cannot disclaim
liability in view of its own failure to prove not only that
it exercised due diligence to prevent damage but that it
was not negligent in the selection and supervision of its
employees.
George Mckee & Ararelo Koh Mckee v.

IAC, Jaime Tayag & Rosalinda Manalo
GR 68102, Jul. 16, 1992
In the case at bar, as employers of the truck driver,
the private respondents are, under Art. 2180 of the Civil
Code, directly and primarily liable for the resulting dam-
ages. The presumption that they are negligent flows from
the negligence of their employee. That presumption, how-
ever, is only juris tantum, not juris et de jure. Their only
possible defense is that they exercised all the diligence of
a good father of a family to prevent the damage.
The diligence of a good father referred to means that
diligence in the selection and supervision of employees.
The answers of the private respondents in Civil Cases
Nos. 4477 and 4478 did not interpose this defense. Nei-
ther did they attempt to prove it.
1217
San Miguel Corp. v. Heirs of Sabiano

Inguito & Julius Ouano
GR 141716, Jul. 4, 2002
FACTS: San Miguel Corp. (SMC) entered into a Time

Charter Party Agreement with Julius Ouano, doing busi-
ness under the name and style J. Ouano Marine Services.
Under the terms of the agreement, SMC chartered the
M/V Doña Roberta owned by Julius Ouano for a period
of two years, from Jul. 1, 1989 to May 31, 1991, for the
purpose of transporting SMC’s beverage products from
its Mandaue City plant to various points in Visayas and
Mindanao.
On Nov. 11, 1990, during the term of the charter,
SMC issued sailing orders to the Master of the M/V Doña
Roberta, Capt. Sabiano Inguito. In accordance thereto,
Inguito obtained the necessary sailing clearance from
the Philippine Coast Guard. Loading of the cargo on the
M/V Doña Roberta was completed at 8:30 p.m. of Nov.
11, 1990. However, the vessel did not leave Mandaue
City until 6 a.m. of the following day, Nov. 12, 1990.
Meanwhile at 4 a.m. of Nov. 12, 1990, typhoon Ruping
was spotted mowing in the general direction of Eastern
Visayas. At 7 a.m., Nov. 12, 1990, one hour after the
M/V Doña Roberta departed from Mandaue City, SMC
Radio Operator Rogelio P. Moreno contacted Inguito
thru radio and advised him to take shelter. The latter
replied that the ship will proceed since the typhoon was
far away anyway. At 2 p.m. that same day, while the
vessel was two kms. Abeam Boljoon Pt., Moreno again
communicated with Inguito and advised him to take
shelter. The captain responded that the ship can man-
age. Hearing this, Moreno immediately tried to get in
touch with Rico Ouano to tell him that Inguito did not
heed their advice. Rico was out of his office, however,
so Moreno left the message with the secretary.
Again Moreno contacted Inguito at 4 p.m. of Nov. 12,
1990. By then the vessel was already 9.5 miles southeast
of Balicasag Island heading towards Sulauan Pt. Moreno
reiterated the advice and pointed out it will be difficult
to take shelter after passing Balicasag Island as the ship
1218
was approaching an open sea. Still, the captain refused

to heed his advice. At 8 p.m., the vessel was 38 miles
southeast of Balicasag Island, and Westsouth winds were
now prevailing. At 10 p.m., the M/V Doña Roberta was
25 miles approaching Sulauan Pt. Moments later, power
went out in Moreno’s office and resumed at 11:40 p.m.
He immediately made a series of calls to the M/V Doña
Roberta but he failed to get in touch with anyone in the
vessel.
At 1:15 a.m., Nov. 13, 1990, Inguito called Moreno
over the radio and requested him to contact Rico, son of
Julius Ouano, because a helicopter is needed to provide
rescue. The vessel was about 20 miles west of Sulauan
Pt. Upon being told by SMC’s radio operator, Rico turned
on his radio and read the distress signal from Inguito.
When he talked to the captain, the latter requested for
a helicopter to provide rescue. Rico talked to the Chief
Engineer who informed him that the crew can no longer
stop the water from coming into the vessel because the
crew members were feeling dizzy from petroleum fumes.
At 2:30 a.m. of Nov. 13, 1990, M/V Doña Roberta sank.
Out of the 25 officers and crew on board the vessel, only
5 survived. On Nov. 24, 1990, shipowner Julius Ouano, in
lieu of the captain who perished in the sea tragedy, filed
a Marine Protest. Heirs of the deceased captain and crew,
as well as survivors of the ill-fated M/V Doña Roberta
filed a complaint for tort against SMC and Julius Ouano
at the RTC of Lapu-Lapu City, Br. 27. Julius Ouano filed
an answer with crossclaim, alleging that the proximate
cause of the loss of the vessel and its officers and crew
was the fault and negligence of SMC, which had complete
control and disposal of the vessel as charterer and which
issued the sailing order for its departure despite being
forewarned of the impending typhoon. Thus, he prayed
that SMC indemnify him for the cost of the vessel and
the unrealized rentals and earnings thereof.
SMC countered that it was Ouano who had the
control, supervision, and responsibilities over the vessel’s
navigation. This notwithstanding, and despite knowledge
of the incoming typhoon, Ouano never bothered to initi-
ate contact with his vessel. Contrary to his allegation,
1219
SMC argued that the proximate cause of the sinking

was Ouano’s breach of his obligation to provide SMC
with a seaworthy vessel duly manned by competent crew
members. SMC interposed counterclaims against Ouano
for the value of the cargo lost in the sea tragedy. After
trial, the court a quo rendered judgment finding that the
proximate cause of the loss of the M/V Doña Roberta was
attributable to SMC. Both SMC and Ouano appealed to
the Court of Appeals (CA). SMC argued that as mere
charterer, it did not have control of the vessel and that
the proximate cause of the loss of the vessel and its cargo
was the negligence of the ship captain. For his part, Ouano
complained of the reduced damages awarded to him by
the trial court. On Dec. 10, 1998, the CA modified the
decision appealed from, declaring defendant-appellants
SMC and Julian C. Ouano jointly and severally liable to
plaintiff-appellees, except to the heirs of Inguito. SMC and
Ouano filed separate motions for reconsideration, which
were denied by the CA for lack of merit.
ISSUE: Under Arts. 1176 and 2180, owners and
managers are responsible for damages caused by negli-
gence of a servant or an employee, the master or employer
is presumed to be negligent either in the selection or in
the supervision of that employee. May this presumption
be overcome? If so, how?
HELD: Yes. This presumption may be overcome only
by satisfactorily showing that the employer exercised
the care and diligence of a good father of a family in
the selection and supervision of its employee. (Pestaño
v. Sumayang, 346 SCRA 870 [2000]).
In the instant case, the Supreme Court does not find
the SMC liable for the losses incurred. The contention that
it was the issuance of the sailing order by SMC which was
the proximate cause of the sinking is untenable.
The fact that there was an approaching typhoon is
of no moment. It appears that for one previous occasion,
SMC issued a sailing order to the captain of the M/V
Doña Roberta, but the vessel cancelled its voyage due
to a typhoon. Likewise, it appears from the records that
1220
SMC issued the sailing order on Nov. 12, 1990, before the
typhoon, “Ruping’’ was first spotted at 4 a.m. of Nov. 12,
1990. Consequently, Ouano should answer for the loss of
lives and damages suffered by heirs of the officers and crew
members who perished on board the M/V Doña Roberta,
except Capt. Inguito. The award of damages granted by
the CA is affirmed only against Ouano, who should also
indemnify SMC for the cost of the lost cargo, in the total
amount of P10,278,542.40.
‘Charter Party’ Distinguished from ‘Affreightment’

A charter party is a contract by virtue of which the
owner or agent of a vessel binds himself to transport
merchandise or persons for a fixed price. It has also
been defined as a contract by virtue of which the owner
or the agent of the vessel leases for a certain price the
whole or a portion of the vessel for the transportation
of goods or persons from one port to another. (SMC v.
Heirs of S. Inguito & J. Ouano, supra.)
It may either be a: (1) bareboat or demise charter
or (2) contract of affreightment. Under a demise or bare-
boat charter, the charterer mans the vessel with his own
people and becomes, in effect, the owner of the ship for
the voyage or service stipulated, subject to liability for
damages caused by negligence. (Caltex [Phils.], Inc. v.
Sulpicio Lines, Inc., 315 SCRA 709 [1999]).
In a contract of affreightment, upon the other hand,
the owner of the vessel leases part or all of its space to
haul goods for others. It is a contract for special service
to be rendered by the owner of the vessel. Under such
contract the ship owner retains the possession, command
and navigation of the ship, the charterer or freighter
merely having use of the space in the vessel in return
for his payment of the charter hire. (National Food Au-
thority v. CA, 311 SCRA 700 [1999]). Otherwise put, a
contract of affreightment is one by which the owner of
a ship or other vessel lets the whole or part of her to a
merchant or other person for the conveyance of goods,
on a particular voyage, in consideration of the payment
of freight. (SMC v. Heirs of Inguito & Ouano, supra).
1221
A contract of affreightment may be either time

charter, wherein the leased vessel is leased to the
charter for a fixed period of time, or voyage charter,
wherein the ship is leased for a single voyage. In both
cases, the charterer provides for the hire of the vessel
only, either for a determinate period of time or for a
simple or consecutive voyage, the ship owner to supply
the ship’s store, pay for the wages of the master of the
crew, and defray the expenses for the maintenance of
the ship. (Ibid.)
If the charter is a contract of affreightment, which
leaves the general owners is possession of the ship as
owner for the voyage, the rights and responsibilities of
ownership rest on the owner. The charterer is free from
liability to third persons in respect of the ship. (Caltex
[Phils.], Inc. v. Sulpicio Lines, Inc., supra.).
‘Emergency Rule’
George Mckee, et al. v.

IAC, et al.
GR 68102, Jul. 16, 1992
Under what is known as the emergency rule, one
who suddenly finds himself in a place of danger, and is
required to act without time to consider the best means
that may be adopted to avoid the impending danger, is
not guilty of negligence, if he fails to adopt what subse-
quently and upon reflection may appear to have been a
better method, unless the emergency in which he finds
himself is brought about by his own negligence.
‘Labor-Only’ Contracting
Napocor v. CA
GR 119121, Aug. 14, 1998
FACTS: A vehicle owned by a company and driven by

a driver supplied by the “labor-only” contractor figured in
an accident and both were sued by the heirs of the victims.
Petitioner Napocor insists that the responsibilities of the
employer contemplated in a “labor-only” contract should
1222
be restricted to the workers and cannot be expanded to

cover liabilities for damages to third persons resulting
from the employee’s tortious acts under Art. 2180 of the
Civil Code that provides that employers are liable for
the damages caused by their employees and household
helpers acting within the scope of their assigned tasks.
Petitioner theorizes that its liability is limited only to
compliance with the substantive labor provisions on
working conditions, rest periods, wages — and does not
extend to liabilities suffered by third persons.
HELD: Napocor’s position is incorrect since the ac-
tion brought by the heirs of the victims of the vehicular
accident was premised on the recovery of damages as a
result of a quasi-delict against both Napocor and Phesco.
Hence, it is the Civil Code and not the Labor Code that
is the applicable law. The present controversy is not a
labor dispute on conditions of employment between an
employee and an employer. It is a claim for damages for
injury caused by the negligent acts of an employee and
his employer.
Under the factual milieu of the case, respondent
Phesco, Inc. was engaged in “labor-only” contracting
vis-á-vis petitioner Napocor and as such, it is consid-
ered merely an agent of the latter. Hence, Napocor is
deemed liable. “Labor-only” contracting, as defined un-
der Sec. 9(b), Rule VII, Book III of the Omnibus Rules
Implementing the Labor Code, is prohibited and the
person acting as contractor shall be considered merely
as an agent or intermediary of the employer who shall
be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.
Nonetheless, petitioner Napocor could have disclaimed
liability had it raised the defense of due diligence in the
selection or supervision of respondent Phesco and the
truck driver. In the same Art. 2180 of the Civil Code,
the responsibility of the employer ceases when it can
proved that it observed all the diligence of a good father
of a family to prevent damages. For unknown reasons,
however, petitioner Napocor did not invoke said defense.
By opting not to present any evidence that it exercised
1223
due diligence in the supervision of the activities of re-

spondent Phesco and the driver, it foreclosed its right
to interpose the same on appeal in conformity with the
rule that points of laws, theories, issues of facts, and
arguments not raised in lower court cannot be raised
for the first time on appeal.
FGU Insurance Corp. v. CA, Filcar

Transport, Inc. & Fortune Insurance Corp.
GR 118889, Mar. 23, 1998
ISSUE: For damages suffered by a third party, may

an action based on quasi-delict prosper against Filcar,
a rent-a-car company, and, consequently, its insurer,
for fault or negligence of the car lessee in driving the
rented vehicle?
HELD: No. Filcar being engaged in a rent-a-car
business was only the owner of the car leased to Dahl-
Jensen. As such, there was no vinculum juris between
then employer and employee. Filcar cannot in any way
be responsible for the negligent act of Dahl-Jensen, the
former not being an employer of the latter.
(6) Liability of Teachers and Heads of Establishment (of

Arts and Trades)
Palisoc v. Brillantes
41 SCRA 548
FACTS: During recess-time, one student of a techni-

cal, (trade, vocational) school fatally injured another at the
school’s laboratory room. Are the president of the school and
the instructor concerned liable for the death of the student?
HELD: Yes, they are liable under the provisions of Art.
2180 of the Civil Code. The clause used in said article “so
long as they remain in their custody” does not necessarily
refer to the custody over students boarding in dormitories of
the school (as erroneously referred to in a previous case) but
to the protective and supervisory custody that the school and
its heads or teachers exercise over the pupils and students
1224
for as long as they are at attendance in school and includes

recess-time. To avoid liability, the school officials concerned
should have proved “that they observed all the diligence of a
good father of a family to prevent damage.” Said school offi-
cials and teachers incidentally are liable even if the students
or pupils are no longer minors.
Magtibay v. Garcia
GR 28971, Jan. 28, 1983
While a school is obliged to afford its students a fair

opportunity to complete the courses they seek to pursue,
this opportunity is forfeited if the students commit a serious
breach of discipline. Courts should not review the discretion
of university authorities in failing students for disciplinary
reasons or academic deficiencies. The requisite academic
standard must be maintained.
Pasco v. CFI
GR 54357, Apr. 25, 1987
FACTS: Reynaldo, together with two companions, while

walking inside the campus of Araneta University, after at-
tending classes in said University, was accosted and mauled
by a group of Muslim students led by Teng. The Muslim
group were also students of the Araneta University. Reynaldo
was stabbed by Teng and as a consequence, he was hospital-
ized and he underwent surgery to save his life. In a suit by
Reynaldo against Teng for damages, the Araneta University
was impleaded as a party defendant based on Art. 2180. The
trial court, on motion of Araneta University, dismissed the
complaint as to said defendant.
ISSUE: Is the provision of the penultimate par. of Art.
2180 which states that “teachers or heads of establishment of
arts and trades shall be liable for damages caused by their
pupils and students or apprentices, so long as they remain in
their custody” — equally applicable to academic institutions?
HELD: The answer is in the negative. The provision
concerned speaks only of “teachers or heads.”
1225
(7) Liability of the State

A State’s liability has two aspects:
(a) Its public or government aspects (here it is liable for the
tortious acts of special agents only.)
(b) Its private or business aspects (as when it engages in
private enterprises — here it is liable as an ORDINARY
EMPLOYER). (See Palma v. Garciano, et al., L-7240,
May 16, 1956).
MMTC & Apolinario Ajoc v. CA, Etc.

GR 141089, Aug. 1, 2002
FACTS: Petitioner MMTC contends that the Court

of Appeals (CA) erred in finding it solidarily liable for
damages with its driver/employee, Ajoc, pursuant to Art.
2180. It argues that Ajoc’s act in bringing the victim to
a hospital reflects MMTC’s diligence in the selection and
supervision of its drivers, particularly with regard to
safety measures. Hence, having exercised the diligence
of a good father of a family in the selection and supervi-
sion of its employees to prevent damage, MMTC should
not be held vicariously liable.
HELD: The claim that Ajoc’s act of bringing the
victim to the nearest medical facility shows adequate
supervision by MMTC over its employees deserves but
scant consideration. For one, the act was after the fact
of negligence on Ajoc’s part. For another, evidence on
record shows that Ajoc’s act was neither voluntary nor
spontaneous; he had to be prevailed upon by the victim’s
companions to render assistance to his victim.
Suffice it to say, owners of public utilities fall within
the scope of Art. 2180. MMTC is a public utility, organ-
ized and owned by the government for public transport
service. Hence, its liability to private respondents, for
the negligent and reckless acts of its driver, Ajoc, under
Art. 2180 is both manifest and clear.
1226
Victor Orquiola & Honorata Orquiola v. CA, Etc.

GR 141463, Aug. 6, 2002
FACTS: Petitioner-spouses purchased the subject

land in 1964 from Mariano Lising. The spouses acquired
the land in question without knowledge of any defect in
the title of Lising. Shortly afterwards, they built their
conjugal home on said land. It was only in 1998, when
the sheriff of Quezon City tried to execute the judgment
in Civil Case Q-12918, that they had notice to private
respondent’s adverse claim.
ISSUE: Can the institution of Civil Case Q-12918
serve as notice of such adverse claim to petitioners?
HELD: No. It cannot since petitioner-spouses were
not impleaded therein as parties. As builders in good faith
and innocent purchases for value, petitioners have rights
over the subject property and, hence, are proper parties
in interest in any case thereon. (Sec. 2, Rule 3, Rules of
Court). Consequently, private respondents should have
impleaded them in Civil Case Q-12918. Since they failed
to do so, petitioners cannot be reached by the decision in
said case. No man shall be affected by any proceeding
to which he is a stranger, and strangers to a case are
not bound by any judgment rendered by the court.
In the same manner, a writ of execution can be is-
sued only against a party and not against one who did
not have his day in court. Only real parties in interest
in an action are bound by the judgment therein and by
writs of execution and demolition issued pursuant thereto.
Thus, spouses Victor and Honorata Orquiola have valid
and meritorious cause to resists the demolition of their
house on their titled lot, which is tantamount to a dep-
rivation of property without due process of law.
(8) Special Agent

(a) This is a government employee who commits a tort while
performing a job or act foreign to his usual duties. (See
Merritt v. Government, 34 Phil. 311).
1227
In Republic v. Palacio (L-20322, May 29, 1968), the

Supreme Court held that the State is liable only for torts
caused by its special agents specially commissioned to
carry out the acts of which the torts arise, and which
acts are OUTSIDE of the REGULAR DUTIES of said
special agents.
(b) Hence, when the damage has been caused by the official
upon whom properly devolved the doing of the act per-
formed, the State (both central and local governments)
is NOT liable. Where therefore the plaintiff’s father
was run over by a truck driven by a chauffeur of the
provincial government of a province, and at the time
of the accident, he was driving a vehicle in compliance
with his duties as such, his employer is NOT liable for
the plaintiff’s claim. The chauffeur alone is liable. (Pala-
fox v. Ilocos Norte, et al., L-10659, Jan. 31, 1958). The
same principle applies to a chauffeur of the Philippine
General Hospital (Merritt v. Gov’t., 34 Phil. 311), or to
any employee of a branch of the government performing
his usual duties. (Rosell v. Aud.-Gen., 81 Phil. 453).
[NOTE: In the case of Palma v. Garciano, et al.,
it was held that if a governor and a mayor file criminal
charges which are groundless, their acts cannot have
borne the approval of the province and the municipal-
ity; hence, these political subdivisions cannot be liable.
Moreover, the prosecution of crimes is NOT corporate but
governmental or political in character. In the discharge of
functions of this nature, municipal corporations are not
liable for the acts of its officers, except if and when, and
only to the extent that, they have acted by authority of
law and in conformity with the requirement thereof.]
Republic v. Palacio
L-20322, May 29, 1968
FACTS: Ildefonso Ortiz filed a complaint against a
government entity (the Irrigation Service Unit) alleging
that said entity had induced the Handong Irrigation
Association to occupy and possess the land of Ortiz. As
a consequence of the complaint, the funds of the entity
1228
(deposited at the Philippine National Bank) was gar-

nished. There was no proof, however, that the State had
specifically commissioned the entity to make the tortious
inducement.
ISSUES:
(a) Is the government here liable, for the acts of the
Irrigation Service Unit?
(b) Assuming that there is liability may there be a
levy of execution against the funds deposited by
the entity with the PNB?
HELD:
(a) The government is not liable for no authorization
was ever given to its alleged “special agent.” If
there had been such authorization, there would
have been liability for then the acts authorized are
NOT REGULARLY performed by the entity.
(b) Assuming that there is liability, the Court’s power
ends with the promulgation of the judgment. Execu-
tion cannot issue on a judgment against the State.
After all, the State should be regarded as free to
determine whether or not it will honor the judgment
by payment. The presumption of course is that the
State will honor and respect the judgment, and this
can be done when Congress, recognizing the final-
ity of the judgment, enacts a legislative measure
providing for the satisfaction of the judgment.
(9) Defense
(a) If an employee (or ward or minor child, etc.) is found
negligent, it is presumed that the employer (or person
in charge) was negligent in selecting and/or supervising
him for it is hard for the victim to prove the negligence
of such employer. It is impossible for the victim to have
observed the conduct of all employers, etc. who are
potential tortfeasors. (See Campo, et al. v. Comarote &
Gemilga, L-9147, Nov. 29, 1956).
(b) In Campo v. Camarote and Gemilga (supra), it was held
that the mere fact that the driver was a professional
1229
one does not show sufficient diligence on the part of the

employer. The employer should not have been satisfied
with the mere possession by his driver of a professional
driver’s license; he had the duty to examine thoroughly
the qualifications, experience, and record of the driver.
(c) Even if the employer can prove the diligence in the selec-
tion and supervision of the employee, still if he ratifies
the wrongful acts, or take no steps to avert further dam-
age, he (the employer) would still be liable. (See Maxion
v. Manila Railroad Co., 44 Phil. 597).
(10) Penal Provisions in Case of Crimes

Art. 365, par. 3 of the Revised Penal Code simply means
that if there is only damage to property, the amount fixed
therein shall be imposed, but if there are also physical inju-
ries there should be an additional penalty for the latter. The
information cannot be split into two; one for physical injuries
and another for the damage to property, for both the inju-
ries, and the damage committed were caused by one single
act of the defendant and constituted what may be called a
complex crime of physical injuries and damage to property. It
is clear that the fine fixed by the law in this case is beyond
the jurisdiction of the municipal court and within that of the
Court of First Instance (now Regional Trial Court). (People v.
Villanueva, L-15014, Apr. 29, 1961).
(11) Failure of Doctor to Follow Medical Procedure Is a

Clear Indicia of Negligence
Erlinda Ramos v. Court of Appeals

GR 124354, Apr. 11, 2002
FACTS: Private respondents De Los Santos Medical
Center (DLSMC), Dr. Orlino Hosaka, and Dr. Perfecta Gutier-
rez –– were held civilly liable for petitioner Erlinda Ramos’
comatose condition after she delivered herself to them for
their professional care and management.
The Philippine College of Surgeon (PSC) filed its petition-
in-intervention contending in the main that the court erred
in holding private respondent Dr. Hosaka liable under the
1230
Captain-of-the-Ship doctrine. For the intervenor, said doctrine

had long been abandoned in the United States in recognition of
the developments in modern medical and hospital practice.
For his part, Dr. Hosaka mainly contends that the court
erred in finding him negligent as a surgeon by applying the
Captain-of-the-Ship doctrine. Dr. Hosaka argues that the
trend in U.S. jurisprudence has been to reject said doctrine in
light of developments in medical practice. He points out that
anesthesiology and surgery are two distinct and specialized
fields in medicine and as a surgeon, he is not deemed to have
control over the acts of Dr. Gutierrez. As anesthesiologist, Dr.
Gutierrez is a specialist in her field and has acquired skills
and knowledge in the course of her training which Dr. Hosaka,
as a surgeon, does not possess. He states further that current
American jurisprudence on the matter recognizes that the trend
towards specialization in medicine has created situations where
surgeons do not always have the right to control all personnel
within the operating room, especially a fellow specialist.
Dr. Gutierrez maintains that the court erred in finding
her negligent and in holding that it was the faulty intubation
which was the proximate cause of Erlinda’s comatose condi-
tion. The following objective facts allegedly negate a finding
of negligence on her part:
1. That the outcome of the procedure was a comatose
patient and not a dead one;
2. That the patient had a cardiac arrest; and
3. That the patient was revived from that cardiac ar-
rest.
In effect, Dr. Gutierrez, insists that, contrary to the
finding of the court, the intubation she performed on Erlinda
was successful. The instruments used in the administration
of anesthesia, including the endotracheal tube, were all under
the exclusive control of private respondents Dr. Gutierrez and
Dr. Hosaka.
Meanwhile, the hospital, DLSMC, argues that it can-
not be deemed liable for the resulting injury to petitioner
Erlinda. DLSMC contends that applying the four-fold test
in determining whether such a relationship exists between
1231
it and respondent doctors, it (DLSMC) cannot be considered

an employer of respondent doctors. The four-fold test in de-
termining whether an employer-employee relationship exists
between the parties are the following:
1. selection and engagement of services;
2. payment of wages;
3. power to hire and fire; and
4. power to control not only the end to be achieved,
but the means to be used in reaching such an end.
On the 1st test, DLSMC maintains that a hospital does
not hire or engage the services of a consultant, but rather,
accredits the latter and grants him or her the privilege of
maintaining a clinic and/or admitting patients in the hospi-
tal upon a showing by the consultant that he or she possess
the necessary qualifications, such as accreditation by the
appropriate board (diplomate), evidence of fellowship and
references.
On the 2nd test, it is not the hospital but the patient
who pays the consultant’s fee for services rendered by the
latter.
On the 3rd test, a hospital does not dismiss a consult-
ant; instead, the latter may lose his or her accreditation or
privileges granted by the hospital.
On the 4th and last test, DLSMC argues that when a
doctor refers a patient for admission in a hospital, it is the
doctor who prescribes the treatment to be given to said patient.
The hospital’s obligation is limited to providing the patient
with the preferred room accommodation, the nutritional diet
and medications prescribed by the doctor, the equipment and
facilities necessary for the patient’s treatment, as well as the
services of the hospital staff who perform the ministerial tasks
of ensuring that the doctor’s orders are carried out strictly.
Issues: (1) Whether or not Dr. Hosaka (surgeon) is liable
for negligence; (2) Whether or not Dr. Gutierrez (anesthe-
siologist) is liable for negligence; and (3) Whether or not the
hospital (DLSMC) is liable for any act of negligence committed
by their visiting consultant-surgeon and anesthesiologist.
1232
HELD: (1) That there is a trend in American jurispru-

dence to do away with the Captain-of-the-Ship doctrine does
not mean that the Supreme Court will ipso facto follow said
trend. Due regard for the peculiar factual circumstances
obtaining in this case justify the application of the Captain-
of-the-Ship doctrine. From the facts on record, it can be logi-
cally inferred that Dr. Hosaka exercised a certain degree of,
at the very least, supervision over the procedure then being
performed on Erlinda. Thus:
a. It was Dr. Hosaka who recommended to petitioner
the services of Dr. Gutierrez. In effect, he represented to peti-
tioner that Dr. Gutierrez possessed the necessary competence
and skills. Drs. Hosaka and Gutierrez had worked together
since 1977. Whenever Dr. Hosaka performed a surgery, he
would always engage the services of Dr. Gutierrrez to admin-
ister the anesthesia on his patient.
b. Dr. Hosaka himself admitted that he was the at-
tending physician of Erlinda. When Erlinda showed signs of
cyanosis, it was Dr. Hosaka who gave instructions to call for
another anesthesiologist and cardiologist to help resuscitate
Erlinda.
c. It is conceded that in performing their responsibili-
ties to the patient, Dr. Hosaka and Gutierrez worked as a
team. Their work cannot be placed in separate watertight com-
partments because their duties intersect with each other.
The duties of Dr. Hosaka and those of Dr. Gutierrez
in the treatment of petitioner Erlinda are, therefore, not a
clearcut as respondents claim them to be. On the contrary,
it is quite apparent that they have a common responsibility
to treat the patient, which responsibility necessitates that
they call each other’s attention to the condition of the patient
while the other physician is performing the necessary medical
procedures.
It is important to point out that Dr. Hosaka was remiss
in his duty of attending to petitioner Erlinda promptly, for
he arrived more than 3 hrs. late for the scheduled operation.
In reckless disregard for his patient’s well-being, Dr. Hosaka
scheduled two procedures on the same day, just 30 minutes
apart from each other, at different hospitals. When the first
1233
procedure (protoscopy) at the Sta. Teresita Hospital did not

proceed on time, Erlinda was kept in a state of uncertainty
at the DLSMC. The long period that Dr. Hosaka made Er-
linda wait for him cause anxiety that adversely affected the
administration of anesthesia on her. A patient’s anxiety usually
causes the outpouring of adrenaline which, in turn, results
in high blood pressure or disturbances in the heart rhythm.
Dr. Hosaka’s irresponsible conduct of arriving very late for
the scheduled operation of petitioner Erlinda is violative, not
only of his duty as a physician “to serve the interest of his
patients with the greatest solicitude, giving them always his
best talent and skill,” but also of Art. 19 of the Civil Code
which requires a person, in the performance of his duties, to
act with justice and give everyone his due.
(2) It was the faulty intubation on Erlinda that caused
her comatose condition. Ther is no question that Erlinda
became comatose after Dr. Gutierrez performed a medical
procedure on her. Even the counsel of Dr. Gutierrez admitted
to the fact during the oral arguments.
The cyanosis (bluish discoloration of the skin or mucous
membranes caused by lack of oxygen or abnormal hemoglobin
in the blood) and enlargement of the stomach of Erlinda indi-
cate that the endotracheal tube was improperly inserted into
the esophagus instead of the traches. Consequently, oxygen
was delivered not to the lungs but to the gastrointestinal
tract. This conclusion is supported by the fact that Erlinda
was placed in trendelenbarg position. This indicates that
there was a decrease of blood supply to the patient’s brain.
The brain was, thus, temporarily deprived of oxygen supply
causing Erlinda to go into coma.
The injury occurred by petitioner Erlinda does not nor-
mally happen absent any negligenve in the administration of
anesthesia and in the use of an endotracheal tube. In Voss v.
Bridweld (364 P2d 955 [1961]), the Kansas Supreme Court
applied the doctrine of res ipsa loquitur, reasoning that the
injury to the patient therein was one which does not ordinarily
take place in the absence of negligence in the administration
of an anesthetic, and in the use and employment of an en-
dotracheal tube. The court went to say: “Ordinarily, a person
being put under anesthesia is not rendered decerebrate as a
1234
consequence of administering such anesthesia in the absence

of negligence.”
(3) Respondent hospital’s position on this issue is meri-
torious. There is no employer-employee relationship between
DLSMC and Drs. Gutierrez and Hosaka which would hold
DLSMC solidarily liable for the injury suffered by petitioner
Erlinda under Art. 2180 of the Civil Code. Moreover, the
contract between the consultant in respondent hospital and
his patient is separate and distinct from the contract between
respondent hospital and said patient.
No evidence was adduced to show that the injury suf-
fered by petitioner Erlinda was due to failure on the part of
the respondent DLSMC to provide for hospital facilities and
staff necessary for her treatment.
Apropos to the award of damages to petitioner in view of the
supervening event of the former’s death, the amount represent-
ing actual (P1,325,000), moral and exemplary damages, attor-
ney’s fees, and costs of suit should be awarded to petitioner.
Art. 2181. Whoever pays for the damages caused by his

dependents or employees may recover from the latter what
he has paid or delivered in satisfaction of the claim.
COMMENT:
Right of Person (Who Pays) to Get Reimbursement

Reason for the Article: After all, the person who actually
caused the injury should be made to answer for his fault.
Sarkies Tours Phil. v.

