Professional Documents
Culture Documents
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It will thus be noted that We have awarded moral and humiliations.
exemplary damages depending upon the facts attendant
to each case. It will also be noted that We gave separate We note however that petitioners limited their claim for
awards for moral and exemplary damages. This is as it moral and exemplary damages in their complaint filed
should be because the nature and purposes of said with the Court of First Instance to a total of P35,000.00
damages are different. While moral damages have to do plus attorney’s fees and costs. We feel that Our award
with injury personal to the awardee, such as physical should not exceed the said amount.
suffering and the like, exemplary damages are imposed
by way of example or correction for the public good. WHEREFORE, the decision of the Court of Appeals
subject of the petition for review is hereby modified,
It is essential however, in the award of damages that the increasing the award to petitioners of moral and
claimant must have satisfactorily proven during the trial exemplary damages to P35,000.00 and attorney’s fees to
the existence of the factual basis of the damages and its P5,000.00 with costs. This decision is immediately
causal connection to defendant's acts. This is so because executory.
moral damages, though incapable of pecuniary
estimation, are in the category of an award designed to BURDEN OF PROOF, QUANTUM OF EVIDENCE
compensate the claimant for actual injury suffered and
not to impose a penalty on the wrongdoer,[13] and are RAAGAS VS. TRAYA
allowable only when specifically prayed for in the
complaint.[14] FACTS: The complaint filed by the spouses Melquiades
Raagas and Adela Laudiano Raagas against Octavio
As reflected in the records of the case, the Court of Traya, his wife, and Bienvenido Canciller, alleges in
Appeals was in agreement with the findings of the trial essence that the latter was "recklessly" driving a truck
court that petitioners suffered anguish, embarrassment owned by his co-defendants along the public highway,
and mental sufferings due to failure of private respondent the said vehicle ran over the plaintiffs' three-year old son
to perform its obligation to the petitioners. According to Regino, causing his instantaneous death. The plaintiffs
the Court of Appeals, private respondent acted in wanton ask for actual damages in the sum of P10,000, moral,
disregard of the rights of petitioners. These nominal and corrective damages in a sum to be
pronouncements lay the basis and justification for this determined by the court, Pl,000 as attorney's fees, Pl,000
Court to award petitioners moral and exemplary
for expenses of litigation, plus costs.
damages.
It must be emphasized that moral damages are not HELD: NO. The trial court erred. Actual damages must
intended to enrich the complainant at the expense of a be proved, and that a court cannot rely on "speculation,
defendant. They are awarded only to enable the injured conjecture or guesswork" as to the fact and amount of
parties to obtain means, diversions or amusements that damages, but must depend on actual proof that damages
will serve to alleviate the moral sufferings the injured had been suffered and on evidence of the actual amount
parties have undergone by reason of defendant's culpable (Tomassi v. Villa-Abrille; Suntay Tanjangco v. Jovellanos;
action. In other words, the award of moral damages is Delfin v. Court of Agrarian Relations). In Malonzo v.
aimed at a restoration within the limits of the possible, of Galang, the Supreme Court reaffirmed the rule that
the spiritual status quo ante; and therefore it must be although an allegation is not necessary in order that
proportionate to the suffering inflicted.[15] The amount of moral damages may be awarded, "it is, nevertheless,
P5,000.00 is minimal compared to the sufferings and
essential that the claimant satisfactorily prove the
embarrassment of petitioners who left Manila with high
existence of the factual basis of the damages and its causal
spirits and excitement hoping to enjoy their first trip to a
relation to defendant's acts."
foreign land only to be met with uncertainties and
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G.R. No. L-21879 September 29, 1967 distraint and levy will be issued against its properties
unless it settles its tax liability under the ordinance
SAN MIGUEL BREWERY, INC., plaintiff-appellant,
aforesaid. On September 23, 1960, counsel for the
vs. FRANCISCO MAGNO, defendant-appellee. company wrote a letter to the City Treasurer of Butuan
questioning the power of the city government of Butuan
to levy upon its properties pointing out, "that the power
An appeal from a decision of the Court of First Instance of distraint and levy as embodied in your Charter
of Manila, in civil case No. 46039, dismissing the (Republic Act No. 523, as amended), can only be exercised
complaint filed by the San Miguel Brewery, Inc., and by your goodselves in respect to delinquencies in the
ordering it to pay to the defendant P2,000.00 in damages, payment of real estate taxes". To this, the City Treasurer
P1,000.00 as attorney's fees, and costs. of Butuan, in a letter dated September 29, 1960, promptly
answered and explained that he may issue warrants of
distraint and levy upon properties of delinquent
taxpayers under Ordinance No. 26 of the City of Butuan.
The appeal was originally lodged with the Court of
Thereafter, the San Miguel Brewery, Inc. received a
Appeals which certified the case to this Court, the issue
formal letter of demand for payment of its tax liability
involved being purely one of law. From the stipulation of
from the City Treasurer of Butuan, to which the Branch
facts submitted by the parties in the lower court and the
Manager of the company at Cagayan de Oro City who has
various annexes referred to therein, the facts of the case
supervision of the company's warehouse at Butuan City,
that gave rise to the controversy are as follows:
answered on October 10, 1960, requesting more time
"within which to act on said demand and in order to refer
the matter to its Manila Office". Several other written
On December 14, 1950, the Municipal Board of Butuan demands were thereafter made by the City Treasurer of
City passed Ordinance No. 11 amending Ordinance No. Butuan to officials of plaintiff's branch office in said city,
7 of said City, imposing a tax of two per cent (2%) on the but failed to yield any concrete result. Accordingly, on
gross sales or receipts of those engaged in the sale, trading January 6, 1961, the city treasurer, with the approval of
in, or disposal of all alcoholic or malt beverages, wines the Mayor of Butuan City issued a warrant of distraint
and mixed or fermented liquors, including tuba, basi and and levy against the properties of the San Miguel
tapuy. (Sec. 1 [e], Annex A.) On June 6, 1960, the same Brewery, Inc. at its branch office in that city to enforce the
Municipal Board passed Ordinance No. 110 amending collection of the taxes assessed against it, i.e., under
Ordinance No. 11, fixing instead a tax on the sale of beer Ordinance Nos. 11 and 110, amounting to P9,129.42,
at the rate of P.25 per case of twenty-four bottles, and on including penalties corresponding to the period from
the sales of soft drinks at the rate of P.10 per case of May, 1957 to August 15, 1960, and under Ordinance No.
twenty-four bottles of Coca-Cola, Pepsi-Cola, Tru- 110, the amount of P15,618.96, including penalty, for the
Orange, Seven-Up, Bireley, Soda Water, and any other period corresponding to June 6 up to October 30, 1960, or
kind of soft drinks or carbonated drinks. (Sec. 2 [e] and a total of P24,747.32. On January 9, 1961, at about 9 o'clock
Sec. 3, respectively, Annex B.) in the morning, a notice of seizure by virtue of the warrant
of distraint and levy was served on the company's Branch
Manager at Butuan City who, upon previous
The San Miguel Brewery, Inc., a corporation organized arrangement with the representative of the City Treasurer
and existing under the laws of the Philippines with of Butuan, voluntarily surrendered the two (2) delivery
principal offices at Manila, maintains a warehouse or trucks of the company seized under the warrant to the
branch office in the City of Butuan and is engaged in the said City Treasurer at about 5 o'clock in the afternoon of
sale of beer and soft drinks in said City. Although it the same day.
appears to have paid the required taxes under Ordinance
No. 11 promptly and religiously upon the effectivity of
the ordinance, the company stopped paying the taxes On January 12, 1961, the San Miguel Brewery, Inc.
thereafter (Annex D), and thereby incurred in back taxes. instituted the present action in the Court of First Instance
Verbal demands were made by the City Treasurer of of Manila, praying for an order directing the defendant
Butuan on the representative of the San Miguel Brewery, Francisco Magno to release the delivery trucks seized and
Inc. at Butuan City with warnings that a warrant of impounded by the City Government of Butuan allegedly
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"without authority and for reasons unknown to the of facts was being prepared that the defendant-appellee
company", and to order the defendant to pay to the made mention for the first time of his alleged authority to
plaintiff damages in the amount of P6,000.00 issue a warrant of distraint and levy against properties of
corresponding to the period from January 9, 1961 to tax delinquents under Ordinance No. 26 of the City of
January 10, 1961, and P3,000.00 for each day thereafter Butuan. The contention is untenable. In paragraph 8 of
that the trucks remain impounded and unused by the the stipulation of facts, it is admitted that on September
plaintiff, plus the costs of the suit. Parenthetically, the 29, 1960, in a letter of the City Treasurer of Butuan to
action was brought against the defendant Francisco Attys. Ponce Enrile, Siguion Reyna, Montecillo & Belo,
Magno in his individual capacity, as disclosed in the counsel for the plaintiff, said counsel was informed that
allegations in the complaint, and as expressly admitted in the city government was exercising its power of levy and
the appellant's brief, thus — "As a matter of fact, plaintiff distraint against properties of taxpayers under Ordinance
filed this action against Francisco Magno, not in his No. 26 of the city. Appellant, therefore, may not now feign
official capacity, but in his individual capacity, . . . ." (p. ignorance of such notice which appears in the records.
13).
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accounting error incurred by Filinvest, was increased ante; and therefore it must be proportionate to the
from P30,000.00 to P50,000.00. suffering inflicted.
Verily the respondent court disregarded such a well • As a result thereof, she had to be hospitalized first at
settled rule when it increased the award for moral Pangasinan Provincial Hospital where she incurred
damages from P30,000.00 to P50,000.00, notwithstanding expenses of P8,053.65. The pain has persisted even after
the fact that the private respondent did not appeal from her discharge from the Medical City General Hospital to
the judgment of the trial court. the present. She still wears crutches and she has not yet
reported for duty as a court interpreter as she has
There is no dispute that the private respondent, a difficulty of locomotion in going up the stairs of her office.
businessman and owner of the NBS Machineries
Marketing and NAP-NAP Transit, is entitled to moral • Defendant Alfredo Tangco, City Engineer of Dagupan
damages due to the unwarranted seizure of the minibus City and admittedly exofficio Highway Engineer, City
Mazda, allegedly because he was delinquent in the Engineer of the Public Works and Building Official for
payment of its monthly amortizations, which as stated DAgupan City, admitted the existence of the manhole
above, turned out to be incorrect and that said manhole is owned by the National
Government. In his answer, he expressly admitted that he
Such intent tainted private respondent Sunga's exercises supervision and control over National roads
reputation in the business community, thus causing him including the Perez Blvd.
mental anguish, serious anxiety, besmirched reputation,
wounded feelings, moral shock, and social humiliation. • The Lower Court found in favor of Guilatco but on
appeal, the appellate court reversed the lower court
Considering, however, that respondent Sunga was findings on the ground that no evidence was presented
dispossessed of his motor vehicle for barely three days by the plaintiff to prove that the City of Dagupan had
and possession of which was restored to him soon after “control or supervision” over Perez Blvd.
the accounting errors were ironed out, SC ruled that the
award of moral damages even in the sum of P30,000.00 is ISSUES & ARGUMENTS
excessive for it must be emphasized that "damages are not • W/N control or supervision over a national road by the
intended to enrich the complainant at the expense of a city of Dagupan exists, in effect binding the city to answer
defendant”. for damages in accordance with Article 2189.
The award of moral damages is aimed at a restoration
within the limits of the possible, of the spiritual status quo
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o Respondent City: Perez Blvd. is a national road that is
not under the control or supervision of the City of
Issues: (1) Whether the defendant acted in bad faith for
Dagupan hence no liability should attach
deliberate refusal to comply with its contract to provide
HOLDING & RATIO DECIDENDI first-class accommodation to the plaintiff
YES, THE CITY OF DAGUPAN IS LIABLE. (2) Whether moral and exemplary damages should be
awarded
• Art. 2189 provides that “Provinces, cities and
municipalities shall be liable for damages for the death of,
or injuries suffered by, any person by reason of the
Held:
defective condition of roads, streets, bridges, public
buildings, and other public works under their control or (1) From the evidence of defendant it is in effect admitted
supervision.” that defendant - through its agents - first cancelled
plaintiffs, reservations by mistake and thereafter
• It is not even necessary for the defective road or street
deliberately and intentionally withheld from plaintiffs or
to belong to the province, city, or municipality for liability
their travel agent the fact of said cancellation, letting them
to attach. The article only requires that either control or
go on believing that their first class reservations stood
supervision is exercised over the defective road or street.
valid and confirmed. In so misleading plaintiffs into
• This control or supervision is provided for in the charter purchasing first class tickets in the conviction that they
of Dagupan exercised through the City Engineer who had confirmed reservations for the same, when in fact
according to Section 22 has the following duties, “xxx He they had none, defendant wilfully and knowingly placed
shall have the care and custody of the public system of itself into the position of having to breach its a foresaid
waterworks and sewers xxx” contracts with plaintiffs should there be no last-minute
cancellation by other passengers before flight time, as it
• The same charter also provides that the laying out,
turned out in this case. Such actuation of defendant may
construction and improvement of streets and regulation
indeed have been prompted by nothing more than the
of the use thereof may be legislated by the Municipal
promotion of its self-interest in holding on to Senator
Board. Thus the charter clearly indicates that the city
Lopez and party as passengers in its flight and foreclosing
indeed has supervision and control over the sidewalk.
on their chances to seek the services of other airlines that
• The city cannot be excused from liability by the may have been able to afford them first class
argument that the duty of the City Engineer to supervise accommodations. All the time, in legal contemplation
or control the said road belongs more to his functions as such conduct already amounts to action in bad faith. For
an ex-officio Highway Engineer or the Ministry of Public bad faith means a breach of a known duty through some
Highway than as a city officer. This is because while he is motive of interest or ill-will.
entitled to an honorarium from the Ministry, his salary
At the time plaintiffs bought their tickets, defendant,
from the city government substantially exceeds the
therefore, in breach of its known duty, made plaintiffs
honorarium.
believe that their reservation had not been cancelled. Such
Lopez v. Pan American World Airways willful-non-disclosure of the cancellation or pretense that
the reservations for plaintiffs stood - and not simply the
Facts: Reservation for first class accommodation in Pan erroneous cancellation itself - is the factor to which is
American Airlines from Tokyo to San Francisco was attributable the breach of the resulting contracts. And, as
made by Delfin Faustino for then Senator Fernando above-stated, in this respect defendant clearly acted in
Lopez and company. First class tickets were issued and bad faith.
paid for. The party left Manila for Tokyo as scheduled.
Senator Lopez requested Minister Busuego to contact the (2) First, then, as to moral damages. As a proximate result
airlines regarding their accommodation. However, they of defendant's breach in bad faith of its contracts with
were informed that there was no accommodation for plaintiffs, the latter suffered social humiliation, wounded
them. Because of some urgent matters to attend to in San feelings, serious anxiety and mental anguish. For
Francisco, they were constrained to take the tourist flight plaintiffs were travelling with first class tickets issued by
“under protest”. defendant and yet they were given only the tourist class.
At stop-overs, they were expected to be among the first-
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class passengers by those awaiting to welcome them, only fees; and costs of the action.- Both appealed: PAN-AM
to be found among the tourist passengers. It may not be contended that there was NO bad faith; Lopez et al
humiliating to travel as tourist passengers; it is wanted a total of P650T as award for damages.
humiliating to be compelled to travel as such, contrary to
ISSUES
what is rightfully to be expected from the contractual
undertaking. 1. WON there was bad faith on the part of PAN-AM
The rationale behind exemplary or corrective damages is, 2. WON the amount of damages should be increased
as the name implies, to provide an example or correction
for public good. Defendant having breached its contracts HELD
in bad faith, the court, as stated earlier, may award
1. YES
exemplary damages in addition to moral damages. In
view of its nature, it should be imposed in such an Reasoning-
amount as to sufficiently and effectively deter similar
Defendant — through its agents — first cancelled
breach of contracts in the future by defendant or other
plaintiffs, reservations by mistake and thereafter
airlines. In this light, we find it just to award P75,000.00
deliberately and intentionally withheld from plaintiffs
as exemplary or corrective damages.
their travel agent such information. In so misleading
LOPEZ V PAN AM WORLD AIRWAYS plaintiffs into purchasing first class tickets in the
conviction that they had confirmed reservations, when in
16 SCRA 431BENGZON; March 30, 1966
fact they had none, defendant wilfully and knowingly
FACTS- Sen Fernando Lopez, his wife, his son-in-law, placed itself into the position of having to breach its
and his daughter made reservations, through their contracts with plaintiffs should there be no last-minute
agency, for first class accommodations in the Tokyo – San cancellation by other passengers before flight time, as it
Francisco flight of PAN-AM. PAN-AM's SF head office turned out in this case. Bad faith means a breach of a
confirmed the reservations. First class tickets were known duty through some motive of interest or ill-will. -
subsequently issued, with the total fare having been fully At any rate, granting all the mistakes advanced by the
paid before this.- As scheduled, they left Manila and as defendant, there would at least be negligence so gross
soon as they arrived in Tokyo, they contacted PAN-AM's and reckless as to amount to malice or bad faith.
Tokyo office regarding their accommodations. For the
2. YES
given reason that the first class seats were all booked up,
PAN-AM's Tokyo office informed them that they could Ratio
not go in that flight unless they took the tourist class. Due
to pressing engagements in the US, they were constrained Moral damages are recoverable in breach of contracts
to take PAN-AM's flight as tourist passengers.- Sen Lopez where the defendant acted fraudulently or in bad faith
filed suit for damages alleging breach of contracts in bad (Art. 2220). Exemplary or corrective damages may be
faith by defendant out of racial prejudice against imposed by way of example or correction for the public
Orientals. He asked for P500T actual and moral damages, good, in breach of contract where the defendant acted in
P100T exemplary damages, P25Tattorney's fees plus a wanton, fraudulent, reckless, oppressive or malevolent
costs.- PAN-AM asserted that its failure to provide first manner (Art. 2229, 2232). A written contract for an
class accommodations to plaintiffs was due to honest attorney's services shall control the amount to be paid
error of its employees. It interposed a counterclaim for there for unless found by the court to be unconscionable
atty's fees of P25T.- CFI Rizal decision: in favor of plaintiff or unreasonable (Sec. 24,Rule 138, ROC).
and granted (a) P100Tmoral damages; - Factors in determining Amount for Moral Damages:
(b)P20T,exemplarydamages; (c)
The amount of damages awarded in this appeal has been
P25T, atty's fees, and costs of the action.- Plaintiffs filed determined by adequately considering the official,
MFR asking that moral damages be increased to P400T political, social, and financial standing of the offended
and for 6% interest per annum on amount to be granted.- parties on one hand, and the business and financial
CFI modified decision: (a)P150T, moral damages; (b) position of the offender on the other. The present rate of
P25T, exemplary damages; with legal interest on both exchange and the terms at which the amount of damages
from date of filing of complaint until paid; (c)P25T,atty's
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awarded would approximately be in U.S. dollars has also plaintiffs;(2) P75T as exemplary or corrective damages;(3)
been considered. Interest at the legal rate of 6% per annum on the moral
and exemplary damages, from date of amended CFI
(a) MORAL DAMAGES
decision, until said damages are fully paid;(4) P50T as
- As a proximate result of defendant's breach in bad faith attorney's fees; and(5) Costs of action. Counterclaim
of its contracts with plaintiffs, the latter suffered social dismissed.
humiliation, wounded feelings, serious anxiety and
G.R. No. 82808 July 11, 1991
mental anguish. It may not be humiliating to travel as
tourist passengers; it is humiliating to be compelled to DENNIS L. LAO, petitioner, vs.
travel as such, contrary to what is rightfully to be
HON. COURT OF APPEALS, JUDGE FLORENTINO
expected from the contractual undertaking.
FLOR, Regional Trial Court, Branch 89 of Morong,
- Sen Lopez was then Senate President Pro Tempore. Rizal, BENJAMIN L. ESPIRITU, MANUEL QUERUBIN
International carriers like defendant know the prestige of and CHAN TONG, respondents.
such an office. For the Senate is not only the Upper
For being a witness in an unsuccessful estafa case which
Chamber of the Philippine Congress, but the nation's
his employer filed against a debtor who had defaulted in
treaty-ratifying body. He was also former Vice-President
paying his just obligation, the petitioner was sued,
of the Philippines. (MD = P100T)- Mrs. Maria Lopez, as
together with his employer, for damages for malicious
wife of the Senator, shared his prestige and therefore his
prosecution. The issue in this case is whether the damages
humiliation. In addition she suffered physical discomfort
awarded to the defaulting debtor may be satisfied by
during the 13-hour trip; her reason for going to the US
execution against the employee's property since his
was actually for medical check-up and relaxation. The
employer's business has already folded up.
fact that the seating spaces in the tourist class are quite
narrower than in first class will suffice to show that she Petitioner Dennis Lao was an employee of the New St.
indeed experienced physical suffering during the trip. Joseph Lumber & Hardware Supply, hereinafter called St.