Intermediate Appellate Court
GR 63723, Sep. 2, 1983
If as a result of an accident a tour operator and the owner

of the boat used for the tour are sued, the tour operator has
a right of action against the boat owner for reimbursement.
The principle embodied in Art. 2181 of the Civil Code may
be applied in favor of the tour operator.
1235
Arts. 2182-2184 CIVIL CODE OF THE PHILIPPINES
Art. 2182. If the minor or insane person causing damage

has no parents or guardian, the minor or insane person shall
be answerable with his own property in an action against
him where a guardian ad litem shall be appointed.
COMMENT:
When a Minor or an Insane Person Is Answerable With
His Own Property
The Article explains itself.
Art. 2183. The possessor of an animal or whoever may

make use of the same is responsible for the damage which it
may cause, although it may escape or be lost. This responsi-
bility shall cease only in case the damage should come from
force majeure or from the fault of the person who have suf-
fered damage.
COMMENT:
Damages Caused By Animals
Defenses:
(a) force majeure — as when the tooting of a car horn
frightens a horse, who thereby injures and kills a person.
(Derifas v. Escano, [C.A.] 40 O.G. [Supp. 12] 526).
(b) fault of the person injured
[NOTE: The law does not mention diligence of the
possessor of the animal as a defense.]
Art. 2184. In motor vehicle mishaps, the owner is soli-

darily liable with his driver, if the former, who was in the
vehicle, could have, by the use of due diligence, prevented
the misfortune. It is disputably presumed that a driver was
negligent, if he had been found guilty of reckless driving or
violating traffic regulations at least twice within the next
preceding two months.
If the owner was not in the motor vehicle, the provi-
sions of Article 2180 are applicable
1236
COMMENT:
(1) Liability of Owner of a Motor Vehicle

Note the difference in the owner’s responsibility when
he was in the vehicle, or was not. In a sense, the owner is
compelled to be an intelligent “back-seat driver.”
(2) Case
Marcial T. Caedo, et al. v.

Yu Khe Thai, et al.
L-20392, Dec. 18, 1968
FACTS: Marcial T. Caedo and the members of his family

were injured when their Mercury car was hit on Highway 54
by a Cadillac car owned by Yu Khe Thai, and driven by the
latter’s driver, Rafael Bernardo. According to the facts, the
accident was due to Bernardo’s trying to overtake a carretela
in front of the Cadillac. There was therefore no question about
Bernardo’s negligence. Now then, would the owner Yu Khe
Thai be held solidarily liable inasmuch as he was in the car
at the time of the collision? (It was proved that the driver
had been driving for over 20 years, and had no record of an
accident; at the time of the collision, he was driving at mod-
erate speed).
HELD: Under the facts given, the owner had no negli-
gence either in employing the driver, or in supervising the
driver at or before the time of the accident. Hence, he is not
liable at all, much less solidarily liable. It is true that under
Art. 2184 of the Civil Code, “In motor vehicle mishaps, the
owner is solidarily liable with his driver if the former, who
was in the vehicle, could have, by the use of due diligence,
prevented the misfortune. It is disputably presumed that a
driver was negligent, if he had been found guilty of reckless
driving or violating traffic regulations at least twice within
the preceding two months.”
The basis of the master’s liability in civil law is not
respondeat superior but rather, the relationship of pater fa-
milias. The theory is that ultimately the negligence of the
servant, if known to the master and susceptible of timely
1237
correction by him, reflects his own negligence if he fails to

correct it in order to prevent injury or damage. There is no
such negligence here as the imputed negligence is necessarily
subjective — depending invariably on the car-driving ability
of the master himself. As a matter of fact, many car own-
ers precisely hire drivers since the former for one reason or
another cannot drive their cars themselves. Hence, the care
or vigilance demanded of them cannot be uniform; each case
must stand on its own.
Art. 2185. Unless there is proof to the contrary, it is

presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap, he was violating any
traffic regulation.
COMMENT:
Presumption of Driver’s Negligence
The presumption arises if at the time of the mishap, he
was VIOLATING any traffic regulation.
Mikee v. IAC
GR 68102, Jul. 16, 1992
Under Art. 2185 of the Civil Code, a person driving a
vehicle is presumed negligent if at the time of the mishap,
he was violating any traffic regulation.
Art. 2186. Every owner of a motor vehicle shall file with

the proper government office a bond executed by a govern-
ment controlled corporation or office, to answer for damages
to third persons. The amount of the bond and other terms
shall be fixed by the competent public official.
COMMENT:
Duty of Owner of Motor Vehicle to File a Bond
(a) For the present, the “proper government office’’ would
seem to be the Land Transportation Commission (formerly
the Motor Vehicles’ Office).
1238
CIVIL CODE OF THE PHILIPPINES Arts. 2187-2189
(b) The GSIS may be called upon to take charge of the

“bonding.”
(c) One big problem is whether or not motor vehicle already
insured privately against third party liability (damages
to third persons) would still be covered by the Article.
Perhaps an amendment can better reveal the Congres-
sional intent.
Art. 2187. Manufacturers and processors of foodstuffs,

drinks, toilet articles and similar goods shall be liable for
death or injuries caused by any noxious or harmful sub-
stances used, although no contractual relation exists between
them and the consumers.
COMMENT:
Liability of Manufacturers
Note that liability exists even in the absence of contrac-
tual relations.
Art. 2188. There is prima facie presumption of negli-

gence on the part of the defendant if the death or injury
results from his possession of dangerous weapons or sub-
stances, such as firearms and poison, except when the pos-
session or use thereof is indispensable in his occupation
or business.
COMMENT:
Presumption of Negligence Because of the Possession

of Dangerous Weapons or Substances
Note the exception indicated in the law.
Art. 2189. Provinces, cities and municipalities shall be

liable for damages for the death of, or injuries suffered by
any person by reason of the defective condition of roads,
streets, bridges, public buildings, and other public works,
under their control or supervision.
1239
COMMENT:
Liability of Municipal Subdivisions Because of Defec-

tive Roads, Bridges, Etc.
(a) The liability is for the DEATH or INJURIES suffered by

a person (it would seem that damages to property would
not come under this Article).
(b) If a pedestrian falls into a manhole in a city street
(Manila), the Supreme Court has ruled that the City
Government would be liable under this Article despite
the fact that under the Revised Charter of Manila, the
City incurs no liability. While the Charter of Manila is
a special law insofar as territory is involved, still this
Article is a special provision insofar as defective condition
of streets, etc. is concerned. (City of Manila v. Genero N.
Teotico, L-23052, Jan. 29, 1968).
Guilatco v. City of Dagupan and CA

GR 61516, Mar. 21, 1989
The liability of public corporations for damages arising

from injuries suffered by pedestrians from the defective condi-
tion of roads extends to the fact that it is not even necessary
for such defective road or street to belong to the province,
city, or municipality for liability to attach. Art. 2189 only
requires that either control or supervision is exercised over
the defective road or street.
Art. 2190. The proprietor of a building or structure

is responsible for the damages resulting from its total or
partial collapse, if it should be due to the lack of necessary
repairs.
COMMENT:
Liability of Proprietor if a Building or Structure Col-

lapses
The Article is self-explanatory.
1240
Art. 2191. Proprietors shall also be responsible for

damages caused:
(1) By the explosion of machinery which has not been
taken care of with due diligence, and the inflammation of
explosive substances which have not been kept in a safe
and adequate place;
(2) By excessive smoke, which may be harmful to
persons or property;
(3) By the falling of trees situated at or near highways,
or lanes, if not caused by force majeure;
(4) By emanations from tubes, canals, sewers or de-
posits of infectious matter, constructed without precautions
suitable to the place.
COMMENT:
Other Liabilities of Proprietors of Buildings or Struc-

ture
(a) The Article enumerates four instances.
(b) Injunction is an available remedy here because the damage
may be irreparable. (See Bengzon v. Prov. of Pangasinan,
62 Phil. 816 and Ollendorf v. Abrahamson, 38 Phil. 585).
Austin Hardware Co., Inc. & All-Steel Products,

Inc. v. The Court of Appeals, et al.
L-41754, Feb. 27, 1976
FACTS: A hardware business and a factory for the

manufacture of steel products located at No. 115 L.K. San-
tos St., San Juan, Rizal, was ordered stopped by the Mayor,
pursuant to a municipal council resolution finding same to be
nuisances in a residential zone, causing both noise and air
pollution. May the permit for the same be validly revoked?
HELD: Yes. The power to license carries with it the
power to revoke it, either for cause or upon a change of policy
1241
and legislation. Moreover, the permit violated the existing

ordinances.
Art. 2192. If damages referred to in the two preceding

articles should be the result of any defect in the construc-
tion mentioned in Article 1723, the third person suffering
damages may proceed only against the engineer or architect
or contractor in accordance with said article, within the
period therein fixed.
COMMENT:
Rule if the Cause Is a Construction Defect

Art. 2193. The head of a family that lives in a build-

ing or a part thereof, is responsible for damages caused by
things thrown or falling from the same.
COMMENT:
Responsibility for Thrown or Fallen Things

The Article can apply to the lessee of a house who con-
verts same into a hotel. (See Dingcong v. Kanaan, 72 Phil.
14). Note the liability of the head of the family.
Art. 2194. The responsibility of two or more persons

who are liable for a quasi-delict is solidary.
COMMENT:
(1) Solidary Liability of Tort-Feasors

Although all those responsible for a quasi-delict are called
joint tortfeasors, their liability is SOLIDARY. (See Worcester
v. Ocampo, 22 Phil. 42).
1242
(2) Cases
Metro Manila Transit Corp. v. CA

42 SCAD 538
1993
Where the injury is due to the concurrent negligence of

the drivers of the colliding vehicles, the drivers and owners of
said vehicles shall be primarily, directly and solidarily liable
for damages and it is immaterial that one action is based on
quasi-delict and the other on culpa contractual.
Light Rail Transit Authority & Rodolfo

Roman v. Marjorie Navidad, Heirs of the
late Nicanor Navidad & Prudent
Security Agency
GR 145804, Feb. 6, 2003
ISSUE: Can a contractual obligation be breached by

tort?
HELD: Yes, and when the same act or omission causes
the injury, one resulting in culpa contractual and the other
culpa acquiliana, Art. 2194 can well apply. (Air France v.
Carrascoso, 124 Phil. 722).
In fine, a liability for tort may arise even under a con-
tract, where tort is that which breaches the contract. (PSBA
v. CA, 205 SCRA 729). Stated differently, when an act which
constitutes a breach of contract would have itself constituted
the source of a quasi-delict liability and no contract existed
between the parties, the contract can be said to have been
breached by tort, thereby allowing the rules on tort to apply.
(Cangco v. Manila Railroad, 38 Phil. 768 and Manila Railroad
v. Compania Transatlantica, 38 Phil. 875).
1243
TITLE XVIII
DAMAGES
(New, except Arts. 2200, 2201, 2209, and 2212.)
Introductory Comment:
The fundamental principle of the law on damages is that one
injured by a breach of a contract or by a wrongful or negligent act
or omission shall have a fair and just compensation, commensurate
with the loss sustained as a consequence of the defendant’s act.
Hence, actual pecuniary compensation is the general rule, whether
the action is based on a contract or in tort, except where the cir-
cumstances warrant the allowance of other kinds of damages. (See
Western Union Teleg Co. v. Green, 153 Tenn. 69). In general, the
damages awarded should be equal to, and precisely commensurate
with the injury sustained. However, rules of law respecting the
recovery of damages are framed with reference to just rights of
BOTH PARTIES, not merely what may be right for an injured
person to receive, but also what is just to compel the other party
to pay, to accord just compensation for the injury. (Kennings v.
Kline, 158 Ind. 602).
Zulueta v. Pan American World Airways, Inc.

43 SCRA 397
FACTS: Zulueta and his wife were passengers of a Pan

American airplane. At a stop-over, Zulueta was ill-treated and
was left at the airport. Is he entitled to recover damages?
HELD: Yes. Passengers should be treated by the employ-
ees of an airplane carrier with kindness and courtesy, and
should be protected against indignities, abuses, and injurious
language from such employees. In case of breach of contract,
the airline company should be held liable for damages. Be it
1244
noted further that the contract of common air carriage gener-

ates a relation attended with a public duty.
Air France v. CA and Morales

GR 76093, Mar. 21, 1989
Mere refusal to accede to the passenger’s wishes does

not necessarily translate into damages in the absence of bad
faith.
Tiu v. Court of Appeals

46 SCAD 408, 228 SCRA 51
1993
An adverse result of a suit in law does not mean that
the same is wrongful as to justify assessment of damages
against the actor.
1245
Chapter 1
GENERAL PROVISIONS
Art. 2195. The provisions of this Title shall be respectively

applicable to all obligations mentioned in Article 1157.
COMMENT:
Applicability to All Kinds of Legal Obligations
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punishable by law; and
(5) Quasi-delicts.
Art. 2196. The rules under this Title are without preju-
dice to special provisions on damages formulated elsewhere
in this Code. Compensation for workmen and other em-
ployees in case of death, injury or illness is regulated by
special laws. Rules governing damages laid down in other
laws shall be observed insofar as they are not in conflict
with this Code.
COMMENT:
(1) Special Provisions and Laws
It is to be observed that in case of conflict between the
Civil Code and the Special Laws, it is the Civil Code that
prevails insofar as damages are concerned — EXCEPT in the
case of compensation for workmen and other employees.
1246
(2) Indemnity in Workmen’s Compensation Cases
Milagros F. Vda. de Forteza v. Workmen’s

Compensation Commission and the Philippine
Charity Sweepstakes Office
L-21718, Jun. 29, 1968
FACTS: Amadeo R. Forteza worked as watchman in the

Philippine Charity Sweepstakes Office (PCSO) from Jul. 1,
1950 up to Jan. 17, 1955. He was more than 60 years old, and
was suffering from hypertension when he entered the service of
the office. On Jan. 17, 1955, he died of cerebral hemorrhage
due to said hypertension. It was proved that he had to work
at nighttime, was exposed to colds, lacked proper sleep and
rest, and had to go up and down a 3-story building (without
elevator) to check out the premises. Is his death compensa-
ble?
HELD: Yes, his death is compensable. It is the rule in
Workmen’s Compensation cases that it need not be proven
that his employment was the sole cause of the death or in-
jury suffered by the employee. It is enough — to entitle him
or his heirs to compensation benefits under the law — that
there be a showing that his employment (as in this case)
had contributed to the acceleration of his death or ailment.
Moreover, the law presumes that such death is compensable,
unless the employer clearly establishes that it was not caused
or aggravated by the employment. (See Niara v. Workmen’s
Compensation Commission, L-18066, Oct. 30, 1962).
Ysmael Maritime Corp. v. Avelino

GR 43674, Jun. 30, 1987
FACTS: RGL was a licensed second mate on board a
vessel owned by YMC when the same ran aground and sank.
RGL perished as a result. FL and CG, the parents of RGL,
sued YMC in the Court of First Instance (Regional Trial
Court) for damages. YMC invoked the rule in Robles v. Yap
Wing, 41 SCRA 267, that all claims for death or injuries by
employees against employers are exclusively cognizable by
the Workmen’s Compensation Commission (WCC) regardless
1247
of the causes of said death or injuries. CG admitted that he

had previously filed a claim for death benefits with the WCC
and had received the compensation payable to them under the
Workmen’s Compensation Act (WCA). The trial court denied
YMC’s motion to dismiss.
ISSUE: Is the compensation remedy under the WCA (now
under the Labor Code) for work-connected death or injuries
sustained by an employee exclusive of the other remedies
available under the Civil Code?
HELD: The rule in Robles v. Yap Wing no longer controls.
In Floresca v. Philex, 136 Phil. 141, involving a complaint
for damages for the death of five miners in a cave-in, the
Supreme Court was confronted with three divergent opinions
on the exclusivity rule.
One view is that the injured employee or his heirs, in
case of death, may initiate an action to recover damages (not
compensation under the Workmen’s Compensation Act) with
the regular courts on the basis of negligence of the employer
pursuant to the Civil Code. Another view, as enunciated in
the Robles case, is that the remedy of an employee for work-
connected injury or accident is exclusive in accordance with
Sec. 5 of the WCA. A third view is that the action is selec-
tive and the employee or his heirs have a choice of availing
themselves of the benefits under the Workmen’s Compensation
Act or of suing in the regular courts under the Civil Code
for higher damages from the employer by reason of his negli-
gence. But once the election has been exercised, the employee
or his heirs are no longer free to opt for the other remedy,
i.e., the employee cannot pursue both actions simultaneously.
The view was adopted by the majority in the Floresca case,
reiterating as main authority its earlier decision in Pacana v.
Cebu Autobus, 32 SCRA 442. In so doing, the Court rejected
the doctrine of exclusivity of the rights as remedies granted
by the WCA as laid down in the Robles case.
Claimants cannot be allowed to maintain their action
to recover additional damages against the employer if the
former had previously filed a claim for death benefits with
the WCC and had received the compensation payable to them
under the WCA. If they had not only opted to recover under
1248
the Act but they had also been duly paid, at the very least,
a sense of fair play would demand that if a person entitled
to a choice of remedies made a first election and accepted the
benefits thereof, he should no longer be allowed to exercise the
second option. If one had staked his fortunes on a particular
remedy, he is precluded from pursuing the alternate course,
at least until the prior claim is rejected by the WCC.
(3) Dismissal of Action
Enrique A. Defante v. Hon. Antonio

E. Rodriguez, et al.
L-28380, Feb. 27, 1976
If an action for damages is sought to be dismissed by
plaintiff-appellant or his heirs when the case is already on
appeal, may the dismissal be granted despite the appeal?
Yes, since the parties involved are no longer interested in
prosecuting the appeal.
Art. 2197. Damages may be:

(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
COMMENT:
(1) Damages Distinguished from Injury
Damages (from the Latin “damnum” or “demo” — to take
away) refers to the harm done and what may be recovered
(See Hale on Damages, 2nd Ed., p. 1); injury refers to the
wrongful or unlawful or tortious act. The former is the meas-
ure of recovery, the latter is the legal wrong to be redressed.
There may be damages without injury, and an injury without
damages. (15 Am. Jur., p. 388).
1249
(2) Damage Without Injury

There can be “damage without injury” (damnum absque
injuria) (or physical hurt or injury without legal wrong). The
principle was mentioned in, among other cases, De la Rama
Steamship Co., Inc. v. Judge Tan and the NDC (99 Phil.
1034). In that case, the government exercised a contractual
right to cancel an agency, although by such cancellation, the
agent would suffer damages.
Similarly, one who complies with a government-promul-
gated rule cannot be held liable for damages that may because
by other person. (Janda v. Lepanto Cons. Mining Co., L-6930,
May 25, 1956).
(3) Some Rules on Waiver

(a) Although the right to recover civil liability whether aris-
ing from an offense or otherwise is waivable, still, where
the waiver thereof was made in behalf of the minor heirs
by a person who is not their judicial guardian, such
waiver is ineffective if it lacks judicial approval. (People
v. Verano, L-15805, Feb. 28, 1961).
(b) Waiver of the right to recover upon the civil liability
of an accused employee arising from a crime, made in
favor of his employer, embraces also the civil liability of
the accused himself, since the law makes his employer
subsidiarily liable for the civil obligation and in default
of the person criminally liable, responsible for the civil
liability. (Ibid.). (QUERY: Should extinction of the sub-
sidiary obligation result also in extinction of the principal
obligation?)
(4) Liability of Fiscal (now Prosecutor)
Lim v. De Leon
L-22554, Aug. 29, 1975
A Fiscal (now Prosecutor) who orders the seizure of prop-
erty alleged to be involved in the crime of robbery without
a search warrant is liable (except in the case of a citizen’s
1250
arrest) for actual damages (including attorney’s fees), moral

damages, and exemplary damages. There is nothing in the
law (RA 732) which gives to provincial fiscals the power to
issue warrants, much less to order the seizure without war-
rant, of personal property alleged to be the corpus delicti of
a crime.
(5) Damages in Voidable Contracts
Development Bank of the Phil.

v. Court of Appeals
L-28774, Feb. 28, 1980, 96 SCRA 342
A person not obliged principally or subsidiarily in a con-

tract may nevertheless ask for its annulment (with damages
in the proper cases) if he is prejudiced in his rights regarding
one of the contracting parties. (See Banez v. Court of Appeals,
L-30351, Sep. 11, 1974, 59 SCRA 16, 21).
Art. 2198. The principles of the general law on damages

are hereby adopted insofar as they are not inconsistent
with this Code.
COMMENT:
Adoption of the Principles of the General Law on Dam-
ages
It is clear that in case of conflict, it is the Civil Code
that prevails.
1251
Chapter 2
ACTUAL OR COMPENSATORY DAMAGES
Art. 2199. Except as provided by law or by stipula-

tion, 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 compensa-
tory damages.
COMMENT:
(1) ‘Actual or Compensatory Damages’ Defined
Actual or compensatory damages are those recoverable
because of pecuniary loss (in business, trade, property, profes-
sion, job, or occupation). (Algarra v. Sandejas, 27 Phil. 284).
They include:
(a) the value of the loss suffered (daño emergente);
(b) profits which were not obtained or realized (lucro cesante).
(Art. 2199; 8 Manresa 100).
NOTE: Recovery cannot be had for the death of an
unborn (aborted) child. This is not to say that the parents
are not entitled to collect any damages at all. But all such
damages must be those inflicted directly upon them, as
distinguished from the injury or violation of the rights
of the deceased, his right to life, and physical integrity.
Because the parents cannot expect either help, support,
or service from an unborn child, they would normally be
limited to moral damages for the illegal arrest of the nor-
mal development of the spos hominis that was the foetus,
i.e., on account of distress and anguish attendant to its
loss, and the disappointment of their parental expecta-
tions (Art. 2217), as well as to exemplary damages, if the
circumstances should warrant them. (Art. 2230). (Geluz v.
Court of Appeals, et al., L-16439, Jul. 20, 1961).
1252
Bert Osmeña and Associates v. Court of Appeals

GR 56545, Jan. 28, 1983
Because of a breach of contract on the part of the sell-

ers, the buyers were not able to construct the house they
had intended to build (at a certain estimated cost). Can they
recover said cost from the delinquent party?
HELD: No, they are not entitled to be awarded said es-
timated costs because after all they did not lose this amount.
The amount was an expense, not expected income that had
been lost.
Radio Communications of the Philippines, Inc. v.

Court of Appeals
L-55194, Feb. 26, 1981
In transmitting a telegramic message, the RCPI er-

roneously transmitted “no truck available” instead of “truck
available,” causing damage to a freight company the Yabut
Freight Express. The RCPI was held liable:
(1) for both actual damages (damnum emergens) and compen-
satory damages (lucrum cessans or unrealized profit).
(2) for exemplary damages — because of the gross negligence
or wanton misconduct here.
(3) attorney’s fees and expenses of litigation (which may be
reduced if found unreasonable)
(4) temperate or moderate damages — for injury to one’s
business standing.
Ramos v. CA,
GR 124354, Apr. 11, 2002
The Court rules on actual or compensatory damages
generally assume that at the time of litigation, the injury
suffered as a consequence of an act of negligence, has
been completed and that the cost can be liquidated.
These provisions, however, neglect to take into ac-
count those situations, as in the case at bar, where the
resulting injury might be continuing and possible future
1253
complications directly arising from injury, while certain

to occur, are difficult to predict.
[NOTE: To be able to recover actual or compensa-
tory damages, the amount of loss must be proven with a
reasonable degree of certainty, based on competent proof
and on the best evidence obtainable by the injured party.
(MOF Co. v. Enriquez, GR 149280, May 9, 2002).]
(2) Necessity of Pleading

To be recoverable, actual damages must be pleaded or
prayed for. However, when a prayer mentions only exemplary
damages, moral damages, and attorney’s fees and “such further
relief... as this Honorable Court may deem just and equitable,”
the phrase “such further relief” may include “actual damages”
if and when they are proved. (Heirs of Justiva v. Court of
Appeals, L-16396, Jan. 31, 1963).
(3) Necessity of Proof

(a) Actual damages must be proved as a general rule (Tomassi
v. Villa-Abrille, L-7047, Aug. 21, 1958) and the amount of
damages must possess at least some degree of certainty.
(Chua Teck Hee v. Phil. Publishing Co., 34 Phil. 447).
[NOTE: It is not necessary to prove exactly how
much the loss is; it is enough that LOSS is proved; and if
the amount the court awards is fair and reasonable, this
will be allowed. (Tan Ti v. Alvear, 26 Phil. 506; Hicks v.
Manila Notel, 28 Phil. 235; Pedret v. Ponce Enrile, (C.A.)
53 O.G. 2809). In Republic v. Tayengco, et al., L-23766,
Apr. 27, 1967, it was held that in expropriation, the
owners of the lands involved can recover interest from
the date the expropriator takes possession of the parcels
concerned until payment or deposit in court is made.]
Inhelder Corporation v. Court of Appeals

GR 52358, May 30, 1983
Judges and Justices must be careful not to award

exorbitant damages. There must be balanced restraint
and measured objectivity.
1254
[NOTE: If there is NO proof of loss (Sanz v. Lavin