(MD =P50T)- Mr. and Mrs. Alfredo Montelibano, Jr., were Joseph Lumber, owned by the private respondent, Chan
travelling as immediate members of the family of Sen Tong. In January 1981, St. Joseph Lumber filed a
Lopez. Even if they initially wanted to change their collection suit against a customer, the private respondent,
seatreservations from first class to tourist class, Benjamin Espiritu, for unpaid purchases of construction
theyeventually paid for first class seats. Hence, they also materials from St. Joseph Lumber.
suffered social humiliation. (MD = P25T each)
In November 1981, upon the advice of its lawyer, St.
(b) EXEMPLARY DAMAGES Joseph Lumber filed a criminal complaint for estafa
against Espiritu, based on the same transaction. Since the
- In view of its nature, it should be imposed in such an
petitioner was the employee who transacted business
amount as to effectively deter similar breach of contracts
with Espiritu, he was directed by his employer, the firm's
in the future by defendant or other airlines.(ED = P75T)
owner, Chan Tong, to sign the affidavit or complaint
(c) ATTORNEY’S FEES prepared by the firm's, lawyer, Attorney Manuel
Querubin.
- Record shows a written contract of services wherein
plaintiffs engaged the services of their counsel — Atty. Finding probable cause after conducting a preliminary
Francisco — and agreed to pay the sum of P25T upon the investigation of the charge, the investigating fiscal filed
termination of the case in the CFI, and anotherP25T if case an information for estafa in the Court of First Instance of
is appealed to the SC. This is reasonableconsidering the Quezon City against Espiritu. The case was however later
subject matter of the presentcontroversy, the professional dismissed because the court believed that Espiritu's
standing of the attorney or plaintiffs-appellants, and the liability was only civil, not criminal.
extent of the service rendered by him.
On April 12, 1984, Espiritu filed a complaint for malicious
Disposition prosecution against the petitioner and St. Joseph Lumber,
praying that the defendants be ordered to pay him
Judgment appealed from is hereby MODIFIED so as to P500,000 as moral damages, P10,000 as actual damages,
award in favor of plaintiffs and against defendant, the and P100,000 as attorney's fees.
following:(1) P200T as moral damages, divided among
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2. in not holding that he was deprived of a day in
court due to the gross ignorance, negligence and
In his answer to the complaint, the petitioner alleged that
dereliction of duty of the lawyer whom his employer
he acted only as agent or employee of St. Joseph Lumber
hired as his and the company's counsel, but who failed to
when he executed the affidavit which his employer
protect his interest and even acted in a manner inimical
submitted to the investigating fiscal who conducted the
to him; and
preliminary investigation of his employer's estafa charge
against Espiritu. 3. in not partially annulling the decision of the trial
court dated January 22, 1985 insofar as he is concerned.
The pre-trial of the case was set on October 30, 1984. Since
the defendants and their counsel failed to appear in court,
they were declared in default.
The petition is meritorious.
On November 11, 1984, the defendants filed a motion for
reconsideration of the order of default.
Lao had a valid defense to the action for malicious
On November 13, 1984, the motion was granted, and the
prosecution (Civil Case No. 84-M) because it was his
order of default was set aside.
employer, St. Joseph Lumber, not himself, that was the
On January 16, 1985, the defendants, including herein complainant in the estafa case against Espiritu. It was
petition petitioner Lao, and their counsel, again failed to Chan Tong, the owner of the St. Joseph Lumber, who,
attend the pretrial despite due notice to the latter who, upon advice of his counsel, filed the criminal complaint
however, failed to notify Lao. They were once more against Espiritu. Lao was only a witness in the case. He
declared in default. The private respondent was allowed had no personal interest in the prosecution of Espiritu for
to present his evidence ex parte. he was not the party defrauded by Espiritu. He executed
the affidavit which was used as basis of the criminal
On January 22, 1985, a decision was rendered by the trial
charge against Espiritu because he was the salesman who
court in favor of Espiritu ordering the defendants Lao and
sold the construction materials to Espiritu. He was only
St. Joseph Lumber to pay jointly and severally to Espiritu
an agent of St. Joseph Lumber, hence, not personally
the sums of P100,000 as moral damages, P5,000 as
liable to the party with whom he contracted (Art. 1897,
attorney's fees, and costs.
Civil Code; Philippine Products Co. vs. Primateria Societe
Petitioner's motion for reconsideration of the decision Anonyme, 122 Phil. 698).
was denied by the trial court.
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salesman of the St. Joseph Lumber from whom Espiritu liability to the private respondent arising from the
made his purchases of construction materials and who, unsuccessful prosecution of Criminal Case No. Q-20086
therefore, had personal knowledge of the transaction. for estafa against said private respondent. Costs against
Although the prosecution of Espiritu for estafa did not the private respondent.
prosper, the unsuccessful prosecution may not be
labelled as malicious. "Sound principles of justice and
public policy dictate that persons shall have free resort to SO ORDERED.
the courts for redress of wrongs and vindication of their
rights without later having to stand trial for instituting RAMOS VS. RAMOS
prosecutions in good faith" (Buenaventura vs. Sto. 61 SCRA 284
Domingo, 103 Phil. 239).
FACTS: Spouses Martin Ramos and Candida Tanate died
on October 4, 1906 and October 26, 1880, respectively.
They were survived by their 3 children. Moreover, Martin
There is merit in petitioner's contention that he was was survived by his 7 natural children. In December 1906,
deprived of his day in court in the damage suit filed by a special proceeding for the settlement of the intestate
Espiritu, due to the gross ignorance, negligence, and estate of said spouses was conducted. Rafael Ramos, a
dereliction of duty of Attorney Manuel Querubin whom brother of Martin, administered the estate for more than
his employer had hired to act as counsel for him and the 6 years. Eventually, a partition project was submitted
St. Joseph Lumber. However, Attorney Querubin which was signed by the 3 legitimate children and 2 of the
neglected to defend Lao. He concentrated on the defense 7 natural children. A certain Timoteo Zayco signed in
representation of the other 5 natural children who were
of the company and completely forgot his duty to defend
minors. The partition was sworn to before a justice of
Lao as well. He never informed Lao about the pre-trial
peace.
conferences. In fact, he (Attorney Querubin) neglected to
attend other pre-trial conferences set by the court. The conjugal hereditary estate was appraised at
P74,984.93, consisting of 18 parcels of land, some head of
cattle and the advances to the legitimate children. ½
When adverse judgment was entered by the court against thereof represented the estate of Martin. 1/3 thereof was
Lao and the lumber company, Attorney Querubin did not the free portion or P12,497.98. The shares of the 7 natural
file a motion for reconsideration of the decision. He children were to be taken from that 1/3 free portion.
allowed it to become final, because anyway Espiritu Indeed, the partition was made in accordance with the
Old Civil code. Thereafter, Judge Richard Campbell
would not be able to satisfy his judgment against Chan
approved the partition project. The court declared that
Tong who had informed his lawyer that the St. Joseph
the proceeding will be considered closed and the record
Lumber was insolvent, had gone out of business, and did should be archived as soon as proof was submitted that
not have any leviable assets. As a result, Espiritu levied each he3ir had received the portion adjudicated to him.
on the petitioner's car to satisfy the judgment in his favor
since the company itself had no more assets that he could On February 3, 1914, Judge Nepumoceno asked the
seize. administrator to submit a report showing that the shares
of the heirs had been delivered to them as required by the
previous decision. Nevertheless, the manifestation was
In view of the foregoing circumstances, the judgment not in strict conformity with the terms of the judge’s order
and with the partition project itself. 8 lots of the
against Lao was a nullity and should be set aside. Its
Himamaylan Cadastre were registered in equal shares in
execution against the petitioner cannot be allowed to
the names of Gregoria (widow of Jose Ramos) and her
proceed. daughter, when in fact the administrator was supposed
to pay the cash adjudications to each of them as enshrined
in the partition project. Plaintiffs were then constrained to
WHEREFORE, judgment is hereby rendered partially bring the suit before the court seeking for the
setting aside the decision of the Court of Appeals dated reconveyance in their favor their corresponding
May 21, 1987, insofar as it declared the petitioner, Dennis participations in said parcels of land in accordance with
Lao, solidarily liable with St. Joseph Lumber to pay the Article 840 of the old Civil Code. Note that 1/6 of the
damages awarded to the private respondent Benjamin subject lots represents the 1/3 free portion of martin’s
shares which will eventually redound to the shares of his
Espiritu. Said petitioner is hereby absolved from any
14 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
7 legally acknowledged natural children. The petitioners’ fees and costs
action was predicated on the theory that their shares were
merely held in trust by defendants. Nonetheless, no Deed • Espiritu levied on petitioner’s car because no more
of Trust was alleged and proven. Ultimately, the lower assets could be seized
court dismissed the complaint on the grounds of res
ISSUES & ARGUMENTS
judicata, prescription and laches.
W/N Lao can be held liable for damages and such sums
ISSUE: Whether or not the plaintiffs’ action was barred may be satisfied by execution against employee’s
by prescription, laches and res judicata to the effect that
property because St. Joseph is closed
they were denied of their right to share in their father’s
estate. HOLDING & RATIO DECIDENDI
RULING: YES, there was inexcusable delay thereby NO. LAO SHOULD NOT BE HELD LIABLE AS HE HAD
making the plaintiffs’ action unquestionably barred by A VALID
prescription and laches and also by res judicata.
Inextricably interwoven with the questions of DEFENSE. HIS EMPLOYER FORCED HIM TO SIGN
prescription and res judicata is the question on the THE COMPLAINT.
existence of a trust. It is noteworthy that the main thrust
• Elements to maintain action for damages based on
of plaintiffs’ action is the alleged holding of their shares
malicious prosecution:
in trust by defendants. Emanating from such, the
Supreme Court elucidated on the nature of trusts and the • The fact of prosecution and the further fact that plaintiff
availability of prescription and laches to bar the action for himself was the prosecutor and the action was finally
reconveyance of property allegedly held in trust. It is said
terminated with an acquittal
that trust is the right, enforceable solely in equity to the
beneficial enjoyment of property, the legal title to which • That in bringing the action, the prosecutor acted
is vested in another. It may either be express or implied. without probable cause
The latter ids further subdivided into resulting and
constructive trusts. Applying it now to the case at bar, the • The prosecutor was actuated or impelled by legal
plaintiffs did not prove any express trust. Neither did malice
they specify the kind of implied trust contemplated in
their action. Therefore, its enforcement maybe barred by • Lao was only witness and not prosecutor in the Estafa
laches and prescription whether they contemplate a case.Lao made the affidavit as an employee who had
resulting or a constructive trust. personal knowledge of the transaction. The prosecution
for Estafa did not prosper but the unsuccessful
prosecution may be labeled as libelous.
Lao vs. CA | Grino-Aquino
Hence, the judgment against Lao is a nullity and should
G.R. No. 82808, July 11, 1991 | 199 SCRA 58
be set aside.
FACTS
BEATRIZ GALANG, petitioner vs. COURT OF
• Dennis Lao was an employee of New St. Joseph Lumber APPEALS, respondent
owned by Chan Tong NO.L-17248.January 29, 1962
15 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
to stay as husband and wife. However when Rodrigo was gradually toward the left side of the road, over the
not able to secure a marriage license for lack of a shoulder and into a ravine some 270 meters away. From
residence certificate, he went back to his hometown to get the wreckage, the bodies of the passengers, several dead,
such certificate but never returned. others injured, were recovered, and among the fatalities
was Ramon Lira, Jr. (24), son of Mr. and Mrs. Ramon Lira,
On the other hand, the defendants sough to establish that Sr. and injured Nita Lira. Two cases for recovery of
he and plaintiff were engaged but his parents were damages were commenced against the owners and
opposed to the marriage. Rodrigo was agreeable operators in the Court of First Instance of Batangas: No.
to marry the plaintiff after his graduation but the latter 104 (now G.R. Nos. L-13326-29, in this Court) by the
was impatient and wanted the marriage to take place parents of deceased Ramon Lira, Jr. and No. 107 (now
sooner. Because of continued relationships with the G.R. No. L-13358, in this Court) by Nita Lira. After a joint-
plaintiff, Rodrigo’s parents told him to leave the parental trial, defendants, Mercado and others were sentenced to
home. He later told this to plaintiff. The plaintiff pay the following sums: In Civil Case No. 104:
convinced him to go to Dagawan’s house where she
followed and stayed thereafter. Because of his continued For the death of Ramon Lira, Jr. P10,000.00
refusal to marry the plaintiff, the latter’s relatives, including funeral and church expenses
accompanied by policemen and constabulary soldiers
For loss of earning capacity of Ramon 18,000.00
intimidated him. He was allowed to go home and was
Lira, Jr. for ten (10) years at P1,800.00
then placed under the custody of a town mayor by his
per annum
parents. He refused to acknowledge the marriage
application, which was provided by Dagawan for him to Moral damages for mental anguish 4,000.00
sign, when he did not appear before a notary public. For expenses of litigation and 4,000.00
attorney's fees
Plaintiff filed an action against Rodrigo and his father TOTAL
Maximo Quinit to recover damages for breach of promise P36,000.00
on the part of Rodrigo to marry her. The trial court
rendered judgment in favor of plaintiff, which on appeal, In Civil Case No. 107:
was reversed by the Court of Appeals.
18 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
the Code expresslyexcludes the cases presumption of liability upon mere proof of
where there is a 'preexisting contractual injury to the passenger; the latter is relieved from
relation between the parties.' the duty to establish the fault of the carrier or of
his employees; and the burden is placed on the
Art. 2176. Whoever by act or omission causes carrier to prove that it was due to an unforeseen
damage to another, there being fault or event or to force majeure (Cangco v. Manila
negligence, is obliged to pay for the damage Railroad Co., 38 Phil. 768, 777). Moreover, the
done. Such fault or negligence, if there is no carrier, unlike in suits for quasi-delict, may not
preexisting contractual relation between the escape liability by proving that it has exercised
parties, is called a quasi-delict and is governed by due diligence in the selection and supervision of
the provisions of this Chapter.' its employees (Art. 1759, new Civ. Code; Cangco
v. Manila Railroad Co., supra; Prado v. Manila
The exception to the basic rule of damages now Elec. Co., 51 Phil. 900).
under consideration is a mishap resulting in the
death of a passenger, in which case Art. 1764 The difference in conditions, defenses and proof,
makes the common carrier expressly subject to as well as the codal concept of quasi-delict as
the rule of Art. 2206, that entitles the spouse, essentiallyextra-contractual negligence, compel us
descendants and ascendants of the deceased to differentiate between actions excontractu, and
passenger to 'demand moral damages for mental actions quasi ex delicto, and, prevent us from
anguish by reason of the death of the deceased' viewing the action for breach of contract as
(Necesito v. Paras, G.R. No. L-10605, Resolution simultaneously embodying an action on tort.
on motion to reconsider, Sept. 11, 1958). But the Neither can this action be taken as one to enforce
exceptional rule of Art. 1764 makes it all the more on employer's liability under Art. 103 of the Rev.
evident that where the injured passenger does Penal Code, since the responsibility is not alleged
not die, moral damages are not recoverable to be subsidiary, nor is there on record any
unless it is proved that the carrier was guilty of averment or proof that the driver of appellant
malice or bad faith. We think it is clear that the was insolvent. In fact, he is not even made a party
mere carelessness of the carrier's driver does not to the suit.
per se constitute or justify an inference of malice
or bad faith on the part of the carrier; and in the It is also suggested that a carrier's violation of its
case at bar there is no other evidence of such engagement to safely transport the passenger
malice to support the award of moral damages by involves a breach of the passenger's confidence,
the Court of Appeals. To award moral damages and therefore should be regarded as a breach of
for breach of contract, therefore, without proof of contract in bad faith, justifying recovery of moral
bad faith or malice on the part of the defendant, damages under Art. 2220. This theory is
as required by Art. 2220 would be to violate the untenable, for under it the carrier would always
clear provisions of the law, and constitute be deemed in bad faith, in every case its
unwarranted judicial legislation. obligation to the passenger is infringed, and it
would never be accountable for simple
The Court of Appeals has invoked our rulings negligence; while under the law (Art. 1756), the
in Castro v. Acro Taxicab Co., G.R. No. L-49155, presumption is that common carriers
Dec. 14, 1948 and Layda v. Court of Appeals, G.R. acted negligently (and not maliciously), and Art.
No. L-4487, Jan. 29, 1952, but these doctrines were 1762 speaks of negligence of the common carrier.
predicated upon our former law of damages,
before judicial discretion in fixing them became xxx xxx xxx
limited by the express provisions of the new Civil
Code (previously quoted). Hence, the aforesaid "Art. 1756. In case of death of or injuries to
rulings are now inapplicable. passengers common carriers are presumed to
have been at fault or to have acted negligently,
Upon the other hand, the advantageous position unless they prove that they observed
of a party suing a carrier for breach of the contract extraordinary diligence as prescribed in articles
of transportation explains, to some extent, the 1733 and 1755."
limitations imposed by the new Code on the
amount of the recovery. The action for the breach "Art. 1762. The contributory negligence of the
of contract imposes on the defendant carrier a passenger does not bar recovery of damages for
19 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
his death or injuries, if the proximate cause bus was overspeeding, the cause of petitioner Nita Lira
thereof is the negligence of the common carrier, should fail, as far as moral damages is concerned. Moral
but the amount of damages shall be equitably damages was, therefore, correctly eliminated by the
reduced." Court of Appeals.
The distinction between fraud, bad faith or IN VIEW OF THE FOREGOING CONSIDERATIONS,
malice (in the sense of deliberate or wanton the decision of the Court of Appeals in G.R. Nos. L-13328-
wrongdoing) and negligence (as mere 29 and L-13358 (Court of Appeals resolution dated
carelessness) is too fundamental in our law to be December 19, 1957), hereby is affirmed, without costs in
ignored (Arts. 1170-1172); their consequences this instance.
being clearly differentiated by the Code.
G.R. No. 125031. January 24, 2000]
"Art. 2201. In contracts and quasi-contracts, the
damages for which the obligor who acted in good PERMEX INC. and/or JANE (JEAN) PUNZALAN,
faith is liable shall be those that are the natural PERSONNEL MANAGER and EDGAR LIM,
and probable consequences of the breach of the MANAGER, petitioners, vs. NATIONAL LABOR
obligation, and which the parties have foreseen RELATIONS COMMISSION and EMMANUEL
or could have reasonably foreseen at the time the FILOTEO, respondents.
obligation was constituted.
This special civil action for certiorari impugns the
In case of fraud, bad faith, malice or wanton Resolution of the National Labor Relations Commission,
attitude, the obligor shall be responsible for all Fifth Division, dated March 14, 1996, which reversed the
damages which may be reasonably attributed to decision of the Labor Arbiter in NLRC Case No. RAB-09-
the non-performance of the obligation." 09-00259-94, as well as its Resolution, dated April 17,
1996, denying the motion for reconsideration.
It is to be presumed, in the absence of statutory
provision to the contrary, that this difference was Petitioner, Permex Producer and Exporter Corporation
in the mind of the lawmakers when in Art. 2220 (hereinafter Permex), is a company engaged in the
they limited recovery of moral damages to business of canning tuna and sardines, both for export
breaches of contract in bad faith. It is true that and domestic consumption. Its office and factory are both
negligence may be occasionally so gross as to located in Zamboanga City.
amount to malice; but that fact must be shown in
evidence, and a carrier's bad faith is not to be Co-petitioners Edgar Lim and Jean Punzalan[1] are its
lightly inferred from a mere finding that the Manager and Personnel Manager, respectively.
contract was breached through negligence of the
carrier's employees. Private respondent Emmanuel Filoteo, an employee of
Permex, was terminated by petitioners allegedly for
(See also Tamayo v. Aquino, L-12634 & L-12720, flagrantly and deliberately violating company rules and
May 29, 1959; (56 O.G. #36, p. 5617); Cariaga v. regulations. More specifically, he was dismissed
L.T. Bus, L-11037, Dec. 29, 1960; Versoza v. allegedly for falsifying his daily time record.
Baytan L-14092, Apr. 29, 1960; Rex Taxicab Inc. v.
Bautista, L-15392, Sept. 30, 1960). The pertinent facts, as found by both the NLRC and the
Labor Arbiter, are as follows:
We gleaned, therefore, from the above mentioned
decisions, (1) that the case of a passenger of a carrier who Permex initially hired Emmanuel Filoteo on October 1,
suffered physical injuries "because of the carrier's 1990, as a mechanic. Eventually, Filoteo was promoted to
negligence (culpa contractual), cannot be considered in the water treatment operator, a position he held until his
descriptive expression 'analogous cases', used in Art. termination on August 29, 1994. As water treatment
2219"; and (2) that in cases of breach of contract (including operator, Filoteo did not have a fixed working schedule.
one of transportation) proof of bad faith or fraud (dolus) His hours of work were dependent upon the company's
i.e., wanton or deliberate injurious conduct is essential to shifting production schedules.
justify an award of moral damages. There being no
evidence of fraud, malice or bad faith, contemplated by On July 31, 1994, Filoteo was scheduled for the night shift
law, on the part of the respondents, because the cause of from 7:00 p.m. to 7:00 a.m. the following day. That night
the accident was merely the bursting of a tire while the
20 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
he reported for work together with his co-workers, Felix docketed as NLRC Case No. RAB 09-09-00259-
Pelayo and Manuel Manzan. They logged in at the main 94.
gate and guardhouse of the petitioner's factory. Filoteo
entered his time-in at 8:45 p.m. and since he was On June 9, 1995, the Labor Arbiter dismissed the
scheduled to work until 7:00 a.m. the next day, he wrote complaint for lack of merit. The decretal portion of the
7:00 a.m. in his scheduled time-out. This practice of decision reads:
indicating the time out at the moment they time in, was
customarily done by most workers for convenience and "WHEREFORE, in view of the foregoing
practicality since at the end of their work shift, they were considerations, judgment is hereby rendered
often tired and in a hurry to catch the available service dismissing the complaint for lack of merit. However,
vehicle for their trip home, so they often forgot to log out. for violation of compliance of (sic) procedural due
There were times also when the Log Book was brought to process, the respondent is hereby ordered thru its
the Office of the Personnel Manager and they could not Authorized Officer to pay complainant P1,000.00 by
enter their time out. The company had tolerated the way of indemnity pay. Furthermore, complainant's
practice. claims for damages and attorney's fees be dismissed
for lack of merit.
On the evening of July 31,1994, at around 9:20 p.m.,
Filoteo, together with Pelayo, went to see the Assistant "SO ORDERED."[2]
Production Manager to inquire if "butchering" of fish
would be done that evening so they could start operating Filoteo appealed to the NLRC. Finding merit therein, the
the boiler. They were advised to wait from 9:30 p.m. to Commission's Fifth Division promulgated its resolution,
10:00 p.m. for confirmation. reversing and setting aside the Labor Arbiter's decision,
by disposing as follows:
At or about 10:00 p.m., Filoteo and Pelayo went back to
the Assistant Production Manager's office. There they "WHEREFORE, the decision appealed from, is
were informed that there would be no "butchering" of Vacated and Set Aside and a new one entered
tuna that night. Filoteo then sought permission to go declaring the complainant to have been illegally
home, which was granted. Filoteo then hurriedly got his dismissed by respondent company. Accordingly,
things and dashed off to the exit gate to catch the service respondent Permex, Inc., through its corporate
jeep provided by Permex. officers, is hereby ordered and directed to pay
complainant, Emmanuel Filoteo, separation pay at
The next day, August 1, 1994, Filoteo reported for work the rate of one (1) month salary for every year of
as usual. He then remembered that he had to make a re- service or in the equivalent of four (4) months
entry in his daily time record for the previous day. He separation pay and backwages effective August 23,
proceeded to the Office of the Personnel Manager to 1994 up to the promulgation of this decision,
retime his DTR entry. Later, he received a memorandum inclusive of fringe benefits, if any. Further,
from the Assistant Personnel Officer asking him to respondent company is ordered to pay complainant
explain, in writing, the entry he made in his DTR. Filoteo moral and exemplary damages in the sum of
complied and submitted his written explanation that P10,000.00 and P5,000.00, respectively, as well as
same evening. attorney's fees equivalent to ten (10%) percent of the
total monetary award after computation thereof at
On August 8, 1994, Filoteo was suspended indefinitely. the execution stage.
His explanation was found unsatisfactory. He was
dismissed from employment on August 23, 1994. "SO ORDERED."[3]
The dismissal arose from Filoteo's alleged violation of On April 3, 1996, petitioners filed a motion for
Article 2 of the company rules and regulations. The reconsideration. It was denied for lack of merit by the
offense charged was entering in his DTR that he had NLRC in a resolution dated April 17, 1996.
worked from 8:45 p.m. of July 31, 1994 to 7:00 a.m. of
August 1,1994, when in fact he had worked only up to Hence, the present petition, assigning the following
10:00 p.m. errors:
II - PUBLIC RESPONDENT ERRED WHEN IT RULED (b) Subject to the constitutional right of workers to
THAT PRIVATE RESPONDENT WAS ILLEGALLY security of tenure and their right to be protected against
DISMISSED. dismissal except for a just and authorized cause...The
burden of proving that the termination was for a valid
III - PUBLIC RESPONDENT ERRED WHEN IT or authorized cause shall rest on the employer..."
AWARDED PRIVATE RESPONDENT SEPARATION
PAY, BACKWAGES, DAMAGES AND ATTORNEY'S Second, the private respondent was not afforded an
FEES SANS FACTUAL AND LEGAL BASIS. opportunity to be heard. As found by the
NLRC:
We will now consider these assigned errors to resolve the
principal issue of whether or not private respondent was "... Aside from the fact that there was no valid and
illegally terminated from his employment. justifiable cause for his outright dismissal from the
service, complainant's dismissal as correctly held by the
Note that, firstly, petitioners seek a reversal of the public Labor Arbiter was tainted with arbitrariness for failure
respondent's findings of the facts. But as the Court has of respondent company (petitioner herein) to observe
repeatedly ruled the findings of facts of the NLRC, procedural due process in effecting his dismissal.
particularly where the NLRC and the Labor Arbiter are in Admittedly, complainant was suspended indefinitely
agreement, are deemed binding and conclusive upon the on August 8, 1994 and subsequently dismissed on
Court.[4] For the Court is not a trier of facts.[5] Second, August 23, 1994 without any formal investigation to
resort to judicial review of the decisions of the NLRC in a enable complainant to defend himself."[11]
special civil action for certiorari under Rule 65 of the Rules
of Court, is limited only to the question generally of grave Such dismissal, in our view, was too harsh a penalty for
abuse of discretion amounting to lack or excess of an unintentional infraction, not to mention that it was his
jurisdiction.[6] Thirdly, in this case, the NLRC's factual first offense committed without malice, and committed
findings are supported by the evidence on record. We are also by others who were not equally
therefore constrained not to disturb said findings of fact. penalized.[12]
Whether private respondent was illegally dismissed or It is clear that the alleged false entry in private
not is governed by Article 282 of the Labor Code.[7] To respondent's DTR was actually the result of having
constitute a valid dismissal from employment, two logged his scheduled time-out in advance on July 31,
requisites must concur: (a) the dismissal must be for any 1994. But it appears that when he timed in, he had no idea
of the causes provided for in Article 282 of the Labor that his work schedule (night shift) would be cancelled.
Code; and (b) the employee must be afforded an When it was confirmed at 10:00 p.m. that there was no
opportunity to be heard and defend himself.[8] This "butchering" of tuna to be done, those who reported for
means that an employer can terminate the services of an work were allowed to go home, including private
employee for just and valid causes, which must be respondent. In fact, Filoteo even obtained permission to
supported by clear and convincing evidence.[9] It also leave from the Assistant Production Manager.
means that, procedurally, the employee must be given
notice, with adequate opportunity to be heard,[10] before Considering the factory practice which management
he is notified of his actual dismissal for cause. tolerated, we are persuaded that Filoteo, in his rush to
catch the service vehicle, merely forgot to correct his
In the present case, the NLRC found that the two-fold initial time-out entry. Nothing is shown to prove he
requirements for a valid dismissal were not satisfied by deliberately falsified his daily time record to deceive the
the petitioners. company. The NLRC found that even management's own
evidence reflected that a certain Felix Pelayo, a co-worker
First, petitioner's charge of serious misconduct of of private respondent, was also allowed to go home that
falsification or deliberate misrepresentation was not night and like private respondent logged in advance 7:00
supported by the evidence on the record contrary to Art. a.m. as his time-out. This supports Filoteo's claim that it
277 of the Labor Code which provides that: was common practice among night-shift workers to log in
22 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
their usual time-out in advance in the daily time No. T-32810, would be foreclosed. Inasmuch as Aurea
record. was his aunt, Jovencio acceded to the request. They
agreed that, upon payment by Jovencio of the loan to
Moreover, as early as Tide Water Associated Oil Co. PNB, half of Yasoas subject property would be sold to
v. Victory Employees and Laborers Association, 85 Phil. 166 him.
(1949), we ruled that, where a violation of company
On December 29, 1971, Jovencio paid Aureas bank
policy or breach of company rules and regulations was
loan. As agreed upon, Aurea executed a deed of absolute
found to have been tolerated by management, then the
sale in favor of Jovencio over half of the lot consisting of
same could not serve as a basis for termination.
123 square meters. Thereafter, the lot was surveyed and
separate titles were issued by the Register of Deeds of Sta.
All told we see no reason to find that the NLRC gravely Cruz, Laguna in the names of Aurea (TCT No. 73252) and
abused its discretion when it ruled that private Jovencio (TCT No. 73251).
respondent was illegally dismissed. Hence we concur in
that ruling. Nonetheless, we find that the award of moral Twenty-two years later, in August 1993, Aurea filed
and exemplary damages by the public respondent is not an estafa complaint against brothers Jovencio and
in order and must be deleted. Moral damages are Rodencio de Ramos on the ground that she was deceived
recoverable only where the dismissal of the employee by them when she asked for their assistance in 1971
was tainted by bad faith or fraud, or where it constituted concerning her mortgaged property. In her complaint,
an act oppressive to labor, and done in a manner contrary Aurea alleged that Rodencio asked her to sign a blank
to morals, good customs, or public policy.[13] Exemplary paper on the pretext that it would be used in the
damages may be awarded only if the dismissal was done redemption of the mortgaged property. Aurea signed the
in a wanton, oppressive, or malevolent manner.[14] None blank paper without further inquiry because she trusted
of these circumstances exist in the present her nephew, Rodencio. Thereafter, they heard nothing
case. from Rodencio and this prompted Nimpha Yasoa Bondoc
to confront Rodencio but she was told that the title was
WHEREFORE, the petition is DENIED. The assailed still with the Register of Deeds. However, when Nimpha
resolutions of the National Labor Relations Commission inquired from the Register of Deeds, she was shocked to
dated March 14, 1996 and April 17, 1996 in NLRC CA No. find out that the lot had been divided into two, pursuant
M-002808-95 are AFFIRMED with to a deed of sale apparently executed by Aurea in favor of
MODIFICATION. Petitioner Permex, through its Jovencio. Aurea averred that she never sold any portion
corporate officers, is ORDERED to pay jointly and of her property to Jovencio and never executed a deed of
solidarily the private respondent separation pay at the sale. Aurea was thus forced to seek the advice of Judge
rate of one (1) month salary for every year of service as Enrique Almario, another relative, who suggested filing a
well as backwages effective August 23, 1994, inclusive of complaint for estafa.
fringe benefits if any, with legal interest until fully paid, On February 21, 1994, Assistant Provincial
and attorney's fees equivalent to ten (10%) percent of the Prosecutor Rodrigo B. Zayenis dismissed the criminal
total monetary award computed at the execution stage complaint for estafa for lack of evidence. On account of
hereof. The award of moral and exemplary damages, this dismissal, Jovencio and Rodencio filed a complaint
however, is DELETED. Costs against petitioners. for damages on the ground of malicious prosecution with
the Regional Trial Court of Sta. Cruz, Laguna, Branch
SO ORDERED.[G.R. No. 156339. October 6, 2004] 91,[2] which was docketed as Civil Case No. SC-3230. They
alleged that the filing of the estafa complaint against them
MS. VIOLETA YASOA, , petitioners, vs. RODENCIO
was done with malice and it caused irreparable injury to
and JOVENCIO, both surnamed DE
RAMOS, respondents. their reputation, as Aurea knew fully well that she had
already sold half of the property to Jovencio.
Before this Court is a petition for review
on certiorari seeking the reversal of the decision[1] of the On October 5, 2000, the trial court rendered a
Court of Appeals dated June 14, 2002 and its resolution decision in favor of Jovencio and Rodencio. The
dated December 12, 2002 in CA-G.R. SP No. 69300. dispositive portion stated:
The records disclose that in November 1971, Aurea WHEREFORE, premises considered, finding that
Yasoa and her son, Saturnino, went to the house of plaintiffs have established their case by preponderance of
Jovencio de Ramos to ask for financial assistance in evidence, judgment is hereby rendered in their favor and
paying their loans to Philippine National Bank (PNB), against the defendants ordering the latter to pay the
otherwise their residential house and lot, covered by TCT former as follows:
23 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
A) P150,000.00 by way of moral damages; surveyed and divided into two portions. Separate titles
were then issued in the names of Aurea Yasoa (TCT No.
B) P30,000.00 as exemplary damages; 73252) and Jovencio de Ramos (TCT No. 73251). Since
1973, Jovencio had been paying the realty taxes of the
C) P10,000.00 as attorneys fees incurred in defending portion registered in his name. In 1974, Aurea even
themselves from the criminal complaint for estafa; requested Jovencio to use his portion as bond for the
temporary release of her son who was charged with
D) P10,000.00 as attorneys fees and cost of litigation, and malicious mischief. Also, when Aurea borrowed money
to pay the costs. from the Rural Bank of Lumban in 1973 and the PNB in
1979, only her portion covered by TCT No. 73252 was
mortgaged.
There being no sufficient evidence established to prove
the claim for actual damages the same is hereby All these pieces of evidence indicate that Aurea had
dismissed. long acknowledged Jovencios ownership of half of the
property. Furthermore, it was only in 1993 when
SO ORDERED.[3] petitioners decided to file the estafa complaint against
respondents. If petitioners had honestly believed that
Petitioner Violeta Yasoa, personally and on behalf of they still owned the entire property, it would not have
her brothers and sisters and mother Aurea, filed a petition taken them 22 years to question Jovencios ownership of
for certiorari under Rule 65 with the Court of Appeals half of the property. The only conclusion that can be
which dismissed the same on June 14, 2002 on the ground drawn from the circumstances is that Aurea knew all
that petitioners availed of the wrong remedy. Their along that she was no longer the owner of Jovencios
subsequent motion for reconsideration was likewise portion after having sold it to him way back in 1971.
denied on December 12, 2000. Likewise, other than petitioners bare allegations, no other
evidence was presented by them to substantiate their
Hence, the instant petition. claim.
We agree with the appellate court that the remedy Malicious prosecution, both in criminal and civil
availed of by petitioners was inappropriate as Rule 65 of cases, requires the elements of (1) malice and (2) absence
the Rules of Court cannot be a substitute for a lost of probable cause.[7] These two elements are present in the
appeal,[4] and that, in any event, petitioners are liable for present controversy. Petitioners were completely aware
malicious prosecution. that Jovencio was the rightful owner of the lot covered by
The principal question to be resolved is whether the TCT No. 73251, clearly signifying that they were impelled
filing of the criminal complaint for estafa by petitioners by malice and avarice in bringing the unfounded action.
against respondents constituted malicious prosecution. That there was no probable cause at all for the filing of the
estafa case against respondents led to the dismissal of the
In this jurisdiction, the term malicious charges filed by petitioners with the Provincial
prosecution has been defined as an action for damages Prosecutors Office in Siniloan, Laguna.
brought by one against whom a criminal prosecution,
civil suit, or other legal proceeding has been instituted Petitioners reliance on Drilon vs. Court of Appeals[8] is
maliciously and without probable cause, after the misplaced. It must be noted that in Drilon, the
termination of such prosecution, suit, or other proceeding investigating panel found that there was probable cause
in favor of the defendant therein. To constitute malicious to hold private respondent Homobono Adaza for trial for
prosecution, there must be proof that the prosecution was the crime of rebellion with murder and frustrated
prompted by a sinister design to vex or humiliate a murder. Thus, petitioner (now Senate President) Franklin
person, and that it was initiated deliberately by the Drilon could not be held liable for malicious prosecution
defendant knowing that his charges were false and as there existed probable cause for the criminal case.
groundless.[5] Concededly, the mere act of submitting a Here, the complaint for estafa was dismissed outright as
case to the authorities for prosecution does not make one the prosecutor did not find any probable cause against
liable for malicious prosecution.[6] respondents. A suit for malicious prosecution will
prosper where legal prosecution is carried out without
In this case, however, there is reason to believe that probable cause.
a malicious intent was behind the filing of the complaint
for estafa against respondents. The records show that the In sum, we find no reversible error on the part of the
sale of the property was evidenced by a deed of sale duly appellate court in dismissing the petition and in effect
notarized and registered with the local Register of Deeds. affirming the trial courts decision holding petitioners
After the execution of the deed of sale, the property was
24 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
liable for damages for the malicious prosecution of Ruling:
respondents.
In law, moral damages include physical
WHEREFORE, the decision declaring petitioners suffering, mental anguish, fright, serious anxiety,
liable for malicious prosecution is hereby AFFIRMED in besmirched reputation, wounded feelings, moral shock,
toto. social humiliation and similar injury. However, to be
SO ORDERED. entitled to the award thereof, it is not enough that one
merely suffered sleepless nights, mental anguish or
serious anxiety as a result of the actuations of the other
Moral Damages: When awardable; when not party.
25 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
We are thus at a loss to understand why, despite concurrence of injury to the plaintiff and legal
its very own finding of absence of bad faith or malice on responsibility by the person causing it. The underlying
the part of the petitioner, the CA nonetheless adjudged it basis for the award of tort damages is the premise that an
liable for moral damages to respondent. individual was injured in contemplation of law. Thus,
there must first be a breach of some duty and the
Calderon’s card privileges for dollar transactions
imposition of liability for that breach before damages may
were suspended because of his past due and demandable
be awarded; and the breach of such duty should be the
obligations. He made a deposit of US$14,000.00 in his
proximate cause of the injury.
dollar account but did not bother to request the petitioner
for the reinstatement of his credit card privileges for In the situation in which respondent finds
dollar transactions, thus the same remained under himself, his is a case of damnum absque injuria.
suspension. On account of this, and with the express
On a final note, x x x “moral damages are in the
provision on automatic suspension without notice under
category of an award designed to compensate the claim
paragraph 3 of the parties’ Credit Card Agreement, there
for actual injury suffered and not to impose a penalty on
is simply no basis for holding petitioner negligent for not
the wrongdoer.”
notifying respondent of the suspended status of his credit
card privileges. And, certainly, respondent could not MAMBULAO LUMBER COMPANY V. PNB (G.R.
have justifiably assumed that petitioner must have
reinstated his card by reason alone of his having NO. L-22973)
deposited US$14,000.00 a day before he left for
Hongkong. As issuer of the card, petitioner has the Facts: Petitioner Mambulao Lumber applied for an
option to decide whether to reinstate or altogether industrial loan with herein respondent PNB and was
terminate a credit card previously suspended on approved with its real estate, machinery and equipments
considerations which the petitioner deemed proper, not as collateral. PNB released the approved loan but
the least of which are the cardholder’s payment record, petitioner failed to pay and was later discovered to have
capacity to pay and compliance with any additional already stopped in its operation. PNB then moved for the
requirements imposed by it. foreclosure and sale of the mortgaged properties. The
properties were sold and petitioner sent a bank draft to
Even on the aspect of negligence, therefore, PNB to settle the balance of the obligation. PNB however
petitioner could not have been properly adjudged liable alleges that a remaining balance stands and a foreclosure
for moral damages. sale would still be held unless petitioner remits said
amount. The foreclosure sale proceeded and petitioner’s
Unquestionably, respondent suffered damages
properties were taken out of its compound. Petitioner
as a result of the dishonor of his card. There is, however,
filed actions before the court and claims among others,
a material distinction between damages and injury. To moral damages.
quote from the decision in BPI Express Card Corporation vs.