Brothers, 6 Phil. 299) or if the proof is flimsy and unsub-
stantial, no damages will be given (Heredia v. Salinas, 10
Phil. 157). The Court cannot rely on its own speculations
as to the fact and amount of damages, but must depend
on actual proof that damage had been suffered and actual
proof of the amount. (Suntay Tanjangco v. Jovellanos,
L-12332, Jun. 30, 1960). The Court in awarding dam-
ages, must point out specific acts which afford a basis
for measuring compensatory or actual damages had been
suffered. (Malonzo v. Galang, et al., L-13851, Jul. 27,
1960). However, if there was proof, but it is not clear or
satisfactory, the appellate court may remand the case to
the lower court for new trial. (Brodeck v. Larsen, 8 Phil.
425; Roroqui v. Maiquez, et al., {C.A.} 37 O.G. 1191). In no
instance may the judge give more than the damages proved
in court. (Marker v. Garcia, 5 Phil. 557). Just because the
complaint filed by the plaintiffs against the defendant is
“clearly unfounded,” this does not necessarily mean, in
the absence of specific facts proving damages, that said
defendants really suffered actual damages over and above
attorney’s fees and costs. A mere relief by the Court that
the sum of P500 must have been what they had actually
suffered clearly should not be countenanced. (Malonzo v.
Galang, et al., L-13851, Jul. 27, 1960). Similarly, an alleged
but unproved claim of damages in the amount of P10,000
simply because a party had been made a defendant in an
unfounded “easement” case cannot be allowed. Indeed, the
Court cannot rely on its own speculations as to the fact
and amount of damages alleged to have been suffered.
(Tanjangco v. Jovellanos, et al., L-12332, Jun. 30, 1960;
see Basilan Lumber Co. v. Cagayan Timber Export Co., et
al., L-15908, Jun. 30, 1961).]
[NOTE: If there be an award for compensatory
damages, there can be no grant of nominal damages.
The reason is that the purpose of nominal damages is
to vindicate or recognize a right that has been violated,
in order to preclude further cost thereon, and “not for
the purpose of indemnifying the plaintiff for any loss
suffered by him.” (Medina, et al. v. Cresencia, et al.,
L-8194, Jul. 11, 1956).]
1255
[NOTE: The damages given must be based on the

evidence given and not on the personal knowledge of the
court. (Villaroman v. Lastrella, [C.A.] L-136-R, Feb. 11,
1947 and Romualdez v. Ysmael and Co., [C.A] 53 O.G.
8858). Neither must the damages be remote or specula-
tion (Tomassi v. Villa Abrille, L-7047, Aug. 21, 1958 and
Standard Oil Co. v. Castro, 54 Phil. 716), nor must the
claim be delayed unreasonably. (Strong v. INAEC, 40 O.G.
[18th, S] p. 269). In Kairuz v. Pacio and Pacio (L-14506,
Jul. 25, 1960), it was held that a person who unjustifiably
withholds from another the latter’s motor engine used for
the hauling of logs should not be held liable for speculative
and contingent damages (in the form of possible rentals).
Instead, the withholder must be held responsible for its
return (or payment of its value) plus legal interest ther-
eon from the date of demand. In the case of Ventanilla
v. Centeno, L-14333, Jan. 28, 1961, the Supreme Court
held that even if an attorney fails to perfect an appeal in
a civil case from an adverse judgment in a lower court,
he should not be held liable for the “damages that could
have been recovered” since these damages are highly
speculative. In Rizal Surety and Insurance Co., Inc. v.
MRR Co., L-22409, Apr. 27, 1967, the Court ruled that
a provisional claim filed by a consignee BEFORE knowl-
edge of any actual shortage or damage with respect to
cargo consigned to her is a speculative claim. In Delfin
v. Court of Agrarian Relations, L-23348, Mar. 14, 1967,
the Court decreed that damages, such as those awarded
to an illegally dispossessed tenant, should not be given
the basis of guesswork or speculation.]
(b) In the following cases, actual damages need NOT be
proved:
1) In case liquidated damages had been previously
agreed upon. (Art. 2216).
2) In case of damages other than actual. (Art. 2216).
3) In case loss is presumed as when a child (minor) or a
spouse dies. (Manzanares v. Moreta, 38 Phil. 821).
4) In case of forfeiture of bonds in favor of the govern-
ment for the purpose of promoting public interest
1256
or policy (like a bond for the temporary stay of an

alien). (Far Eastern Surety & Ins. Co. v. Court of
Appeals, L-12019, Oct. 16, 1958).
Radio Communications of the Philippines,

Inc. (RCPI) v. Lantin
L-59311, Jan. 31, 1985
If because of a breach in a lease contract, there
is an award of compensatory damages, this award
may be ordered executed pending appeal, but not an
award for moral or exemplary damages. The award
for moral or exemplary damages cannot be regarded
as fixed or definite until there is a final judgment.
Otherwise stated, their grant is dependent on the
outcome of the main case.
Art. 2200. Indemnification for damages shall comprehend

not only the value of the loss suffered, but also that of the
profits which the obligee failed to obtain.
COMMENT:
(1) Two Kinds of Actual Damages
There are two kinds of actual or compensatory damages:
(a) losses suffered (damno vitando or daño emergente)
(b) unrealized profits (lucro captando or lucro cesante or
lucrum cessans). (Angeles v. Lerma, [C.A.] 45 O.G. No. 6,
p. 2589).
[NOTE that “lucrum cessan” is also a basis for indem-
nification. Hence, if there exists a basis for a reasonable ex-
pectation that profits would have continued had there been
no breach of contract, indemnification for damages based
on such expected profits is proper. (General Enterprises v.
Lianga Bay Logging Co., L-18487, Aug. 31, 1964).]
St. Louis Realty Corporation v. Court of Appeals

L-46061, Nov. 14, 1984
If a person’s house is used as advertising material
without the consent of the owner, and without apologizing
1257
to him, he is entitled to an award of actual and moral

damages.
BA Finance Corp. v. CA
GR 61464, May 28, 1988
The court cannot sustain the award of unrealized
profits if the same have not been proved or justified before
the trial court, and the basis of the alleged unearned
profits is too speculative and conjectural to show actual
damages for a future period.
Batong Buhay Gold Mines, Inc. v. CA

GR 45048, Jan. 7, 1987
Damages by way of unrealized profits (lucro cesante)
may not be awarded in the absence of supporting evidence
or merely on the basis of pure assumption, speculation or
conjecture. Speculative damages cannot be recovered.
Aguilar v. Chan
GR 28688, Oct. 9, 1986
Where the actual damages suffered by plaintiff
exceeded the amount awarded her by the lower court,
but plaintiff did not appeal, the appellate court cannot
award her more than the amount awarded by the lower
court.
(2) Examples of Daño Emergente

(a) destruction of things. (19 Scaevola 557).
(b) fines or penalties that had to be paid. (19 Scaevola
557).
(c) medical and hospitalization expenses. (See Araneta, et
al. v. Arreglado, et al., 104 Phil. 529).
[NOTE: If the injured party claims actual damages
because a jaw injury prevented him from going to school
for one year, will not be given said damages because
damages due to a lost school year and the resulting re-
duction in the victim’s earning capacity are manifestly
1258
speculative, and may not exist at all. (Araneta, et al. v.

Arreglado, et al., 104 Phil. 529). In one case, however,
where the victim’s mental capacity was so reduced that
according to a psychiatrist, he could no longer finish his
studies as a medical student; had become a misfit for
any kind of work; and unable to walk around without
someone helping him, compensatory damages amount-
ing to P25,000 were awarded by the Court. (Carriaga,
et al. v. Laguna-Tayabas Bus Co., et al., L-11037, Dec.
29, 1960).]
(d) rents and agricultural products not received in an agri-
cultural lease. (J.M. Tuason, Inc. v. Santiago, et al.,
L-5079, Jul. 31, 1956).
(3) Examples of Lucro Cesante

(a) profits that could have been earned had there been
no interruption in the plaintiff’s business as evidenced
by the reduced receipts of the enterprise. (See Algarra
v. Sandejas, 27 Phil. 284; Tan Ti v. Alvear, 26 Phil.
566).
(b) profits because of a proposed future re-sale of the property
being purchased — if the existence of a contract there
was known to the delinquent seller. (See Enriquez de la
Cavoda v. Diaz, 37 Phil. 982).
(c) interest on rentals that were not paid. (Here, the interest
undeniably forms profits which could have been realized
had the rents been given.) (See J.M. Tuason, Inc. v.
Santiago, et al., L-5079, Jul. 31, 1956).
Art. 2201. In contracts and quasi-contracts, the damages

for which the obligor who acted in good faith is liable shall
be those that are the natural and probable consequences
of the breach of the obligation, and which the parties have
foreseen or could have reasonably foreseen at the time the
obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude,
the obligor shall be responsible for all damages which may
be reasonably attributed to the non-performance of the
obligation.
1259
COMMENT:
(1) Liability of Debtor in Contracts and Quasi-Contracts
(a) if in GOOD FAITH ––
It is essential that the damages be:
1) the NATURAL and PROBABLE consequences of
the breach of the obligation;
2) those which the parties FORESAW or COULD
HAVE REASONABLY FORESEEN at the time the
obligation was constituted.
(b) if in BAD FAITH
It is ENOUGH that the damages may be REA-
SONABLY ATTRIBUTED to the non-performance of the
obligation. (Relation of cause and effect is enough.)
[NOTE: There is no necessity of the damage be-
ing a natural or probable consequence, and there is no
necessity of foreseeing or foreseeability. (See 8 Manresa
103-104).]
[NOTE: The fundamental difference between the
first paragraph and the second paragraph in Art. 2201
is this: in the first, there was mere carelessness; in the
second, there was deliberate or wanton wrongdoing
(Verzesa v. Baytan, et al., L-14092, Apr. 29, 1960). Mere
carelessness or negligence of a bus driver in a collision
with a train would make his liability fall under the first
paragraph. (Carriaga, et al. v. Laguna, Tayabas Bus Co.,
et al., L-11037, Dec. 29, 1960).]
(2) Examples of Reasonably Foreseen or Foreseeable Dam-

ages in Contracts
(a) ORDINARY DAMAGES (generally inherent in a breach
of typical contract)
1) Value of the use of the land if same is withheld,
computed for the duration of the withholding. (Day-
walt v. Corporacion de P.P. Agustinos Recoletos, 39
Phil. 587).
1260
2) Difference in the value of goods at the time of

stipulated delivery and the time of actual delivery
(common carriers). (Uy Chaco v. Admiral Line, 46
Phil. 418).
3) Cost of completing or repairing a defective build-
ing (in the case of building contracts). (Marker v.
Garcia, 5 Phil. 551).
4) The income which an injured bus passenger could
have earned (had he finished his medical course
and passed the corresponding board examinations)
must be deemed within the category of “natural
and probable consequences which parties should
have foreseen by the parties at the moment said
passenger boarded the bus. (Carriaga, et al. v. La-
guna, Tayabas Bus. Co., et al., L-111037, Dec. 29,
1960).
5) Salary for the entire period agreed upon in an em-
ployment contract in case the employer breaks it
without just cause MINUS income actually earned
or could have been earned during the unexpired
period. (Lemoine v. Alkan, 33 Phil. 162; see Sotelo v.
Behn, Meyer & Co., 57 Phil. 775; Berbari v. General
Oil Co., 43 Phil. 414 and Logan v. Phil. Acetylene
Co., 33 Phil. 177).
[NOTE: The breach is generally indivisible,
and therefore action may be brought AT ONCE for
both present and future salaries, without waiting for
the stipulated end of the contract. Failure to sue for
all damages by suing only for the damages already
accrued will BAR future suits on the same point.
(Hicks v. Manila Hotel, 78 Phil. 325 and Garcia v.
Hotel de Francia, 42 Phil. 660).]
[NOTE: The employer has the duty to prove
the earnings made or which could have been earned
during the unexpired period. (Hicks v. Manila Hotel,
supra; Garcia v. Hotel de Francia, supra).]
(b) SPECIAL DAMAGES (Those which exist because of
special circumstances and for which a debtor in GOOD
1261
FAITH can be held liable only if he had been previously

informed of such circumstances.)
Example: If a carrier fails to deliver a movie film
intended for showing at a fiesta, it cannot be held liable
for the extraordinary profits realizable at a fiesta showing,
if it had not been told that the film had to be delivered
in time for said fiesta. (Mendoza v. PAL, 90 Phil. 836).
[NOTE: If a debtor is in BAD faith, special damages
can be assessed against him even if he had NO knowl-
edge of the special circumstances. It is enough that the
damage be reasonably attributed to the non-performance
of obligation. (8 Manresa 103).]
Art. 2202. In crimes and quasi-delicts, the defendant

shall be liable for all damages which are the natural
and probable consequences of the act or omission com-
plained of. It is not necessary that such damages have
been foreseen or could have reasonably been foreseen
by the defendant.
COMMENT:
(1) Damages in Crimes and Quasi-Delicts
(a) Note here that as distinguished from the rule in the
preceding article, it “is not necessary that such dam-
ages have been foreseen or could have reasonably been
foreseen by the defendant.”
(b) The Article applies to CRIMES and QUASI-DELICTS.
Maranan v. Perez
L-22272, Jun. 26, 1967
If a taxi driver should kill his passenger, the civil

liability of the offender is based on his having commit-
ted a crime. On the basis of contracts, it is the taxicab
owner-operator who should be held liable for damages,
not the driver-killer, for said driver is not a party to the
contract of carriage.
1262
People v. Salig
L-53568, Oct. 31, 1984
During their appeal in a criminal case where they

were convicted, one of the accused died. The estate of
the person who died, can be held solidarily liable with
others in case of a final judgment of conviction. [NOTE:
Justice Serafin Cuevas dissents because under Art. 89
of the Revised Penal Code, the pecuniary liability of the
deceased was extinguished because of his death before
final judgment.]
(2) What Victim Must Prove in a Tort or Quasi-Delict

Suit
In a tort action the alleged victim must prove:
(a) a causal connection between the tort and the injury;
(b) the amount and extent of the injury.
(3) Unfair Competition

If unfair competition deprives the victims of certain prof-
its, the person liable must respond if the two things stated
above are proved. Liability may, however, be reduced if loss
was suffered by the plaintiff not only because of the unfair
competition but also because of his fault, e.g., inferior quality
or service. (Castro, et al. v. Ice and Cold Storage Industries,
et al., L-10147, Dec. 27, 1958).
(4) Concealment of an Existing Marriage

Concealment of an existing marriage from a girl whom
a man intends to seduce can make a man liable for damages.
Thus, if on account of his concealment, the woman lives with
him and bears a child, and relinquishes her employment to
attend to a litigation filed to obtain support for her child
— he must be held liable for all the consequent damages. This
concealment of the marriage in fact is NOT mere negligence,
but actual fraud (dolo) practiced upon the girl. While the
liability may be considered extra-contractual in nature, still
under the old Civil Code as well as, it is believed, the new
Civil Code, said liability is equivalent to that of a contractual
1263
debtor in bad faith. (Silva, et al. v. Peralta, et al., L-13114,

Aug. 29, 1961). Should the man be also held liable for moral
damages? YES. It is true that no moral damages are gener-
ally allowable as a consequence of sexual relations outside of
wedlock, but in the instant case it appears that after the girl
had filed the action for support the man avoided the service
of summons and then exercised improper pressure upon her to
make her withdraw the suit. When she refused, the man and
his lawful wife even filed an action against her, thus calling
to her employer’s attention the fact that she was an unwed
mother. These are deliberate maneuvers causing her anguish
and physical suffering in which she got sick as a result. As this
injury was inflicted after the new Civil Code became operative,
it constitutes a justification for the award of moral damages.
(Ledesma Silva, et al. v. Peralta, L-13114, Aug. 29, 1961).
Budiong v. Judge Apalisok

GR 60151, Jun. 24, 1983
Even if there is no specific allegation of damages in the
complaint or information, civil liability may still be claimed
in the criminal case.
Brinas v. People
GR 50309, Nov. 25, 1983
Even if a separate civil case is brought because of an
accident, the Court in the criminal case can still impose civil
liability (arising from the commission of a crime). In the civil
case, if it is the employer who is sued, it will be an obliga-
tion arising from culpa contractual (not one arising from the
commission of the criminal act).
People v. Castañeda
GR 49781, Jun. 24, 1983
If the accused in a criminal case is acquitted on reasonable
doubt, a civil action for damages may still be instituted.
Art. 2203. The party suffering loss or injury must exer-

cise the diligence of a good father of a family to minimize the
damages resulting from the act or omission in question.
1264
COMMENT:
(1) Victim Must Minimize the Damage
Prudent men must minimize the damage done to them
by others. Thus, one prevented from entering a particular
hacienda must complain to the proper officials in time. (Del
Castelvi v. Compania Gen. de Tabacos, 49 Phil. 998). One
ousted from a job must try to seek other employment. (Lem-
oine v. Alkan, 33 Phil. 162).
(2) Burden of Proof

The person sued has the burden of proving that the
victim could have mitigated the damage. (Lemoine v. Alkan,
supra).
(3) Plastic Surgery Which Could Have Been Performed in

the Philippines
A victim cannot recover the cost of plastic surgery in
the United States if it is proved that the operation could
have been completely performed in the Philippines by local
practitioners. (Araneta, et al. v. Arreglado, et al., 104 Phil.
529).
(4) Case
Abelardo Lim & Esmadito Gumalan v.

CA & Donato H. Gonzales
GR 125817, Jan. 16, 2002
FACTS: Private respondent left his passenger jeepney
by the roadside at the mercy of the elements.
HELD: Art. 2203 exhorts parties suffering from loss or
injury to exercise the diligence of a good father of a family
to minimize the damages resulting from the act or omission
in question. One who is injured then by the wrongful or
negligent act of another should exercise reasonable care and
diligence to minimize the resulting damage. Anyway, he can
recover from the wrong doer’s money lost in reasonable efforts
to preserve the property injured and for injuries incurred in
attempting to prevent damages to it.
1265
Art. 2204. In crimes, the damages to be adjudicated

may be respectively increased or lessened according to the
aggravating or mitigating circumstances.
COMMENT:
Effect of Aggravating or Mitigating Circumstances
Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases
of temporary or permanent personal injury;
(2) For injury to the plaintiff’s business standing or
commercial credit.
COMMENT:
Damages to Earning Capacity and to Business
(a) The Article is self-explanatory.
(b) Lameness is a permanent personal injury. (Marcelo v.
Veloso, 11 Phil. 287). If a dancer’s leg is amputated, it is
clear that recovery is proper. (Julio v. Manila Railroad
Co., 58 Phil. 176).
Consolidated Plywood Industries, Inc. & Henry

Lee v. CA, Willie Kho & Alfred C.H. Kho
GR 101706, Sep. 23, 1992
While it is the Court’s belief that petitioner is entitled

to an award for moral damages, the award granted by
the trial court in the amount of P200,000 is excessive.
It should be stated here that the hauling agreement
between the petitioners and the private respondent had
no fixed date of termination; it was a verbal agreement
where the private respondents bound themselves until
the loan with Equitable Bank in the personal account of
petitioners had been fully paid. There was substantial
compliance by the private respondents of their obliga-
tions in the contract for about a year. The record showed
1266
that the remaining balance owing to the bank was only

P30,000 which was not due until one year and 6 months
after the breach by the private respondents, or on Sep.
4, 1980. However, the trial court found that private re-
spondents acted with bad faith when it surreptitiously
pulled out their hauler trucks from petitioner’s jobsite
before the termination of the contract.
The trial court held that the act of defendants in
suddenly and surreptitiously withdrawing its hauler
trucks from the jobsite and abandoning its obligation of
hauling the logs is indubitably a wanton violation of its
obligation, under the contract, a neglect to perform its
obligation in bad faith more particularly in its stipulation
to liquidate the cash advance obtained from Equitable
Bank, for the law would not permit said defendants to
enrich themselves at the expense of the plaintiffs. Thus,
an award of P50,000 for moral damages is sufficient.
Francisco, et al. v.
Ferrer, Jr., et al.
GR 142029, Feb. 28, 2001
FACTS: A couple engaged to be married had ordered

a 3-layered cake from a bakeshop to be delivered at 5
p.m. of the wedding day itself. On the wedding day, the
now newly-married couple arrived at the country club
(venue-reception of the wedding) at around 6 p.m., but
the wedding cake was nowhere to be found. At 10 p.m.,
the wedding cake finally arrived, but by then rejected
because of the lateness of the hour. One other reason
for its rejection: what arrived was only a 2-layered cake
and not a 3-layered one as originally agreed upon. The
bakeshop owner was sued for breach of contract, with
the complaints alleging personal embarrassments, mental
anguish, serious anxiety, and sleepless nights. Issue: To
recover moral damages, is it enough that one suffered
sleepless nights, mental anguish, serious anxiety, social
embarrassment, or besmirched reputation?
HELD: No. To recover moral damages, it must be
proven that the guilty party acted in bad faith. In the
1267
instant case, no such bad faith existed. The bakeshop

owner was quick to apologize and offered to repair what-
ever damage was done. Note that the bakeshop owner
sent a letter of apology accompanied by a P5,000 check
for the harm done, but which was unacceptable to the
couple who considered the amount offered as inadequate.
Nevertheless, while not liable for moral damages, the
bakeshop owner must pay nominal damages in the
amount of P10,000 for prevarication when confronted
with failure to deliver the cake on time, this, in addition
to paying the cost of the cake in the sum of P3,175 and
attorney’s fees of P10,000.
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 circum-
stances. In addition:
(1) The defendant shall be liable for the loss of the earn-
ing 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 accord-
ing 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.
COMMENT:
(1) Damages for Death — Reason for Awarding Damages

(a) “Human life has heretofore been very cheap, in law and
the practice thereunder. Before the passage of Common-
1268
wealth Act 284, in Jun. 1938, the practice was to allow

P1,000 to the heirs of the deceased in case of death
caused by a crime. Later, by virtue of that special law,
a minimum of P2,000 was fixed, but the courts usually
award only the minimum, without taking the trouble
to inquire into the earning capacity of the victim, and
regardless of aggravating circumstances.” (Report of the
Code Com., p. 34).
(b) Note that under Art. 2206, the minimum to be given is
P3,000, but this does not mean that the court should
stop after awarding that amount, because the life of a
captain of industry, scientist, inventor, a great writer
or statesman, is materially more valuable to the family
and community than that of an ordinary man. Moreo-
ver, exemplary damages may be justified by aggravating
circumstances. The earning capacity of the deceased, his
obligation to support dependents, and the moral damages
suffered by his kin must also be considered. (Report of
the Code Com., p. 35). It is clear from Art. 2206 that
P3,000 is the minimum award. Hence, a greater sum
can be given. (Nita Lira v. Gonzalo Mercado, et al. and
Gonzalo Mercado, et al. v. Ramon Ura, et al., L-13358,
L-13328, L-13329, Sept. 29, 1961).
(c) In fact in many decisions, the appellate courts awarded
P6,000, then P12,000, and now, P50,000, as damages.
The Court gave as its reason the great rise in prices and
declining purchasing power of the peso. Independently
of its financial capacity, a common carrier, if liable for
the death of a passenger or of a pedestrian, must be
made to pay the minimum amount. But if its financial
capacity enables it to pay more, said greater sum should
be given. It is here where financial capacity is material
and significant.
(d) Cases
Mckee, et al. v. IAC, et al.

GR 68102, Jul. 16, 1992
In light of recent decisions of the Supreme Court,

the indemnity for death is now P50,000.
1269
(2) Factors Which May Be Considered in Determining the

Amount
(a) life expectancy (considering the state of health and
habit of the deceased; mortality tables are inconclusive
evidence) and consequent loss of earning capacity.
Monzon, et al. v. IAC and Theo H.

Davies and Co., Far East Ltd.
GR 72828, Jan. 31, 1989
Life expectancy fluctuates with several factors but it
is for that very reason that a generally accepted formula
has been established by this Court in a long line of cases.
It would be most unfair and illogical for a court to
reduce the compensation due for the loss of the earning
capacity of a deceased by discarding the well-established
formula by taking a pessimistic and depressed view of
every situation instead of an average standard. For as a
man grows older, and gains more experience, his income
generally increases, with each passing year.
Smith Bell Dodwell Shipping Agency Corp. v.

Catalino Borja and International Towage
& Transport Corp.
GR 143008, Jun. 10, 2002
FACTS: Petitioner contends that respondent Borja
died nine years after the incident and, hence, his life
expectancy of 80 years should yield to the reality that
he was only 59 when he actually died.
ISSUE: Is this contention correct?
HELD: No. The Court uses the American Experi-
ence/Expectancy Table of Morality or the Actuarial Com-
bined Experience Table of Mortality, which consistently
pegs the life span of the average Filipino at 80 years,
from which it extrapolates the estimated income to be
earned by the deceased had he not been killed. (People
v. Villanueva, 302 SCRA 380 [1999]).
The owner or the person in possession and control of
a vessel is liable for all natural and proximate damages
1270
caused to persons and property by reason of negligence

in its management or navigation. Negligence is conducted
that creates undue risk of harm to another. It is failure
to observe that degree of care, precaution, and vigilance
that circumstances justly demand — whereby that other
person suffers injury. (Jarco Marketing Corp. v. CA,
321 SCRA 375 [1999]; Bulitan v. COA, 300 SCRA 445
[1998]; and Valenzuela v. CA, 253 SCRA 303 [1996]).
Petitioner’s vessel was carrying chemical cargo — alkyl
benzene and methyl methacrylate monomer. While know-
ing that their vessel was carrying dangerous inflammable
chemicals, its officers and crew failed to take all the
necessary precautions to prevent an accident. Petitioner
was, therefore, negligent and held liable for damages and
loss of respondent Borja’s income.
As a result of the fire and the explosions during
the unloading of the chemicals from petitioner’s vessel,
respondent Borja suffered damages and injuries, thus:
1. chemical burns of the face and arms;
2. inhalation of fumes from burning chemicals;
3. exposure to the elements while floating in sea water
for about 3 hours;
4. homonymous hemianopsia or blurring of the right
eye which was of possible toxic origin; and
5. cerebral infract with neo-vascularization, left oc-
cipital region with right sided headache and the
blurring of vision of right eye.
Respondent Borja’s demise earlier than the estimated
life span is of no moment. For purposes of determining
loss of earning capacity, life expectancy remains at 80.
Otherwise, the computation of loss of earning capacity
will never become final, being always subject to the
eventuality of the victim’s death. The computation should
not change even if Borja lived beyond 80 years. Fair is
fair.
(b) pecuniary loss, loss of support and service.
1271
(c) moral and mental suffering. (Alcantara, et al. v. Surro,

et al., 93 Phil. 472).
[NOTE: The minimum award (actual) for the debt of
a person does NOT cover the case of an unborn foetus, be-
cause it is NOT endowed with juridical personality. (Geluz
v. C.A. and Lazo, L-16439, Jul. 20, 1961). However, under
certain circumstances, moral damages may be awarded.]
Villa-Rey Transit v. Bello

L-18957, Apr. 23, 1963
FACTS: The Villa-Rey Transit, Inc. committed a
breach of contract when it failed to comply with its ob-
ligation of bringing safely the passenger, Felipe Tejada,
to his place of destination. Issue: How much damages
may Tejada’s heirs recover?
HELD: Had not Tejada met this fatal accident on
Jul. 17, 1961, he would have continued to serve in the
government for some 27 years until his retirement with
a compensation of P6,000. As consequential damages,
the heirs having been deprived of the earning capacity of
their husband and father, respectively, they are entitled
to P3,300 a year for at least 17 years the average life of a
Filipino being between 50 and 60 years (17 years because
he could have died at the age of 50 only). For failure of
the transportation company to exercise due diligence in
employing a careful and prudent driver, the amount of
P2,000 as exemplary damages is hereby awarded. And for
the agony, mental anguish and sorrow suffered by the heirs
because of the sudden death of Tejada and the mutilated
and gory condition of the body, the amount of P5,000 is
awarded as moral damages. (See Art. 2234; Velayo v. Shell
Co., 100 Phil. 187; Singson v. Aragon and Lerza, 92 Phil.
514; Estopa v. Piansay, L-14733, Sep. 30, 1962 and Yutuk
v. Manila Electric Co., L-13106, May 31, 1961).
Davila v. Phil. Air Lines

49 SCRA 497
At the age of 30, one’s normal life expectancy is
33-1/3 years more. This is the formula adopted by the
1272
Supreme Court in Villa-Rey Transit v. Court of Appeals,

31 SCRA 511, based on the American Expectancy Table
of mortality. Earning capacity under Art. 2206(1) means
gross earning LESS the necessary living expenses of the
deceased.
Budiong v. Judge Apalisok

GR 60161, Jun. 24, 1983
After the accused has pleaded guilty in a criminal

case, the judge must set the case for hearing so that
the offended party’s evidence on the civil liability may
be received. And this is true even if the accused has
already filed an application for probation.
Dangwa Transportation v. CA
GR 95582, Oct. 7, 1991
The amount recoverable by the heirs of a victim, a

tort is not the loss of the entire earnings, but rather the
loss of that portion of the earnings which the beneficiary
would have received. In other words, only net earnings,
not gross earnings, are to be considered, that is, the total
of the earnings less expenses necessary in the creation
of such earnings or income and minus living and other
incidental expenses.
The deductible living and other expenses of the
deceased may fairly and reasonably be fixed at P500 a
month or P6,000 a year. In adjudicating the actual or
compensatory damages, the appellate court found that
the deceased was 48 years old, in good health with a
remaining productive life expectancy of 12 years and
then earning P24,000 a year. Using the gross annual
income as the basis, and multiplying the same by 12
years, it accordingly awarded P288,000. Applying the
aforesaid rule on computation based on the net earnings,
said award must be rectified and reduced to P216,000.
However, in accordance with prevailing jurisprudence,
the death indemnity is hereby increased to P50,000.
1273
Metro Manila Transit Corp. (MMTC),

et al. v. CA & Spouses Rodolfo V. Rosales
and Lily R. Rosales
GR 116617, Nov. 16, 1998
FACTS: Pedro Musa, a bus driver of MMTC, was
found guilty by the trial court of reckless imprudence
resulting in homicide for the death of Liza Rosalie Ro-
sales. Liza Rosalie’s parents filed an independent civil
action for damages against MMTC, Musa, MMTC Actg.,
Gen. Mgr. Conrado Tolentino, the GSIS, and Felicinao
Celebrado, an MMTC dispatcher. The trial court found
MMTC and Musa guilty of negligence and ordered them
to pay damages and attorney’s fees. The Court of Appeals
(CA) affirmed the trial court’s decision, but deleted the
award of actual damages and awarded instead death
indemnity. On appeal, the Supreme Court set aside the
CA’s decision.
HELD: Both MMTC and Musa, respectively, are
liable for negligence for the death of Liza Rosalie. The
responsibility of employers for the negligence of their
employees is primary, i.e., the injured party may recover
from the employers directly, regardless of the solvency of
their employees. Employees may be relieved of respon-
sibility for the negligent act of their employees within
the scope of their assigned tasks only if they can show
that they observed all the diligence of a good father of
a family to prevent damage. For this purpose, they have
the burden of proving that they have indeed exercised
such diligence, both in the selection of employee who
committed the quasi-delict and in the supervision of the
performance of his duties.
In addition to the death indemnity, the heirs of
Liza Rosalie are awarded moral damages, exemplary
damages, attorney’s fees, and compensation for loss of
earning capacity. Compensation for loss of earning capacity
was awarded because Liza Rosalie’s parents had adduced
proof that the victim was a good student, a promising
artist, and an obedient child. Such form of damages,
computed in accordance with the formula laid down in
decided cases, may use as basis for the victim’s projected
1274
gross annual income the minimum wage for workers in

the non-agricultural sector at the time of her death.
(3) Moral Damages

(a) If the victim dies because of a CRIME, QUASI-DELICT
(Art. 2206), or BREACH OF CONTRACT BY COMMON
CARRIER (Art. 1764 read together with Art. 2206), moral
damages may be recovered by:
1) the spouse (legitimate);
2) legitimate descendants and ascendants:
3) illegitimate descendants and ascendants [Art. 2206;
Necesito, etc. v. Paras, et al., 104 Phil. 75 –– where
the court said that moral damages may be recov-
ered here as an EXCEPTION to the general rule
against moral damages in breach of contract under
Art. 2220. Indeed, once the heirs are able to prove
that they are entitled to the actual damages of at
least P3,000, it becomes the duty of the court to
award moral damages to the claimants in an amount
commensurate with their mental anguish. (Mercado
v. Lira, L-13328-29, Sept. 29, 1961).]
[NOTE: In the case of Tamayo v. Aquino
(Nos. L-12634, L-12720, May 29, 1959), the Court
apparently forgot the ruling in the case of Necesito
v. Paras (supra), when it denied moral damages
for the heirs of a passenger who died as a result
of culpa contractual. The Court obviously forgot to
consider Art. 1764 read together with Art. 2206.
However, the error was obviously corrected in later
cases which correctly granted moral damages in
case of death. One such case is Mercado v. Lira,
L-13328-29, Sep. 29, 1961).]
[NOTE: In ordinary breaches of contract, moral
damages may be recovered only if the defendant
acted fraudulently or in bad faith. (Art. 2220).]
[NOTE: In Heirs of Gervacio Gonzales v. Ale-
garbes, et al., 99 Phil. 213, it was held that Arts.
2206 (No. 3) and 2217, do NOT grant brothers and
1275
sisters of the deceased who left a child a right to

recover moral damages arising out of or from the
death of the deceased caused by the wrongful or
tortuous act of the defendant. (See Art. 2219, last
paragraph, which excludes brothers, and sisters, if
a descendant is present).]
(b) If the victim does not die, but merely suffers physical
injuries, may moral damages be recovered?
ANS.: Yes, but only in the following instances:
1) if caused by a crime. (Art. 2219, No. 1).
2) if caused by a quasi-delict. (Art. 2219, No. 2).
3) if caused by a breach of contract BUT ONLY if the
defendant acted fraudulently or in bad faith (Art.
2220) or in case of wanton and deliberately injurious
conduct on the part of the carrier. (LTB v. Cornista,
L-22193, May 29, 1964). Thus, if a passenger is
merely injured due to the negligence of a common
carrier there is no right to recover moral damages,
unless the common carrier acted fraudulently or in
bad faith. (Art. 2220). This is DIFFERENT from a
case of death. (Necesito, et al. v. Paras, et al., supra).
Indeed, proof of fraud, malice, or bad faith must
be given if only physical injuries were sustained.
The mere bursting of a tire while a passenger bus
was overspeeding cannot be considered evidence
of fraud, malice, or bad faith. (Lira v. Mercado,
L-13328, Sept. 29, 1961 and Consolidated Plywood
Industries, Inc. & Henry Lee v. CA, Willie Kho &
Alfred C. H. Kho, GR 101706, Sep. 23, 1992).
(4) Right of Recovery Not Affected By Testimony
People v. Santiago Manos

L-27791, Dec. 24, 1970
FACTS: A son was convicted for having killed his fa-
ther. May he be required to indemnify the victim’s heirs (the
defendant’s mother, brothers, and sisters) even if they had
testified in his favor?
1276
HELD: Yes, for they have suffered, even if their natural

impulses compelled them to seek exoneration of the guilty
son.
(5) Liability for Reckless Imprudence
People v. Eutiquia Carmen, et al.

GR 137268, Mar. 26, 2001
FACTS: Accused-appellants, none of whom was a medical
practitioner, belonged to a religious group engaged in faith-
healing. Upon advise of one of the accused-appellants, the
parents of the victim agreed to subject their child, who had
earlier suffered from a nervous breakdown, to a “treatment,”
but which, resulted in the child’s death. Charged with and
later convicted of murder by the trial court, the Supreme Court
modified the accused-appellants’ judgment upon appeal.
HELD: Accused-appellants can only be made liable
for reckless imprudence resulting in homicide as qualifying
circumstance of treachery cannot be appreciated absent an
intent to kill.
As to the their civil liability, accused-appellants should
pay the heirs of the victim an indemnity in the amount of
P50,000 and moral damages also in the amount of P50,000.
(Arts. 2206[3] and 2219[1], Civil Code). (See People v. Silva,
321 SCRA 647 [1999]). (See also People v. Silvestre, 307 SCRA
60 [1999]). In addition, they should pay exemplary damages
in the amount of P30,000 in view of accused-appellants’ gross
negligence in attempting to “cure” the victim without a license
to practice medicine and to give an example or correction for
the public good. (Arts. 2229 and 2231). (See People v. Medroso,
Jr., 62 SCRA 245 [1975]).
Art. 2207. If the plaintiff’s property has been insured,

and he has received indemnity from the insurance company
for the injury or loss arising out of the wrong or breach
of contract complained of, the insurance company shall be
subrogated to the rights of the insured against the wrong-
doer or the person who has violated the contract. If the
amount paid by the insurance company does not fully cover
1277
the injury or loss, the aggrieved party shall be entitled to

recover the deficiency from the person causing the loss or
injury.
COMMENT:
(1) Effect if Property Was Insured
(a) According to American jurisprudence, the fact that the
plaintiff has been indemnified by an insurance company
cannot lessen the damages to be paid by the defendant.
Such rule gives more damages than those actually suf-
fered by the plaintiff, and the defendant, if also sued
by the insurance company for reimbursement, would
have to pay in many cases twice the damages he has
caused. The proposed article would seem to be a better
judgment of the rights of the three parties. (Report of
the Code Commission, p. 73).
(b) The principle enunciated in this article can apply even
to cases that accrued prior to the effectivity of this ar-
ticle and the new Civil Code — otherwise, the general
principle against unjust enrichment would be violated.
(Africa v. Caltex, L-12986, Mar. 21, 1966). Hence, the
amount of insurance recovered shall be deducted from
the total liability of the defendant. (Ibid.)
(2) Meaning of “Authorized Driver” in Car Insurance
CCC Insurance Corp. v. Court of Appeals

and Carlos F. Robes
L-25920, Jan. 30, 1970
FACTS: A car insured against loss or damage was being

driven by a driver, who was licensed, WITHOUT an examina-
tion (he was illiterate). The car was subsequently damaged
in an accident, but the insurance company refused to pay on
the ground that the driver was not an “authorized driver.” Is
the insurance company liable?
HELD: Yes, the insurance company is liable for under Sec.
24 of the Revised Motor Vehicles Law, Act 3992, as amended
by Republic Acts 587, 1204, and 2363, an examination or
1278
demonstration of the applicant’s ability to operate a motor

vehicle may (only) be required in the discretion of the Chief,
Motor Vehicles Office. Sec. 26 even allows a non-examination.
Whether discretion on the part of the government official was
abused or not is a matter of legislative policy. The issuance
of the license is proof that the driver was entitled to drive.
Besides, insurance contracts must be construed liberally in
favor of the insured and strictly against the insurer.
(3) Subrogation of Insurer
Fireman’s Fund Insurance Co., et al. v.

Jamila and Co., Inc.
L-27427, Apr. 7, 1976
FACTS: Firestone Corporation had its properties insured

by Fireman’s Fund Insurance Co. Some of said properties
were lost allegedly because of the acts of its own employees,
who were in connivance with security guards from the Jamila
agency. These security guards were supposed to safeguard the
Firestone properties, and under the contract, Jamila assumed
responsibility for the guards’ actuations. The First Quezon City
Insurance guaranteed this obligation of Jamila. The losses of
Firestone Corporation were paid by Fireman’s Fund Insurance
Company as insurer. Does Fireman’s Fund Insurance Company
have a cause of action against Jamila and the First Quezon City
Insurance Company, so that the money paid may be reimbursed?
Can there be subrogation even without Jamila’s consent?
HELD: Yes, it has a valid cause of action, under Art.
2207, Civil Code. Said article states that the insurer who has
paid shall be subrogated in the place of the injured party in
the latter’s rights against the offender or violator of a con-
tractual commitment. This is an instance when the consent
of the debtor is not required for the subrogation in favor of
the Fireman’s Fund Insurance Company.
Art. 2208. In the absence of stipulation, attorney’s fees

and expenses of litigation, other than judicial costs, cannot
be recovered except:
(1) When exemplary damages are awarded;
1279
(2) When the defendant’s act or omission has com-

pelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3) In criminal cases of malicious prosecution against
the plaintiff;
(4) In case of a clearly unfounded civil action or pro-
ceeding against the plaintiff;
(5) Where the defendant acted in gross and evident
bad faith in refusing to satisfy the plaintiffs plainly valid,
just and demandable claim;
(6) In actions for illegal support;
(7) In actions for the recovery of wages of household
helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen’s com-
pensation and employer’s liability laws;
(9) In a separate civil action to recover civil liability
arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just
and equitable that attorney’s fees and expenses of litigation
should be recovered.
In all cases, the attorney’s fees and expenses of litiga-
tion must be reasonable.
COMMENT:
(1) Concept of Attorney’s Fees As Damages

The attorney’s fees referred to in this article do not refer
to the duty of a client to pay his own attorney. Such payment
generally involves only the client and his attorney. The fees
stated in the article apply rather to instances when a client
may recover from the other party the fees which the former
may pay the former’s attorney. (See Tan Ti v. Alvear, 26 Phil.
566).
1280
Luz G. Cristobal v. Employees’

Compensation Commission
L-49280, Feb. 26, 1981
While a pauper litigant is exempt from the payment of legal

fees and from filing an appeal bond, a printed record on appeal,
and a printed brief, he is not exempted from the payment of
attorney’s fees. An award of attorney’s fees whether in favor of
or against a litigant in “forma pauperis” is thus proper.
Borcena, et al. v. IAC

GR 70099, Jan. 7, 1987
The Supreme Court has invariably fixed counsel fees on

a quantum meruit basis whenever the fees stipulated appear
excessive, unconscionable, or unreasonable, because a lawyer is
primarily a court officer charged with the duty of assisting the
court in administering impartial justice between the parties.
Hence, the fees should be subject to judicial control. Sound
public policy demands that courts disregard stipulations for
counsel fees, whenever they appear to be a source of specula-
tive profit at the expense of the debtor or mortgagor.
In determining the compensation of an attorney, the fol-
lowing circumstances should be considered: the amount and
character of the services rendered; the responsibility imposed;
the amount of money or the value of the property affected by
the controversy, or involved in the employment; the skill and
experience called for in the performance of the service; the
professional standing of the attorney; the results secured; and
whether or not the fee is contingent or absolute, it being a
recognized rule that an attorney may properly charge a much
larger fee when it is to be contingent than when it is not.
Sun Insurance Office, Ltd. v. CA & Nerissa Lim

GR 92383, Jul. 17, 1992
FACTS: Petitioner issued a personal accident policy to

Felix Lim, Jr. with a face value of P200,000. Two months
later, he was shot dead with a bullet wound in his head.
As beneficiary, his wife Nerissa Lim sought payment on the
policy but her claim was rejected. The petitioner agreed that
1281
there was no suicide. It argued, however, that there was no

accident either.
HELD: The petitioner is liable to the private respondent
in the sum of P200,000 representing the face value of the
insurance contract, with interest at the legal rate from the
date of the filing of the complaint until the full amount is
paid, but modified with the deletion of all awards for dam-
ages, including attorney’s fees, except the costs of the suit.
In order that a person may be made liable to the pay-
ment of moral damages, the law requires that his act be
wrongful. The adverse result of an action does not per se
make the act wrongful and subject the act or to the payment
of moral damages. The law could not have meant to impose
a penalty on the right to litigate; such right is so precious
that moral damages may not be charged on those who may
exercise it erroneously. For these, the law taxes costs. If a
party wins, he cannot, as a rule, recover attorney’s fees and
litigation expenses, since it is not the fact of winning alone
that entitles him to recover such damages of the exceptional
circumstances enumerated in Art. 2208. Otherwise, every
time a defendant wins, automatically the plaintiff must pay
attorney’s fees thereby putting a premium on the right to
litigate, which should not be so. For those expenses, the law
deems the award of costs as sufficient.
(2) Generally Not Part of Damages

Generally, attorney’s fees, as understood in this article
are not a proper element of damage, for it is NOT sound
public policy to place a penalty on the right to litigate. To
compel the defeated party to pay the fees of counsel for his
successful opponent would throw wide the door of temptation
to the opposing party and his counsel to swell the fees to
undue proportions. (Tan Ti v. Alvear, 26 Phil. 566). Thus, no
right to such fees can accrue merely because of an adverse
decision. Otherwise stated, if a party loses in court, this does
not mean necessarily that the court will compel him to award
attorney’s fees (as damages) to the winning party. (Ramos
v. Ramos, 61 SCRA 284). This is precisely the rationale for
taxing costs in certain cases against the losing party. The
payment of said costs is deemed a sufficient sanction. How-
1282
ever, under the new Civil Code, it may truly be said that in
certain cases, attorney’s fees are an element of recoverable
damages, whether they be in writing or not stipulated at all.
(Santiago v. Dimayuga, L-17883, Dec. 30, 1961). The appellate
court may fix attorney’s fees even when the trial court did
not award attorney’s fees, and even when no appeal on this
point was interposed before the appellate tribunal. (Medenilla
v. Kayanan, 40 SCRA 154).
Salao v. Salao
L-26699, Mar. 16, 1976
FACTS: Plaintiffs lost in a reconveyance case although
they presented 15 witnesses in a protracted five (5)-year case,
and fought vigorously. They honestly thought that their ac-
tion could prosper because they believed (albeit erroneously)
that the property involved had been acquired by the funds
of the common ancestor of plaintiffs and defendants. Should
said plaintiffs be held liable for moral damages and attorney’s
fees?
HELD: No, they should not be assessed moral damages
and attorney’s fees. Although their causes of action turned
out to be unfounded, still, the pertinacity and vigor with
which they pressed their claim indicate sincerity and good
faith. Thus, the action was not manifestly frivolous. With
respect to attorney’s fees, while the case was unfounded (Art.
2208[4], Civil Code), still there was the element of good faith,
and, therefore, neither attorney’s fees or litigation expenses
should be awarded. (See Rizal Surety and Insurance Co., Inc.
v. Court of Appeals, L-23729, May 16, 1967).
Public Estates Authority v. Elpidio S. Uy

GR 147933-34, Dec. 12, 2001
FACTS: Anent petitioner’s claim for attorney’s fees, suf-

fice it to state that it was represented by the Government
Corporate Counsel in the proceedings before the Construction
Industry Arbitration Commission.
HELD: Attorney’s fees are in the nature of actual dam-
ages, which must be duly proved. Petitioner failed to show
with convincing evidence that it incurred attorney’s fees.
1283
(3) Given to Party, Not to Counsel

The Court’s award of attorney’s fees is an indemnity to
the party and NOT to counsel, and the fact that the contract
between the client and his counsel was on a CONTINGENT
basis does not affect the client’s right to counsel fees. A litigant
who improvidently stipulates higher counsel fees than those to
which he is lawfully entitled, does NOT for that reason earn
the right for a larger indemnity, but by parity of reasoning,
he should NOT be deprived of counsel fees if by law he is
entitled to recover. (Necesito, et al. v. Paras, et al., 104 Phil.
75).
Tiu Po v. Bautista
L-55514, Mar. 17, 1981
A claim for attorney’s fees which arises out of the filing

of a complaint partakes of the nature of a compulsory coun-
terclaim. Therefore, if it is not pleaded or prayed for in the
answer to the complaint, it is barred.
What has been said above applies also to all damages
claimed to have been suffered by the defendant as a conse-
quence of the action filed against him.
Quirante and Cruz v. IAC, et al.

GR 73886, Jan. 31, 1989
Attorney’s fees as an item of damages provided for under
Art. 2208 of the Civil Code is an award made in favor of the
litigant, not of his counsel. And the litigant, not his counsel,
is the judgment creditor who may enforce the judgment for
attorney’s fees by execution.
What is being claimed in this case as attorney’s fees by
petitioners is, however, different. Herein, the petitioners’ claims
are based on an alleged contract for professional services, with
them as the creditors and the private respondents as the debt-
ors.
(4) Express Stipulation

(a) Note that aside from the eleven instances enumerated,
attorney’s fees and expenses of litigation may be recov-
1284
ered also should there be an express stipulation to that

effect. (Introductory paragraph, Art. 2208). However, if
despite an express stipulation for attorney’s fees, there
is an implied WAIVER thereof (as when instead of
demanding specific fulfillment of an obligation — with
attorney’s fees in compelling such fulfillment — there is
a demand for cancellation of a contract), attorney’s fees
cannot be recovered. (Luneta Motor Co. v. Baguio Bus
Co., L-15157, Jun. 30, 1960).
(b) If the parties agree on attorney’s fees based on a certain
percentage of the amount of the principal obligation, the
stipulation is valid. (Luneta Motor v. Mora Limlengco,
73 Phil. 80).
(c) Where the contract does not expressly stipulate that
a fixed sum by way of attorney’s fees shall be paid by
defendant in case of collection even if the same is subse-
quently settled by compromise, it is just and fair to reduce
the amount of counsel’s fees in the court’s discretionary
power, where the case is partially or fully settled out of
court. (Santiago v. Dimayuga, L-17833, Dec. 30, 1961).
(d) Be it noted, however, that an agreement whereby a
non-lawyer will be given part of the attorney’s fees, is
condemned by legal ethics, is immoral and cannot be justi-
fied. (PAFLU v. Binalbagan Isabela Sugar Co., 42 SCRA
302).
Kapol v. Masa
L-50473, Jan. 21, 1985
(1) When exemplary damages are recovered, there

can be an award of attorney’s fees.
(2) Exemplary damages may be awarded even if
not expressly prayed for in the complaint and even if
not proved.
(3) Moral damages may be proved by documentary
evidence even without testimonial proof.
1285
(5) Paragraph 2 (Defendant’s Act or Omission)

If the litigation was caused not by the defendant’s failure
to pay but by the plaintiff’s exorbitant charge, the plaintiff
cannot get attorney’s fees. (Cachero v. Manila Yellow Taxicab
Co., 101 Phil. 523 and Globe Assurance Co. v. Arcache, L-
12378, May 28, 1958). Similarly, if the plaintiff goes to court
after refusing an amicable settlement by the guilty party, said
plaintiff cannot recover attorney’s fees if it is proved that he
was asking “too much.” Here, the defendant was justified in
resisting the unjust claim. (Juana Soberano & Jose B. Sober-
ano v. The Manila Railroad Co., L-19407, Nov. 23, 1966). If
the suit, however, was prompted by the defendant’s deliberate
failure to pay for the trucks it had purchased, compelling the
plaintiff to litigate and incur expenses in order to protect its
interest, the plaintiff is entitled both to attorney’s fees under
Art. 2208(2) and to costs under Rule 131 of the Rules of Court
(now Rule 142) as the prevailing party. (Luneta Motor Co. v.
Baguio Bus Co., Inc., L-15167, Jun. 30, 1960; see also Suntay
Tanjangco v. Jovellanos, et al., L-12332, Jun. 30, 1960).
Bert Osmeña and Associates v. Court of Appeals

GR 56545, Jan. 28, 1983
If the prevailing party in a case was compelled to litigate
to protect his interests he is entitled to an award of attorney’s
fees.
Sarming v. Dy
GR 133643, Jun. 6, 2002
The award of attorney’s fees for P2,000 is justified under
Art. 2208(2) of the Civil Code.
This is, in view of the trial court’s finding, that the unjusti-
fied refusal of petitioners to reform or to correct the document of
sale compelled respondents to litigate to protect their interest.
(6) Paragraph 3 (Malicious Prosecution)

(a) There is malicious prosecution only if the person concerned
acted deliberately and knew that his accusation was false
or groundless. (Buenaventura v. Sto. Domingo, 54 O.G.
8439).
1286
(b) Hence, if there is in the record no indication that the

action was malicious and intended only to prejudice the
other party, attorney’s fees on this ground cannot be
recovered. (Mercader v. Manila Polo Club, L-8373, Sep.
28, 1956).
(7) Paragraph 4 (Unfounded Civil Action)

(a) If A’s complaints against B are found to be insincere,
baseless and intended to harass, annoy, and defame B,
B can now sue for and be granted attorney’s fees, for the
“clearly unfounded civil actions or proceedings against the
plaintiff (A).” (See Heirs of Justiva v. Court of Appeals,
L-16396, Jan. 31, 1963 and Suntay Tanjangco v. Jovel-
lanos, et al., L-12332, Jun. 30, 1960; See also Enervida
v. De la Torre, 55 SCRA 339).
(b) Paragraph 4 also applies in favor of a defendant under a
counterclaim for attorney’s fees, because a counterclaim is a
complaint filed by the defendant against the original plaintiff.
(Malonzo v. Galang, et al., L-13851, Jul. 27, 1960).
Hermosa, Jr. v. Zobel y Roxas

L-11836, Oct. 1958
FACTS: A sued B for annulment of a contract. A
did not take part in the contract itself, and he did not
know the circumstances under which it was entered into.
It turned out that the contract was valid, and therefore
was not annulled. Shortly thereafter, B asked A for at-
torney’s fees incurred in the prior litigation.
HELD: Under the circumstances (good faith and
lack of knowledge of the actual facts), A is not liable for
attorney’s fees.
Roque Enervida v. Lauro De la Torre

and Rosa De la Torre
L-38037, Jan. 28, 1974
FACTS: The owner (Ciriaco Enervida) of land cov-
ered by a homestead patent issued Nov. 17, 1952 sold
the same on Nov. 20, 1957 to the spouses Dela Torre. In
1965, Roque Enervida, son of the seller, sued the spouses
1287
for the cancellation of the deed of sale stating that the

sale had been made within the 5-year prohibitory period.
Incidentally, at the pre-trial, Roque admitted his father
is still alive. The trial court dismissed the complaint and
awarded attorney’s fees and moral damages in favor of
the spouses. Is the decision correct?
HELD:
(1) The dismissal of the case is proper because the
property was sold after the 5-year prohibitory period,
and besides, Roque’s father is still alive.
(2) The award of attorney’s fees is proper because the
suit is clearly unfounded (Art. 2208, No. 4) but
–– there should be no award of moral damages
because same is not provided for in Art. 2219. Art.
2208 cannot be applied by analogy.
Metropolitan Bank v. Tan

Chuan Leong, et al.
GR 46539, Jun. 25, 1986
FACTS: On Apr. 22, 1965, “A” sold his house
and lot to his son “B”. “A” twice mortgaged the
same property: first to “C” on Apr. 21, 1965, and
then to “D” on Feb. 11, 1966. The first mortgage
had been cancelled on Sep. 21, 1967.
On Dec. 17, 1967, the trial court ordered “A”
to pay Metrobank the unliquidated balance of an
overdraft line secured by “A” from the bank on
Mar. 4, 1965. Unable to obtain satisfaction of this
judgment, the bank sued “A,” “B,” and “C” for re-
scission to annul the sale and mortgages. It alleged
that these transactions were in fraud of creditors,
the sale being fictitious and the mortgages having
been entered into in bad faith.
The trial court dismissed the complaint and
ordered “A” to pay “C” and “D” (first and second
mortgagees) P5,000 as attorney’s fees. The appel-
late court modified this decision by nullifying the
sale as fictitious, but affirming it in all respects.
Petition for review was lodged with the Supreme
1288
Court. Pending said petition, the Court approved a

compromise agreement whereby “A” and “B” paid
their monetary liability to “X” to the satisfaction of
the latter. The award of attorney’s fees, however,
remained unresolved.
HELD: Attorney’s fees cannot be recovered,
except in cases of clearly unfounded civil action or
proceeding against plaintiff.
The mortgage did not in anyway affect the
bank’s rights. It were as if said mortgage had never
existed. With the mortgage no longer existing, the
same could not be cited as reason for the bank’s
failure to collect its credit. Although “C” may have
had knowledge of the simulated sale between “A”
and his son “B” and had entered into the contract
of mortgage pursuant to a design to defraud “A’s”
creditors, no damage or prejudice was suffered by
the bank thereby. The cancellation of “C’s” lien over
the property had rendered the issues of rescissibility
and bad faith moot and academic. The fact that the
bank nevertheless impleaded “C,” in its complaint,
compelling the latter to litigate to protect its rights,
justifies the award of attorney’s fees. At the time
the second mortgage was entered into, the certifi-
cate of title was in the name of “B” without any
annotation of encumbrance in favor of the bank or
any one else. Mortgage “D” then had every right
to rely on what appeared in that certificate of title
and there being none to excite suspicion, did not
have to inquire further. There being good faith, “D”
is an innocent purchaser for value. Since “D” had
no intention to defraud “X,” and in fact he is also
a creditor of “A,” the bank had no cause of action
against “D”. The award of attorney’s fees in favor
of “D” should also be beyond question.
Phoenix Publishing House v. Ramos

GR 32339, Mar. 29, 1988
FACTS: Phoenix charged Ramos with gross

violation of the copyright law and prayed for actual,
1289
moral and exemplary damages as well as attorney’s

fees. The trial court dismissed the complaint and
ordered Phoenix to pay Ramos P5,000 attorney’s fees
as and by way of damages. The Court of Appeals
affirmed the judgment of the trial court. Phoenix
appealed contending that the court erred in assign-
ing attorney’s fees against it for no other apparent
reason than for losing its case.
HELD: The award of attorney’s fees, if at all,
is proper in case of a “clearly unfounded civil ac-
tion or proceeding.” It cannot be said that the case
filed by Phoenix is clearly an unfounded civil ac-
tion. Phoenix secured the corresponding copyrights
for its books. These copyrights were found to be
all right by the Copyright Office, and Phoenix was
conceded to be the real owner thereof. It was on
the strength of these facts that Phoenix filed the
complaint against Ramos. Thru a proper search
warrant obtained after Phoenix was convinced that
Ramos was selling spurious copies of its copyrighted
books, the books were seized from the latter and
were identified to be spurious. There is therefore
not enough justification for such an award under
paragraph 11 of Art. 2208 of the Civil Code.
(8) Paragraph 5 (Bad Faith of Defendant)

(a) Here, the defendant (in the suit for attorney’s fees) must
have acted in GROSS and EVIDENT BAD FAITH in refus-
ing to satisfy plaintiff’s claim. (Art. 2208, No. 5). (See Carlos
M. Sison v. Gonzalo D. David, L-11268, Jan. 28, 1961).
(b) Therefore, where the defendant’s refusal to pay the amount
claimed was due not to malice but to the fact that the
plaintiff demanded more than what it should, and conse-
quently, the defendant had the right to refuse it, plaintiff
is not entitled to attorney’s fees. (Globe Assurance Co., Inc.
v. Arcache, L-12378, May 28, 1958).
(c) Similarly, where the defendant did not deny the debt but
merely pleaded for adjustment in accordance with the
1290
Ballantine Scale, the refusal is not done in bad faith.

(Jimenez v. Bucoy, L- 10221, Feb. 28, 1958 and Intestate
Estate of Luther Young v. Bucoy, 54 O.G. 7560). As a
matter of fact, even clearly untenable defenses would be
no ground for awarding attorney’s fees unless the plea
thereof amounts to gross and evident bad faith. (Jimenez
v. Bucoy, L-10221, Feb. 28, 1958).
(d) Indeed, mere failure of the defendant to pay his obligation
without bad faith does not warrant recovery of attorney’s
fees. (Lasedeco v. Gaston, L-8938, Oct. 31, 1956; Koster,
Inc. v. Zulueta, 99 Phil. 945 and Francisco v. GSIS,
L18155, Mar. 30, 1963).
(9) Paragraph 8 (Workmen’s Compensation and Employer’s

Liability)
Because Sec. 31 of the Workmen’s Compensation Act does
not govern attorney’s fees recoverable from the adverse party,
Art. 2208(8) of the Civil Code will apply — to supply the defi-
ciency in the said Act, in accordance with Art. 18 of the new
Civil Code. (MRR v. Manalang, L-20845, Nov. 29, 1965 and
Nat. Development Corp. v. WCC, L-19863, Apr. 29, 1964).
(10) Paragraph 9 (Civil Liability Arising from a Crime)

Attorney’s fees by express provision of law may be
awarded in a separate civil action to recover the civil liabil-
ity arising from a crime. (Art. 2208, par. 9). Moreover, an
award of attorney’s fees granted by a trial court can envisage
the services of counsel only up to the date of its judgment.
Therefore, if the decision is appealed, attorney’s fees should
perhaps be at least doubled. (Bantoto, et al. v. Bobis, et al.
& Vallejo, L-18966, Nov. 22, 1966).
Ebajan v. CA
GR 77930-31, Feb. 9, 1989
Reiterating its ruling in People v. Biador, CA-GR 19589-R,

Jan. 21, 1959 (55 O.G. No. 32, p. 6384), the Court ruled that
attorney’s fees, under Art. 2208 (No. 9) of the Civil Code, can
1291
only be recovered in a separate civil action to recover civil

liability arising from crime.
(11) Paragraph 11 (Any Other Case)

(a) Paragraph 11 does not apply if the case was instituted
before the effectivity of the new Civil Code. This was the
ruling in the case of Bureau of Lands v. Samia (L-8068,
Aug. 26, 1956), where the court said that unless author-
ized by statute, attorney’s fees cannot be recovered from
the government if it abandons expropriation proceedings.
It would be otherwise if the abandoner is a private entity
or a quasi-public corporation.
Thus also, if the award of attorney’s fees would be
just and equitable, still if the suit was brought before the
new Civil Code became effective, attorney’s fees (other
than those allowed as costs under the Rules of Court)
could not be recovered as damages against the losing
party (otherwise, there would be a sort of penalty on the
right to litigate). (See Receiver for North Negros Sugar
Co., Inc. v. Ybanez, L-22183, Aug. 30, 1968 and Koster
v. Zulueta, 99 Phil. 945).
(b) Attorney’s fees and expenses of litigation may be recov-
ered when deemed by the court as just and equitable
as when the defendant never questioned the correctness
and legality of the plaintiff’s case but based its defense
and appeal entirely on a pure technicality which took up
the time of two appellate courts, and delayed giving of
appropriate relief to plaintiff for more than three years.
(Phil. Milling Co. v. Court of Appeals, L-9404, Dec. 27,
1956). Indeed, the award of attorney’s fees is essentially
discretionary in the trial court (Francisco v. GSIS, L-
18165, Mar. 30, 1963), and in the absence of abuse of
discretion, the same should not be disturbed. (Lopez, et
al. v. Gonzaga, L-18788, Jan. 31, 1964). The allowance,
for example, of counsel’s fees in probate proceedings rests
largely on the sound discretion of the Court which shall
not be interfered with except for manifest abuse. (In Re
Estate of Raquel, L-16349, Jan. 31, 1964).
1292
(12) Instance When the Insurance Code Grants Damages
Prudential Guarantee and Assurance, Inc. v.