Court of Appeals: Issue: Whether or not petitioner corporation, who has
Injury is the illegal invasion of a legal right; damage is the already ceased its operation, may claim for moral
damages.
loss, hurt or harm which results from the injury; and
damages are the recompense or compensation awarded
Ruling: NO.
for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or Herein appellant’s claim for moral damages, however,
harm was not the result of a violation of a legal duty. In seems to have no legal or factual basis. Obviously, an
such cases the consequences must be borne by the injured artificial person like herein appellant corporation cannot
person alone, the law affords no remedy for damages experience physical sufferings, mental anguish, fright,
resulting from an act which does not amount to a legal serious anxiety, wounded feelings, moral shock or social
injury or wrong. These situations are often called humiliation which are basis of moral damages. A
damnum absque injuria. corporation may have a good reputation which, if
besmirched, may also be a ground for the award of moral
In other words, in order that a plaintiff may damages. The same cannot be considered under the facts
maintain an action for the injuries of which he complains, of this case, however, not only because it is admitted that
he must establish that such injuries resulted from a breach herein appellant had already ceased in its business
of duty which the defendant owed to the plaintiff- a operation at the time of the foreclosure sale of the chattels,
26 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
but also for the reason that whatever adverse effects of the 3. Foreclosure should be conducted in the City of
foreclosure sale of the chattels could have upon its Manila, as agreed in the contract. Ergo, R is guilty of
reputation or business standing would undoubtedly be conversion when he sells under the mortgage but not
the same whether the sale was conducted at Jose in accordance with its terms; and
Panganiban, Camarines Norte, or in Manila which is the 4. The amount of sale of the chattels is spurious/
place agreed upon by the parties in the mortgage contract. grossly unfair to P.
However, P’s claim for moral damages seems to have no
legal or factual basis. Obviously, an artificial person like
TOPIC: (Entitlement to moral damages) herein P corporation cannot experience physical
sufferings, mental anguish, fright, serious anxiety,
Mambulao Lumber Co. vs PNB GR L-22973 wounded feelings, moral shock or social humiliation
which are basis of moral damages. A corporation may
have a good reputation which, if besmirched, may also be
30 January 1968 a ground for the award of moral damages. The same
cannot be considered under the facts of this case,
FACTS: Petitioner (P) applied for industrial loan and however, not only because it is admitted that herein
granted by Respondent bank (R). To secure payment of appellant had already ceased in its business operation at
loan, P mortgaged a parcel of land together with various the time of the foreclosure sale of the chattels, but also for
sawmill equipment, rolling units and other fixed assets the reason that whatever adverse effects of the foreclosure
situated therein. sale of the chattels could have upon its reputation or
business standing would undoubtedly be the same
P failed to pay the amortization and the amounts released whether the sale was conducted at Jose Panganiban,
to and received by it. Repeated demands were made but Camarines Norte, or in Manila which is the place agreed
upon inspection it was found that P stopped operation. R upon by the parties in the mortgage contract.
sent a letter to R sheriff of Camarines Norte requesting But for the wrongful acts of herein R bank and the
him to take possession of the parcel of land and the R sheriff of Camarines Norte in proceeding with the sale
chattels and to sell them at public auction. R sheriff issued in utter disregard of the agreement to have the chattels
corresponding notice of extrajudicial sale and sent copy sold in Manila as provided for in the mortgage contract,
to P. to which their attentions were timely called by herein
appellant, and in disposing of the chattels in gross for the
P sent a bank draft for to PNB allegedly full settlement of miserable amount of P4,200.00, herein appellant should
the obligation after the application of the sum be awarded exemplary damages in the sum of P10,000.00.
representing the proceeds of the foreclosure sale of the
parcel of land. P averred that the foreclosure of chattel
mortgage is no longer needed for being fully paid and Case: ABS-CBN BROADCASTING CORP. v. CA,
that it could not be legally effected at a place other than REPUBLIC BROADCASTING CORP., VIVA
City of Manila, the place agreed and stipulated in their PRODUCTIONS, INC., and VICENTE DEL ROSARIO
contract. (301 SCRA 589)
Date: January 21, 1999
R’s counsel wrote to P that the remitted amount was not Ponente: C.J. Davide, Jr.
enough for its liability to which should be added the
expenses for guarding the mortgaged of chattels, Facts:
attorney’s fees and expenses of the sale. Notwithstanding, In 1990, ABS-CBN and VIVA executed a Film
the foreclosure of both land and the chattels were held. Exhibition Agreement whereby VIVA gave ABS-CBN an
exclusive right to exhibit some VIVA films. According to
ISSUE: Whether P is entitled to moral damages. the agreement, ABS-CBN shall have the right of first
DECISION: No. Even if the R bank and R sheriff refusal to the next 24 VIVA films for TV telecast under
committed several infractions/errors, to wit: such terms as may be agreed upon by the parties,
1. R sheriff’s actual work performed should be however, such right shall be exercised by ABS-CBN from
compensated pursuant to Sec 4 of Act 3135, which is the actual offer in writing.
the governing law for extrajudicial foreclosure and
not Sec 7 of Rule 130, which is applicable for judicial Sometime in December 1991, VIVA, through
foreclosure; Vicente Del Rosario (Executive Producer), offered ABS-
2. Atty’s fees was found to be excessive and CBN through VP Charo Santos-Concio, a list of 3 film
unconscionable; packages from which ABS-CBN may exercise its right of
first refusal. ABS-CBN, however through Mrs. Concio,
27 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
tick off only 10 titles they can purchase among which is concurrence between the offer and the acceptance upon
the film “Maging Sino Ka Man” which is one of the the subject matter, consideration, and terms of payment a
subjects of the present case, therefore, it did not accept the contract is produced. The offer must be certain. To
said list as per the rejection letter authored by Mrs. Concio convert the offer into a contract, the acceptance must be
sent to Del Rosario. absolute and must not qualify the terms of the offer; it
must be plain, unequivocal, unconditional, and without
Subsequently, Del Rosario approached Mrs. variance of any sort from the proposal. A qualified
Concio with another list consisting of 52 original movie acceptance, or one that involves a new proposal,
titles and 104 re-runs, proposing to sell to ABS-CBN constitutes a counter-offer and is a rejection of the original
airing rights for P60M (P30M in cash and P30M worth of offer. Consequently, when something is desired which is
television spots). Del Rosario and ABS-CBN’s General not exactly what is proposed in the offer, such acceptance
Manager, Eugenio Lopez III, met at the Tamarind Grill is not sufficient to generate consent because any
Restaurant in QC to discuss the package proposal but to modification or variation from the terms of the offer
no avail. annuls the offer.
Four days later, Del Rosario and Mr. Graciano After Mr. Del Rosario of Viva met Mr. Lopez of
Gozon, Senior VP of Finance of Republic Broadcasting ABS-CBN to discuss the package of films, ABS-CBN, sent
Corporation (RBS/Channel 7) discussed the terms and through Ms. Concio, counter-proposal in the form a draft
conditions of VIVA’s offer. A day after that, Mrs. Concio contract. This counter-proposal could be nothing less
sent the draft of the contract between ABS-CBN and than the counter-offer of Mr. Lopez during his conference
VIVA which contained a counter-proposal covering 53 with Del Rosario. Clearly, there was no acceptance of
films for P35M. VIVA’s Board of Directors rejected the VIVA’s offer, for it was met by a counter-offer which
counter-proposal as it would not sell anything less than substantially varied the terms of the offer.
the package of 104 films for P60M. After said rejection,
In the case at bar, VIVA through its Board of
ABS-CBN closed a deal with RBS including the 14 films
previously ticked off by ABS-CBN. Directors, rejected such counter-offer. Even if it be
conceded arguendo that Del Rosario had accepted the
Consequently, ABS-CBN filed a complaint for counter-offer, the acceptance did not bind VIVA, as
specific performance with prayer for a writ of preliminary there was no proof whatsoever that Del Rosario had the
injunction and/or TRO against RBS, VIVA and Del specific authority to do so.
Rosario. RTC then enjoined the latter from airing the
Under the Corporation Code, unless otherwise
subject films. RBS posted a P30M counterbond to dissolve
provided by said Code, corporate powers, such as the
the injunction. Later on, the trial court as well as the CA
power to enter into contracts, are exercised by the Board
dismissed the complaint holding that there was no
meeting of minds between ABS-CBN and VIVA, hence, of Directors. However, the Board may delegate such
there was no basis for ABS-CBN’s demand, furthermore, powers to either an executive committee or officials or
the right of first refusal had previously been exercised. contracted managers. The delegation, except for the
executive committee, must be for specific purposes.
Hence, the present petition, ABS-CBN argued Delegation to officers makes the latter agents of the
that an agreement was made during the meeting of Mr. corporation; accordingly, the general rules of agency as to
Lopez and Del Rosario jotted down on a “napkin” (this the binding effects of their acts would apply. For such
was never produced in court). Moreover, it had yet to officers to be deemed fully clothed by the corporation to
fully exercise its right of first refusal since only 10 titles exercise a power of the Board, the latter must specially
were chosen from the first list. As to actual, moral and authorize them to do so. That Del Rosario did not have
exemplary damages, there was no clear basis in awarding the authority to accept ABS-CBN’s counter-offer was
the same. best evidenced by his submission of the draft contract
to VIVA’s Board of Directors for the latter’s
Issue: WON a contract was perfected between ABS-CBN
approval. In any event, there was between Del Rosario
and VIVA and WON moral damages may be awarded to
and Lopez III no meeting of minds.
a corporation
Held: Both NO. The testimony of Mr. Lopez and the allegations
in the complaint are clear admissions that what was
Ratio: Contracts that are consensual in nature are supposed to have been agreed upon at the Tamarind Grill
perfected upon mere meeting of the minds. Once there is between Mr. Lopez and Del Rosario was not a binding
28 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
agreement. It is as it should be because corporate power PHIBRO received from NPC a confirmed and workable
to enter into a contract is lodged in the Board of letter of credit. However, PHIBRO effected its first
Directors. (Sec. 23, Corporation Code). Without such shipment only on November 17, 1987.
board approval by the Viva board, whatever agreement
Lopez and Del Rosario arrived at could not ripen into a In October 1987, NPC once more advertised for the
valid contact binding upon Viva. delivery of coal to its Calaca thermal plant. PHIBRO
participated anew but was disapproved. PHIBRO found
However, the Court find for ABS-CBN on the that the real reason for the disapproval was its purported
failure to satisfy NPC's demand for damages due to the
issue of damages. Moral damages are in the category of
delay in the delivery of the first coal shipment. PHIBRO
an award designed to compensate the claimant for actual
filed an action for damages with application for
injury suffered and not to impose a penalty on the
injunction against NPC with the RTC Makati
wrongdoer. The award of moral damages cannot be City. PHIBRO alleged that NPC's act of disqualifying it in
granted in favor of a corporation because, being the October bidding and in all subsequent biddings was
an artificial person and having existence only in legal tainted with malice and bad faith. PHIBRO prayed for
contemplation, it has no feelings, no emotions, no actual, moral and exemplary damages and attorney's fees.
senses. It cannot, therefore, experience physical
suffering and mental anguish, which can be In its answer, NPC averred that the strikes could not be
experienced only by one having a nervous system. The the reason for the since PHIBRO admitted on July 28, 1987
statement that a corporation may recover moral damages those strikes had already ceased. And, even assuming
if it “has a good reputation that is debased, resulting in that the strikes were still ongoing, PHIBRO should have
social humiliation” is an obiter dictum. On this score shouldered the burden of a "strike-free" clause because
alone the award for damages must be set aside, since RBS their contract was "C and F Calaca, Batangas,
is a corporation. Philippines," meaning, the cost and freight from the point
of origin until the point of destination would be for the
account of PHIBRO. Furthermore, due to PHIBRO's
NPC vs. PHILIPP BROTHERS OCEANIC, INC. G.R.
failure to deliver the coal on time, it was compelled to
No. 126204 November 20, 2001
purchase coal from ASEA at a higher price. NPC claimed
for actual damages in the amount of P12,436,185.73,
FACTS: On May 14, 1987, the NPC issued invitations to
representing the increase in the price of coal, and a claim
bid for the supply and delivery of 120,000 metric tons of
of P500,000.00 as litigation expenses.
imported coal for its Batangas Coal-Fired Thermal Power
Plant in Calaca, Batangas. The Philipp Brothers Oceanic,
RTC rendered a decision in favor of PHIBRO, which
Inc. (PHIBRO) participated as one of the bidders which
ordered NPC to reinstate PHIBRO in the list of accredited
PHIBRO's bid was accepted. NPC's acceptance was
bidders and allow to participate in any and all future
conveyed in a letter dated July 8, 1987, which was
tenders of NPC for the supply and delivery of imported
received by PHIBRO on July 15, 1987.The "Bidding Terms
steam coal; and to pay PHIBRO actual damages, moral
and Specifications" provide for the manner of shipment
damages, exemplary damages, reimbursement for
of coals, which states that the winning TENDERER who
then becomes the SELLER shall arrange and provide gearless expenses, cost of litigation, attorney's fees; and costs of
bulk carrier for the shipment of coal to arrive at discharging port suit. The counterclaims of dNPC are dismissed for lack of
on or before thirty (30) calendar days after receipt of the Letter merit.
of Credit by the SELLER or its nominee as per Section XIV
hereof to meet the vessel arrival schedules at Calaca, Batangas, Unsatisfied, NPC, through the Sol Gen, elevated the case
Philippines as follows: 60,000 +/ - 10 % July 20, 1987; 60,000 to the CA. On August 27, 1996, the CA rendered a
+/ - 10% September 4, 1987. Decision affirming in toto the Decision of the RTC. It
ratiocinated that PHIBRO's delivery of the shipment of
On July 10, 1987, PHIBRO sent word to NPC that coal was delayed through NPC's own delay in opening a
industrial disputes might soon plague Australia, which workable letter of credit; and b) the strikes are included
could seriously hamper PHIBRO's ability to supply the in the definition of force majeure in Section XVII of the
needed coal. From July 23 to July 31, 1987, PHIBRO again Bidding Terms and Specifications, (supra), so Phibro is not
explained NPC that the ship owners therein are not liable for any delay caused thereby.
willing to load cargo unless a "strike-free" clause is
incorporated in the charter party or the contract of NPC filed a petition for review ascribing to the CA the
carriage and that they equally share the burden of a following errors:
"strike-free" clause. NPC refused. On August 6, 1987,
29 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
ISSUES: Power Plant I at Calaca, Batangas Philippines,"25 is
I. WON, CA gravely erred in concluding that PHIBRO's explicit, thus: NPC reserves the right to reject any or all bids,
delay in the delivery of imported coal was due to NPC's to waive any minor informality in the bids received.The right is
alleged delay in opening a letter of credit and to force also reserved to reject the bids of any bidder who has previously
majeure, and not to PHIBRO's own deliberate acts and failed to properly perform or complete on time any and all
faults. contracts for delivery of coal or any supply undertaken by a
bidder.
II. WON, CA gravely erred in concluding that NPC acted
maliciously and unjustifiably in disqualifying PHIBRO This Court has held that where the right to reject is so
from participating in the December 8, 1987 and future reserved, the lowest bid or any bid for that matter may be
biddings. rejected on a mere technicality. And where the
government as advertiser, availing itself of that right,
III. WON, CA gravely erred in concluding that PHIBRO makes its choice in rejecting any or all bids, the losing
was entitled to injunctive relief, to actual or bidder has no cause to complain nor right to dispute that
compensatory, moral and exemplary damages, attorney's choice unless an unfairness or injustice is shown.
fees and litigation expenses despite the clear absence of Accordingly, a bidder has no ground of action to compel
legal and factual bases for such award. the Government to award the contract in his favor, nor to
compel it to accept his bid. Even the lowest bid or any bid
IV. WON, CA gravely erred in absolving PHIBRO from may be rejected.
any liability for damages to NPC for its unjustified and
deliberate refusal and/or failure to deliver the contracted Did NPC abuse its right or act unjustly in disqualifying
imported coal within the stipulated period. PHIBRO from the public bidding? We rule in the
negative. In practice, courts, in the sound exercise of their
V. WON, CA gravely erred in dismissing NPC's discretion, will have to determine under all the facts and
counterclaims for damages and litigation expenses. circumstances when the exercise of a right is unjust, or
when there has been an abuse of right. We are convinced
RULE: that NPC's act of disapproving PHIBRO's application for
The CA is justified in sustaining the RTC's decision pre-qualification to bid was without any intent to injure
exonerating PHIBRO from any liability for damages to or a purposive motive to perpetrate damage. Apparently,
NPC. It is worthy to note that PHIBRO and NPC explicitly NPC acted on the strong conviction that PHIBRO had a
agreed in Section XVII of the "Bidding Terms and "seriously-impaired" track record. NPC cannot be faulted
Specifications" that "neither seller (PHIBRO) nor buyer from believing so. At this juncture, it is worth mentioning
(NPC) shall be liable for any delay in or failure of the that at the time NPC issued its subsequent Invitation to
performance of its obligations, other than the payment of Bid, i.e., October 1987, PHIBRO had not yet delivered the
money due, if any such delay or failure is due to first shipment of coal under the July 1987 contract, which
Force Majeure." Specifically, they defined force majeure as was due on or before September 5, 1987. Naturally, NPC
"any disabling cause beyond the control of and without is justified in entertaining doubts on PHIBRO's
fault or negligence of the party, which causes may include qualification or capability to assume an obligation under
but are not restricted to Acts of God or of the public a new contract.
enemy; acts of the Government in either its sovereign or
contractual capacity; governmental restrictions; strikes, That NPC believed all along that PHIBRO's failure to
fires, floods, wars, typhoons, storms, epidemics and deliver on time was unfounded is manifest from its
quarantine restrictions." The law is clear and so is the letters reminding PHIBRO that it was bound to deliver
contract between NPC and PHIBRO. Therefore, we have the coal within 30 days from its (PHIBRO's) receipt of the
no reason to rule otherwise. Letter of Credit, otherwise it would be constrained to take
legal action.
However, does it necessarily follow that NPC acted
unjustly, capriciously, and unfairly in disapproving Thus, one who acted pursuant to the sincere belief that
PHIBRO's application for pre-qualification to bid? First, it another willfully committed an act prejudicial to the
must be stressed that NPC was not bound under any interest of the government cannot be considered to have
contract to approve PHIBRO's pre-qualification acted in bad faith. Bad faith has always been a question of
requirements. In fact, NPC had expressly reserved its intention. It is that corrupt motive that operates in the
right to reject bids which is found in the "Post- mind. As understood in law, it contemplates a state of
Qualification Documents/Specifications for the Supply mind affirmatively operating with furtive design or with
and Delivery of Coal for the Batangas Coal-Fired Thermal some motive of self-interest or ill-will or for ulterior
30 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
purpose. While confined in the realm of thought, its from real ills, sorrows, and griefs of life — all of which cannot
presence may be ascertained through the party's be suffered by respondent bank as an artificial person."
actuation or through circumstantial evidence. The
circumstances under which NPC disapproved PHIBRO's Neither can we award exemplary damages under Article
pre-qualification to bid do not show an intention to cause 2234 of the Civil Code. Before the court may consider the
damage to the latter. The measure it adopted was one of question of whether or not exemplary damages should be
self-protection. Consequently, we cannot penalize NPC awarded, the plaintiff must show that he is entitled to
for the course of action it took. NPC cannot be made liable moral, temperate, or compensatory damages. NPC, in
for actual, moral and exemplary damages. this petition, likewise contests the judgment of the lower
courts awarding PHIBRO the amount of $73,231.91 as
Corollarily, in awarding to PHIBRO actual damages in reimbursement for expenses, cost of litigation and
the amount of $864,000, the RTC computed what could attorney's fees. We agree with NPC.
have been the profits of PHIBRO had NPC allowed it to
participate in the subsequent public bidding. It ruled that This Court has laid down the rule that in the absence of
"PHIBRO would have won the tenders for the supply of stipulation, a winning party may be awarded attorney's
about 960,000 metric tons out of at least 1,200,000 metric fees only in case plaintiff's action or defendant's stand is
tons" from the public bidding of December 1987 to 1990. so untenable as to amount to gross and evident bad
We find this to be erroneous. Basic is the rule that to faith. This cannot be said of the case at bar. NPC is
recover actual damages, the amount of loss must not only justified in resisting PHIBRO's claim for damages. As a
be capable of proof but must actually be proven with matter of fact, we partially grant the prayer of NPC as we
reasonable degree of certainty, premised upon competent find that it did not act in bad faith in disapproving
proof or best evidence obtainable of the actual amount PHIBRO's pre-qualification to bid.
thereof. A court cannot merely rely on speculations,
conjectures, or guesswork as to the fact and amount of Trial courts must be reminded that attorney's fees may
damages. Thus, while indemnification for damages shall not be awarded to a party simply because the judgment
comprehend not only the value of the loss suffered, but is favorable to him, for it may amount to imposing a
also that of the profits which the obligee failed to obtain, it premium on the right to redress grievances in court. We
is imperative that the basis of the alleged unearned profits adopt the same policy with respect to the expenses of
is not too speculative and conjectural as to show the litigation. A winning party may be entitled to expenses of
actual damages which may be suffered on a future litigation only where he, by reason of plaintiff's clearly
period. In Pantranco North Express, Inc. v. CA, this Court unjustifiable claims or defendant's unreasonable refusal
denied the plaintiff's claim for actual damages which was to his demands, was compelled to incur said
premised on a contract he was about to negotiate on the expenditures. Evidently, the facts of this case do not
ground that there was still the requisite public bidding to warrant the granting of such litigation expenses to
be complied with. PHIBRO.