Trans-Asia Shipping, Lines, Inc.
491 SCRA 411 (2006)
Sec. 244 of the Insurance Code grants damages consisting
of attorney’s fees and other expenses incurrd by the insured
after a finding by the Insurance Commissioner or the Court,
as the case may be, of an unreasonable denial or withholding
of payment of the claims due. Sec. 244 of the Code does not
require a showing of bad faith in order that attorney’s fees
be granted.
In the instant controversy, Sec. 244 thereof is categori-
cal in imposing an interest twice the ceiling prescribed by
the Bangko Sentral’s Monetary Board due the insured, from
the date following the time prescribed in Sec. 242 or in Sec.
243 of the Code, as the case may be, until the claim is fully
satisfied.
Art. 2209. If the obligation consists in the payment of a

sum of money, and the debtor incurs in delay, the indemnity
for damages, there being no stipulation to the contrary,
shall be the payment of the interest agreed upon, and in
the absence of stipulation, the legal interest, which is six
per cent per annum.
COMMENT:
(1) Monetary Obligations
This applies to a monetary obligation where the debtor
is in default.
(2) Rules
(a) give the indemnity (other than interest) agreed upon
[NOTE: Attorney’s fees may be stipulated. (Andreas
v. Green, 48 Phil. 463).]
(b) if none was specified, give the interest agreed upon.
1293
(c) if none, give the legal interest (now this is 12% per an-
num).
State Investment House, Inc. v. CA
GR 90676, Jun. 19, 1991
FACTS: The promissory note executed by respondent

had three components: (a) principal of the loan in the
amount of P110,000; (b) regular interest in the amount
of 17% per annum; and (c) additional or penalty interest
in case of non-payment at maturity, at the rate of 2%
per month or 24 per cent per annum. In the dispositive
of his resolution, the trial judge did not specify which of
these components of the loan he was ordering respond-
ent to pay and which component or components he was
in effect defecting. It cannot be assumed that the judge
meant to grant the relief prayed for by respondent in
all its parts. The decision was ambiguous in the sense
that it was cryptic. It must be assumed that the judge
meant to decide in accordance with law, that it cannot
be fairly assumed that the judge was grossly ignorant
of the law or that he intended to grant the respondent
relief to which he was not entitled under the law. The
ultimate question which arises is: If respondent was not
in delay, what should he have been held liable for in
accordance with law?
HELD: Since the respondent was held not to have
been in delay, he is properly liable only for: (a) the
principal of the loan or P110,000; and (b) regular or
monetary interest in the amount of 17% per annum. He
is not liable for penalty or compensatory interest, fixed
in the promissory note at 2% per month or 24% per an-
num. The fact that the respondent was not in default
did not mean that he, as a matter of law, was relieved
from the payment not only of penalty or compensatory
interest at the rate of 24% per annum but also of regular
monetary interest of 17 per cent per annum. The regular
or monetary interest continued to accrue under the terms
of the relevant promissory note until actual payment is
effected. The payment of regular interest continues to
accrue since the debtor continues to use such principal
amount. In the instant case, since respondent, while he
1294
is properly regarded as having made a written tender

or payment to the creditor, failed to consign in court the
amount due at the time of the maturity of the obliga-
tion. Hence, his obligation to pay principal-cum-regular
or monetary interest under the terms and conditions of
the note was not extinguished by such tender of pay-
ment alone. For the respondent to continue in possession
of the principal of the loan amounting to P110,000 and
to continue to use the same after maturity of the loan
without payment of regular or monetary interest, would
constitute unjust enrichment on the part of the respondent
at the expense of the creditor even though the respondent
had not been guilty of mora. It is precisely this unjust
enrichment which Art. 1256 Of the Civil Code prevents
by requiring, in addition to tender of payment, the
consignation of the amount due in court which amount
would thereafter be deposited by the Clerk of Court in
a bank and earn interest to which the creditor would
be entitled.
Tio Khe Chio v. CA

GR 76101-02, Sep. 30, 1991
FACTS: Tio Khe Chio imported 1,000 bags of fish

meal valued at $36,000 which were insured with East-
ern Assurance and shipped on Board the M/V Peskev,
owned by Far Eastern Shipping. When the goods reach
Manila, they were found to have been damaged by sea
water which rendered the fishmeal useless. Chio filed a
claim with Eastern Assurance and Far Eastern Shipping.
Both refused to pay. So Chio sued them before the Court
of First Instance (Regional Trial Court) for damages.
Eastern Assurance filed a counterclaim against Chio for
recovery of unpaid insurance premiums. The trial court
ordered Eastern Assurance and Far Eastern Shipping
to pay Chio solidarily P105,986, less P18,387 for unpaid
premiums with interest at the legal rate from the filing
of the complaint. Judgment became final as to Eastern
Assurance, but Far Eastern Shipping appealed and was
absolved from liability by the Court of Appeals. The trial
court issued a writ of execution against Eastern Assur-
1295
ance. The sheriff enforcing the writ fixed the legal rate
of interest at 12%. Eastern Assurance moved to quash
the writ alleging that the legal interest to be computed
should be 6% in accordance with Art. 2209 of the Civil
Code and not 12%. The trial court denied Eastern As-
surance’s motion. The Court of Appeals (CA) reduced
the interest to 6%. Chio maintains that not only is it
unjust and unfair but it is also contrary to the correct
interpretation of the fixing of interest rates under Secs.
243 and 244 of the Insurance Code. Since Chio’s claim is
based on an insurance contract, then it is the Insurance
Code that must govern and not the Civil Code.
HELD: The Supreme Court sustained the Court of
Appeals and held that the legal rate of interest in the
case at bar is 6% per annum. Secs. 243 and 244 of the
Insurance Code are not pertinent to the instant case.
They apply only when the court finds an unreasonable
delay or refusal in the payment of the claims. Neither
does Circular 416 of the Central Bank which took effect
on Jul. 29, 1974 pursuant to Presidential Decree No.
116 (Usury Law) which raised the legal rate of interest
from 6% to 12% per annum apply to the case at bar as
contended by the petitioner. The adjusted rate mentioned
in the circular refers only to loans or forbearances of
money, goods or credits and court judgments thereon but
not to court judgments for damages arising from injury
to persons and loss of property which does not involve
a loan.
The legal rate of interest is 6% per annum and
not 12% where a judgment award is based on an action
for damages for personal injury, not use or forbearance
of money, goods or credit. In the same vein, the court
held that the rates under the Usury law (amended by
PD 116) are applicable only to interest by way of dam-
ages is governed by Art. 2209 of the Civil Code. Since
the contending parties did not allege the rate of interest
stipulated in the insurance contract, the legal interest
was properly pegged by the appellate court, at 6% per
annum.
1296
(3) Absence of Stipulation

In the absence of stipulation, only the legal interest can
be recovered. This is true even if a chance to make more in
business can be proved, inasmuch as here, the profit would
be SPECULATIVE. The Court in the case of Lopez v. Del
Rosario and Quiogue (44 Phil. 98) said that “the deprivation
of an opportunity for making money, which might have proved
beneficial or might have been ruinous, is of too uncertain a
character to be weighed in the even balance of the law.”
(4) From What Moment Interest Runs

In the absence of stipulation, interest (as damages) runs
from default (after a judicial or extrajudicial demand, except
when demand is NOT essential to put the debtor in default).
(Art. 2209 which states “in delay’’; Zobel v. City of Manila,
47 Phil. 169). If there is no evidence of an extrajudicial de-
mand, the period starts from the judicial demand (Vda. de
Murciano v. Auditor General, et al., L-11744, May 28, 1958),
which naturally is in the form of filing a complaint in court.
(Cabarroguis v. Vicente, 107 Phil. 340).
Consuelo Piczon, et al. v. Esteban Piczon, et al.

L-29139, Nov. 15, 1974
FACTS: In a contract of loan, Esteban Piczon, as guar-

antor, promised to pay in default of the principal debtor, the
sum of P12,500 with interest, “commencing from the date of
execution” (Sept. 28, 1956) of the contract. On Aug. 6, 1964
demand was made for payment, but neither the principal
debtor nor the guarantor was able to pay. Issue: From what
time will interest run on the debt: from Sept. 28, 1956 or
from Aug. 6, 1964?
HELD: Interest will run from Sept. 28, 1956, in view of
the express stipulation in the contract. Under Art. 2209, Civil
Code, the indemnity of damages in a monetary obligation shall
be the payment of interest agreed upon, as a general rule.
Here it was expressly agreed that interest should commence
from the execution of the contract. (See Firestone Tire & Rub-
ber Co. v. Delgado, 104 Phil. 920). [NOTE — the statement
in the decision that Art. 1169, Civil Code (damages in case
1297
of default) applies only to obligations other than monetary is

only an obiter dictum.]
[NOTE: While it is true that interest (by way of com-
pensation for the use of money) cannot be demanded unless
it was previously stipulated upon in writing (Art. 1956), still
interest (by way of damages or penalty) can be recovered in
case of default even if there be no stipulation to the effect.
(See Zobel v. City of Manila, 47 Phil. 169).]
[NOTE: If the amount of the debt is unliquidated, it is
the final judgment that will ascertain the amount. In such a
case, interest by way of damages shall be counted only from
the date the decision becomes final. (Montilla v. Agustinian
Corp., 25 Phil. 477; Seton Donna v. Inouye, 40 Phil. 728 and
See Art. 2213). However, the court should not require the col-
lection of interest when the judgment on which it is issued
does not give it, and interest is not allowed by statute. This
has been held to be the rule even where interest on judg-
ments is allowed by statute, if the judgment does not include
it. (Robles, et al. v. Timario, L-13911, Apr. 28, 1960).]
[NOTE: If the contract stipulates from what time inter-
est by way of damages will be counted, said stipulated time
controls, and therefore the interest is payable from such time,
and not from the date of the filing of the complaint. (Firestone
Tire & Rubber Co. v. Ines Chavez & Co., Ltd., et al., L-11162,
Dec. 4, 1958).]
[NOTE: If the term for payment was left to the will of the
debtor, the interest should not run from the time the action
was commenced in court, but only from default of payment
AFTER the period was fixed by the Court. (Tiglao v. Manila
Railroad Co., L-7900, Jan. 2, 1956).]
Arwood Industries, Inc.

v. D.M. Consunji, Inc.
GR 142277, Dec. 11, 2002
FACTS: Petitioner and respondent, as owner and con-

tractor, respectively, entered into a Civil, Structural, and
Architectural Works Agreement, dated Feb. 6, 1989 for the
construction of petitioner’s Westwood Condominium at 23
1298
Eisenhower St., Greenhills, San Juan, Metro Manila. The

contract price for the condominium project aggregated to
P20,800,000. Despite completion of the condominium project,
the amount of P962,434.78 remained unpaid by petitioner.
Repeated demands by respondent for petitioner to pay went
unheeded. Respondent specifically prayed for payment of the
amount of P962,434.78 with interest of 2% per month or a
fraction thereof, from Nov. 1990 up to the time of payment.
Issue: Is the imposition of a 2% per month interest on the
award of P962,434.78 correct?
HELD: Yes. Upon the fulfillment by respondent of its
obligation to complete the construction project, petitioner had
the correlative duty to pay for respondent’s services. However,
petitioner refused to pay the balance of the contract price.
From the moment respondent completed the construction of
the condominium project and petitioner refused to pay in full,
there was delay on the part of petitioner.
Delay in the performance of an obligation is looked upon
with disfavor because, when a party to a contract incurs delay,
the other party who performs his part of the contract suffers
damages thereby. Dilationes in lege sunt idiosae (“Delays in
law are idious”). Obviously, respondent suffered damages
brought about by the failure of petitioner to comply with its
obligation on time. And, sans elaboration of the matter at
hand, damages take the form of interest. Accordingly, the
appropriate measure of damages in this case is the payment
of interest at the rate agreed upon, which is 2% interest for
every month of delay.
Art. 2209 specifies the appropriate measure of damages
where the obligation breached consisted of the payment of
sum of money. (See State Investment House, Inc. v. CA, 198
SCRA 390 [1991]). (See also Pacific Mills, Inc. v. CA, 206
SCRA 317 [1992]). Payment of interest as penalty is a neces-
sary consequence of petitioner’s failure to exercise diligence in
the discharge of its obligation under the contracts. And even
in the absence of a stipulation on interest, under Art. 2209,
respondent would still be entitled to recover the balance of
the contract price with interest. Respondent court, therefore,
correctly interpreted the terms of the agreement which pro-
1299
vides that “the owner shall be required to pay the interest

at a rate of 2% per month or the fraction thereof in days of
the amount due for payment by the owner.”
(5) Query
In a loan, is it permissible to stipulate that in addition
to 10% interest for use of the money, the debtor would pay
an additional 10% by way of penalty (penal clause) in case
of default?
ANS.: Generally, the answer should be in the affirma-
tive, for after all, if there is NO default, the additional 10%
cannot be recovered, and there would be no violation of the
Usury Law which in essence regulates only interest (by way
of compensation for the use of the money). The two interests
referred to are indeed distinct and therefore separately de-
mandable, and should NOT be added. (See Lopez v. Hernaez,
32 Phil. 631 and Bachrach Motor Co. v. Espiritu, 52 Phil.
346).
However, under the present Usury Law (as amended),
the word “penalties” is referred to, in case of a SECURED debt,
aside from the word “interests.” It would seem therefore that a
strict construction of the present Usury Law results in a nega-
tive answer (in case of SECURED debts) to the query posed
hereinabove. The Lopez and Bachrach cases referred to above
were decided PRIOR to the amendment of the Usury Law.
(6) Recovery of Interest in Case of Usury
Angel Jose Warehousing Co., Inc. v.

Chelda Enterprises and David Syjuico
L-25704, Apr. 24, 1968
FACTS: A partnership (Chelda Enterprises and David

Syjuico) borrowed some P20,000 from Angel Jose Warehous-
ing Co. at clearly usurious rates from 2% to 2-1/2% PER
MONTH).
Issues:
(a) Can creditor recover the PRINCIPAL debt?
1300
(b) If the entire usurious rate has been paid by the debtor,
how much of it can be recovered by said debtor from the
creditor?
HELD:
(a) Yes, the creditor can recover the PRINCIPAL debt. The
contract of loan with usurious interest is valid as to
the interest is valid as to the loan, and void only with
respect to the interest — for the loan is the principal
contract while the interest is merely an accessory ele-
ment. The two are separable from each other. (See Lopez
v. El Hogar Filipino, 47 Phil. 249). The ruling on this
point by the Court of Appeals in the case of Sebastian
v. Bautista, 58 O.G. No. 15, p. 3146, holding that even
the loan itself is void is WRONG.
(b) With respect to the usurious interest, the entire interest
agreed upon is void, and if already paid, may be recov-
ered by the debtor. It is wrong to say that the debtor
can recover only the excess of 12% or 14% as the case
may be –– for the simple reason that the entire inter-
est stipulated is indivisible, and being illegal, should be
considered entirely void. It is true that Art. 1413 of the
Civil Code states: “interest paid in excess of the inter-
est allowed by the usury laws may be recovered by the
debtor with interest thereon from the date of payment.”
But as we construe it, Art. 1413, in speaking of “inter-
est paid in excess of the interest allowed by the usury
laws” means the whole usurious interest; i.e., in a loan of
P1,000, with interest of 20% per annum or P200 for one
year, if the borrower pays said P200, the whole P200 is
the usurious interest not just that part thereof in excess
of the interest allowed by law. It is in this case that
the law does not allow division. The whole stipulation
as to interest is void since payment of said interest is
the cause or object and said interest is illegal. Note that
there is no conflict on this point between the new Civil
Code and the Usury Law. Under the Usury Law, in Sec.
6, any person who for a loan shall have paid a higher
rate or greater sum or value than is allowed in said law,
may recover the whole interest paid. The only change
1301
effected therefore by Art. 1413, of the New Civil Code is

not to provide for the recovery of interest paid in excess
of that allowed by law, which the Usury Law already
provided for, but to add that the same can be recovered
“with interest thereon from the date of payment.” The
foregoing interpretation is reached with the philosophy
of usury legislation in mind; to discourage stipulation on
usurious interest. Said stipulation is treated as wholly
void, so that the loan becomes one without stipulation
as to payment of interest. It should not, however be
interpreted to mean forfeiture even of the principal, for
this would unjustly enrich the borrower at the expense
of the lender. Furthermore, penal sanctions are avail-
able against a usurious lender, as further deterrence to
usury.
The principal debt remaining without stipulation for
payment of interest can thus be recovered by judicial ac-
tion. And in case of such demand, and the debtor incurs in
delay, the debt earns interest from the date of the demand,
whether judicial or extrajudicial (in the instant case, from
the filing of the complaint). Such interest is not due to stipu-
lation, for there was none, the same being void. Rather,
it is due to the general provision of law that in obligation
to pay money, where the debtor incurs in delay, he has to
pay interest, by way of damages. (Art. 2209).
(NOTE: As already adverted to, the Usury Law
has been repealed.)
GSIS v. CA, et al.

GR 52478, Oct. 30, 1986
The Civil Code permits the agreement upon a pen-
alty apart from the interest. Should there be such an
agreement, the penalty does not include the interest, and
as such the two are different and distinct things which
may be demanded separately. The stipulation about pay-
ment of such additional rate is a penalty clause, which
is sanctioned by law.
The usury law applies only to interest by way of
compensation for the use or forbearance of money. Inter-
1302
est by way of damages is governed by Art. 2209 of the

Civil Code.
Florendo v. Hon. Ruiz, et al.

GR 64571, Feb. 21, 1989
Central Bank (Bangko Sentral) Circular 416 (dated
July 29, 1974), which fixes the legal rate of interest at
12% per annum, applies only to loans or forbearances of
money, goods or credits and court judgments thereon.
Said Circular does not apply to actions based on a
breach of employment contract.
[NOTA BENE: In Reformina, et al. v. Hon. Tomol,
Jr., et al., L-59096, Oct. 11, 1985, the Supreme Court
held that the judgments spoken of and referred to in CB
(BS) Circular 416 are judgments in litigations involving
loans or forbearance of any money, goods or credits. Any
other kind of monetary judgment which has nothing to
do with, nor involving loans or forbearance of any money,
goods or credits does not fall within the coverage of the
said law for it is not within the ambit of the authority
granted by the Central Bank (Bangko Sentral).]
Art. 2210. Interest may, in the discretion of the court, be

allowed upon damages awarded for breach of contract.
COMMENT:
Interest on Damages for Breach of Contract
Actual damages given by a court in a breach of contract
case shall earn legal interest, not from the date of the filing
of the complaint but from the date the judgment of the trial
court is rendered. (Juana Soberano & Jose B. Soberano v.
The Manila Railroad Co., L-19407, Nov. 23, 1966).
Pleno v. Court of Appeals and Manila Gas Corp.

GR 56919, Oct. 23, 1981
A CFI (RTC) judgment ordering payment of a sum of

money with interest was appealed to the Court of Appeals on
1303
the question of prescription. The Court of Appeals affirmed

the CFI (RTC) judgment but neglected to give interest. In
executing the judgment, should interest be also given?
HELD: Yes, despite the silence of the Court of Appeals
judgment. The reason is the Court of Appeals decided merely
the issue of prescription. Interest was not discussed in the Court
of Appeals judgment. Its affirmance of the CFI (RTC) decision
can only mean affirmance also of the grant of interest.
Art. 2211. In crimes and quasi-delicts, interest as a part

of the damages may, in a proper case, be adjudicated in the
discretion of the court.
COMMENT:
Interest on Damages Because of Crimes and Quasi-

Delicts
Art. 2212. Interest due shall earn legal interest from

the time it is judicially demanded, although the obligation
may be silent upon this point.
COMMENT:
Interest on Interest Due
(a) Interest due is also referred to as “accrued interest.”
(b) Note that accrued interest earns legal interest, not from de-
fault (which may be from judicial OR extrajudicial demand)
but from JUDICIAL DEMAND. (Art. 2212; Cu Unjieng v.
Mabalacat Sugar Co., 54 Phil. 976; Sunico v. Ramirez, 14
Phil. 500 and Bachrach v. Golingco, 39 Phil. 912).
(c) An agreement to charge interest on interest is valid even
if in adding the combined interest, the limits under the
Usury Law are exceeded. (Valdezco v. Francisco, 52 Phil.
350 and Government v. Conde, 61 Phil. 14).
(d) If a stipulation governing the rate of interest is inserted in
a contract for the payment of money, this rate, if lawful,
1304
remains in force until the obligation is SATISFIED. The

interest that accrues prior to the date of the filing of the
complaints should be capitalized and consolidated as of
that date with the capital, after which the whole bears
interest at the contract rate until the amount is paid.
The contracted obligation is not merged in the judgment,
but remains in full force until the debt is paid. (Zobel
v. City of Manila, 47 Phil. 169).
Art. 2213. Interest cannot be recovered upon unliqui-

dated claims or damages, except when the demand can be
established with reasonable certainty.
COMMENT:
(1) Interest on Unliquidated Claims or Damages
Bareng v. Court of Appeals, et al.

L-12973, Apr. 25, 1960
FACTS: The buyer of a certain equipment, because of cer-
tain alleged violations of warranties, refused to pay the balance
to the seller. Instead of tendering payment of said balance and
instead of depositing said balance in Court, the buyer sought
to have the sale rescinded on account of the alleged breach of
warranty. The alleged breach was not however, proved. Issue:
Should the buyer pay interest on the balance?
HELD: Yes, on account of the default, counted from the
date of the filing of the complaint by the seller (there appar-
ently having been no extrajudicial demand). Incidentally, the
arguments that the debt was unliquidated until its amount
was determined by the appellate court at P3,600 and that
consequently, he cannot be made answerable for interest on
the amount due before the judgment in said court is completely
untenable. The price of the equipment under their contract of
sale was determined and known; hence, liquidated; and the
obligation to pay any unpaid balance thereof did not cease
to be liquidated and determined simply because the vendor
and the vendee, in the suit for collection disagrees as to its
amount. If the buyer had wanted to free himself from any
responsibility for interests on the amount he had already ac-
1305
knowledged he still owed his vendor, he should have deposited

the same in Court at the very start of the action.
(2) No Liquidated Obligation
Abelardo Lim & Esmadito Gumabon v.

CA & Donato H. Gonzales,
GR 125817, Jan. 16, 2002
FACTS: Assessment of the damage on the vehicle was
heavily debated upon by the parties with private respond-
ent’s demand for P236,000 being refuted by petitioners who
argue that they could have the vehicle repaired easily for
P20,000.
ISSUE: Was the matter a liquidated obligation?
HELD: The amount due private respondent was not a
liquidated amount that was already demandable and pay-
able. Upon the provisions of Art. 2213, interest “cannot be
recovered upon unliquidated claims or damages, except when
the demand can be established with reasonable certainty.” It
is axiomatic that if the suit were for damages, unliquidated
and not known until definitely ascertained, assessed, and
determined by courts after proof — interest at the rate of 6%
per annum should be due from the date the judgment of the
court is made (at which time the quantification of damages
may be deemed to be reasonably ascertained.)
Sadly, petitioners failed to offer in evidence the esti-
mated amount of the damage caused by private respondent’s
unconcern towards the damaged vehicle. It is the burden of
petitioners to show satisfactorily not only that the injured
party could have mitigated his damages but also the amount
thereof; failing in this regard, the amount of damages award
cannot be proportionally reduced.
The questioned decision awarding private respondent
P236,000 with legal interest from Jul. 22, 1990 as compen-
satory damages and P30,000 as attorney’s fees is modified.
Interest at the rate of 6% per annum shall be computed from
the time judgment of the lower court is made until the finality
of this decision. If the adjudged principal and interest remain
1306
unpaid thereafter, interest shall be 12% per annum computed

from the time judgment becomes final and executory until it
is fully satisfied.
Art. 2214. In quasi-delicts, the contributory negligence

of the plaintiff shall reduce the damages that he may re-
cover.
COMMENT:
Contributory Negligence of Plaintiff in Quasi-Delicts

Note that here the damages shall be reduced.
Art. 2215. In contracts, quasi-contracts, and quasi-

delicts, the court may equitably mitigate the damages un-
der circumstances other than the case referred to in the
preceding article, as in the following instances:
(1) That the plaintiff himself has contravened the
terms of the contract;
(2) That the plaintiff has derived some benefit as a
result of the contract;
(3) In cases where exemplary damages are to be award-
ed, that the defendant acted upon the advice of counsel;
(4) That the loss would have resulted in any event;
(5) That since the filing of the action, the defendant
has done his best to lessen the plaintiffs loss or injury.
COMMENT:
Mitigation of Damages in Contracts, Quasi-Contracts,
and Quasi-Delicts
Note that the enumeration is not exclusive for the law
uses the phrase “as in the following instances.”
1307
Chapter 3
OTHER KINDS OF DAMAGES
Art. 2216. No proof of pecuniary loss is necessary in

order that moral, nominal, temperate, liquidated or exem-
plary damages may be adjudicated. The assessment of such
damages, except liquidated ones, is left to the discretion of
the court, according to the circumstances of each case.
COMMENT:
(1) When No Proof of Pecuniary Loss Is Necessary

The Article was applied in Del Castillo v. Guerrero,
L-11994, Jul. 26, 1960.
(2) Necessity of Proving the Factual Basis

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, it is, nevertheless,
essential that the claimant satisfactorily prove the existence
of the factual basis of the damages (Art. 2217) and its causal
relation to the defendant’s acts. This is 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.
The mere fact that a party was sued for instance without any
legal foundation, does not entitle him to an award of moral
damages, for it would make a moral damage 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. (Malonzo
v. Galang, et al., L-13851, Jul. 27, 1960).
1308
(3) In Civil Case to Recover or for Restitution, Reparation

of Damages or Indemnification for Consequential and
Other Damages or Any Other Civil Actions under the
New Civil Code or Other Existing Laws Filed with the
Sandiganbayan against Ferdinand E. Marcos, et al., the
Sandiganbayan is Not to Look for Proof Beyond Reason-
able Doubt. But to Determine, Based on the Evidence
Presented, in Light of Common Human Experience,
which of the Theories Proffered by the Parties is More
Worthy of Credence
Yuchengco v. Sandiganbayan
479 SCRA 1 (2006)
“Juries must often reason,” says one author, ”according
to probabilities, drawing an inference that the main fact in
issue existed from collateral facts not directly proving, but
strongly tending to prove, its existence. The vital question in
such cases is the cogency of the proof afforded by the second-
ary facts. How likely, according to experience, is the existence
of the primary fact if certain secondary facts exist?”
For the Supreme Court ––
if the required quantum of proof obtains to establish ille-

gal acquisition, accumulation, misappropriation, fraud, or
illicit conduct –– ours is the duty to affirm the recovery
efforts of the Republic but should such proof be wanting,
we have the equally-exacting obligations to declare that
it is so –– the guarantee against deprivation of property
without due process, which, like other basic constitutional
guarantees, applies to all individuals, including tyrants,
charlatans, and scoundrels of enemy stripe.
Section 1
MORAL DAMAGES
Art 2217. Moral damages include physical suffering,

mental anguish, fright, serious anxiety, besmirched reputa-
tion, wounded feelings, moral shock, social humiliation, and
similar injury. Though incapable of pecuniary computation,
1309
moral damages may be recovered if they are the proximate

result of the defendant’s wrongful act or omission.
COMMENT:
(1) Requisites for the Recovery of Moral Damages
(a) There must be physical suffering, mental anguish, fright,
etc.
NOTE:
1) Physical suffering includes pain incident to a
surgical operation or medical treatment (Serio v.
American Brewing Co., 141 La. 290), as well as
possible FUTURE pain. (Southern Brewery & Ice
Co. v. Schmidt, 226 U.S. 162).
2) Mental anguish is a high degree of mental suf-
fering and not a mere disappointment or regret
(Southwestern Bell Tel. Co. v. Cooks, 30 S.W. 497)
or from annoyance or vexation. (Johnson v. West-
ern Union Teleg Co., 128 Am. Rep. 905). However,
inconvenience amounting to physical discomforts is
a subject of compensation.
3) Fright is one form of mental suffering. (Eastern v.
United Trade School Contracting Co., 77 Am. State
Rep. 859).
(b) The suffering, etc. must be the proximate result of the
wrongful act or omission. (St. Francis High School v.
CA, GR 82466, Feb. 25, 1991).
Thus, the grant of moral damages is NOT subject to
the whims and caprices of judges or courts. The court’s
discretion in granting or refusing it is governed by reason
and justice. In order that an individual may be made li-
able, the law requires that his act be WRONGFUL. The
adverse result of an action does not per se make the act
wrongful and subject the actor to the payment of moral
damages. (Barreto v. Arevalo, et al., 99 Phil. 771).
1310
St. Mary’s Academy v. William Carpitanos

& Lucia S. Carpitanos, Guada Daniel,
James Daniel II, James Daniel, Sr., &
Vivencio Villanueva
GR 143363, Feb. 6, 2002
FACTS: Petitioner St. Mary’s Academy was made

liable for the death of Sherwin Carpitanos under Arts.
218 and 219 of the Family Code. It was pointed out that
petitioner was negligent in allowing a minor to drive and
in not having a teacher accompany the minor students
in the jeep.
Respondents, however, failed to show that the negli-
gence of petitioner was the proximate cause of the death
of the victim. Respondents Daniel spouses and Villanueva
admitted that the immediate cause of the accident was
not the negligence of petitioner or the reckless driving
of James Daniel II, but the detachment of the steering
wheel guide of the jeep.
ISSUES: (1) Was petitioner liable for damages for
the death of Sherwin Carpitanos?; and (2) Was the award
of moral damages against petitioner proper?
HELD: On the first issue, considering that the
negligence of the minor driver or the detachment of the
steering wheel guide of the jeep owned by respondent
Villanueva was an event over which petitioner St. Mary’s
Academy had no control, and which was the proximate
cause of the accident, petitioner may not be held liable
for the death resulting from such accident.
On the second issue, petitioner cannot be held liable
for moral damages in the amount of P500,000 awarded
by the trial court and affirmed by the Court of Appeals.
Though incapable of pecuniary computation, moral dam-
ages may be recovered if they are the proximate result of
defendant’s wrongful act or omission. (Art. 2217). In the
instant case, the proximate cause was not attributable
to petitioner.
There was no question that the registered owner of
the vehicle was respondent Villanueva, and who never
1311
denied and, in fact, admitted this fact. Hence, with

the overwhelming evidence presented by petitioner and
respondent Daniel spouses that the accident occurred
because of the detachment of the steering wheel guide of
the jeep, it is not the school, but the registered owner of
the vehicle who shall be held responsible for the death
of Sherwin Carpitanos.
[NOTE: The registered owner of any vehicle, even
if not used for public service, would primarily be re-
sponsible to the public or to third persons for injuries
caused the latter while the vehicle was being driven on
the highways or streets. (Aguilar, Sr. v. Commercial
Savings Bank, GR 128705, Jun. 29, and Erezo v. Depte,
102 Phil. 103 [1957]).]
(c) There must be clear testimony on the anguish, etc. (Thus,
if the plaintiff fails to take the witness stand and testify
as to her social humiliation, wounded feelings, anxiety,
etc., moral damages cannot be recovered. (Francisco v.
GSIS, L-18166, Mar. 30, 1963).
People v. Manero
218 SCRA 85
1993
It is only when a juridical person has a good repu-

tation that is DEBASED, resulting in social humiliation,
that moral damages may be awarded.
Carlota P. Valenzuela, et al. v. CA, et al.