The award of moral damages is likewise improper. To At this point, we believe that, in the interest of fairness,
reiterate, NPC did not act in bad faith. Moreover, moral NPC should give PHIBRO another opportunity to
damages are not, as a general rule, granted to a participate in future public bidding. As earlier
corporation. While it is true that besmirched reputation is mentioned, the delay on its part was due to a fortuitous
included in moral damages, it cannot cause mental event.
anguish to a corporation, unlike in the case of a natural
person, for a corporation has no reputation in the sense But before we dispose of this case, we take this occasion
that an individual has, and besides, it is inherently to remind PHIBRO of the indispensability of coal to a
impossible for a corporation to suffer mental coal-fired thermal plant. With the deleterious possible
anguish. In LBC Express, Inc. v. CA, we ruled: "Moral consequences that may result from failure to deliver the
damages are granted in recompense for physical suffering, needed coal, we believe there is greater strain of
mental anguish, fright, serious anxiety, besmirched reputation,
commitment in this kind of obligation.
wounded feelings, moral shock, social humiliation, and similar
injury. A corporation, being an artificial person and having
existence only in legal contemplation, has no feelings, no WHEREFORE, the decision of the CA in CA-G.R. CV No.
emotions, no senses; therefore, it cannot experience physical 126204 dated August 27, 1996 is hereby MODIFIED. The
suffering and mental anguish. Mental suffering can be award, in favor of PHIBRO, of actual, moral and
experienced only by one having a nervous system and it flows exemplary damages, reimbursement for expenses, cost of
litigation and attorney's fees, and costs of suit, is
DELETED.
31 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
SO ORDERED. juridical person, or to blacken the memory of one who is
dead.
G.R. No. 141994. January 17, 2005
xxx
Ruling: A libel is a public and malicious imputation of a
crime, or of a vice or defect, real or imaginary, or any act 7. The station shall be responsible at all times in
or omission, condition, status, or circumstance tending to the supervision of public affairs, public
cause the dishonor, discredit, or contempt of a natural or issues and commentary programs so that
32 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
they conform to the provisions and Moreover, where the broadcast is libelous per se, the
standards of this code. law implies damages. In such a case, evidence of an
honest mistake or the want of character or reputation of
8. It shall be the responsibility of the newscaster, the party libeled goes only in mitigation of
commentator, host and announcer to damages.[46] Neither in such a case is the plaintiff required
protect public interest, general welfare and to introduce evidence of actual damages as a condition
good order in the presentation of public precedent to the recovery of some damages. In this case,
affairs and public issues.[36] the broadcasts are libelousper se. Thus, AMEC is entitled
to moral damages.
The broadcasts fail to meet the standards prescribed However, we find the award of P300,000 moral
in the Radio Code, which lays down the code of ethical damages unreasonable. The record shows that even
conduct governing practitioners in the radio broadcast though the broadcasts were libelous per se, AMEC has not
industry. The Radio Code is a voluntary code of conduct suffered any substantial or material damage to its
imposed by the radio broadcast industry on its own reputation. Therefore, we reduce the award of moral
members. The Radio Code is a public warranty by the damages from P300,000 to P150,000.
radio broadcast industry that radio broadcast
practitioners are subject to a code by which their conduct 2. The award of attorney’s fees is not proper.
are measured for lapses, liability and sanctions.
AMEC failed to justify satisfactorily its claim for
The public has a right to expect and demand that attorney’s fees. AMEC did not adduce evidence to
radio broadcast practitioners live up to the code of warrant the award of attorney’s fees. Moreover, both the
conduct of their profession, just like other professionals. trial and appellate courts failed to explicitly state in their
A professional code of conduct provides the standards for respective decisions the rationale for the award of
determining whether a person has acted justly, honestly attorney’s fees.
and with good faith in the exercise of his rights and
In Inter-Asia Investment Industries, Inc. v. Court of
performance of his duties as required by Article 19 of the
Appeals, we held that:
Civil Code. A professional code of conduct also provides
the standards for determining whether a person who
willfully causes loss or injury to another has acted in a [I]t is an accepted doctrine that the award thereof as an
manner contrary to morals or good customs under Article item of damages is the exception rather than the rule, and
21 of the Civil Code. counsels fees are not to be awarded every time a party
wins a suit. The power of the court to award attorneys
1. FBNI contends that AMEC is not entitled to fees under Article 2208 of the Civil Code demands factual,
moral damages because it is a corporation. legal and equitable justification, without which the award
is a conclusion without a premise, its basis being
A juridical person is generally not entitled to moral
improperly left to speculation and conjecture. In all
damages because, unlike a natural person, it cannot
events, the court must explicitly state in the text of the
experience physical suffering or such sentiments as
decision, and not only in the decretal portion thereof, the
wounded feelings, serious anxiety, mental anguish or
legal reason for the award of attorney’s fees.[51] (Emphasis
moral shock. The Court of Appeals cites Mambulao
supplied) Petition denied.
Lumber Co. v. PNB, et al. to justify the award of moral
damages. However, the Courts statement
G.R. No. L-68138 May 13, 1991
in Mambulao that a corporation may have a good
reputation which, if besmirched, may also be a ground for
the award of moral damages is an obiter dictum. AGUSTIN Y. GO and THE CONSOLIDATED BANK
AND TRUST CORPORATION
Nevertheless, AMECs claim for moral damages falls (Solidbank), petitioners,
under item 7 of Article 2219 of the Civil Code. This vs.
provision expressly authorizes the recovery of moral HONORABLE INTERMEDIATE APPELLATE COURT
damages in cases of libel, slander or any other form of and FLOVERTO JAZMIN, respondents.
defamation. Article 2219(7) does not qualify whether the
plaintiff is a natural or juridical person. Therefore, a The instant petition for review on certiorari questions the
juridical person such as a corporation can validly propriety of the respondent appellate court's award of
complain for libel or any other form of defamation and nominal damages and attorney's fees to private
claim for moral damages. respondent whose name was used by a syndicate in
encashing two U.S. treasury checks at petitioner bank.
33 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
Floverto Jazmin is an American citizen and retired On June 29, 1976 or more than a year later, the two dollar
employee of the United States Federal Government. He cheeks were returned to Solidbank with the notation that
had been a visitor in the Philippines since 1972 residing the amounts were altered.3 Consequently, Go reported
at 34 Maravilla Street, Mangatarem, Pangasinan. the matter to the Philippine Constabulary in Baguio City.
As pensionado of the U.S. government, he received
annuity checks in the amounts of $ 67.00 for disability and On August 3, 1976, Jazmin received radio messages
$ 620.00 for retirement through the Mangatarem post requiring him to appear before the Philippine
office. He used to encash the checks at the Prudential Constabulary headquarters in Benguet on September 7,
Bank branch at Clark Air Base, Pampanga. 1976 for investigation regarding the complaint filed by Go
against him for estafa by passing altered dollar checks.
In January, 1975, Jazmin failed to receive one of the checks Initially, Jazmin was investigated by constabulary officers
on time thus prompting him to inquire from the post in Lingayen, Pangasinan and later, at Camp Holmes, La
offices at Mangatarem and Dagupan City. As the result of Trinidad, Benguet. He was shown xerox copies of U.S.
his inquiries proved unsatisfactory, on March 4, 1975, Government checks Nos. 5-449-076 and 5-448-890
Jazmin wrote the U.S. Civil Service Commission, Bureau payable to the order of Floverto Jasmin in the respective
of Retirement at Washington, D.C. complaining about the amounts of $1,810.00 and $913.40. The latter amount was
delay in receiving his check. Thereafter, he received a actually for only $13.40; while the records do not show
substitute check which he encashed at the Prudential the unaltered amount of the other treasury check.
Bank at Clark Air Base.
Jazmin denied that he was the person whose name
Meanwhile, on April 22, 1975, Agustin Go, in his capacity appeared on the checks; that he received the same and
as branch manager of the then Solidbank (which later that the signature on the indorsement was his. He
became the Consolidated Bank and Trust Corporation) in likewise denied that he opened an account with
Baguio City, allowed a person named "Floverto Jazmin" Solidbank or that he deposited and encashed therein the
to open Savings Account No. BG 5206 by depositing two said checks. Eventually, the investigators found that the
(2) U. S. treasury checks Nos. 5-449-076 and 5-448-890 in person named "Floverto Jazmin" who made the deposit
the respective amounts of $1810.00 and and withdrawal with Solidbank was an impostor.
$913.40 equivalent to the total amount of P 20,565.69,
1
both payable to the order of Floverto Jasmin On September 24, 1976, Jazmin filed with the then Court
of Maranilla St., Mangatarem, Pangasinan and drawn on of First Instance of Pangasinan, Branch II at Lingayen a
the First National City Bank, Manila. complaint against Agustin Y. Go and the Consolidated
Bank and Trust Corporation for moral and exemplary
The savings account was opened in the ordinary course damages in the total amount of P90,000 plus attorney's
of business. Thus, the bank, through its manager Go, fees of P5,000. He alleged therein that Go allowed the
required the depositor to fill up the information sheet for deposit of the dollar checks and the withdrawal of their
new accounts to reflect his personal circumstances. The peso equivalent "without ascertaining the identity of the
depositor indicated therein that he was depositor considering the highly suspicious
Floverto Jazmin with mailing address at Mangatarem, circumstances under which said deposit was made; that
Pangasinan and home address at Maravilla St., instead of taking steps to establish the correct identity of
Mangatarem, Pangasinan; that he was a Filipino citizen the depositor, Go "immediately and recklessly filed (the)
and a security officer of the US Army with the rank of a complaint for estafa through alteration of dollar check"
sergeant bearing AFUS Car No. H-2711659; that he was against him; that Go's complaint was "an act of vicious
married to Milagros Bautista; and that his initial deposit and wanton recklessness and clearly intended for no
was P3,565.35. He wrote CSA No. 138134 under remarks other purpose than to harass and coerce the plaintiff into
or instructions and left blank the spaces under telephone paying the peso equivalent of said dollar checks to the
number, residence certificate/alien certificate of CBTC branch office in Baguio City" so that Go would not
registration/passport, bank and trade performance and be "disciplined by his employer;" that by reason of said
as to who introduced him to the bank.2 The depositor's complaint, he was "compelled to present and submit
signature specimens were also taken. himself" to investigations by the constabulary authorities;
and that he suffered humiliation and embarrassment as a
Thereafter, the deposited checks were sent to the drawee result of the filing of the complaint against him as well as
bank for clearance. Inasmuch as Solidbank did not receive "great inconvenience" on account of his age (he was a
any word from the drawee bank, after three (3) weeks, it septuagenarian) and the distance between his residence
allowed the depositor to withdraw the amount indicated and the constabulary headquarters. He averred that his
in the checks. peace of mind and mental and emotional tranquility as a
34 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
respected citizen of the community would not have Finding that the plaintiff had sufficiently shown that
suffered had Go exercised "a little prudence" in prejudice had been caused to him in the form of mental
ascertaining the identity of the depositor and, for the anguish, moral shock and social humiliation on account
"grossly negligent and reckless act" of its employee, the of the defendants' gross negligence, the court, invoking
defendant CBTC should also be held responsible. 4 Articles 2176, 2217 and 2219 (10) in conjunction with
Article 21 of the Civil Code, ruled in favor of the plaintiff.
In their answer, the defendants contended that the The dispositive portion of the decision states:
plaintiff had no cause of action against them because they
acted in good faith in seeking the "investigative WHEREFORE, this Court finds for plaintiff and
assistance" of the Philippine Constabulary on the that he is entitled to the reliefs prayed for in the
swindling operations against banks by a syndicate which following manner: Defendant Agustin Y. Co and
specialized in the theft, alteration and encashment of the CONSOLIDATED BANK AND TRUST
dollar checks. They contended that contrary to plaintiff s CORPORATION are hereby ordered to pay,
allegations, they verified the signature of the depositor jointly and severally, to the plaintiff the amount
and their tellers conducted an Identity check. As of SIX THOUSAND PESOS (P6,000.00) as moral
counterclaim, they prayed for the award of P100,000 as damages; ONE THOUSAND PESOS (P1,000.00)
compensatory and moral damages; P20,000 as exemplary as attorney's fees and costs of litigation and to
damages; P20,000 as attorney's fees and P5,000 as pay the costs and defendant AGUSTIN Y. Go in
litigation, incidental expenses and costs.5 addition thereto in his sole and personal capacity
to pay the plaintiff the amount of THREE
In its decision of March 27, 19786 the lower court found THOUSAND PESOS (P3,000.00) as exemplary
that Go was negligent in failing to exercise "more care, damages, all with interest at six (6) percent per
caution and vigilance" in accepting the checks for deposit annum until fully paid.
and encashment. It noted that the checks were payable to
the order of Floverto Jasmin, Maranilla St., Mangatarem, SO ORDERED.
Pangasinan and not to Floverto Jazmin, Maravilla St.,
Mangatarem, Pangasinan and that the differences in The defendants appealed to the Court of Appeals. On
name and address should have put Go on guard. It held January 24, 1984, said court (then named Intermediate
that more care should have been exercised by Go in the Appellate Court) rendered a decision7 finding as evident
encashment of the U.S. treasury checks as there was no negligence Go's failure to notice the substantial difference
time limit for returning them for clearing unlike in in the identity of the depositor and the payee in the check,
ordinary checks wherein a two to three-week limit is concluded that Go's negligence in the performance of his
allowed. duties was "the proximate cause why appellant bank was
swindled" and that denouncing the crime to the
Emphasizing that the main thrust of the complaint was constabulary authorities "merely aggravated the
"the failure of the defendants to take steps to ascertain the situation." It ruled that there was a cause of action against
identity of the depositor," the court noted that the the defendants although Jazmin had nothing to do with
depositor was allegedly a security officer while the the alteration of the checks, because he suffered damages
plaintiff was a retiree-pensioner. It considered as due to the negligence of Go. Hence, under Article 2180 of
"reckless" the defendants' filing of the complaint with the the Civil Code, the bank shall be held liable for its
Philippine Constabulary noting that since the article on a manager's negligence.
fake dollar check ring appeared on July 18, 1976 in the
Baguio Midland Courier, it was only on August 24, 1976 The appellate court, however, disallowed the award of
or more than a month after the bank had learned of the moral and exemplary damages and granted nominal
altered checks that it filed the complaint and therefore, it damages instead. It explained thus:
had sufficient time to ascertain the identity of the
depositor. While it is true that denouncing a crime is not
negligence under which a claim for moral
The court also noted that instead of complying with the damages is available, still appellants are liable
Central Bank Circular Letter of January 17, 1973 under the law for nominal damages. The fact that
requesting all banking institutions to report to the Central appellee did not suffer from any loss is of no
Bank all crimes involving their property within 48 hours moment for nominal damages are adjudicated in
from knowledge of the crime, the bank reported the order that a right of the plaintiff, which has been
matter to the Philippine Constabulary. violated or invaded by the defendant, maybe
vindicated or recognized and not for the purpose
35 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
of indemnifying the plaintiff for any loss suffered petitioners' complaint with the Philippine Constabulary.
by him (Article 2221, New Civil Code). These are It was only then that he had to bear the inconvenience of
damages recoverable where a legal right is travelling to Benguet and Lingayen for the investigations
technically violated and must be vindicated as it was only then that he was subjected to
against an invasion that has produced no actual embarrassment for being a suspect in the unauthorized
present loss of any kind, or where there has been alteration of the treasury checks. Hence, it is
a breach of contract and no substantial injury or understandable why petitioners appear to have
actual damages whatsoever have been or can be overlooked the facts antecedent to the filing of the
shown (Elgara vs. Sandijas, 27 Phil. 284). They are complaint to the constabulary authorities and to have put
not intended for indemnification of loss suffered undue emphasis on the appellate court's statement that
but for the vindication or recognition of a right "denouncing a crime is not negligence."
violated or invaded (Ventanilla vs. Centeno, L-
14333, January 28, 1961). And, where the plaintiff Although this Court has consistently held that there
as in the case at bar, the herein appellee has should be no penalty on the right to litigate and that error
established a cause of action, but was not able to alone in the filing of a case be it before the courts or the
adduce evidence showing actual damages then proper police authorities, is not a ground for moral
nominal damages may be recovered (Sia vs. damages,9 we hold that under the peculiar circumstances
Espenilla CA-G.R. Nos. 45200-45201-R, April 21, of this case, private respondent is entitled to an award of
1975). Consequently, since appellee has no right damages.
to claim for moral damages, then he may not
likewise be entitled to exemplary damages Indeed, it would be unjust to overlook the fact that
(Estopa vs. Piansay, No. L-14503, September 30, petitioners' negligence was the root of all the
1960). Considering that he had to defend himself inconvenience and embarrassment experienced by the
in the criminal charges filed against him, and that private respondent albeit they happened after the filing
he was constrained to file the instant case, the of the complaint with the constabulary authorities.
attorney's fees to be amended (sic) to plaintiff Petitioner Go's negligence in fact led to the swindling of
should be increased to P3,000.00. his employer. Had Go exercised the diligence expected of
him as a bank officer and employee, he would have
Accordingly, the appellate court ordered Go and noticed the glaring disparity between the payee's name
Consolidated Bank and Trust Corporation to pay jointly and address on the treasury checks involved and the
and severally Floverto Jazmin only NOMINAL name and address of the depositor appearing in the
DAMAGES in the sum of Three Thousand Pesos (P bank's records. The situation would have been different if
3,000.00) with interest at six (6%) percent per annum until the treasury checks were tampered with only as to their
fully paid and One Thousand Pesos (P 1,000.00) as amounts because the alteration would have been
attorney's fees and costs of litigation. unnoticeable and hard to detect as the herein altered
check bearing the amount of $ 913.40 shows. But the error
Go and the bank filed a motion for the reconsideration of in the name and address of the payee was very patent and
said decision contending that in view of the finding of the could not have escaped the trained eyes of bank officers
appellate court that "denouncing a crime is not negligence and employees. There is therefore, no other conclusion
under which a claim for moral damages is available," the than that the bank through its employees (including the
award of nominal damages is unjustified as they did not tellers who allegedly conducted an identification check
violate or invade Jazmin's rights. Corollarily, there being on the depositor) was grossly negligent in handling the
no negligence on the part of Go, his employer may not be business transaction herein involved.1âwphi1
held liable for nominal damages.
While at that stage of events private respondent was still
The motion for reconsideration having been denied, Go out of the picture, it definitely was the start of his
and the bank interposed the instant petition for review consequent involvement as his name was illegally used in
on certiorari arguing primarily that the employer bank the illicit transaction. Again, knowing that its viability
may not be held "co-equally liable" to pay nominal depended on the confidence reposed upon it by the
damages in the absence of proof that it was negligent in public, the bank through its employees should have
the selection of and supervision over its employee.8 exercised the caution expected of it.
The facts of this case reveal that damages in the form of In crimes and quasi-delicts, the defendant shall be liable
mental anguish, moral shock and social humiliation were for all damages which are the natural and probable
suffered by private respondent only after the filing of the consequences of the act or omission complained of. It is
36 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
not necessary that such damages have been foreseen or Temperate damages are included within the context of
could have reasonably been foreseen by the compensatory damages. In arriving at a reasonable level
defendant.10 As Go's negligence was the root cause of the of temperate damages to be awarded, trial courts are
complained inconvenience, humiliation and guided by our ruling that there are cases where from the
embarrassment, Go is liable to private respondents for nature of the case, definite proof of pecuniary loss cannot
damages. be offered, although the court is convinced that there has
been such loss.
Anent petitioner bank's claim that it is not "co-equally
liable" with Go for damages, under the fifth paragraph of For instance, injury to one's commercial credit or to the
Article 2180 of the Civil Code, "(E)mployers shall be liable goodwill of a business firm is often hard to show certainty
for the damages caused by their employees . . . acting in terms of money. Should damages be denied for that
within the scope of their assigned tasks." Pursuant to this reason? The judge should be empowered to calculate
provision, the bank is responsible for the acts of its moderate damages in such cases, rather than that the
employee unless there is proof that it exercised the plaintiff should suffer, without redress from the
diligence of a good father of a family to prevent the defendant's wrongful act.
damage.11Hence, the burden of proof lies upon the bank
and it cannot now disclaim liability in view of its own As to the loss or impairment of earning capacity, there is
failure to prove not only that it exercised due diligence to no doubt that Pleno is an entrepreneur and the founder
prevent damage but that it was not negligent in the of his own corporation, the Mayon Ceramics
selection and supervision of its employees. Corporation.
WHEREFORE, the decision of the respondent appellate It appears also that he is an industrious and resourceful
court is hereby affirmed. Costs against the petitioners. person with several projects in line and were it not for the
incident, might have pushed them through. His actual
SO ORDERED. income however has not been sufficiently established so
that this Court cannot award actual damages, but, an
award of temperate or moderate damages may still be
Pleno vs. Court of Appeals| Gutierrez, Jr.
made on loss or impairment of earning capacity. That
G.R. No. L-56505, June 16, 1992 | 161 SCRA 208
Pleno sustained a permanent deformity due to a
FACTS shortened left leg and that he also suffers from double
• Florante de Luna was driving a delivery truck owned vision in his left eye is also established. Because of this, he
by Philippine Paper Products Inc. at great speed along suffers from some inferiority complex and is no longer
South Super Highway in Taguig when he bumped the active in business as well as in social life.
van which was being driven by Maximo Pleno.
[G.R. No. 126524. November 29, 2001.] BPI
• The bump caused Pleno’s van to swerve to the right and INVESTMENT CORPORATION, petitioner, vs. D. G.
crash into a parked truck.
CARREON COMMERCIAL CORPORATION,
DANIEL G. CARREON, AURORA J. CARREON, AND
• As a result, Pleno was hospitalized and his van was
JOSEFA M. JECIEL, respondents.
wrecked.
SYNOPSIS
• Pleno sued and was awarded actual, temperate, moral,
exemplary damages and attorney’s fees by the trial court. On November 15, 1979, respondents placed P318,981.59
in the money market operated by petitioner. The same
• However, the CA reduced the amount of temperate and was to mature on December 17, 1979 at a value of
moral damages given because they were ‘too high’. P323,518.22. On December 12, 1979, it appeared that an
amount of P323,518.22 was also due to respondents but
ISSUES & ARGUMENTS allegedly respondents did not make any money
W/N the CA erred in reducing the amount of temperate
placement maturing on said date. Petitioner claimed that
damages awarded?
there was an error in the posting of dates and petitioner
HOLDING & RATIO DECIDENDI paid respondents twice for a single placement made. As
The CA erred in reducing the award of temperate the amount paid on December 12, 1979 was rolled over
damages. several times, petitioner professed that it made an over-
payment of a total of P410,937.09. There is no sufficient
37 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
evidence to prove that respondents indeed received disregard of his contractual obligation. With the
money in excess of what was due them. Petitioner elimination of award of moral damages, so must the
admitted that the alleged payments made to respondents award of attorney's fees be deleted."
were withdrawals from validly issued commercial papers
5. ID.; ID.; TEMPERATE DAMAGES; WHEN PROPER.
duly verified and signed. The appellate court awarded
— The damages sustained by respondents were due to
respondents moral, compensatory and exemplary
petitioner's fault or negligence, short of gross negligence.
damages, and attorney's fees. The Court, however,
Temperate or moderate damages may be recovered when
deleted them all for lack of basis. Petitioner cannot be
the court finds that some pecuniary loss has been suffered
blamed for the wrongful attachment made by the sheriff
but its amount cannot, from the nature of the case, be
and the death of two of the respondents. At any rate,
proved with certainty. The Court deems it prudent to
respondents are entitled to temperate damages for the
award reasonable temperate damages to respondents
injuries sustained because of petitioner's fault.
under the circumstances.
SYLLABUS
39 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
issued commercial papers (TSN of August 12, 1986, pp. 3- until fully paid; "4. Ordering plaintiff BPI to pay for the
5) for value received (Exhs. 1-B, 2-B up to 11-B) duly costs of the suit. "SO ORDERED" 10 Hence, this appeal.
verified and signed by at least two (2) authorized high 11 Petitioner BPI Investments raises the following issues:
ranking officers of plaintiff's corporation. Again, as 1. Whether there was an over payment of respondents'
correctly stated by defendants, Art. 1431 of the New Civil money market placements. 2. Whether petitioner abused
Code provides that through estoppel an admission or its right in implementing the writ of preliminary
representation is rendered conclusive upon the person attachment; 3. Whether the Court of Appeals awarded
making it, and cannot be denied or disapproved as excessive moral and exemplary damages as well as
against the person relying thereon. Accordingly, plaintiff attorney's fees to respondents; and 4. Whether petitioner
having thus clearly stated in several documents duly was obliged to pay the estate of Josefa Jeceil the amount
signed by its responsible officers cannot now vary their of her money market placement. 12 Petitioner's
contents and claim that they were received without value Submissions First, BPI Investments submits that the
having been received for the same. "Lastly, it is summary of the money market placements and the
incumbent upon plaintiff corporation to provide for checks issued to D. G. Carreon are sufficient to show that
competent employees possessed with adequate skills in one renewal or "roll over" of the money market placement
implementing effective safeguards and measures that dated November 15, 1979, for a period of thirty-two days
ensure the non-occurrence of errors of this nature, it gave rise to two placements maturing on two dates, that
would be gross negligence on the part of plaintiff if it fails is, December 12, 1979 and December 17, 1979. 13 After
to provide for the same considering that it is primarily several roll overs and withdrawals by D. G. Carreon, BPI
engaged in the solicitation of money market placements. Investments discovered that respondent corporation has
"In view of the foregoing, the case is hereby DISMISSED overpaid P410,937.09 since the December 12, 1979
with cost against plaintiff. The attachment previously placement was not funded. BPI Investments stressed that
issued is likewise lifted. "It appearing that plaintiff was in a money market transaction an official receipt must
not motivated by malice in filing this case, the support maturing placements. The December 12, 1979
counterclaim is likewise DISMISSED. "SO ORDERED." placement was unsupported by any fund. 14 Second, a
mistake caused the overpayment in the posting of the
Both parties appealed the above decision to the Court of
maturity date of "12-12" instead of "12-17." The mistake in
Appeals. 9 After due proceedings, on July 19, 1996, the
the posting of the maturity date benefited D. G. Carreon.
Court of Appeals promulgated a decision, the dispositive
And as soon as petitioner discovered the wrong posting,
portion of which reads as follows: "WHEREFORE, the
it immediately wrote D. G. Carreon to inform the latter of
appealed judgment of the trial court dismissing the
the error in the posting of the maturity dates on its money
plaintiff's complaint is hereby AFFIRMED while its
market placements. 15 Third, the manner of execution of
dismissal of the counterclaim of defendants is
the writ of attachment is not the fault of BPI Investments.
REVERSED and SET ASIDE and judgment is hereby
The sheriff of the trial court implemented the writ. The
rendered as follows: "1. Ordering plaintiff BPI to pay the
only participation BPI Investments had in the process was
following amounts of damages: "Moral Damages — "a)
the application for a writ of preliminary attachment. BPI
P1,000,000.00 to the late Daniel G. Carreon or his estate
Investments did not have a hand in its implementation.
represented by Aurora J. Carreon; "b) P1,000,000.00 to
16 Fourth, the Court of Appeals blamed BPI Investments
Aurora J. Carreon; P500,000.00 to the late Josefa M. Jeceil
for the deterioration of the health of two respondents who
or her estate represented by Aurora J. Carreon;
died pendente lite. The award of moral and exemplary
"Compensatory Damages — "P1,500,000.00 to D. G.
damages and attorney's fees in favor of respondents is
Carreon Commercial Corporation; "Exemplary Damages
bereft of factual and legal bases. 17 Petitioner filed the
— P1,000,000.00 to all defendants; "Attorney's Fees
case below to recover the overpayment arising from an
P500,000.00 to all defendants CD Technologies Asia, Inc.
unfunded CD Technologies Asia, Inc. © 2016
© 2016 cdasiaonline.com "2. Ordering plaintiff BPI to pay
cdasiaonline.com placement. The respondents failed to
to the estate of Daniel G. Carreon, represented by Aurora
show proof that the December 12, 1979 placement was
J. Carreon, the money market placement of P109,238.75
different from the December 17, 1979 placement. The
with 12% interest per annum from June 3, 1982 until fully
Court of Appeals ruling that the filing of the case
paid; "3. Ordering plaintiff BPI to pay to the estate of
aggravated and caused the death of respondents Daniel
Josefa M. Jeceil, represented by Aurora J. Carreon, the
Carreon and Josefa Jeceil is completely unfounded and
money market placement in the amount of P73,857.57 at
farfetched. Daniel Carreon, prior to the filing of the case,
12% interest per annum from maturity on July 12, 1982
40 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
was suffering from nasopharyngeal cancer from which he evidence. All the respondents are persons of high
died in 1984. Whereas Josefa Jeceil died from various reputation in the community. Each of them CD
heart ailments in 1987, almost five years since the case Technologies Asia, Inc. © 2016 cdasiaonline.com suffered
was filed. No causal relation whatsoever was established mental anguish, embarrassment and humiliation due to
between the health of the respondents and the filing of the case filed by petitioner and two of them deteriorated
the case. 18 The award of damages in favor of the in their health and died during the pendency of the case.
respondent corporation was also without basis. There As to the compensatory damages awarded to the
was no proof adduced that the credit standing of the corporation, the same is proper. It was proved that D. G.
respondent corporation was affected by the filing of the Carreon is a reputable corporation with good credit
case. There was no proof of bad faith or malice on the part standing in the business community and this reputation
of BPI Investments. What happened was an honest was damaged due to the malicious charges filed by
mistake. 19 Fifth, the order of the Court of Appeals for BPI petitioner. 24 As to the award of exemplary damages, the
Investments to pay the money market placement of Josefa same is not excessive. It must be stressed that the amount
Jeceil was also without basis. The amount of P73,857.57 of P1,000,000.00 was awarded to four respondents. The
was placed and deposited by BPI Investments with the attorney's fees in the amount of P500,000.00 is not
sheriff of the Court of First Instance of Rizal in compliance excessive considering that the case dragged on from 1981
with the order of the court. Respondent Jeceil knew of this up to the present, over fifteen years. 25 As to the order to
fact but she failed to withdraw the amount in the custody pay the long overdue money market placement of the late
of the trial court. 20 Respondents' Position Respondents Josefa Jeceil, petitioner's contention that respondent
submit that the issues raised are factual, hence, not failed to withdraw the amount deposited with the sheriff
reviewable in this case. Only questions of law, distinctly is not correct. First, the deposit does not amount to
set forth, may be raised in a petition for review on payment; indeed, consignation was not proper. Josefa
certiorari, subject to clearly settled exceptions in case law. Jeceil had no right to withdraw such deposit because of
The case at bar does not fall within any of the exceptions. the pending litigation. As a consequence, the Court of
21 BPI Investments was guilty of bad faith, malice and Appeals directed the petitioner to pay the matured
gross negligence in the management of respondent's money market placement of the late Josefa Jeceil. 26 The
money market placements. According to respondents, Court's Ruling After a careful consideration of the facts
this is not a mere case of "misreading" "12-17" as "12-12." and the evidence presented by both parties, we consider
The sloppy accounting and recording of the ledger was a the petition partly meritorious. "There are instances when
clear case of gross negligence in the exercise of the findings of fact of the trial court and/or Court of
petitioner's primary business of accepting money market Appeals may be reviewed by the Supreme Court, such as
placements. BPI Investments was remiss in its duty to (1) when the conclusion is a finding grounded entirely on
treat respondents' money market placements with the speculation, surmises and conjectures; (2) when the
highest degree of care, considering the fiduciary nature of inference made is manifestly mistaken, absurd or
their relationship. 22 The Court of Appeals correctly ruled impossible; (3) where there is a grave abuse of discretion;
that petitioner abused its right in executing the writ of (4) when the judgment is based on a misapprehension of
attachment against respondents. Notwithstanding the facts; (5) when the findings of fact are conflicting; (6)
fact that petitioner's claim amounted only up to when the Court of Appeals, in making its findings, went
P410,937.09, petitioner caused the levy on property of beyond the issues of the case and the same is contrary to
respondents valued at more than P40,000,000.00, in a the admissions of both appellant and appellee; (7) when
harsh, unjust, inhuman and oppressive manner. This the findings are contrary to those of the trial court; (8)
constitutes an abuse that justifies the award of damages when the findings of fact are conclusions without citation
to the respondents. Articles 19, 20 and 21 of the Civil Code of specific evidence on which they are based; (9) when the
constitute the legal basis for the award of damages to facts set forth in the petition as well as in the petitioners'
respondents. 23 As to the alleged excessive award of main and reply briefs are not disputed by the
moral and exemplary damages as well as attorney's fees, respondents; and (10) the findings of fact of the Court of
respondents submit that the same is supported by proofs. Appeals are premised on the supposed absence of
As to the moral damages awarded to Daniel G. Carreon evidence and contradicted by the evidence on record." 27
and Aurora J. Carreon, both in the amount of In the case at bar, the Court of Appeals committed errors
P1,000,000.00, and to Josefa M. Jeceil in the amount of in the apprehension of the facts of the case, hence, we
P500,000.00, the awards are reasonable and supported by review its findings of facts. We find petitioner not guilty
41 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
of gross negligence in the handling of the money market for payment of the money market placement of Josefa
placement of respondents. "Gross negligence implies a Jeceil, the trial court may release the deposited amount of
want or absence of or failure to exercise slight care or P73,857.57 to petitioner as the consignation was not
diligence, or the entire absence of care. It evinces a proper or warranted. The Fallo IN VIEW WHEREOF, the
thoughtless disregard of consequences without exerting decision of the Court of Appeals is hereby AFFIRMED
any effort to avoid them." 28 However, while petitioner with MODIFICATION. The award of moral,
BPI Investments may not be guilty of gross negligence, it compensatory and exemplary damages and attorney's
failed to prove by clear and convincing evidence that D. fees are deleted. BPI Investments is ordered to pay to the
G. Carreon indeed received money in excess of what was estate of Daniel G. Carreon and Aurora J. Carreon the
due them. "The alleged payments in the complaint were money market placement of P109,238.75, with legal
admitted by plaintiff itself to be withdrawals from validly interest of twelve (12%) percent per annum from June 3,
issued commercial papers, duly verified and signed by at 1982, until fully paid; to pay the estate of Josefa M. Jeceil,
least two authorized high-ranking officers of BPI the money market placement in the amount of P73,857.57,
Investments." 29 The law on exemplary damages is found with legal interest at twelve (12%) percent per annum
in Section 5, Chapter 3, Title XVIII, Book IV of the Civil from maturity on July 12, 1982, until fully paid. The
Code. These are imposed by way of example or correction petitioner may withdraw its deposit from the lower court
for the public good, in CD Technologies Asia, Inc. © 2016 at its peril. BPI Investments is likewise ordered to pay
cdasiaonline.com addition to moral, temperate, temperate damages to the estate of the late Daniel G.
liquidated, or compensatory damages. They are Carreon in the amount of P300,000.00, and to the estate of
recoverable in criminal cases as part of the civil liability Aurora J. Carreon in the amount of P300,000.00, and to
when the crime was committed with one or more the estate of Josefa M. Jeceil in the amount of P150,000.00.
aggravating circumstances; in quasi-delicts, if the No costs. SO ORDERED.
defendant acted with gross negligence; and in contracts
[G.R. No. 135644. September 17, 2001] GOVERNMENT
and quasi-contracts, if the defendant acted in a wanton,
SERVICE INSURANCE SYSTEM, petitioner, vs.
fraudulent, reckless, oppressive, or malevolent manner.
SPOUSES GONZALO and MATILDE LABUNG-
30 BPI Investments did not act in a wanton, fraudulent,
DEANG, respondents.
reckless, oppressive, or malevolent manner, when it
asked for preliminary attachment. It was just exercising a The petitioner in the case is the Government Service
legal option. The sheriff of the issuing court did the Insurance System (hereafter, GSIS). Having lost the case
execution and the attachment. Hence, BPI Investments is in the trial court and the Court of Appeals, it now comes
not to be blamed for the excessive and wrongful to this Court for redress.
attachment. As to the finding of the appellate court that At the onset, we state that the issue is not suability
the filing of the case aggravated and eventually caused or whether GSIS may be sued despite the doctrine of state
the death of two of the respondents, we agree with the immunity from suit, but liability, whether or not GSIS
petitioner that such correlation is bereft of basis and is far may be liable to pay damages to respondent spouses
fetched. The award of moral damages and attorney's fees given the applicable law and the circumstances of the
is also not in keeping with existing jurisprudence. Moral case.[1]
damages may be awarded in a breach of contract when
the defendant acted in bad faith, or was guilty of gross
negligence amounting to bad faith, or in wanton The Case
disregard of his contractual obligation. Finally, with the
elimination of award of moral damages, so must the
The case is a petition[2] for review on certiorari of the
award of attorney's fees be deleted. 31 There is no doubt,
decision of the Court of Appeals[3] affirming the decision
however, that the damages sustained by respondents
of the Regional Trial Court, Angeles City[4] ordering GSIS
were due to petitioner's fault or negligence, short of gross to pay respondents Gonzalo (now deceased) [5] and
negligence. Temperate or moderate damages may be Matilde Labung-Deang (hereafter, spouses Deang)
recovered when the court finds that some pecuniary loss temperate damages, attorneys fees, legal interests and
has been suffered but its amount cannot, from the nature costs of suit for the loss of their title to real property
of the case, be proved with certainty. 32 The Court deems mortgaged to the GSIS.
it prudent to award reasonable temperate damages to
respondents under the circumstances. 33 As to the claim
42 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
The Facts audit and post-audit procedures to verify if the spouses
Deangs account had been fully settled.[18]
Sometime in December 1969, the spouses Deang On July 31, 1995, the trial court rendered a decision
obtained a housing loan from the GSIS in the amount of ruling for the spouses Deang. The trial court reasoned
eight thousand five hundred pesos (P8,500.00). Under the that the loss of the owners duplicate copy of the title in
agreement, the loan was to mature on December 23, the possession of GSIS as security for the mortgage...
1979. The loan was secured by a real estate mortgage without justifiable cause constitutes negligence on the
constituted over the spouses property covered by part of the employee of GSIS who lost it, making GSIS
Transfer Certificate of Title No. 14926-R issued by the liable for damages.[19] We quote the dispositive portion of
Register of Deeds of Pampanga.[6] As required by the the decision:[20]
mortgage deed, the spouses Daeng deposited the owners
duplicate copy of the title with the GSIS.[7] IN VIEW OF THE FOREGOING, the Court renders
judgment ordering the GSIS:
On January 19, 1979, eleven (11) months before the
maturity of the loan, the spouses Deang settled their debt
a) To pay the plaintiffs-spouses the amount of
with the GSIS[8] and requested for the release of the
P20,000.00 as temperate damages;
owners duplicate copy of the title since they intended to
secure a loan from a private lender and use the land b) To pay plaintiffs-spouses the amount of
covered by it as collateral security for the loan of fifty P15,000.00 as attorneys fees;
thousand pesos (P50,000.00)[9] which they applied for
with one Milagros Runes.[10] They would use the c) To pay legal interest on the award in
proceeds of the loan applied for the renovation of the paragraphs a) and b) from the filing of the
spouses residential house and for business.[11] complaint; and,
However, personnel of the GSIS were not able to d) To pay cost of the suit.
release the owners duplicate of the title as it could not be
found despite diligent search.[12] As stated earlier, the SO ORDERED.
spouses as mortgagors deposited the owners duplicate
copy of the title with the GSIS located at its office in San On August 30, 1995, GSIS appealed the decision to
Fernando, Pampanga.[13] the Court of Appeals.[21]
Satisfied that the owners duplicate copy of the title On September 21, 1998, the Court of Appeals
was really lost, in 1979, GSIS commenced the promulgated a decision affirming the appealed
reconstitution proceedings with the Court of First judgment, ruling: First, since government owned and
Instance of Pampanga for the issuance of a new owners controlled corporations (hereafter, GOCCs) whose
copy of the same.[14] charters provide that they can sue and be sued have a
legal personality separate and distinct from the
On June 22, 1979, GSIS issued a certificate of release government, GSIS is not covered by Article 2180[22] of the
of mortgage.[15] Civil Code, and it is liable for damages caused by their
On June 26, 1979, after the completion of judicial employees acting within the scope of their assigned
proceedings, GSIS finally secured and released the tasks. Second, the GSIS is liable to pay a reasonable
reconstituted copy of the owners duplicate of Transfer amount of damages and attorneys fees, which the
Certificate of Title No. 14926-R to the spouses Deang.[16] appellate court will not disturb. We quote the dispositive
portion:[23]
On July 6, 1979, the spouses Deang filed with the
Court of First Instance, Angeles City a complaint against WHEREFORE, finding no reversible error in the appealed
GSIS for damages, claiming that as result of the delay in judgment, the same is hereby AFFIRMED.
releasing the duplicate copy of the owners title, they were
unable to secure a loan from Milagros Runes, the
SO ORDERED. Hence, this appeal.[24]
proceeds of which could have been used in defraying the
estimated cost of the renovation of their residential house
The Issue
and which could have been invested in some profitable
business undertaking.[17]
Whether the GSIS, as a GOCC primarily performing
In its defense, GSIS explained that the owners governmental functions, is liable for a negligent act of its
duplicate copy of the title was released within a employee acting within the scope of his assigned tasks.[25]
reasonable time since it had to conduct standard pre-
43 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
The Courts Ruling copy of the title immediately. This insistence is not
warranted. Negligence is obvious as the owners duplicate
copy could not be returned to the owners. Thus, the more
We rule that the GSIS is liable for damages. We deny applicable provisions of the Civil Code are:
the petition for lack of merit.