GR 56168, Dec. 22, 1988
The grant of moral damages is expressly allowed

by law in instances where proofs are shown that mental
anguish, serious anxiety, and moral shock have been
suffered by the private respondent as a consequence of
the fraudulent act committed by the petitioner who took
advantage of the very limited education of the respond-
ent.
1312
Danao v. CA
GR 48276, Sep. 30, 1987
The filing alone of the foreclosure application should

not be a ground for an award of moral damages.
Boysaw, et al. v. Interphil

Promotions, Inc.
GR 22590, Mar. 20, 1987
Moral damages cannot be imposed on a party

litigant, although such litigant exercises it erroneously
because if the action has been erroneously filed, such
litigant may be penalized for costs.
(2) Social and Financial Standing

In Layda v. Court of Appeals (90 Phil. 724), the Supreme
Court held that the social and financial standing (including
the earning capacity) of the victim, is NOT important in the
assessment of moral damages, because the controlling ele-
ment is the dignity of man and his human value. However,
in Domingding and Aranas v. Ng, et al. (103 Phil. 111), the
Court seemingly reversed its former stand when it held that
the social and financial standing of the offender and offended
party should be taken into account in the computation of
moral damages. In that case, where the trial court ordered
the offender, an overseer of a mango store to pay the victim
(a customer of the store, whom he had subjected to indigni-
ties by embracing and kissing her inside a taxi) P50,000 as
moral damages, the Supreme Court reduced the award to a
measly P1,000, considering the lack of wealth or financial
consequence on the part of both parties. In Yutuk v. Manila
Electric Co., L-13016, May 31, 1961, the Court held that the
aggrieved party’s moral feeling and personal pride should be
weighed in the determination of the indemnity.
(3) Need for Certain Steps

The husband of a woman, who voluntarily procured her
abortion, cannot recover moral damages from the physician who
caused the same where the said husband appeared to have
1313
taken no steps to investigate or pinpoint the causes thereof,

and obtain the punishment of the responsible practitioner.
(Geluz v. Court of Appeals, et al., L-16439, Jul. 20, 1961).
(4) Necessity of Personal Injury

(a) As a general rule, if a person is not himself physically
hurt, he cannot obtain moral damages. Thus, mere
sympathy for a close relative’s physical injuries cannot
grant moral damages to the sympathizer, even if he also
suffers mental anguish, as a result of such sympathy.
(See Strebel v. Figueras, et al., 96 Phil. 321; 15 Am. Jur.
597-598 and Araneta, et al. v. Arreglado, et al., 104 Phil.
529). Thus also, if it is the wife who suffered the physi-
cal injuries, moral damages may be recovered only by
her, and not by her next of kin or the husband. (Juana
Soberano & Jose B. Soberano v. Manila Railroad Co.,
L-19407, Nov. 23, 1966).
(b) Exceptions to the rule
Exceptions to the rule may be found in the last two
paragraphs of Art. 2219.
(5) Rule Under the Old Law

Under the old Civil Code, moral damages could not be
recovered for pain and suffering, even by the person person-
ally injured. (Marcelo v. Velasco, 11 Phil. 287 and Algarra v.
Sandejas, 7 Phil. 84).
The Code Commission decided to revise the rule, with
the following explanation:
“Denial of the award of moral damages has been predi-
cated on the idea that physical suffering, mental anguish, and
similar injury are incapable of pecuniary estimation. But it
is unquestionable that the loss or injury is just as real as in
other cases. The ends of justice are better served by giving
the judge discretion to adjudicate some definite sum as moral
damages. That is more equitable than that the sufferer should
be uncompensated. The wrongdoer cannot complain because
it was he who caused the injury. In granting moral damages,
the court proceeds upon the ancient maxim that when there
1314
is a wrong, there is a remedy.” (Report of the Code Commis-

sion, p. 74).
(6) Mental Anguish
Ramos v. Ramos
L-19872, Dec. 3, 1974
FACTS: Because an action for reconveyance of real prop-
erties brought against them had already prescribed, and was
resultantly dismissed, the defendants sued the plaintiffs for
moral damages, alleging that they had suffered from worries,
anxieties, and mental anguish because of the suit that had
been brought against them. However, while the action for
reconveyance had indeed prescribed, there was no showing
that the action had been maliciously brought. The plaintiffs
in the reconveyance case had honestly believed that they had
a good and valid cause of action. Issue: May moral damages
be assessed against the unsuccessful plaintiffs?
HELD: No, moral damages cannot be awarded in favor
of the defendants, and against the unsuccessful plaintiffs. The
reason is because there was no malice in the institution of
the suit for reconveyance. If a case is filed in good faith, and
the defendant suffers from worries and anxieties, said mental
anguish is not the anguish where the law allows a recovery
of moral damages. The law does not impose a penalty on the
right to litigate.
American Express International, Inc. v.

IAC and Jose M. Alejandrino, Nov. 9, 1988
Private respondent Alejandrino was awarded moral dam-
ages amounting to P100,000 with 6% interest thereon computed
from the finality of this decision until paid because of the
alleged humiliation suffered by him when he was forced to
surrender his credit card at Bon Department Store in Seattle.
But as there are no pre-set spending limits to the use of the
Amexco credit card, petitioner could not be faulted for order-
ing the immediate seizure of private respondent’s credit card.
Considering the large number of people availing themselves
of the pre-set spending privilege in the use of the credit card,
1315
petitioner’s only protection consists in its ability to stop with

dispatch anyone wrongfully using the credit card.
Whatever humiliation or embarrassment Alejandrino
might have suffered on account of the seizure incident in
Seattle, the Director of Operations of Amexco’s Hongkong
office apologized to private respondent. The Director offered
to write a letter of explanation to Bon Department Store.
He even offered to reopen Alejandrino’s account. Alejandrino,
however, rejected the offers. Clearly then, while petitioner was
not in bad faith, its negligence caused the private respondent
to suffer mental anguish, serious anxiety, embarrassment and
humiliation, for which he is entitled to recover reasonable
moral damages.
Pan American World Airways, Inc. v. IAC

GR 44442, Aug. 31, 1987
The award of moral damages by the trial court and the
Court of Appeals in favor of a Pan American passenger, who
was bumped off, in the amount of P500,000 as moral damages,
P200,000 as exemplary damages and P100,000 as attorney’s
fees was considered by the Supreme Court to be exorbitant
and consequently reduced the moral and exemplary damages
to the combined total sum of P200,000 and the attorney’s
fees to P20,000. It retained the award of actual damages in
the amount of US$1,546.15 computed at the exchange rate
prevailing at the time of payment.
Danao v. CA
GR 48276, Sep. 30, 1987
The creditor not only filed an unwarranted foreclosure
proceedings, but also carried out the proceedings in a manner
as to embarrass the debtor by publishing the notice of extra-
judicial foreclosure and sale in the society page of a Sunday
edition of a widely circulated newspaper, instead of in the
“legal notices” or “classified ads” sections as usual in these
types of notices, in extraordinarily large and boxed advertise-
ments, which allegedly bespoke of the bank’s malicious intent
to embarrass and harass the defendant in alleged violation
of the canons of conduct provided for in Articles 19, 20 and
21 of the Civil Code.
1316
Both the Court of Appeals (CA) and the lower court took
cognizance of the debtor’s mental anguish, serious anxiety and
besmirched reputation traceable to the unfortunate publica-
tion. The lower court awarded P100,000 moral damages, but
the CA reduced said amount to P30,000. The Supreme Court
increased the amount to P60,000.
(7) Courts Given Discretion to Award Moral Damages
Prudenciado v. Alliance Transport System, Inc.

GR 33836, Mar. 16, 1987
Trial courts are given discretion to determine the amount
of moral damages. The Court of Appeals can only modify or
change the amount awarded when they are palpably and
scandalously excessive “so as to indicate that it was the
result of passion, prejudice or corruption on the part of the
trial court.” But where the awards of moral and exemplary
damages are far too excessive compared to the actual losses
sustained by the aggrieved party, they should be reduced to
more reasonable amounts.
While the amount of moral damages is a matter left
largely to the sound discretion of a court, the same when
found excessive should be reduced to more reasonable amounts,
considering the attendant facts and circumstances. Moral
damages, though incapable of pecuniary estimation, are in
the category of an award designed to compensate the claim-
ant for actual injury suffered and not to impose a penalty on
the wrongdoer. Moral damages are not intended to enrich a
complainant at the expense of a defendant. They are awarded
only to enable the injured party to obtain means, diversion
or amusements that will serve to alleviate the moral suffer-
ing he has undergone, by reason of the defendants’ culpable
action. The award of moral damages must be proportionate
to the suffering inflicted.
Isabelita Vital-Gozon v. CA & Alejandro

dela Fuente
GR 129132, Jul. 8, 1998
A public officer, like petitioner herein, may be liable for
moral damages for as long as the moral damages suffered by
1317
private respondent were the proximate result of petitioner’s

wrongful act or omission, i.e., refusal to perform an official
duty or neglect in the performance thereof.
Since moral damages are, in the language of Art. 2217,
“incapable of pecuniary estimation,” courts have the discre-
tion to fix the corresponding amount, not being bound by any
self-serving assessment by the claimants.
Development Bank of the Phils. v.

CA & Emerald Resort Hotel Corp.
GR 125838, Jun. 10, 2003
FACTS: DBP maintains that ERHC, a juridical person,

is not entitled to moral damages. ERHC counters that its
reputation was debased when the sheriffs and several armed
men intruded into Hotel Ibalon’s premises and inventoried
the furniture and fixtures in the hotel. The Court of Appeals
(CA) affirmed the trial court’s award of moral damages.
HELD: The CA erred in awarding moral damages to
ERHC, the latter having failed to present evidence to warrant
the award. In a long line of decisions, the Supreme Court
has ruled that the claimant for moral damages must present
concrete proof to justify its award. (Enervida v. Dela Torre,
154 Phil. 301 [1974], citing Algara v. Sandejas, 27 Phil. 284
[1914]).
Moreover, as a general rule, moral damages are not
awarded to a corporation because, being an artificial person
and having existence only in legal contemplation, it has no
feelings, no emotions, no senses. It cannot, therefore, experience
physical suffering and mental anguish which can be experi-
enced only by one having a nervous system. The statement
in People v. Manero and Mamburao Lumber Co. v. PNB that
a corporation may recover moral damages if it “has a good
reputation that is debased, resulting in social humiliation” is
an obiter dictum. On this core alone, the award for damages
must be set aside. (ABS-CBN Broadcasting Corp. v. CA, 361
Phil. 499 [1999] and Napocor v. Philipp Brothers Oceanic,
Inc., GR 126204, Nov. 20, 2001).
1318
Art. 2218. In the adjudication of moral damages, the

sentimental value of property, real or personal, may be
considered.
COMMENT:
Sentimental Value
Sentimental value may be considered both in civil li-
abilities arising from crimes (Art. 106, Rev. Penal Code) and
in civil cases, where there are fraudulent or deceitful motives.
(See Arnaldo v. Famous Dry Cleaners, [C.A.] 52 O.G. 282).
Art. 2219. Moral damages may be recovered in the fol-

lowing 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 sisters may bring the action mentioned in No. 9 of this
article, in the order named.
1319
COMMENT:
(1) Instances (Not Exclusive) When Moral Damages May
Be Recovered
(a) The law here speaks of 9 instances and “analogous
cases.”
Mayo y Agpaoa v. People

GR 91201, Dec. 5, 1991
Article 2219 of the New Civil Code provides: “Moral

damages may be recovered in the following and analogous
cases:
(1) A criminal offense resulting in physical inju-
ries;
(2) Quasi-delicts causing physical injuries;
Equitable Leasing Corp. v. Lucita Suyom,

Marissa Enano, Myrna Tamayo & Felix Oledan
GR 143360, Sep. 5, 2002
FACTS: Petitioner claims it is not liable for moral

damages, because respondents failed to establish or show
the causal connection or relation between the factual
basis of their claim and their wrongful act or omission,
if any.
HELD: Having established the liability of petitioner
as the registered owner of the vehicle, respondents have
satisfactorily shown the existence of the factual basis for
the award and its causal connection to the acts of the
driver, who is deemed as petitioner’s employee. Indeed,
the damages and injuries suffered by respondents were
the proximate result of petitioner’s tortuous act or omis-
sion.
(3) Seduction, abduction, rape or other lascivious
acts;
(4) Adultery or concubinage;
(5) Illegal search;
1320
(6) Libel, slander or any other form of defama-

tion;
(7) Malicious prosecution;
(8) Acts mentioned in article 309;
(9) Acts and actions referred to in Articles 21, 26,
27, 28, 29, 30, 32, 34 and 35.”
Garciano v. CA, et al.

GR 96126, Aug. 10, 1992
Moral damages are recoverable only if the case
falls under Art. 2219 in relation to Art. 21. In the case
at bar, petitioner is not without fault. Firstly, she went
on an indefinite leave of absence and failed to report
back in time for the regular opening of classes. Secondly,
for reasons known to herself alone, she refused to sign
a written contract of employment. Lastly, she ignored
the Board of Directors’ order for her to report for duty
on July 5, 1982. The trial court’s award of exemplary
damages to her was not justified for she is not entitled
to moral, temperate, or compensatory damages.
In sum, the Court of Appeals correctly set aside the
damages awarded by the trial court to the petitioner for
they did not have any legal or factual basis.
(b) “Analogous cases” refers to instances similar to the cases
enumerated in the article, and not to ALL causes of
mental anguish. (People v. Plaza, [C.A.] 52 O.G. 6609).
One example is the institution of unfounded suits, one
after another, all resulting in the dismissal of said suits;
the anguish and embarrassment suffered by the defend-
ant cannot be denied. (Haw Pia v. Court of Appeals, L-
20047, Jun. 30, 1967). Ordinarily, a breach of contract
cannot be considered as included in the descriptive term
“analogous cases” used in Art. 2219, not only because
Art. 2220 specifically provides for the damages that are
caused by a contractual breach but because the definition
of quasi-delict in Art. 2176 of the Code expressly excludes
the cases where there is a pre-existing contractual re-
lation between the parties. The advantageous position
of a party suing a carrier for breach of the contract of
1321
transportation explains to some extent, the limitations

imposed by the new Code on the amount of the recov-
ery. The action for breach of contract imposes on the
defendant carrier a presumption of liability upon mere
proof of injury to the passenger; the latter is relieved
from the duty to establish the fault of the carrier, or of
his employees; and the burden is placed on the carrier
to prove that it was due to an unforeseen event or to
force majeure. Moreover, the carrier, unlike in suits in-
volving quasi-delict, may not escape liability by proving
that it has exercised due diligence in the selection and
supervision of the employees. Incidentally, regarding the
claim that moral damages may be awarded because of
Art. 1170 (incidental fraud), suffice it to state that said
article merely sets forth a general principle on dam-
ages. (See Geraldez v. CA, GR 108253, Feb. 23, 1994,
48 SCAD 508). As regards moral damages, Art. 2219 is
controlling, it being a specific provision thereon and as
such, it prevails over Art. 1170. (Verzosa v. Baytan, et
al., 107 Phil. 1010).
Bert Osmeña and Associates v.

Court of Appeals
GR 56545, Jan. 28, 1983
(1) When fraud or bad faith has been proved,
moral damages may be awarded.
(2) When moral damages are awarded, exemplary
damages may also be decreed.
Darang v. Ty Belizar
L-19487, Jan. 31, 1967
To recover moral damages, there must be pleading
and proof of moral suffering, anguish, fright, etc.
Imperial v. Ziga
L-19726, Apr. 13, 1967
Moral damages, imposed in a judgment, can earn
interest, if so provided in the judgment, and reckoning
can begin from the time the judgment is promulgated.
1322
Gatchalian v. Delim
GR 56487, Oct. 21, 1991
Since respondent and his driver had been grossly

negligent in connection with the bus mishap which
had injured petitioner and other passengers and recall-
ing the aggressive maneuvers of respondent, thru 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, the amount of P30,000 would be a reasonable
award. Petitioner’s claim for P1,000 as attorney’s fees
is in fact even more modest.
Mayo y Agpaoa v. People

GR 91201, Dec. 5, 1991
FACTS: June Navarette was driving a Lancer car

owned by Linda Navarette, her sister. On board the car
were Linda, Legionaria, Mae, Noel, Reymond, Antonette
and Mercy. Before the accident took place, the Tamaraw
jeep driven by Danilo was first ahead, followed by the
Lancer car and behind the Lancer car was the Rabbit
bus driven by Mayo travelling towards the direction of
Manila. The Lancer car as well as the Rabbit bus fol-
lowing one after the other overtook the Tamaraw jeep.
The Lancer car was then cruising steadily at the right
lane of the road at a speed rate of about 40 kilometers
per hour. As the vehicle approached the vicinity of
Mabalacat Institute, the Rabbit bus picked up speed
and swerved to the left lane to overtake the Lancer car
which was running on the right lane of the highway.
When the Rabbit bus was abreast with the Lancer, an
oncoming vehicle from the opposite direction appeared
and flashed its headlights to warn the bus to give way.
The bus swerved to its right in an effort to return to the
right lane to avoid collision with the oncoming vehicle,
and in the process it hit the left rear side portion of
1323
the Lancer car with its right front bumper. Because of

the impact, the driver of the Lancer lost control of the
wheel and the car crashed against the concrete fence.
Mayo was charged and convicted with the crime of reck-
less imprudence resulting in damage to property with
multiple serious, less serious and slight physical injuries.
He filed an appeal with the Court of Appeals (CA) which
affirmed the trial court’s decision with the modification
that the appellant suffered a straight penalty of three
months, on the ground that the Indeterminate Sentence
Law is not applicable, the maximum penalty imposable
not exceeding one year. The complainants in the criminal
case were awarded damages. The CA sustained the trial
court.
ISSUE: Whether the findings of the trial court
justify the award of moral damages in the amount of
P700,000 in favor of Linda Navarette.
HELD: The Supreme Court modified the amount of
P700,000 as moral damages granted to complainant by
reducing it to P200,000 and holding that Linda is enti-
tled to moral damages. She suffered injuries as a result
of the criminal offense of Mayo. Moreover, her injuries
resulting in a permanent scar at her forehead and the
loss of her right eye gave her mental anguish, wounded
feelings and shock. The psychological effect on her as
regards the scar on her forehead and her false eye must
have devastated her considering that women in general
are fastidious on how they look. More important was the
loss of vision of her right eye which was severely injured
as a result of the accident. Since the accident, Linda had
to contend with the loss of her eyesight on her right eye
which necessarily hampers her not only physically but
also professionally for the rest of her life. Before the ac-
cident, Linda who is a home economist by profession was
doing well in her career. A graduate of the University of
the Philippines with the degree of Home Economics, she
is the Assistant Vice President as well as the Resident
Manager of Club Solviento receiving a gross income of
P10,000 a month. Simultaneously with her work at Club
Solviento, she served as Food Consultant of Food City
1324
where she received a monthly salary of P7,000. However,

she had to give up her consultancy job after the accident
not only because of her prolonged absences but because
of the physical handicap she suffered. Nevertheless,
there is no justification toward moral damages in favor
of Linda for the loss of her boyfriend. No doubt, the loss
of her boyfriend after the accident added to her mental
and emotional sufferings and psychologically affected and
disturbed her. However, there is no evidence to show
that her boyfriend left her after the accident due to her
physical injuries. He may have left her even if she did not
suffer the slightest injury. The reasons for the break-up
of a courtship are too many and too complicated such
that they should not form the basis of damages arising
from a vehicular accident. Moreover, granting that her
boyfriend left her due to her physical injuries, there is
no legal basis for the award of moral damages in favor
of Linda because of the loss of a boyfriend. Art. 2219
of the new Civil Code enumerates cases wherein moral
damages may be granted. Loss of a boyfriend as a result
of physical injuries suffered after an accident is not one
of them. Neither can it be categorized as an analogous
case. The award of P700,000 as moral damages in favor
of Linda is unconscionable and excessive. The Court
rejects Linda’s claim for the amount of P1,000,000 as
moral damages for the loss of her boyfriend. She asked
for the amount of P500,000 as moral damages due to her
personal injuries. Therefore, the award for moral damages
should not exceed P500,000. Under the circumstances,
the amount of P200,000 as moral damages in favor of
Linda is reasonable, just and fair. Thus, moral damages
may be awarded where gross negligence on the part of
the common carrier is shown.
Spouses Quisumbing v. Manila Electric Co.

GR 142943, Apr. 3, 2002
Art. 2219 lists the instances when moral damages

may be recovered. One such instance is when the rights
of individuals, including the right against deprivation of
property without due process of law, are violated.
1325
Although incapable of pecuniary computation, such

damages may be recovered if they are the proximate
results of the defendant’s wrongful act or omission.
(2) Rule With Respect to Contracts

Note that contracts are not referred to in this article.
However:
(a) Under Art. 2220, moral damages may be recovered where
the defendant acted fraudulently or in bad faith.
Filinvest Credit Corp. v. Mendez

GR 66419, Jul. 31, 1987
FACTS: A credit corporation sued an installment

buyer of a car to recover said car and/or the sum of
money when the latter’s check intended for the February,
March and April installments bounced due to insufficiency
of funds. By virtue of an order of seizure by the court,
the car was repossessed. The buyer later redeposited the
check and credited for the months mentioned. When the
buyer negotiated with the credit company for the release
of the car, the latter demanded payment of the total
outstanding balance on the promissory note. Due to the
persistent pleas of the buyer, the credit company released
the car to him upon payment of the installment remain-
ing unpaid for the months of April, May and June, in
addition to the costs incurred in repossessing. The court
dismissed the case on motion of the credit company.
HELD: The buyer is not entitled to damages. The
willingness of the credit company to allow the buyer to
pay only the unpaid installments for April, May and June,
instead of the total outstanding balance and to release
the car as well as its voluntary motion to dismiss the
case indicates lack of fraud or bad faith on the part of
the credit company. The buyer was not without fault.
He was three months behind in his payments and he
issued a bouncing check.
1326
Moral damages cannot be awarded in the absence

of a wrongful act or omission or fraud or bad faith.
When the action is filed in good faith there should be
no penalty on the right to litigate. One may have erred,
but error alone is not a ground for moral damages.
(b) If death is caused to a passenger by the negligence of a
common carrier, moral damages may be recovered. (Arts.
1764, 2206).
(3) Re Par. 1 (Physical Injuries Because of a Crime)

“A criminal offense resulting in physical injuries.”
(a) If a passenger dies or is injured, and a criminal case is
brought by himself or by his heirs, in the proper case,
moral damages may be recovered.
(b) If there be no death or physical injuries, moral damages
cannot be recovered. (People v. Plaza, [C.A.] 52 O.G.
6609; Strebel v. Figueras, 96 Phil. 321).
(c) If a taxi driver was negligent and injures a passenger,
he can be liable for moral damages, but not the taxi
company, for the company did not commit the crime.
(See Cachero v. Manila Yellow Taxicab Co., Inc., 101
Phil. 523).
[NOTE: Rule in Civil Actions: Moral damages
are NOT recoverable in damage actions predicated on
a breach of the contract of transportation in view of
the provisions of Arts. 2219 and 2220 of the new Civil
Code. (Verzosa v. Baytan, et al., 107 Phil. 1010). The
exceptions to this rule are (a) where the mishap results
in the death of a passenger, and (b) where it is proved
that the carrier was guilty of fraud or bad faith, even if
death does not result. (Fores v. Miranda, 105 Phil. 266).
The mere carelessness of the carrier’s driver does not
per se constitute or justify an inference of malice or bad
faith on said carrier’s part (Rex Taxicab Co. v. Bautista,
L-15392, Sept. 30, 1960), because fraud, malice, or bad
faith must be proved. (Soberano and Soberano v. Manila
Railroad Co., L-19407, Nov. 23, 1966).]
1327
(4) Re Par. 3 (Seduction, etc.)