GSIS, citing the sixth paragraph of Article 2180 of the Article 1170. Those who in the performance of their
Civil Code argues that as a GOCC, it falls within the term obligations are guilty of fraud, negligence, or delay and
State and cannot be held vicariously liable for negligence those who in any manner contravene the tenor thereof are
committed by its employee acting within his functions.[26] liable for damages.
Article 2180. The obligation imposed by Article 2176 is Article 2201. In contracts and quasi-contracts, the
demandable not only for ones own acts or omissions, but damages for which the obligor who acted in good faith is
also for those of persons for whom one is responsible. liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which
xxx the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted xxx.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope Since good faith is presumed and bad faith is a
of their assigned tasks, even though the former are not matter of fact which should be proved, [29] we shall treat
engaged in any business of industry. GSIS as a party who defaulted in its obligation to return
the owners duplicate copy of the title. As an obligor in
good faith, GSIS is liable for all the natural and probable
The State is responsible in like manner when it acts
consequences of the breach of the obligation. The inability
though a special agent, but not when the damage has
of the spouses Deang to secure another loan and the
been caused by the official to whom the task was done
damages they suffered thereby has its roots in the failure
properly pertains, in which case what is provided in
of the GSIS to return the owners duplicate copy of the
Article 2176 shall be applicable.
title.
xxx (underscoring ours) We come now to the amount of damages. In a breach
of contract, moral damages are not awarded if the
The argument is untenable. The cited provision of defendant is not shown to have acted fraudulently or
the Civil Code is not applicable to the case at with malice or bad faith.[30] The fact that the complainant
bar. However, the trial court and the Court of Appeals suffered economic hardship[31] or worries and mental
erred in citing it as the applicable law. Nonetheless, the anxiety[32] is not enough.
conclusion is the same. As heretofore stated, we find that
There is likewise no factual basis for an award of
GSIS is liable for damages.
actual damages. Actual damages to be compensable must
The trial court and the Court of Appeals treated the be proven by clear evidence.[33] A court can not rely on
obligation of GSIS as one springing from quasi- speculation, conjecture or guess work as to the fact and
delict.[27] We do not agree. Article 2176 of the Civil Code amount of damages, but must depend on actual proof. [34]
defines quasi-delict as follows:
However, it is also apparent that the spouses Deang
suffered financial damage because of the loss of the
Whoever by act or omission causes damages to another, owners duplicate copy of the title. Temperate damages
there being fault or negligence, is obliged to pay for the may be granted.
damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called
Article 2224. Temperate or moderate damages, which are
a quasi-delict and is governed by the provisions of this
more than nominal but less than compensatory damages,
Chapter (underscoring ours).
may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot,
Under the facts, there was a pre-existing contract from the nature of the case, be proved with certainty.
between the parties. GSIS and the spouses Deang had a
loan agreement secured by a real estate mortgage. The
GSIS submits that there must be proof of pecuniary
duty to return the owners duplicate copy of title arose as
loss. This is untenable. The rationale behind temperate
soon as the mortgage was released.[28]GSIS insists that it
damages is precisely that from the nature of the case,
was under no obligation to return the owners duplicate
definite proof of pecuniary loss cannot be offered. When
44 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
the court is convinced that there has been such loss, the CONTRARY TO LAW, with the presence of the
judge is empowered to calculate moderate damages, qualifying circumstance of treachery and generic
rather than let the complainant suffer without redress aggravating circumstance of abuse of superior strength.[1]
from the defendants wrongful act.[35]
Arraigned on May 21, 1996, accused Jimena, assisted
The award of twenty thousand pesos (P20,000.00) in
by counsel, entered a plea of not guilty. As accused Alvin
temperate damages is reasonable considering that GSIS
Yrat was then still at large, the case with respect to
spent for the reconstitution of the owners duplicate copy
accused Jimena proceeded to trial with the prosecution
of the title.
presenting Dr. Rachel T. Micarandayo, eyewitnesses
Next, the attorneys fees. Attorneys fees which are Virginia and Violeta Singcay, Allan Garganera, Roger
granted as an item of damages are generally not Rebosura, victims wife, Julia Aca-ac and rebuttal witness
recoverable.[36] The award of attorneys fees is the Avelino Barbajo.
exception rather than the rule and counsels fees are not to
For his part, accused Jimena presented Nercua,
be awarded every time a party wins a suit. The award of
Henry Yabo and Emma Jimena.
attorneys fees demands factual, legal and equitable
justification; its basis cannot be left to speculation or On September 3, 1996, appellant Yrat was
conjecture.[37] arrested. Upon arraignment, with the assistance of
counsel, on September 6, 1996, he also pleaded not
We find no circumstance to justify the award of
guilty. For his defense, appellant adopted all the
attorneys fees. We delete the same.
evidence, both testimonial and documentary, presented
by accused Jimena. He was likewise utilized by accused
Jimena as witness.
The Fallo
The prosecutions case established that on December
27, 1995, on the eve of the town fiesta of Biasong, Lopez
WHEREFORE, we DENY the petition. We AFFIRM Jaena, Misamis Occidental, Benjamin Aca-ac, together
the decision of the Court of Appeals in CA-G.R. CV No. with his wife, Julia and one Father Naron, were in the
51240 with the MODIFICATION that award of attorneys house of Avelino Boy Barbajo. At about 1 oclock that
fees is DELETED. afternoon, appellant, accused Jimena and his wife Emma
arrived. (As Father Naron had another appointment,) the
No costs.
three bade their host goodbye and proceeded to the video
SO ORDERED. house operated by Violeta and Virginia Singcay. At
around 2 oclock, Benjamin returned to Barbajos house
[G.R. No. 130415. October 11, 2001]
and joined appellant and accused Jimena. In the course of
PEOPLE OF THE PHILIPPINES, plaintiff- their conversation, Benjamin and accused Jimena had an
appellee, vs. ALVIN YRAT y BUGAHOD and altercation regarding the local game masiao, or jai-alai,
RAUL JIMENA y POLLESCAS Alias and nearly engaged in a fistfight were it not for the timely
Bobong, accused-appellant. intervention of Barbajo. Appellant was heard saying to
Benjamin, you cannot even reach this New Year. To avoid
For the death of Benjamin Aca-ac, appellants Alvin trouble in his house, Barbajo requested the group to
Yrat and Raul Jimena were charged with the crime of leave,[2] who proceeded to the videoke bar. They saw
murder based on an Information which reads: Julia Aca-ac talking to Violeta Singcay, approached her
and told her that Benjamin is ill-mannered. Appellant
That on or about the 27th day of December, 1995, at about likewise said that you tell your husband that he will not
6:45 oclock in the evening, in barangay Biasong, reach the morning.[3] Thereafter, the two left the
municipality of Lopez Jaena, province of Misamis place. Alarmed by the threats of appellant, Julia left the
Occidental, Philippines, and within the jurisdiction of this videoke bar to warn her husband. Not having seen him,
Honorable Court, the above-named accused, conspiring, she proceeded home.[4]
confederating and helping one another, with intent to kill,
with treachery and with abuse of their superior strength, Between five and six oclock in the evening, appellant
did then and there willfully, unlawfully and feloniously returned to the videoke bar and ordered a bottle of
attack, assault, hit, box and shot one BENJAMIN ACA- beer. Later, accused Jimena and his wife Emma
AC, thereby inflicting upon the latter fatal gunshot arrived. While accused Raul Jimena was looking for a
wounds which caused his immediate death. place to park his motorcycle, Emma approached
appellant and told the latter that Benjamin was following
them.[5] When Benjamin arrived, accused Raul stopped
45 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
the former and talked to him. Benjamin did not alight Bulawins house. At about 5 oclock, they left the house
from the motorcycle.[6] Upon seeing Benjamin, appellant and passed by the videoke bar owned by Virginia
proceeded towards the two men at the same time pulling Singcay. Emma went inside while accused Jimena looked
out a pistol. Walking behind Benjamin, appellant hit him for a place to park his motorcycle. He saw Santos, an ex-
at the right side of the neck with the butt of his barangay captain of Barangay Dampalan. While talking,
gun. Simultaneously, accused Jimena hit Benjamin on the they heard a gun explosion. Accused Jimena looked for
cheek causing the latter to tilt a little backward. At that his wife and then left the place. While the remains of the
instance, appellant Yrat pointed his pistol and fired, but deceased was brought to his house, Julia Aca-ac shouted
the gun did not explode. He then went in front of to accused Jimena who resides nearby, Bong, where is the
Benjamin and fired two more shots hitting him on the man whom you wanted to be killed.[11]
middle portion of his breast and on the face. Benjamin fell
After weighing the evidence presented by the
down, and was pinned by his motorcycle.[7] After the
parties, the trial court rendered a decision the decretal
incident, spouses Jimena left the place while appellant
portion of which reads:
threw the gun towards the bushes and camote
plantation. He went back to the videoke bar and ordered
beer and cigarettes. He warned Virginia not to report to WHEREFORE, finding accused Alvin Yrat, as principal,
the authorities.[8] and Raul Jimena, as an accomplice, guilty beyond
reasonable doubt of the crime of Murder, committed
The body of Benjamin Aca-ac was examined by Dr. without an aggravating or mitigating circumstance
Rachel Micarandayo and was found to have sustained the present and applying the provisions of the Indeterminate
following wounds: Sentence Law as regards Raul Jimena, the Court thereby
sentences accused Alvin Yrat to suffer the penalty of
1. Gunshot wound, entrance, 1 inch in diameter lacerated RECLUSION PERPETUA, and accused Raul Jimena to
in character, left cheek. suffer an indeterminate penalty of imprisonment from
SIX (6) YEARS and ONE (1) DAY of prision mayor as its
2. Gunshot wound, entrance, inch, oval, along the left minimum to FOURTEEN (14) YEARS, EIGHT (8)
sternal line, at the level of the 5th intercostal space. MONTHS and ONE (1) DAY of reclusion temporal as
maximum, both to indemnify jointly and severally the
3. Gunshot wound, exit, inch diameter, everted, at the heirs of Benjamin Aca-ac P50,000.00 as death indemnity,
level of the 7th intercostals space, back, left.[9] P20,000.00 for funeral expenses, P50,000.00 for the loss of
earning capacity of the deceased and P60,000.00 for moral
Appellant Yrat admitted shooting Benjamin but damages and to pay the costs.
claims that he only acted in self-defense. He narrated that
on December 27, 1995, he was invited to the house of Boy SO ORDERED.[12]
Barbajo. Benjamin Aca-ac, who was with them, allegedly
drunk, left the place together with a certain Father Naron Both accused appealed the decision to this Court.
and returned shortly thereafter on a motorcycle with a
On June 10, 1998, accused Raul Jimena filed a motion
policeman. Without any provocation on his part,
to withdraw the appeal which was granted by this Court
Benjamin slapped him. He did not retaliate, instead, he
per Resolution dated September 20, 1999.[13]
left the house and headed for his house in Barangay
Canubay, Oroquieta City. He took his firearm and In his appeal, appellant made a lone assignment of
returned to Lopez Jaena. He proceeded to the videoke bar error-
operated by Violeta Singcay, knowing that Benjamin will
pass by that place. After waiting for about two hours, he THAT THE TRIAL COURT ERRED IN NOT FINDING
saw Benjamin.[10] He approached the latter and asked ACCUSED-APPELLANT GUILTY ONLY OF
why he slapped him. Benjamin allegedly pulled out a gun HOMICIDE.
so he stepped back, drew his firearm and shot Benjamin
twice. Appellant argues that he cannot be sentenced to
Accused Raul Jimena, on the other hand, claimed murder because of the absence of the qualifying
that on December 27, 1995 at about 3 oclock in the circumstance of treachery. He argues that the deceased
afternoon, he, together with his wife, went to Boy Benjamin Aca-ac was shot by him frontally.
Barbajos house in Biasong, Lopez Jaena. From the house We find no cogent reason to reverse the decision of
of Boy Barbajo, they proceeded to the residence of Boy the trial court. The trial court correctly
Bulawin. As the latter was not yet ready to serve them
food, they went home, returned later in the afternoon to
46 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
appreciated aleviosa as having qualified the killing of the sufficient to support the claim for funeral expenses. We
victim to murder. have consistently ruled that only expenses supported by
receipts and which appear to have been actually incurred
Treachery is present when the offender employs
shall be allowed.[21] It is a settled rule that there must be
means, methods, or forms in the execution of the crime
proof that actual or compensatory damages have been
which tend directly and especially to insure its execution
suffered, and evidence of its actual amount. In the present
without risk to himself arising from any defensive or
case, since no receipt was presented to support the claim
retaliatory act which the victim might make.[14] Thus,
for funeral expenses, the same cannot be allowed.[22]
for treachery to be considered, two (2) elements must
concur, to wit: (1) the employment of means of execution In lieu of the aforesaid damages, the heirs of the
that gives the person attacked no opportunity to defend deceased Benjamin Aca-ac should be awarded the
himself or retaliate; and (2) the means of execution were amount of P15,000.00 as temperate damages pursuant to
deliberately or consciously adopted.[15] Article 2224 of the Civil Code which provides that
temperate damages may be recovered when the court
Benjamin Aca-ac was talking to accused Jimena
finds that some pecuniary loss has been suffered, but its
when appellant approached him from behind. With the
amount cannot, from the nature of the case, be proved
butt of his gun, appellant hit Benjamin from
with certainty.[23]
behind. Almost simultaneously, accused Jimena boxed
Benjamin on the face. The latter has not yet recovered We, however, sustain the award of P50,000.00 as civil
from such sudden attack when appellant went in front of indemnity (ex delicto) which requires no proof other than
Benjamin and shot him face to face. Under this situation, the fact of death of the victim and assailants responsibility
Benjamin was not given any time at all to react. The therefor.[24] Article 2206 of the Civil Code provides that
suddenness of the attack made it impossible for him to when death occurs as a result of the crime, the heirs of the
defend himself. He was unarmed and totally defenseless deceased are entitled to be indemnified for the death of
when appellant shot him.[16] Appellant employed means the victim without need of any evidence or proof
of execution which gave Benjamin no opportunity at all thereof. The award of moral damages in the amount of
to defend himself and that the manner of execution was P60,000.00 should also be sustained taking into
deliberately and consciously adapted. While Benjamin consideration the pain and anguish of the victims family.
was assaulted frontally, this does not make such attack
WHEREFORE, the decision of the Regional Trial
less treacherous. Treachery exists even if the attack is
Court of Oroquieta City, Branch 12, is hereby AFFIRMED
frontal if it is sudden and unexpected, giving the victim
with the MODIFICATION that the awards of P50,000.00
no opportunity to repel it or defend himself. What is
for loss of earning capacity of the deceased, and
decisive is that the execution of the attack, without the
P20,000.00 for funeral expenses, be deleted.
slightest provocation from the victim who was unarmed,
made it impossible for the victim to defend himself or to SO ORDERED.
retaliate.[17]
[G.R. No. 159352. April 14, 2004]
Going now to the trial courts award of damages, we
find the award of loss of earning capacity not in order. It
bears stressing that compensation for loss of income is in
the nature of damages and as such requires due proof of PREMIERE DEVELOPMENT BANK, petitioner,
the damages suffered.[18] The prosecution failed to vs. COURT OF APPEALS, PANACOR MARKETING
present evidence to show the deceaseds monthly CORPORATION and ARIZONA TRANSPORT
earnings. What was presented in evidence was only the CORPORATION, respondents.
testimony of the wife that the deceased was earning
P50,000.00. We have held that for lost income due to
death, there must be unbiased proof of the deceaseds
average income. Self-serving, hence, unreliable statement This is a petition for review under Rule 45 of the 1997
is not enough.[19] Rules on Civil Procedure seeking the annulment of the
Decision dated June 18, 2003 of the Court of
The award of P20,000.00 for funeral expenses should
Appeals[1] which affirmed the Decision of the Regional
likewise be deleted in the absence of evidence to prove
Trial Court[2] in Civil Case No. 65577.
the same. To justify a grant of actual damages, it is
necessary to show the amount of actual loss with the best
evidence obtainable.[20] The testimony of Julia Aca-ac that
she spent P20,000.00 for the wake and burial of her The undisputed facts show that on or about October
husband, without presenting any receipts, is not 1994, Panacor Marketing Corporation (Panacor for
47 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
brevity), a newly formed corporation, acquired an (P7,500,000.00) Philippine Currency. The loan shall be
exclusive distributorship of products manufactured by secured by a Real Estate Mortgage over a parcel of land
Colgate Palmolive Philippines, Inc. (Colgate for short). To located at #777 Nueve de Pebrero St. Bo. Mauway,
meet the capital requirements of the exclusive Mandaluyong City, Metro Manila covered by TCT No.
distributorship, which required an initial inventory level 3475 and registered under the name of Arizona Haulers,
of P7.5 million, Panacor applied for a loan of P4.1 million Inc. which is presently mortgaged with your bank.
with Premiere Development Bank. After an extensive
study of Panacors creditworthiness, Premiere Bank The borrowers have authorized IBA FINANCE CORP. to
rejected the loan application and suggested that its pay Premiere Bank from the proceeds of their loan. The
affiliate company, Arizona Transport Corporation disbursement of the loan, however is subject to the
(Arizona for short),[3] should instead apply for the loan on annotation of our mortgage lien on the said property and
condition that the proceeds thereof shall be made final verification that said title is free from any other lien
available to Panacor. Eventually, Panacor was granted a or encumbrance other than that of your company and IBA
P4.1 million credit line as evidenced by a Credit Line Finance Corporation.
Agreement.[4] As suggested, Arizona, which was an
existing loan client, applied for and was granted a loan of In order to register the mortgage, please entrust to us the
P6.1 million, P3.4 million of which would be used to pay- owners duplicate copy of TCT No. 3475, current tax
off its existing loan accounts and the remaining P2.7 declaration, realty tax receipts for the current year and
million as credit line of Panacor. As security for the P6.1 other documents necessary to affect annotation thereof.
million loan, Arizona, represented by its Chief Executive
Officer Pedro Panaligan and spouses Pedro and Marietta Upon registration of our mortgage, we undertake to remit
Panaligan in their personal capacities, executed a Real directly to you or your authorized representative the
Estate Mortgage against a parcel of land covered by TCT amount equivalent to the Borrowers outstanding
No. T-3475 as per Entry No. 49507 dated October 2, indebtedness to Premiere Bank as duly certified by your
1995.[5] goodselves provided such an amount shall not exceed
Since the P2.7 million released by Premiere Bank fell PESOS: SIX MILLION ONLY (P6,000,000.00) and any
short of the P4.1 million credit line which was previously amount in excess of the aforestated shall be for the
approved, Panacor negotiated for a take-out loan with Iba account of the borrowers. It is understood that upon
Finance Corporation (hereinafter referred to as Iba- receipt of payment, you will release to us the
Finance) in the sum of P10 million, P7.5 million of which corresponding cancellation of your mortgage within five
will be released outright in order to take-out the loan (5) banking days therefrom.
from Premiere Bank and the balance of P2.5 million (to
complete the needed capital of P4.1 million with Colgate) If the foregoing terms and conditions are acceptable to
to be released after the cancellation by Premiere of the you, please affix your signature provided below and
collateral mortgage on the property covered by TCT No. furnish us a copy of the Statement of Account of said
T-3475. Pursuant to the said take-out agreement, Iba- borrowers.