“Seduction, abduction, rape or other lascivious acts.”
People of the Philippines v. Mariano Fontanilla

L-25354, Jun. 28, 1968
FACTS: Mariano Fontanilla, 52 years of age, was ac-

cused by his servant, Fe Castro, a 15-year-old virgin of
repeated carnal knowledge with her for three months. She
could not recall the total number of times. She testified that
she repeatedly yielded because of his promises of marriage
(despite the fact that he was a married man), and because
she was frightened by his acts of intimidation. The accused
made love to her during the day when his wife was away,
and at night, when the latter was already asleep. One night,
they were caught in flagrante on the kitchen floor. Fontanilla
denied the accusation stating, inter alia, that because of his
age, it was impossible for him to make love to his wife more
than once a week, much less, to have had Fe carnally day
and night. Fontanilla was found guilty in view of the evidence
presented. Regarding the repeated acts of carnal knowledge,
there is a presumption that an adult male has normal powers
of virility. The Court also awarded Fe or her parents moral
damages amounting to P500. Issue: Is this award of moral
damages proper?
HELD:
(a) The award of only P500 is inadequate. The victim was
a virgin, and she was deflowered by Fontanilla. This
loss of virginity, together with the attendant shame
and scandal, entitles her to the sum of P2,500 in moral
damages. Her future as a woman is definitely impaired,
and the resultant prejudice against her engendered in
the male population of the barrio where she resides,
cannot be blinked away.
(b) The award must not be in the alternative, for under Art.
2219 of the Civil Code, the parents are ALSO entitled
to recover moral damages. The conviction of the accused
suffices as a basis to adjudge him, in the same action,
liable for an award of moral damages, without independ-
1328
ent proof thereof, to the victim AND her parents, because

the law presumes that the parents also naturally suf-
fered besmirched reputation, social humiliation, mental
anguish, and wounded feelings.
People v. Manalo
GR 49810, Oct. 13, 1986
In rape cases, moral damages have been raised to
P20,000.
People v. Bondoy
41 SCAD 432
1993
The indemnity to a rape victim has been increased
to P50,000.
People v. Eric Baid y Ominta

GR 129667, Jul. 31, 2000
FACTS: Appellants was accusing of raping a 27-year
old woman diagnosed with schizophrenia. Found guilty,
appellant assailed victim’s credibility on account of her
ailment.
HELD: It is medically established that schizophrenic
persons do not suffer from a clouding of consciousness
and gross deficits of memory. The victim could understand
the questions propounded to her relating to the rape and
could give responsive answers to them despite exhibiting
inappropriate emotions in the course of her testimony.
Notably, complainant’s submission to the sexual advances
of appellant notwithstanding, the intercourse was without
consent considering that schizophrenia caused an impair-
ment of the judgment on complainant. Hence, appellant
may be convicted of rape under Art. 335(2) of the Re-
vised Penal Code for the victim was completely insane
or deprived of reason when he had carnal knowledge of
her. The phrase “deprived of reason” includes those suf-
fering from mental abnormality, or deficiency, or some
form of mental retardation, those who are feeble-minded
although coherent.
1329
The trial court is correct in awarding moral damages

in the amount of P50,000 in accordance with jurispru-
dence that moral damages may be awarded in rape cases
without any need of proof of moral suffering. Additionally,
civil indemnity in the amount of P50,000 should have been
awarded the complainant consistent with the ruling that
rape victims are entitled to such an award without need
of proof except the fact of the commission of the offense.
(People v. Capillo, GR 123059, November 25, 1999). The
prosecution’s plea that the indemnity should be raised
to P75,000 cannot be granted because such amount is
awarded only in cases of qualified rape. In the case at
bar, there have been no qualifying circumstances raising
the penalty to death. (People v. Lasola, GR 123152, Nov.
17, 1999).
(5) Re Par. 7 (Libel, Slander, Defamation)

“Libel, slander, or any other form of defarmation.”
If there is no libel, etc. because of the defense of “privi-
leged communication” and malice is not proved, there will be
no award of moral damages. This is particularly true in the
case of court pleadings which may contain libelous remarks.
(See De la Rosa, et al. v. Maristela, [C.A.] 50 O.G. 254).
On the other hand, the allegation of forgery in a docu-
ment is all but a defamation, which in the light of Art. 2217
could by analogy be a ground for payment of moral damages,
considering the wounded feelings and besmirched reputation
of the parties involved. (Heirs of Justiva v. Court of Appeals,
L-16396, Jan. 31, 1963).
(6) Re Par. 8 (Malicious Prosecution)

“Malicious Prosecution”
The defendant, to be liable, must have acted deliberately
knowing that his charges were false and groundless. Indeed,
the mere act of submitting a case to the authorities for pros-
ecution does not make him liable for malicious prosecution,
for generally, it is the Government or representative of the
State that takes charge of the prosecution of the offense.
1330
There must be proof that the prosecution was prompted by a

sinister design to vex and humiliate a person, for if the rule
were otherwise, every acquitted person can turn against the
complainant in a civil action for damages. (Buenaventura, et
al. v. Sto. Domingo, et al., L-10661, Mar. 2, 1958). In order
that moral damages may be recovered as a result of a writ
of attachment wrongfully issued, malice must be proved to be
present. (Lazatin v. Tuano, et al., L-12736, Jul. 31, 1961).
Alejo Madera, et al.

v. Heirs of Salvador Lopez
L-37105, Feb. 10, 1981
Statutory basis for an action for moral damages due to

malicious prosecution can be found in Arts. 19, 2176, and
2219 of the Civil Code.
PCIB v. IAC
GR 73610, Apr. 19, 1991
An action to recover damages from the plaintiff who

secures a writ of attachment based on a false affidavit is
identical with or analogous to the ordinary action for mali-
cious prosecution. Moral damages may be recovered by the
defendant on account of an improperly and irregularly issued
writ of attachment.
Albenson Enterprises Corp., et al. v.

CA & Eugenio S. Baltao
GR 88694, Jan. 11, 1993
A civil action for damages for malicious prosecution is

allowed under the Civil Code, more specifically Arts. 19, 20,
26, 29, 32, 33, 35, and 2219(8) thereof.
In order that such a case can prosper, however, the fol-
lowing three (3) elements must be present, to wit: (1) the fact
of the prosecution and the further fact that the defendant was
further fact that the defendant was himself the prosecutor,
and that the action was finally terminated with an acquittal;
(2) that in bringing the action, the prosecutor acted without
probable cause; and (3) the prosecutor was actuated or impelled
1331
by legal malice. Thus, a party injured by the filing of a court

case against him, even if he is later on absolved, may file a
case for damages grounded either on the principle of abuse
of rights, or on malicious prosecution. It is well-settled that
one cannot be held liable for maliciously instituting a pros-
ecution where one has acted with probable cause (defined as
the existence of such facts and circumstances as would excite
the belief, in a reasonable mind, acting on the facts within
the knowledge of the prosecutor, that the person charged was
guilty of the crime for which he was prosecuted). To constitute
malicious prosecution, there must be proof that the prosecu-
tion was prompted by a sinister design to vex and humiliate
a person, that it was initiated deliberately by the defendant
knowing that his charges were false and groundless. Conce-
dedly, the mere act of submitting a case to the authorities for
prosecution does not make one liable for malicious prosecu-
tion. Proof and motive that the institution of the action was
prompted by a sinister design to vex and humiliate a person
must be clearly and preponderantly established to entitle the
victims to damages.
In the case at bar, there is no proof of a sinister design on
the part of petitioners to vex or humiliate private respondent
by instituting the criminal case against him. While petitioners
may have been negligent to some extent in determining the
liability of private respondent for the dishonored check, the
same is not so gross or reckless as to amount to bad faith
warranting an award of damages. The questioned judgment
in the instant case attests to the propensity of trial judges
to award damages without basis. Lower courts are hereby
cautioned anew against awarding unconscionable sums as
damages without bases therefor.
(7) Re Par. 10 (Articles on Human Relations)

Bar Question
(a) Is a breach of promise to marry an actionable wrong?
Explain briefly.
(b) A promised to marry his sweetheart B. Later, both ap-
plied for and obtained a marriage license. Thereafter,
they sent out wedding invitations to friends and rela-
1332
tives. B purchased her wedding trousseau, and dresses

for other participants in the wedding. Two days before
the wedding, A left for the province, and sent a note
to B stating that he could not go on with the wedding
because his mother was opposed to it. He was nowhere
to be found on the date of the wedding. Question: Is A
liable for damages?
Reasons:
ANS.: (a) A breach of promise to marry is by itself
not an actionable wrong. (Hermosisima v. Court of Ap-
peals, L-14628, Sept. 30, 1960 and Estopa v. Piansay, Jr.,
L-14733, Sept. 30, 1960). And neither does it give rise to
an action for specific performance. Therefore, only actual
damages (wedding dress, etc.) may be asked; not moral
damages unless there is criminal or moral seduction or
abuse of a right.
(b) A is liable for actual, moral and exemplary damages.
His acts constituted a palpable, unjustifiable, and willful
violation of morals and good customs, for which he can
be held answerable for damages in accordance with Art.
21. And inasmuch as he acted in a wanton, reckless, and
oppressive manner, he should be made to pay moral and
exemplary damages pursuant to the provisions of Art.
2219, par. 10 and Art. 2232 of the Civil Code. (Wassmer
v. Velez, L-20089, Dec. 26, 1964).
Arturo de Guzman v. NLRC, et al.

GR 90856, Jul. 23, 1992
Under Art. 2219(10) of the Civil Code, moral dam-
ages may be recovered for the acts referred to in art. 21
which reads: “Any person who willfully causes loss or
injury to another in a manner that is contrary to mor-
als, good customs or public policy shall compensate the
latter for the damage.”
In Bert Osmeña & Associates v. CA (120 SCRA 396),
the Court held that “fraud and bad faith having been
established, the award of moral damages is in order.
And in Pan Pacific Co. (Phil.) v. Phil. Advertising Corp.
1333
(23 SCRA 977), moral damages were awarded against

the defendant for its wanton and deliberate refusal to
pay the just debt due the plaintiff. It is settled that the
court can grant the relief warranted by the allegation
and the proof even if it is not specifically sought by the
injured party. (Heirs of Celso Amarante v. CA, 185 SCRA
585).
In the case at bar, while the private respondents
did not categorically pray for damages, they did allege
that the petitioner, taking advantage of his position as
general manager, had appropriated the properties of
the Affiliated Machineries Agency Ltd. (AMAL) in pay-
ment of his own claims against the company. That was
averment enough of the injury they suffered as a result
of the petitioner’s bad faith. It is stressed that the pe-
titioners’ liability to the private respondents is a direct
liability in the form of moral and exemplary damages
and not a solidary liability with AMAL for the claims
of its employees against the company. He is being held
liable not because he is the general manager of AMAL
but because he took advantage of his position by applying
the properties of AMAL to the payment exclusively of
his own claims to the detriment of the other employees.
In the instant case, the fact that no actual or compensa-
tory damages was proven before the trial court does not
adversely affect the private respondents’ right to recover
moral damages. Thus, moral damages may be awarded in
the cases referred to in the Chapter on Human Relations
of the Civil Code (Arts. 19-31) without need of proof that
the wrongful act complained of had caused any physical
injury upon the complainant.
(8) Moral and Exemplary Damages Were NOT Given in the

Following Cases:
(a) When no evidence was introduced thereon, and the case
was submitted simply on a stipulation of facts. (Tabora
v. Montelibano, et al., L-8667, Apr. 3, 1956).
(b) When a complaint contained nothing derogatory to the
good name or reputation of the other party, and bad
1334
faith was not shown. (Litam v. Espiritu, et al., L-7644,

Nov. 27, 1956).
(c) When there was no allegation or proof that a mayor, in
dismissing a policeman, had acted with motives other
than the promotion of the public interest. (Covacha v.
Amante, L-8358, May 25, 1956).
(d) When a broker believed in good faith that he was en-
titled to a commission for having intervened in a sale,
and thus sued unsuccessfully his principal. (Worcester v.
Lorenzana, 104 Phil. 234).
(e) When a common-law wife, Esther Peralta, was prohibited
by the court to represent herself as Mrs. Saturnino Silva,
or as the lawful wife of her paramour. In this case, the
court held that the unwarranted misrepresentation had
been made in GOOD FAITH, inasmuch as she did NOT
know that her common-law mate was already married to
another. (Elenita Ledesma Silva, et al. v. Esther Peralta,
L-13114, Aug. 29, 1961).
(f) In a case of a clearly unfounded or unreasonable suit.
Note that in a case like this, attorney’s fees may be
recovered (Art. 2208, No. 4) but NOT moral damages,
for this is not one of the cases contemplated under Art.
2219. (Malonzo v. Galang, et al., L-13581, Jul. 27, 1960).
It is true that Art. 2219 also provides that moral dam-
ages may be awarded in “analogous cases” but we do
not think the Code intended a “clearly unfounded civil
action proceeding” to be one of those 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 v. Figueras, 96 Phil. 321), excepting
of course, the special torts referred to in Art. 309 (par.
9, Art. 2219) — relating to disrespect for the dead and
wrongful interference with funerals — and in Arts. 21,
26, 27, 28, 29, 30, 32, 34, and 35 on the chapter on Hu-
1335
man Relations. (par. 10, Art. 2219; Malonzo v. Galang,

et al., L-13851, Jul. 27, 1960).
(g) A brother cannot recover moral damages for his broth-
er’s death in 1937 caused by a negligent train engineer
(while this was under the old Civil Code which appar-
ently allowed such recovery, based on FRENCH decisions,
still the less severe sanction under the new Civil Code
should be applied (Art. 2257) and the new Civil Code is
clearly less severe because under the last paragraph of
Art. 2219, brothers and sisters are NOT among these
who can recover moral damages.)
(h) The passenger’s contributory negligence will justify the
deletion of moral damages.
Philippine National Railways v. CA

GR 55347, Oct. 4, 1985
FACTS: A train passenger insists in sitting on the

open platform between the coaches of the train and does
not hold on tightly to the upright metal bar found at
the said platform. Because of his precarious position, he
falls off the speeding train.
HELD: The passenger is chargeable with contribu-
tory negligence. But his contributory negligence will not
exempt the carrier from liability. It will merely justify
the deletion of moral damages.
(9) Liability of the State Governmental & Proprietary

Functions
Fontanilla v. Maliaman
GR 55913, Feb. 27, 1991
FACTS: On December 1, 1989, through its Second Divi-

sion, the Supreme Court rendered a decision declaring the
National Irrigation Administration (NIA) a government agency
performing proprietary functions. Like an ordinary employer,
NIA was held liable for the injuries, resulting in the death
of Francisco Fontanilla, caused by the fault or negligence of
1336
NIA’s driver-employee Hugo Garcia. The Court ordered NIA

to pay the Fontanilla spouses, the victim’s parents, for the
death of the victim, for hospitalization and burial expenses,
for moral and exemplary damages, and attorney’s fees. NIA
moved for reconsideration, alleging that it does not perform
solely or primarily proprietary functions but as an agency of
the government tasked with governmental functions. Thus,
it may not be held liable for damages for injuries caused by
its employees to a third person.
HELD: The Supreme Court en banc denied the motion
for reconsideration and held that the National Irrigation
Administration is a government agency invested with a cor-
porate personality separate and distinct from the government
and thus is governed by the Corporation Law (now Corporate
Code). It had its own assets and liabilities. It also has corpo-
rate powers to be exercised by a Board of Directors. To quote
Sec. 2, subsection (f): “x x x and to transact such business, as
are directly or indirectly necessary, incidental or conducive
to the attainment of the above powers and objectives, includ-
ing the power to establish and maintain subsidiaries, and
in general, to exercise all the powers of a corporation under
the Corporation Law, insofar as they are not inconsistent
with the provisions of this Act.” (Sec. 2, subsection [f]). The
National Irrigation Administration is a government agency
with a juridical personality separate and distinct from the
government. It is not a mere agency of the government but
a corporate body performing proprietary functions. Therefore,
it may be held liable for damages caused by the negligent act
of its driver who was not its special agent.
(10) Closure of Bank Account Due to “Kiting”
Reyes v. Court of Appeals

GR 95535, Jan. 21, 1991
The bank is not liable for damages for closing a depositor’s
current account, where the latter is guilty of “kiting” activities
as defined in the Central Bank Manual, i.e., “where a deposi-
tor, having only one account of his own, can still engage in
kiting by using the account or accounts of other persons who
may be willing to act and cooperate with him.”
1337
(11) No Hard and Fast Rule
Ayala Integrated Steel

Manufacturing Co., Inc. v. CA
GR 94359, Aug. 2, 1991
Moral damages includes physical suffering, mental an-

guish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, they may be
recovered if they are the proximate result of the defendant’s
wrongful act or omission. Damages are not intended to en-
rich the complainant at the expense of a defendant. They are
awarded only to alleviate the moral suffering that the injured
party had undergone by reason of the defendant’s culpable
action.
There is no hard and fast rule in the determination of
what would be a fair amount of moral damages, since each
case must be governed by its own peculiar circumstances.
Although the Court of Appeals increased the moral and ac-
tual damages awarded by the trial court, the awards are not
excessive but only commensurate with the mental anguish,
hardships, inconvenience, and expenses that respondent suf-
fered and incurred as a result of the malicious prosecutions
initiated by the petitioners against him.
Art. 2220. Willful injury to property may be a legal

ground for awarding moral damages if the court should
find that, under the circumstances, such damages are justly
due. The same rule applies to breaches of contract where
the defendant acted fraudulently or in bad faith.
COMMENT:
(1) Willful Injury to Property and Breaches of Contracts

If the breach of a contract is neither malicious nor fraudu-
lent, no award of moral damages may be given. (Francisco v.
GSIS, L-18155, Mar. 30, 1963).
1338
(2) Case
Vicente & Michael Lim v. CA

GR 118347, Oct. 24, 1996
75 SCAD 574
The evidence shows that private respondent made little
more than taken effort to seek the ejectment of squatters
from the land, revealing her real intention to be finding a
way of getting out of her contract. Her failure to make use of
her resources and her insistence on rescinding the sale show
quite clearly that she was indeed just looking for a way to
get out of her contractual obligation by pointing to her own
abject failure to rid the land of squatters.
The award of moral damages is in accordance with Art.
2220 which provides that moral damages may be awarded
in case of a breach of contract where the defendant acted
fraudulently or in bad faith.
[NOTE: In view of Art. 2220, it has been held that
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. Since the
law presumes good faith, the person claiming moral damages
must prove bad faith or ill motive by clear and convincing
evidence. (MOF Co. v. Enriquez, GR 149280, May 9, 2002).]
Section 2
NOMINAL DAMAGES
Art. 2221. Nominal damages are adjudicated in order

that a right of the plaintiff, which has been violated or in-
vaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for
any loss suffered by him.
COMMENT:
(1) The Grant of Nominal Damages — Reason Therefor
“There are instances when the vindication or recognition
of the plaintiff’s right is of the utmost importance to him as
1339
in the case of trespass upon real property. The awarding of

nominal damages does not therefore run counter to the maxim
de minimio non curat lex (the law does not cure or bother
with trifles).” (Report of the Code Commission, p. 74).
LRT v. Navidad,
GR 145804, Feb. 6, 2003
Nominal damages are adjudicated in order that a right

of the plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by
him. (Art. 2221).
It is an established rule that nominal damages cannot co-ex-
ists with compensatory damages. (Medina v. Cresencia, 99 Phil.
506). Nor is the award of nominal damages. Nor is the award of
nominal damages in addition to actual damages tenable.
(2) Effect of Granting Compensatory and Exemplary Dam-

ages
If compensatory and exemplary damages have been ex-
emplary damages have been awarded, this award is by itself a
judicial recognition that the plaintiff’s right has been violated.
Therefore, a further award, this time of nominal damages, is
unnecessary and improper. (Meding, et al. v. Cresencia, et al.,
L-8194, Jul. 11, 1956). It should be remembered that nominal
damages are merely for the VINDICATION of a right that
has been violated, not for indemnification of the loss suffered.
(Ventanilla v. Centeno, L-14333, Jan. 28, 1961).
Sumalpong v. CA
GR 123404, Feb. 26,1997
79 SCAD 969
FACTS: Some species of injury have been caused to

complainant because of the medical expenses he has incurred
in having his wounds treated, and the loss of income due to
his failure to work during his hospitalization.
1340
ISSUE: In the absence of competent proof of the amount

of actual damages, is the complainant entitled only to nominal
damages?
HELD: Yes. Whenever there has been a violation of an
ascertained legal right, although no actual damages resulted
or none are shown, the award of nominal damages is proper.
Nominal damages are adjudicated in order that a right of
the plaintiff, which has 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.
Philippine Telegraph & Telephone Corp.

& Louie Cabalit v. CA & Lolita Sipe Escoro
GR 139268, Sep. 3, 2002
FACTS: Petitioner PT&T, for a fee, undertook to send

private respondent two telegraphic money orders in the sum
of P3,000. Petitioner, however, failed to deliver the money to
respondent immediately after the money order was transmitted
to its Cubao branch. It was almost two months from transmitted
that respondent was finally able to have her money. Issue: For
the violation of the right of private respondent to receive timely
delivery of the money transmitted thru petitioner corporation,
is an award of nominal damages appropriate?
HELD: Yes. An amount of P20,000 by way of nominal
damages, considering all that private respondent has had to go
thru, is reasonable and fair. “Nominal damages are adjudicated
in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized
and not for the purpose of indemnifying the plaintiff for any
loss suffered by him.” (Art. 2221, Civil Code). (Sumalpong v.
CA, 268 SCRA 764). Nominal damages may be awarded in
every obligation arising from any source enumerated in Art.
1157 or, generally, in every case where property right is in-
vaded.
(3) Liability of a Negligent Lawyer

A lawyer who thru negligence fails to deposit on time
the appeal bond, and to file the record of appeal within the
extension period (asked for by him) and granted by the Court,
1341
while not liable for actual damages, may nevertheless be liable

for nominal damages. This is discretionary on the part of the
Court. (Ventanilla v. Centeno, L-14333, Jan. 28, 1961).
Art. 2222. The court may award nominal damages in

every obligation arising from any source enumerated in
Article 1157, or in every case where any property right has
been invaded.
COMMENT:
When Nominal Damages May Be Awarded
The assessment of nominal damages is left to the discre-
tion of the court, according to the circumstances of the case.
(Ventanilla v. Gregorio Centeno, L-14333, Jan. 28, 1961). An
award of nominal damages precludes the recovery of actual,
moral, temperate, or moderate damages. (Ibid.).
Dee Hua Liong Electrical Equipment

Corp. v. Reyes
GR 72182, Nov. 25, 1986
Nominal damages may be awarded, although plaintiff is
not entitled to actual, moral, or exemplary damages.
Art. 2223. The adjudication of nominal damages shall

preclude further contest upon the right involved and all
accessory questions, as between the parties to the suit, or
their respective heirs and assigns.
COMMENT:
Effect of Granting Nominal Damages
Section 3
TEMPERATE OR MODERATE DAMAGES
Art. 2224. Temperate or moderate damages, which are

more than nominal but less than compensatory damages,
may be recovered when the court finds that some pecuni-
1342
ary loss has been suffered but its amount can not, from the
nature of the case, be proved with certainty.
COMMENT:
(1) Reason for allowing Temperate or Moderate Damages
“In some States of the American union, temperate dam-
ages are allowed. There are cases where from the nature of
the case, definite proof of pecuniary loss cannot be offered,
although the court is convinced that there has been such
loss. For instance, injury to one’s commercial credit or to the
goodwill of a business firm is often hard to show with cer-
tainty in terms of money. Should damages be denied for that
reason? The judge should be empowered to calculate moderate
damages in such cases, rather than that the plaintiff should
suffer, without redress, from the defendant’s wrongful act.”
(Report of the Code Commission, p. 75).
(2) Suffering of Some Pecuniary Loss

It is imperative under Art. 2224 that “some pecuniary loss
has been suffered” (though uncertain); otherwise, temperate
damages cannot be recovered. (See Victorino, et al. v. Nora
[C.A.] 52 O.G. 911). As long, however, as there has been an
injury (such as a physical injury) the fact that the same is
incapable of pecuniary estimation does not preclude the right
to an indemnity. Here the judge may calculate moderate dam-
ages. (Necesito v. Paras, 104 Phil. 75).
(3) Cases
Consolidated Plywood Industries, Inc., et al. v.

CA, et al.
GR 101706, Sep. 23, 1992
In the case at bar, there was no showing nor proof that
petitioner was entitled to an award of this kind of damages
in addition to the actual damages it suffered as a direct con-
sequence of private respondents’ act.
The nature of the contract between the parties is such
that damages which the innocent party may have incurred
can be substantiated by evidence.
1343
Ramos v. CA
GR 124354, Apr. 11, 2002
The amount of damages which should be awarded, if they

are to adequately and correctly respond to the injury caused,
should be one which compensates for pecuniary loss incurred
and proved, up to the time of trial, and one which would
meet pecuniary loss certain to be suffered but which could
not, from the nature of the case, be made with certainty.
Temperate damages can and should be awarded on top
of actual or compensatory damages in instances where the
injury is chronic and continuing. And because of the unique
nature of such cases, no incompatibility arises when both
actual and temperate damages are provided for. The reason
is that these damages cover two distinct phases.
As it would not be equitable — and certainly not in
the best interests of the administration of justice — for the
victim in such cases to constantly come before the courts and
invoke their aid in seeking adjustments to the compensatory
damages previously awarded — temperate damages are ap-
propriate. The amount given as temperate damages, though
to a certain extent speculative, should take into account the
cost of proper care.
Art. 2225. Temperate damages must be reasonable under

the circumstances.
COMMENT:
Reasonable Temperate Damages
What is reasonable is a question of fact, depending on
the relevant circumstances.
Section 4
LIQUIDATED DAMAGES
Art. 2226. Liquidated damages are those agreed upon

by the parties to a contract, to be paid in case of breach
thereof.
1344
COMMENT:
Nature of Liquidated Damages
In effect, “liquidated damages” and “penalty” are the same.
Neither requires proof of actual damages. (Lambert v. Fox, 26
Phil. 588). After all, they had been previously agreed upon.
Art. 2227. Liquidated damages, whether intended as an

indemnity or a penalty, shall be equitably reduced if they
are iniquitous or unconscionable.
COMMENT:
(1) Equitable Reduction of Liquidated Damages
The reason is that in both, the stipulation is contra
bonos mores. It is a mere technicality to refuse to lessen the
damages to their just amount simply because the stipulation
is not meant to be a penalty. An immoral stipulation is none-
theless immoral because it is called an indemnity. (Report of
the Code Commission, p. 75).
(2) Effect of Partial or Irregular Performance

Under Art. 2227, liquidated damages shall be reduced
if iniquitous or unconscionable. Now then, suppose there
has been partial or irregular performance, can there also be
reduction?
HELD: Yes, because the fundamental rules governing
“liquidated damages” and “a penalty clause” are the same.
Moreover, the liquidated damages are presumed to be only
for a total breach. Therefore, if out of 500 television sets to
be delivered, 63 only are given, there can be a reduction in
the amount of liquidated damages. (Joe’s Electrical Supply v.
Alto Electronics, L-12376, Aug. 22, 1958).
Art. 2228. When the breach of the contract committed

by the defendant is not the one contemplated by the parties
in agreeing upon the liquidated damages, the law shall de-
termine the measure of damages, and not the stipulation.
1345
COMMENT:
Rule if Breach Was Not Contemplated in the Agreement
on Liquidated Damages
Section 5
EXEMPLARY OR CORRECTIVE DAMAGES
Art. 2229. Exemplary or corrective damages are imposed,

by way of example or correction for the public good, in ad-
dition to the moral, temperate, liquidated or compensatory
damages.
COMMENT:
(1) Reason for Imposing Exemplary or Corrective Damages
Although in the United States exemplary damages are
also called “punitive” damages, still the term “corrective” is
in harmony with the modern theory of penology.
Exemplary damages are required by public policy for
wanton acts must be suppressed. They are an antidote so
that the poison of wickedness may not run through the body
politic. (Report of the Code Com., pp. 75-76).
In the absence of moral, temperate, liquidated, or com-
pensatory damages, no exemplary damages can be granted, for
exemplary damages are allowed only in ADDITION to any of
the four kinds of damages mentioned. (Ventanilla v. Centeno,
L-14333, Jan. 28, 1961; Fores v. Miranda, 105 Phil. 266 and
Francisco v. GSIS, L-18155, Mar. 30, 1963). It is advisable
to specifically ask in the complaint for exemplary damages
(in the proper cases), but the general prayer in the complaint
for “other remedies which may be just and equitable in the
premises” can allow, if warranted, the grant of exemplary
damages. (See Darang v. Belizor, L-19487, Jan. 31, 1967).
Guilatco v. City of Dagupan and CA

GR 61516, Mar. 21, 1989
To serve as an example for the public good, it is high
time that the court should serve warning to the city or cities
1346
concerned to be more conscious of their duty and responsibil-

ity to their constituents, especially when they are engaged
in construction work or when there are manholes on their
sidewalks or streets which are uncovered, to immediately
cover the same, in order to minimize or prevent accidents to
the poor pedestrians.
Too often in the zeal to put up “public impact” projects
such as beautification drives, the end is more important than
the manner in which the work is carried out. Because of this
obsession for showing off, such trivial details as misplaced
flower pots betray the careless execution of the projects, caus-
ing public inconvenience and inviting accidents.
Prudenciado v. Alliance Transport System, Inc.

GR 33836, Mar. 16, 1987
The rationale behind exemplary or corrective damages

is to provide an example or correction for the public good.
A driver running at full speed on a rainy day, on a slip-
pery road in complete disregard of the hazards to life and limb
of other people cannot be said to be acting on anything less
than gross negligence. The frequent incidence of accidents of
this nature caused by taxi drivers, indeed, demands corrective
measures.
(2) Examples of Exemplary Damages

(a) Exemplary damages were imposed against a corporation
which persisted in oppressively invading another’s rights
despite “cease and desist orders” from the Public Service
Commission. This imposition of exemplary damages would
be a reminder that economic power will never justify a
reckless disregard of the rights of others. (Castro, et al.
v. Ice and Cold Storage Industries, et al., L-10147, Dec.
27, 1958).
(b) A victim shot in the jaw by the minor son of the defend-
ant with the father’s gun was given an award of P18,000.
The Court said that this will remind licensed posses-
sors of firearms of their peremptory duty to adequately
safeguard such dangerous weapons at all times, and to
1347
take all requisite measures to prevent minors and other

unauthorized parties from having access thereto. Moreo-
ver, competent observers have recently called attention
to the fact that the growing teenage hooliganism in our
society is principally due to parent’s complacency in and
neglect of their progeny. (Araneta, et al. v. Arreglado, et
al., 104 Phil. 529).
(c) Exemplary damages in the amount of P2,000 was awarded
in a case where the overseer of a mango store abused
the confidence of a female customer by subjecting her
to indignities. According to the Court, this bespeaks of
a perverse nature, dangerous to the community. (Dom-
ing-ding and Aranas v. Ng, et al., 103 Phil. 111).
[NOTE: If a mayor in good faith dismisses an em-
ployee although the former was not authorized, exemplary
damages of P2,000 should be considered excessive, and
must be reduced to P1,000. Exemplary damages, in a case
like this, according to the Court, should be imposed only
to curtail the abuses that some public officials are prone
to commit upon coming to power, in utter disregard of
the civil service rules which constitute the only safeguard
of the tenure of office guaranteed by the Constitution.
(Diaz, et al. v. Amante, L-9228, Dec. 26, 1958)].
People v. Erlindo Talo

GR 125542, Oct. 25, 2000
FACTS: Accused-appellant Erlindo Talo was charged

and found guilty of forcible abduction with rape and sen-
tenced to death and to pay complainant Doris Saguindang
the amount of P30,000 as moral damages and costs of
the suit.
HELD: The trial court’s decision was upheld but
the penalty was reduced to reclusion perpetua and with
the damages awarded modified. In accordance with ju-
risprudence (People v. Baid, GR 129667, Jul. 31, 2000;
People v. Dreu, GR 126282, Jun. 20, 2000; and People
v. Licanda, GR 134084, May 4, 2000), complainant
Saguindang must be paid P50,000 as civil indemnity,
P50,000 as moral damages, and the additional amount of
1348
P25,000 as exemplary damages, in view of the attendance

of aggravating circumstances, pursuant to Art. 2229 of
the Civil Code. (See People v. Santos, GR 131103, and
143472, Jun. 29, 2000).
(d) If an employee commits a wrongful act, may his employer
be required to pay exemplary damages? NO, except inso-
far as said employer had participated in or ratified the
act. The rule is that exemplary damages are imposed
primarily on the wrongdoer as a deterrent in the com-
mission of similar acts in the future. Since exemplary
damages are penal in character, the motive authorizing
their infliction will not be imputed by presumption to
the principal when the act is committed by an agent
or servant. Inasmuch as they are granted not by way
of compensation, but as a punishment to the offender
and as a warning to others, they can only be awarded
against one who has participated in the offense and the
principal therefore cannot be held liable for them merely
by reason of wanton, oppressive, or malicious intent on
the part of the agent. Moreover in this jurisdiction, in
case of crimes, exemplary damages may be imposed only
when the crime is committed with one or more aggravat-
ing circumstances. (Art. 2230, Civil Code and Rotea v.
Halili, L-1203, Sep. 30, 1960).

GR 65295, Mar. 10, 1987
In a suit for damages arising from a quasi-delict
where the plaintiff’s negligence was contributory, the
demands of substantial justice may be satisfied by allo-
cating most of the damages (compensatory, moral, lucro
cesante on a 20-80 ratio). Thus, 20% of the damage.
awarded by the appellate court, except the award of
P10,000 as exemplary damages and P4,500 as attorney’s
fees and costs, shall be borne by defendant driver. Only
the balance of 80% needs to be paid by the driver and
his employer who shall be solidarily liable therefor to
the plaintiff. The award of exemplary damages shall be
borne exclusively by the defendants. The employer, of
course, is entitled to reimbursement from the driver.
1349
(3) Proper Court

If the amount of exemplary damages is NOT specific the
court can grant same only in an amount that should NOT
exceed its jurisdiction. (Singson, et al. v. Aragon, et al., 92
Phil. 514).
(4) Effect of Granting Exemplary Damages on a Claim for

Nominal Damages
If exemplary damages are granted, nominal damages
can not be given. (Medina, et al. v. Cresencia, et al., L-8194,
Jul. 11, 1956).
(5) Cases
Pan American World Airways, Inc.

v. IAC, et al.
L-74442, Aug. 31, 1987
A contract to transport passengers is quite different in

kind and degree from any other contractual relation. And this
is because of the relation which an air carrier sustains with
the public. Its business is mainly with the travelling public.
It invites people to avail of the comforts and advantages it
offers. The contract of carriage, therefore, generates a rela-
tion attended with a public duty. Neglect or malfeasance of
the carrier’s employees, naturally, could give ground for an
action for damages.
By not allowing Ms. Teofista P. Tinitigan to board Flight
431 on April 29, 1973, plaintiff was not able to sign a contract
with Mrs. Lilibeth Warner who had earlier placed an order
for a sizeable number of “capiz” shells in which transaction
Ms. Tinitigan expected to derive a profit of US$1,000. Ms.
Tinitigan had to return to the Hotel El Embajador from the
aircraft costing her US$20. She had to pay for additional
accommodations in said hotel for US$26.15 and the damage
to her personal property amounted to US$600. The carrier,
Pan American World Airways, Inc. should be held liable to
Ms. Tinitigan in the amount of US$1,646.15 or its equivalent
in Philippine currency at the present rate of exchange as
actual or compensatory damages. Pan Am having breached
1350
its contract with Ms. Tinitigan in bad faith, it is not error

for the trial court to have awarded exemplary damages. The
rationale behind exemplary or corrective damages is, as the
name implies, to provide an example or correction for public
good. In view of its nature, it should be imposed in such
amount as to sufficiently and effectively deter similar breach
of contract in the future by Pan Am and other airlines.
Arturo de Guzman v. NLRC

GR 90856, Jul. 23, 1992
When moral damages are awarded, exemplary damages
may also be decreed. Exemplary damages are imposed by way
of example or correction for the public good, in addition to
moral, temperate, liquidated or compensatory damages.
According to the Code Commission, “exemplary damages
are required by public policy, for wanton acts must be sup-
pressed. They are an antidote so that the poison of wickedness
may not run through the body politic.” These damages are
legally assessible against him.
Sociedad Europea de Financiacion,

S.A., et al. v. Court of Appeals
GR 75787, Jan. 21, 1991
FACTS: Muñoz, representing a New York business

firm, Carum Trading, Inc. gave Rocha US$40,000 to open
an insurance company in the Philippines. With the money,
Rocha organized the Capital Insurance. Under Rocha’s direc-
tion, the company prospered. A sister corporation, Capital
Life, was later set up by Rocha. In 1958, Rocha transferred
all the Capital Insurance shares to Carum Trading. Garrido
replaced Rocha in the insurance corporation. Effective control
over Capital Insurance then passed to the hands of Socie-
dad Europea de Financiacion (SEF). Garrido exercised that
control, and was named General Manager of the insurance
firms. He also served as director of the companies, together
with Muñoz, Amat, Araneta and Gamboa. In 1966, Garrido
and Araneta proposed to the Board of Directors that Capital
Insurance obtain a loan of P600,000 from progressive Bank,
so that a better financial position could be projected when
1351
renewal was sought of the license of its sister corporation

Capital Life. Security of the loan would consist of the SEF
shares in Capital Insurance. Garrido and Araneta also gave
assurance that the loan will not be used and would instead
be placed on time deposit in Progressive Bank. The assurance
was of considerable weight since Progressive was owned by
Araneta and his family, and Garrido was himself a director
thereof. The Board approved the arrangement and the loan
was obtained with maturity of 90 days and interest at 11%
per annum. The money was deposited in favor of Capital
Life. In 1966, Garrido, as Capital Life President, executed a
deed assigning to Progressive all the rights of Capital Life
in said time deposit and granted Progressive full control of
the deposit of P600,000. On the pretext that the loan was
unpaid, Progressive caused the foreclosure of the pledged SEF
shares and its sale at public auction through a notary public,
resulting in said shares being auctioned off to Progressive.
SEF, Muñoz and Amat filed a derivative suit against Garrido,
Araneta and Progressive. They sued in their own behalf and
in behalf of Capital Insurance and prayed for annulment of
the loan and the accompanying pledge of SEF stock on the
ground of breach of trust on the part of Garrido, Araneta and
the latter’s bank. They also accused Garrido and Araneta of
mismanagement of the corporation and prayed for damages.
The trial court declared the loan and foreclosure null and
void. It ordered the return of the shares to Capital Insurance,
while Garrido, Araneta and Progressive were sentenced to pay
P100,000 as exemplary or corrective damages. The Court of
Appeals affirmed the judgment of the trial court.
HELD: The Supreme Court modified the judgment so as
to increase to P600,000 the exemplary or corrective damage
that Garrido, et al. were sentenced, jointly and severally, and
held that it finds inexplicable, not to say ludicrous, unjust
and inequitable, to hold petitioners liable to the Progressive
Bank for anything on account of the latter’s so-called “acco-
modation loan” of P600,000, considering that: (1) the proceeds
of the loan were immediately placed on time deposit with
the same lending institution; (2) a day after its placement,
the time deposit was assigned to the same Bank, together
with all rights to the interest thereon, full control of the
1352
deposit being given to said Bank until the accommodation

loan was fully paid; (3) the Bank was at no time under any
risk whatsoever, for an “accommodation” that it could recall
at its pleasure because it retained total control of the loan
proceeds under time deposit with it; (4) while retaining full
disposition of the amount fictitiously loaned, said Bank re-
served and did exercise rights proper and appropriate only
to the lender under a genuine forbearance, such as charging
interests and later, even foreclosing on the security for alleged
nonpayment; there is no evidence that it ever set off interests
on the loan with interests that the time deposit should justly
have earned, only fair arrangement in the circumstances; (5)
as found by the trial court and affirmed by the Court of Ap-
peals, the loan and accompanying pledge were simulated and
the bank was a party to the simulation. The Court feels that
the award of P100,000 in exemplary or corrective damages
lets the respondents off too lightly for the part they played
in this affair. Both the trial court and the Court of Appeals
found that the defendants had concocted a scheme “to divest
SEF of its interests in capital insurance and for themselves
to own the controlling interest therein,” and carried out that
illicit objective. Said award of damages should be increased
to P600,000.
Northwest Airlines v. Dr. Jaime F. Laya

GR 145956, May 29, 2002
FACTS: Respondent Dr. Jaime F. Laya, a medical prac-

titioner, was bound for San Francisco via a first class booking
with Northwest Airlines (NWA). After his luggage passed and
was cleared thru the x-ray machine of the Ninoy Aquino In-
ternational Airport (NAIA). Laya proceeded to NWA’s check-in
counter and was issued a boarding pass. However, while on
his way requested to proceed to a long table where passengers
were lined up. There, the passenger’s Samsonite hand-carried
attaché cases were being subjected to further inspection. Since
he noticed that he was carrying an attaché case similar to those
being inspected, Laya acceded to the request.
In the course of the inspection, however, Laya noticed
that his attaché case was treated differently. While the other
passengers were eventually allowed to carry their cases on
1353
board the plane, he was asked to place his attaché case in

a black garbage bag for which he was handed two paper
envelopes where he could put its contents. Laya felt that he
was singled out for this extraordinary treatment. His situa-
tion was aggravated when the envelopes turned out to be too
fragile for the contents of his attaché case. The envelopes were
eventually torn. Laya asked for a replacement and provided
with a used Duty-Free bag.
On May 25, 1991, Laya wrote to NWA and reported the
rude treatment accorded him by its personnel. An exchange of
communication ensued but NWA did not heed his complaint.
On Oct. 31, 1991, he filed a complaint for damages against
NWA before Br. 84 of RTC QC. After trial, judgment was
rendered in favor of Laya, and against NWA. Both parties
appealed the decision. NWA appealed the unfavorable ruling
against it while Laya appealed the award in his favor of only
P1 million as moral damages and P500,000 exemplary dam-
ages. In its decision, promulgated on Aug. 16, 2000, the Court
of Appeals (CA) affirmed the trial court with modifications by
reducing the award of moral damages to P500,000 and the
exemplary damages to P250,000.
Its motion for reconsideration having been denied, NWA
went to the Supreme Court for relief, alleging the CA: (1)
gravely erred in ruling that respondent is entitled to the award
of damages, and (2) not ruling that the lower court erred in
finding that the United States Federal Airation Administra-
tion (FAA) Security Directive 91-11 is unreasonable and did
not coincide with the carrier’s promise of polite and gracious
service.
HELD: The Supreme Court is convinced that Laya suf-
fered mental anguish and serious anxiety because of his expe-
rience with NWA personnel for which he should be awarded
moral damages. He is also entitled to exemplary damages by
way of correction to the NWA for the public good (Art. 2229,
Civil Code) and in view of the malevolent manner by which
the NWA personnel treated him. Damages are not intended
to enrich a plaintiff at the expense of the defendant (See
Philtranco Services, Inc. v. CA, 273 SCRA 562 [1987]), hence,
the Court is further reducing the award of moral damages
form P500,000 to P100,000 and the amount of exemplary
1354
damages is reduced from P250,000 to P50,000. The Court

likewise awards attorney’s fees in the amount of P25,000.
(Art. 2208, Civil Code).
On the other point raised in the instant case, the Supreme
Court opined that the tragic event that unfolded on Sept. 11,
2001 underscores, more than ever, that airport and airline
personnel cannot afford any lapse in the implementation of
security measures mean to ensure the safety of airplane crew
and passengers. Airline carriers hold the lives of passengers
in their hands and they must at all times be vigilant on mat-
ters affecting their safety.
After a careful review of the records of this case, the
Court finds that the security procedures adopted issued by
the NWA was only the result of a directive issued by the FAA
of which the NWA, being a U.S. carrier, is subject to FAA
Security Directive 91-11, which was in effect at the time of
the incident. Thus, on the action required by U.S. Air Car-
riers the following procedures, in part, shall be applied to
all hardshell black, brown, or burgundy samsonite briefcase
by all U.S. air carrier on flights departing Asia, Africa, and
Europe. All black, brown, or burgundy Samsonite briefcases
shall only be transported as check baggage. The air carrier
shall deny the passenger any access to the briefcase after it
has been tendered until the briefcase is claimed by the pas-
senger upon arrival at destination. Following the application
of the procedures above, the briefcase, shall be transported
as checked baggage. However, the contents of the briefcase
may be returned to the passenger for personal use aboard
the flight.
It may be true that Laya was greatly inconvenienced by
the act of the NWA when his attaché case was subjected to
further inspection and not allowed to bring it on board the
plane. Nevertheless, while the protection of passengers must
take precedence over convenience, the implementation of
security measures must be attended by basic courtesies. The
Court is inclined to believe the testimony of Laya that the
personnel who examined his attaché case were rude, brusque,
arrogant, and domineering. On this score, the Supreme Court
agrees with the trial court and the CA in stating that “[a]ny
security measure must coincide with the passenger’s right to
1355
be treated by the carrier with kindness, respect, and utmost

consideration in all matters relative to his trip.”
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.
COMMENT:
Exemplary Damages in Criminal Offenses
If a driver, in a criminal case, is convicted and made
civilly liable, but exemplary damages are NOT IMPOSED,
the employer cannot in a subsequent case brought to recover
subsidiary civil liability against him — be made liable for
exemplary damages. As Justice JBL Reyes has aptly pointed
out — “No such damages were imposed on the driver, and
the master, as person subsidiarily liable, cannot incur greater
civil liability than his convicted employee, any more than a
guarantor can be held responsible for more than the principal
debtor. (Cf. Civil Code, Art. 2064).” (Vicente Bantoto, et al. v.
Salvador Bobis, et al. & Crispin Vallejo, L-18966, Nov. 22,
1966).
Art. 2231. In quasi-delicts, exemplary damages may be

granted if the defendant acted with gross negligence.
COMMENT:
Exemplary Damages in Quasi-Delicts
Here the defendant must have acted with GROSS NEG-
LIGENCE. And even then, the grant is only discretionary on
the part of the Court.
Art. 2232. In contracts and quasi-contracts, the court

may award exemplary damages if the defendant acted in
a wanton, fraudulent, reckless, oppressive, or malevolent
manner.
1356
COMMENT:
(1) Exemplary Damages in Contracts and Quasi-Con-

tracts
Under Art. 2232, exemplary damages may be awarded in
contracts and quasi-contracts if defendant acts in a wanton,
fraudulent, reckless, oppressive, or malevolent manner. (MOF
Co. v. Enriquez, GR 149280, May 9, 2002).
(2) When Employer Is Also Liable for Exemplary Damages
Lourdes Munsayac v. Benedicta de Lara

L-21151, Jun. 26, 1968
FACTS: A driver of a jeepney was found recklessly negli-
gent in causing injuries to his passenger. Is the owner-operator
of the jeepney liable for exemplary damages (in addition to
other kinds of damages)?
HELD: Not necessarily. A principal or master can be
held liable for exemplary or punitive damages based upon the
wrongful act of his agent or servant only when he participated
in the doing of such wrongful act or has previously authorized
or subsequently ratified it, with full knowledge of the facts.
Exemplary damages punish the intent — and this cannot be
presumed on the part of the employer merely because of the
wanton, oppressive, or malicious intent on the part of the
agent.
Silverio Marchan and Philippine Rabbit Bus

Co., Inc. v. Arsenio Mendoza, et al.
L-24471, Jan. 31, 1969
FACTS: The driver of a common carrier, thru gross or
reckless negligence caused injury to some of the passengers.
Issue: May exemplary or corrective damages be awarded?
HELD: Yes, exemplary damages may be awarded in
contracts and quasi-contracts if the defendant company, thru
its driver, acted in a “wanton, fraudulent, reckless, oppressive
or malevolent manner.” (Art. 2232; see also Laguna-Tayabas
Bus Co. v. Diasanta, L-19882, Jun. 30, 1964).
1357
Noda v. Cruz-Arnaldo
GR 67322, Jun. 22, 1987
The insured’s claim or demand for exemplary damages

cannot be sustained if he fails to show that the insurer, in
contesting payment, had acted in a wanton, oppressive or
malevolent manner to warrant the imposition of corrective
damages.
Art. 2233. Exemplary damages cannot be recovered as

a matter of right; the court will decide whether or not they
should be adjudicated.
COMMENT:
Exemplary Damages Not a Matter of Right
The grant is discretionary. Be it noted, however, that in
the Court’s discretion, the same may be granted even if not
expressly pleaded or prayed for. (See Singson v. Aragon, 92
Phil. 514).
Isabelita Vital-Gozon v.
CA & Alejandro dela Fuente
GR 129132, Jul. 8, 1998
Under Art. 2233, exemplary damages cannot be recovered
as a matter of right; the court will decide whether or not they
should be adjudicated.
Considering that a public official is the culprit here, the
propriety of such an award cannot be questioned. It serves
as an example or deterrent so that other public officials be
always reminded that they are public servants bound to ad-
here faithfully to the constitutional injunction that a public
office is a public trust. That the aggrieved party happened to
be another public official will not serve to mitigate the effects
of petitioner’s having failed to observe the required degree of
accountability and responsibility.
Art. 2234. While the amount of the exemplary damages

need not be proved, the plaintiff must show that he is en-
titled to moral, temperate or compensatory damages before
1358
the court may consider the question of whether or not

exemplary damages should be awarded. In case liquidated
damages have been agreed upon, although no proof of loss
is necessary in order that such liquidated damages may be
recovered, nevertheless, before the court may consider the
question of granting exemplary in addition to the liquidated
damages, the plaintiff must show that he would be entitled
to moral, temperate or compensatory damages were it not
for the stipulation for liquidated damages.
COMMENT:
(1) Amount of Exemplary Damages Need Not Be Proved
Exemplary damages need NOT be alleged and proved
(Singson, et al. v. Aragon, et al., 92 Phil. 514) but note the
conditio sine qua non in the article.
(2) Culpa Contractual

In a case of culpa contractual, while diligence of a good
father of a family in selecting and supervising employees is
NOT a proper or complete defense for the employer, still it
is important that such damages be shown or proved: firstly,
because the damages may be mitigated or decreased; and
secondly, because if this diligence be not shown, exemplary
damages may be charged against the employer. (See Villa Rey
Transit v. Bello, L-18957, Apr. 23, 1963).
(3) Case
Philippine National Bank v. CA, Spouses Antonio

So Hu & Soledad del Rosario and Spouses
Mateo Cruz & Carlita Ronquillo
GR 126908, Jan. 16, 2003
FACTS: Spouses So Hu have not sufficiently proved that

PNB acted maliciously and in bad faith when it foreclosed the
property. On the contrary, PNB believed, although mistakenly,
that it still had an unpaid claim for which the property stood
as a security.
1359
HELD: Records do not support any basis for awarding

moral damages to private respondents, spouses So Hu. 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. (Expertravel
& Tours, Inc. v. CA, 309 SCRA 141 [1991]).
Art. 2235. A stipulation whereby exemplary damages

are renounced in advance shall be null and void.
COMMENT:
The Renouncing in Advance of Exemplary Damages
This renouncing is NULL and VOID.
1360
TITLE XIX
CONCURRENCE AND PREFERENCE
OF CREDITS
Chapter 1
GENERAL PROVISIONS
Introductory Comment (Features of the Title)

“The title on ‘Concurrence and Preference of Credits’
characterized by four (4) features:
(1) the liens and mortgages with respect to specific movable
and immovable property have been increased;
(2) the proposed Civil Code and the Insolvency Law have
been brought into harmony;
(3) preferred claims as to the free property of the insolvent
have also been augmented; and
(4) the order of the preference laid down in articles 1926
and 1927 of the Civil Code, among claims with respect to
specific personal and real property, has been abolished,
except that taxes must first be satisfied.” (Report of the
Code Commission, pp. 163-164).
Art. 2236. The debtor is liable with all his property,

present and future, for the fulfillment of his obligations,
subject to the exemptions provided by law.
COMMENT:
(1) What Creditor Can Do if Debtor Has NO Money
If a debtor has no money, what can the creditor do to
collect the credit?
1361
ANS.:
(a) attach properties not exempt from attachment, forced
sale, or execution
(b) exercise accion subrogatoria (the right to exercise all
rights and actions except those inherent in the person)
(c) exercise accion pauliana (impugn or rescind acts or
contracts done by the debtor to defraud the creditors).
(Art. 1177; see Arts. 1380 to 1389).
(d) in certain cases ask for datio in solutom, cession (assign-
ment in favor of creditors), file insolvency proceedings
(provided all the requisite conditions are present)
(e) wait till the debtor has money or property in the future
(after all, liability is with present and future property).
[NOTE: The obligations must already be DUE.
(Jacinto v. De Leon, 5 Phil. 992).]
(2) Examples of Properties Exempt from Attachment

(a) the family home except in certain cases. (Art. 155, Fam-
ily Code).
(b) the right to support, annuities, pensions (in certain in-
stances).
(c) property in custodia legis. (Springer v. Odlin, 3 Phil.
348).
(d) properties of a municipal corporation used for govern-
mental purposes. (Viuda de Tan Toco v. Mun. Council
of Iloilo, 49 Phil. 52).
(e) in certain cases, homesteads acquired under the Public
Land Act. (See Beach v. PCC & Sheriff, 49 Phil. 365).
(f) those mentioned in Rule 39, Sec. 13, Rules of Court.
(3) Case
DBP v. Minister of Labor

GR 75801, Mar. 20, 1991
FACTS: The Samahan, in representation of its 1,000
members, filed a complaint against Riverside Mills Corporation
1362
for non-payment of Presidential Decree 1713’s P1.00 daily wage

increase and P60 monthly emergency cost of living allowance
with the Ministry of Labor. The MOLE ordered Riverside to
pay the complainant-Samahan additional mandatory ECOLA
of P60 a month and P1.00 increase in the minimum wage,
retroactive as of August 1981. Thereafter, the balance of the
judgment award was computed at P3.3 million. It appears
that the Development Bank of the Philippines had instituted
extrajudicial foreclosure proceedings as early as 1983 on the
properties and other assets of Riverside, as a result of the
latter’s failure to meet its obligations on the loan it had pre-
viously secured from DBP. Thereafter, Samahan sought to
enforce the decision-award against DBP. A notice of garnish-
ment was served upon DBP for the amount of P3.3 million.
ISSUE: Whether a writ of garnishment may be issued
against the proceeds of Riverside’s properties foreclosed by
DBP and sold to Rosario Textile Mills, by the application of
the worker’s right of preference under Art. 110 of the Labor
Code.
HELD: The Supreme Court set aside the order of the
Ministry of Labor and held that the disputed garnishment of
the money paid by Rosario to DBP corresponding to the partial
installment of the sales price of RMC’s foreclosed properties is
not justified. The authority of the sheriff is limited to money
or properties belonging to the judgment debtor in the labor
case concerned. Hence, when the sheriff garnishes the moneys
paid by the employer (Rosario Textile Mills) to Development
Bank of the Philippines, the sheriff, in effect garnished funds
not belonging to the employer but to the DBP. This is viola-
tive of the basic rule that the power of the court or tribunal
in the execution of its judgment extends only over properties
unquestionably belonging to the judgment debtor. Undoubtedly,
when the sheriff garnished the funds belonging to the Devel-
opment Bank of the Philippines, he exceeded the authority
vested in him in the writ of execution, and when the Deputy
Minister of Labor sustained the same in his order, he acted
with grave abuse of discretion correctible by certiorari.
Art. 2237. Insolvency shall be governed by special laws

insofar as they are not inconsistent with this Code.
1363
COMMENT:
Civil Code Superior to Special Laws on Insolvency
(a) In Velayo v. Shell Co. (Phil.) (100 Phil. 187), the Supreme
Court held that while the acts of a creditor who disposes
of his own credit, and not the insolvent’s property, but
in a scheme to remove such property from the possession
and ownership of the insolvent, may not come within the
purview of Sec. 37 of the Insolvency Law which makes
a person coming under it liable for double the value of
the property sought to be disposed of, still said creditor
can be so held liable for such damages under Arts. 2229,
2232, 2142 and 2143.
(b) It is clear under the Article that in case of conflict, it is
the Civil Code that prevails.
Art. 2238. So long as the conjugal partnership or abso-

lute community subsists, its property shall not be among
the assets to be taken possession of by the assignee for the
payment of the insolvent debtor’s obligations, except insofar
as the latter have redounded to the benefit of the family.
If it is the husband who is insolvent, the administration of
the conjugal partnership or absolute community may, by
order of the court, be transferred to the wife or to a third
person other than the assignee.
COMMENT:
Exemption of Properties of the Conjugal Partnership
or of the Absolute Community
The exemption applies provided that:
(a) the conjugal partnership or the absolute community
subsists AND
(b) the obligation did NOT redound to the benefit of the
family.
Art. 2239. If there is property, other than that mentioned

in the preceding article, owned by two or more persons,
one of whom is the insolvent debtor, his undivided share
1364
or interest therein shall be among the assets to be taken

possession of by the assignee for the payment of the insol-
vent debtor’s obligations.
COMMENT:
Rule in Case of Co-Ownership
The undivided share or interest shall be possessed by
the assignee.
Art. 2240. Property held by the insolvent debtor as a

trustee of an express or implied trust, shall be excluded
from the insolvency proceedings.
COMMENT:
Property Held Because of an Express or Implied
Trust
The reason for the exemption is obvious: the trustee is
NOT the owner of the property held. Hence, it should not
respond for the insolvent trustee’s obligations.
1365

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CIVIL CODE OF THE PHILIPPINES

Art. 2176. Whoever by act or omission causes damage

ISSUE: Once fault is established, can on employer

Absent such a showing, one might ask further, how

Phoenix Construction, Inc. v. IAC

But even in such cases, it is not the distinction between

If an ordinance requires certain building to provide

People’s Bank and Trust Co. v.

FACTS: A person induced another to violate the

more or less the tort referred to as “interference with

Penullar v. Philippine National Bank

Prima Malipol v. Lily Lim Tan, et al.

Phoenix Construction, Inc. v. IAC

superior but that of pater familias. Where no allegations

(2) ‘Culpa Aquiliana’ Distinguished from ‘Culpa Contractual’

CULPA CULPA CULPA

(a) Negligence is (a) Negligence here (a) Negligence here

(c) Proof needed — (c) Proof needed — (c) Proof needed in a

Syquia, et al. v. CA and Manila

In the case at bar, it has been established that the Syquias

(3) Necessity of Proving Negligence

Bernabe Africa, et al. v. Caltex, et al.

Republic v. Luzon Stevedoring Corporation

NIA, et al. v. IAC, et al.

necessary safeguards to prevent the inundation of plaintiffs’

Leah Alesna Reyes, et al. v.

FACTS: Petitioner’s husband died while undergoing

(4) Damnum Absque Injuria

Farolan v. Solmac Marketing Corp.

FACTS: Farolan was then the Acting Commissioner of

tion of which is restricted, if not prohibited, under Letter of

the public. Thus, in the discharge of his duties, he is to use

(5) Last Clear Chance

In the case of Ong v. Metropolitan Water District (104

Ong v. Metropolitan Water District

avoid the injury by merely swerving, while still some distance

Phoenix Construction, Inc. v. IAC

The last clear chance doctrine of the common law was

ant’s — was the legal or proximate cause of the injury. The

(6) Tort Liability May Still Exist Despite Presence of Con-

Air France v. Carrascoso

FACTS: An airplane passenger despite his first class

Julian C. Singson and Ramona del Castillo v.

the Bank realized it had committed a mistake, it apologized

If a person’s registered name is “Baby Ng (Ng Kong Ding)”

(8) An Unregistered Deed of Sale

Equitable Leasing Corp v. Lucita Suyom, et al.

ISSUE: Can the petitioner, a registered owner of a motor

Unless registered with the Land Transportation Office

Art. 2177. Responsibility for fault or negligence under

(2) Effect of Acquittal in a Criminal Case

Marcia v. Court of Appeals

If in a criminal case for reckless imprudence resulting in

[NOTE: Here, the court said that Art. 33 of the Civil

Batangas, Laguna, Tayabas, Bus Co., Inc. v.

cause culpa aquiliana is an independent source of obligations.

(4) Rule under the 1985 Rule of Court, as Amended in

of allowing an “independent civil action,” as ordained by the

Crispin Abellana and Francisco Abellana v.

the CFI. A trial that has not even began, therefore, a

ISSUE: One of the questions presented in this case

(5) No Double Recovery

Padua, et al. v. Robles, et al.

FACTS: Because of the recklessness of a taxi-driver, a