Finance was authorized to pay Premiere Bank the prior
existing loan obligations of Arizona in an amount not to On October 12, 1995, Premiere Bank sent a letter-
exceed P6 million. reply[7] to Iba-Finance, informing the latter of its refusal to
turn over the requested documents on the ground
On October 5, 1995, Iba-Finance sent a letter to Ms.
that Arizona had existing unpaid loan obligations and
Arlene R. Martillano, officer-in-charge of Premiere Banks
that it was the banks policy to require full payment of all
San Juan Branch, informing her of the approved loan in
outstanding loan obligations prior to the release of
favor of Panacor and Arizona, and requesting for the
mortgage documents. Thereafter, Premiere Bank issued
release of TCT No. T-3475. Martillano, after reading the
to Iba-Finance a Final Statement of
letter, affixed her signature of conformity thereto and sent
Account[8] showing Arizonas total loan indebtedness.
the original copy to Premiere Banks legal office. The full
On October 19, 1995, Panacor and Arizona executed in
text of the letter reads:[6]
favor of Iba-Finance a promissory note in the amount of
7.5 million. Thereafter, Iba-Finance paid to Premiere Bank
Please be informed that we have approved the loan the amount of P6,235,754.79 representing the full
application of ARIZONA TRANSPORT CORP. and outstanding loan account of Arizona. Despite such
PANACOR MARKETING CORPORATION. Both payment, Premiere Bank still refused to release the
represented by MR. PEDRO P. PANALIGAN (hereinafter requested mortgage documents specifically, the owners
the BORROWERS) in the principal amount of PESOS: duplicate copy of TCT No. T-3475.[9]
SEVEN MILLION FIVE HUNDRED THOUSAND ONLY
48 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
On November 2, 1995, Panacor requested Iba- cancellation of the mortgage constituted
Finance for the immediate approval and release of the thereon;
remaining P2.5 million loan to meet the required monthly
purchases from Colgate. Iba-Finance explained however, 2) Ordering the defendant Premiere Bank to
that the processing of the P2.5 million loan application pay to Intervenor IBA-Finance, the
was conditioned, among others, on the submission of the following sums, to wit:
owners duplicate copy of TCT No. 3475 and the
cancellation by Premiere Bank of Arizonas 3) P1,000,000.00 as and by way of exemplary
mortgage. Occasioned by Premiere Banks adamant damages; and
refusal to release the mortgage cancellation document,
Panacor failed to generate the required capital to meet its 4) P100,000.00 as and for reasonable attorneys
distribution and sales targets. On December 7, 1995, fees; and
Colgate informed Panacor of its decision to terminate
their distribution agreement.
5) Costs of suit.
On March 13, 1996, Panacor and Arizona filed a
complaint for specific performance and damages against For lack of sufficient legal and factual basis, the
Premiere Bank before counterclaim of defendant Premiere Bank is DISMISSED.
the Regional Trial Court of Pasig City, docketed as Civil
Case No. 65577. SO ORDERED.
On June 11, 1996, Iba-Finance filed a complaint-in-
intervention praying that judgment be rendered ordering Premiere Bank appealed to the Court of Appeals
Premiere Bank to pay damages in its favor. contending that the trial court erred in finding, inter alia,
that it had maliciously downgraded the credit-line of
On May 26, 1998, the trial court rendered a decision Panacor from P4.1 million to P2.7 million.
in favor of Panacor and Iba-Finance, the decretal portion
of which reads: In the meantime, a compromise agreement was
entered into between Iba-Finance and Premiere Bank
whereby the latter agreed to return without interest the
WHEREFORE, judgment is hereby rendered in favor of
the plaintiff Panacor Marketing Corporation and against amount of P6,235,754.79 which Iba-Finance earlier
remitted to Premiere Bank to pay off the unpaid loans of
the defendant Premiere Bank, ordering the latter to pay
the former the following sums, namely: Arizona. On March 11, 1999, the compromise agreement
was approved.
1) P4,520,000.00 in addition to legal interest On June 18, 2003, a decision was rendered by the
from the time of filing of the complaint Court of Appeals which affirmed with modification the
until full payment; decision of the trial court, the dispositive portion of which
reads:
2) P1,000,000.00 as and for exemplary damages;
WHEREFORE, premises considered, the present appeal is
3) P100,000.00 as and for reasonable attorneys hereby DISMISSED, and the decision appealed from in
fees; and Civil Case No. 65577 is hereby AFFIRMED with
MODIFICATION in that the award of exemplary
4) Costs of suit. damages in favor of the appellees is hereby reduced to
P500,000.00. Needless to add, in view of the Compromise
Similarly, judgment is hereby rendered in favor of Agreement plaintiff-intervenor IBA-Finance and
plaintiff-in-intervention IBA-Finance Corporation as defendant-appellant PREMIERE between plaintiff-
against defendant Premiere bank, as follows, namely: intervenor IBA-Finance and defendant-appellant
PREMIERE as approved by this Court per Resolution
dated March 11, 1999, Our dispositive of the present
1) Ordering defendant Premiere Bank to release
appeal is only with respect to the liability of appellant
to plaintiff-intervenor IBA-Finance
PREMIERE to the plaintiff-appellees.
Corporation the owners duplicate copy
of Transfer Certificate of Title No. 3475
registered in the name of Arizona With costs against the defendant-appellant.
Haulers, Inc. including the deed of
SO ORDERED.[10]
49 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
Hence the present petition for review, which raises We are not persuaded.
the following issues:[11]
In a letter-agreement[12] dated October 5, 1995, Iba-
I Finance informed Premiere Bank of its approval of
Panacors loan application in the amount of P10 million to
WHETHER OR NOT THE DECISION OF HONORABLE be secured by a real estate mortgage over a parcel of land
COURT OF APPEALS EXCEEDED AND WENT covered by TCT No. T-3475. It was agreed that Premiere
BEYOND THE FACTS, THE ISSUES AND EVIDENCE Bank shall entrust to Iba-Finance the owners duplicate
PRESENTED IN THE APPEAL TAKING INTO copy of TCT No. T-3475 in order to register its mortgage,
CONSIDERATION THE ARGUMENT OF PETITIONER after which Iba-Finance shall pay off Arizonas
BANK AND ADVENT OF THE DULY APPROVED outstanding indebtedness. Accordingly, Iba-Finance
COMPROMISE AGREEMENT BETWEEN THE remitted P6,235,754.79 to Premiere Bank on the
PETITIONER BANK AND IBA FINANCE understanding that said amount represented the full
CORPORATION. payment of Arizonas loan obligations. Despite
performance by Iba-Finance of its end of the bargain,
II Premiere Bank refused to deliver the mortgage
document. As a consequence, Iba-Finance failed to release
WHETHER OR NOT THE ISSUES THAT SHOULD the remaining P2.5 million loan it earlier pledged to
HAVE BEEN RESOLVED BY THE HONORABLE Panacor, which finally led to the revocation of its
COURT OF APPEALS, BY REASON OF THE distributorship agreement with Colgate.
EXISTENCE OF THE COMPROMISE AGREEMENT, IS Undeniably, the not-so-forthright conduct of
LIMITED TO THE ISSUE OF ALLEGED BAD FAITH OF Premiere Bank in its dealings with respondent
PETITIONER BANK IN THE DOWNGRADING OF THE corporations caused damage to Panacor and Iba-
LOAN AND SHOULD NOT INCLUDE THE Finance. It is error for Premiere Bank to assume that the
RENDITION OF AN ADVERSE PRONOUNCEMENT compromise agreement it entered with Iba-Finance
TO AN ALREADY FAIT ACCOMPLI- ISSUE ON THE extinguished all direct and collateral incidents to the
REFUSAL OF THE BANK TO RECOGNIZE THE TAKE- aborted take-out such that it also cancelled its obligations
OUT OF THE LOAN AND THE RELEASE OF TCT NO. to Panacor. The unjustified refusal by Premiere Bank to
3475. release the mortgage document prompted Iba-Finance to
withhold the release of the P2.5 million earmarked for
III Panacor which eventually terminated the distributorship
agreement. Both Iba-Finance and Panacor, which are two
WHETHER OR NOT PETITIONER ACTED IN BAD separate and distinct juridical entities, suffered damages
FAITH IN THE DOWNGRADING OF THE LOAN OF due to the fault of Premiere Bank. Hence, it should be
RESPONDENTS TO SUPPORT AN AWARD OF held liable to each of them.
ACTUAL AND EXEMPLARY DAMAGES NOW
REDUCED TO P500,000.00. While the compromise agreement may have resulted
in the satisfaction of Iba-Finances legal claims, Premiere
Banks liability to Panacor remains. We agree with the
IV
Court of Appeals that the present appeal is only with
respect to the liability of appellant Premiere Bank to the
WHETHER OR NOT THERE IS BASIS OR COMPETENT plaintiffs-appellees (Panacor and Arizona)[13] taking into
PIECE OF EVIDENCE PRESENTED DURING THE account the compromise agreement.
TRIAL TO SUPPORT AN AWARD OF ACTUAL
DAMAGES OF P4,520,000.00. For the foregoing reasons, we find that the Court of
Appeals did not err in discussing in the assailed decision
Firstly, Premiere Bank argues that considering the the abortive take-out and the refusal by Premiere Bank to
compromise agreement it entered with Iba-Finance, the release the cancellation of the mortgage document.
Court of Appeals should have ruled only on the issue of
Secondly, Premiere Bank asserts that it acted in good
its alleged bad faith in downgrading Panacors credit
faith when it downgraded the credit line of Panacor from
line. It further contends that the Court of Appeals should
P4.1 million to P2.7 million. It cites the decision of the trial
have refrained from making any adverse pronouncement
court which, albeit inconsistent with its final disposition,
on the refusal of Premiere Bank to recognize the take-out
expressly recognized that the downgrading of the loan
and its subsequent failure to release the cancellation of the
was not the proximate cause of the damages suffered by
mortgage because they were rendered fait accompli by the
respondents.
compromise agreement.
50 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
Under the Credit Line Agreement[14] dated Neither can Premiere Bank rely on the puerile excuse
September 1995, Premiere Bank agreed to extend a loan that it was the banks policy not to release the mortgage
of P4.1 million to Arizona to be used by its affiliate, cancellation prior to the settlement of outstanding loan
Panacor, in its operations. Eventually, Premiere approved obligations. Needless to say, the Final Statement of
in favor of Arizona a loan equivalent to P6.1 million, P3.4 Account dated October 17, 1995 showing in no uncertain
million of which was allotted for the payment of Arizonas terms Arizonas outstanding indebtedness, which was
existing loan obligations and P2.7 million as credit line of subsequently paid by Iba-Finance, was the full payment
Panacor. Since only P2.7 million was made available to of Arizonas loan obligations. Equity demands that a party
Panacor, instead of P4.1 million as previously approved, cannot disown it previous declaration to the prejudice of
Panacor applied for a P2.5 loan from Iba-Finance, which, the other party who relied reasonably and justifiably on
as earlier mentioned, was not released because of such declaration.
Premiere Banks refusal to issue the mortgage
Thirdly, Premiere Bank avers that the appellate
cancellation.
courts reliance on the credit line agreement as the basis of
It is clear that Premiere Bank deviated from the bad faith on its part was inadmissible or self-serving for
terms of the credit line agreement when it unilaterally not being duly notarized, being unsigned in all of its left
and arbitrarily downgraded the credit line of Panacor margins, and undated. According to Premiere Bank, the
from P4.1 million to P2.7 million. Having entered into a irregularities in the execution of the credit line agreement
well-defined contractual relationship, it is imperative that bolsters the theory that the same was the product of
the parties should honor and adhere to their respective manipulation orchestrated by respondent corporations
rights and obligations thereunder. Law and through undue influence and pressure exerted by its
jurisprudence dictate that obligations arising from officers on Martillano.
contracts have the force of law between the contracting
Premiere Banks posture deserves scant
parties and should be complied with in good faith.[15] The
consideration. As found by the lower court, there are
appellate court correctly observed, and we agree, that:
sufficient indicia that demonstrate that the alleged unjust
pressure exerted on Martillano was more imagined than
Appellants actuations, considering the actual knowledge
real. In her testimony, Martillano claims that she was
of its officers of the tight financial situation of appellee
persuaded and coaxed by Caday of Iba-Finance and
PANACOR brought about primarily by the appellant
Panaligan of Panacor to sign the letter. It was she who
banks considerable reduction of the credit line portion of
provided Iba-Finance with the Final Statement of
the loan, in relation to the bail-out efforts of IBA Finance,
Account and accepted its payment without objection or
whose payment of the outstanding loan account of
qualification. These acts show that she was vested by
appellee ARIZONA with appellant was readily accepted
Premiere Bank with sufficient authority to enter into the
by the appellant, were truly marked by bad faith and lack
said transactions.
of due regard to the urgency of its compliance by
immediately releasing the mortgage cancellation If a private corporation intentionally or negligently
document and delivery of the title to IBA Finance. That clothes its officers or agents with apparent power to
time is of the essence in the requested release of the perform acts for it, the corporation will be estopped to
mortgage cancellation and delivery of the subject title was deny that the apparent authority is real as to innocent
only too well-known to appellant, having only belatedly third persons dealing in good faith with such officers or
invoked the cross-default provision in the Real Estate agents.[17] As testified to by Martillano, after she received
Mortgage executed in its favor by appellee ARIZONA to a copy of the credit line agreement and affixed her
resist the plain valid and just demand of IBA Finance for signature in conformity thereto, she forwarded the same
such compliance by appellant bank.[16] to the legal department of the Bank at its Head
Office. Despite its knowledge, Premiere Bank failed to
Premiere Bank cannot justify its arbitrary act of disaffirm the contract. When the officers or agents of a
downgrading the credit line on the alleged finding by its corporation exceed their powers in entering into contracts
project analyst that the distributorship was not financially or doing other acts, the corporation, when it has
feasible. Notwithstanding the alleged forewarning, knowledge thereof, must promptly disaffirm the contract
Premiere Bank still extended Arizona the loan of P6.1 or act and allow the other party or third persons to act in
million, albeit in contravention of the credit line the belief that it was authorized or has been ratified. If it
agreement. This indubitably indicates that Premiere Bank acquiesces, with knowledge of the facts, or fails to
had deliberately and voluntarily granted the said loan disaffirm, ratification will be implied or else it will be
despite its claim that the distributorship contract was not estopped to deny ratification.[18]
viable.
51 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
Finally, Premiere Bank argues that the finding by the that some pecuniary loss has been suffered but the
appellate court that it was liable for actual damages in the amount cannot, from the nature of the case, be proved
amount of P4,520,000.00 is without basis. It contends that with certainty, temperate damages may be recovered.
the evidence presented by Panacor in support of its claim Temperate damages may be allowed in cases where from
for actual damages are not official receipts but self- the nature of the case, definite proof of pecuniary loss
serving declarations. cannot be adduced, although the court is convinced that
the aggrieved party suffered some pecuniary loss.
To justify an award for actual damages, there must
be competent proof of the actual amount of loss. Credence The Code Commission, in explaining the concept of
can be given only to claims, which are duly supported by temperate damages under Article 2224, makes the
receipts.[19] The burden of proof is on the party who will following comment:[21]
be defeated if no evidence is presented on either side. He
must establish his case by a preponderance of evidence In some States of the American Union, temperate
which means that the evidence, as a whole, adduced by damages are allowed. There are cases where from the
one side is superior to that of the other. In other words, nature of the case, definite proof of pecuniary loss cannot
damages cannot be presumed and courts, in making an be offered, although the court is convinced that there has
award, must point out specific facts that can afford a basis been such loss. For instance, injury to ones commercial
for measuring whatever compensatory or actual damages credit or to the goodwill of a business firm is often hard
are borne. to show with certainty in terms of money. Should
damages be denied for that reason? The judge should be
Under Article 2199 of the Civil Code, actual or
empowered to calculate moderate damages in such cases,
compensatory damages are those awarded in satisfaction
rather than that the plaintiff should suffer, without
of, or in recompense for, loss or injury sustained. They
redress from the defendant's wrongful act.
proceed from a sense of natural justice and are designed
to repair the wrong that has been done, to compensate for
the injury inflicted and not to impose a penalty. It is obvious that the wrongful acts of Premiere Bank
adversely affected, in one way or another, the commercial
In the instant case, the actual damages were proven credit[22] of Panacor, greatly contributed to, if not,
through the sole testimony of Themistocles Ruguero, the decisively caused the premature stoppage of its business
vice president for administration of Panacor. In his operations and the consequent loss of business
testimony, the witness affirmed that Panacor incurred opportunity. Since these losses are not susceptible to
losses, specifically, in terms of training and seminars, pecuniary estimation, temperate damages may be
leasehold acquisition, procurement of vehicles and office awarded. Article 2216 of the Civil Code:
equipment without, however, adducing receipts to
substantiate the same. The documentary evidence No proof of pecuniary loss is necessary in order that
marked as exhibit W, which was an ordinary private moral, nominal, temperate, liquidated or exemplary
writing allegedly itemizing the capital expenditures and damages may be adjudicated. The assessment of such
losses from the failed operation of Panacor, was not damages, except liquidated ones, is left to the discretion
testified to by any witness to ascertain the veracity of its of the Court, according to the circumstances of each case.
contents. Although the lower court fixed the sum of
P4,520,000.00 as the total expenditures incurred by Under the circumstances, the sum of P200,000.00 as
Panacor, it failed to show how and in what manner the temperate damages is reasonable.
same were substantiated by the claimant with reasonable
certainty. Hence, the claim for actual damages should be WHEREFORE, the petition is DENIED. The
admitted with extreme caution since it is only based on Decision dated June 18, 2003 of the Court of Appeals in
bare assertion without support from independent CA-G.R. CV No. 60750, ordering Premiere Bank to pay
evidence. Premieres failure to prove actual expenditure Panacor Marketing Corporation P500,000.00 as
consequently conduces to a failure of its claim. In exemplary damages, P100,000.00 as attorneys fees, and
determining actual damages, the court cannot rely on costs, is AFFIRMED, with the MODIFICATION that the
mere assertions, speculations, conjectures or guesswork award of P4,520,000.00 as actual damages is DELETED
but must depend on competent proof and on the best for lack of factual basis. In lieu thereof, Premiere Bank is
evidence obtainable regarding the actual amount of ordered to pay Panacor P200,000.00 as temperate
loss.[20] damages.
52 | T o r t s a n d D a m a g e s | N I K K I S I A 0 4 1 4 2 0 1 8
G.R. No. L-7991 January 29, 1914 offered to sell his shares of stock to the plaintiff for the
same sum that McCullough was paying them less P1,000,
LEON J. LAMBERT, plaintiff-appellant, the penalty specified in the contract.
vs.
T. J. FOX, defendant-appellee. The learned trial court decided the case in favor of the
defendant upon the ground that the intention of the
This is an action brought to recover a penalty prescribed parties as it appeared from the contract in question was
on a contract as punishment for the breach thereof. to the effect that the agreement should be good and
continue only until the corporation reached a sound
Early in 1911 the firm known as John R. Edgar & Co., financial basis, and that that event having occurred some
engaged in the retail book and stationery business, found time before the expiration of the year mentioned in the
itself in such condition financially that its creditors, contract, the purpose for which the contract was made
including the plaintiff and the defendant, together with and had been fulfilled and the defendant accordingly
many others, agreed to take over the business, discharged of his obligation thereunder. The complaint
incorporate it and accept stock therein in payment of their was dismissed upon the merits.
respective credits. This was done, the plaintiff and the
defendant becoming the two largest stockholders in the It is argued here that the court erred in its construction of
new corporation called John R. Edgar & Co., the contract. We are of the opinion that the contention is
Incorporated. A few days after the incorporation was sound. The intention of parties to a contract must be
completed plaintiff and defendant entered into the determined, in the first instance, from the words of the
following agreement: contract itself. It is to be presumed that persons mean
what they say when they speak plain English.
Whereas the undersigned are, respectively, Interpretation and construction should by the
owners of large amounts of stock in John R. Edgar instruments last resorted to by a court in determining
and Co, Inc; and, what the parties agreed to. Where the language used by
the parties is plain, then construction and interpretation
Whereas it is recognized that the success of said are unnecessary and, if used, result in making a contract
corporation depends, now and for at least one for the parties. (Lizarraga Hermanos vs. Yap Tico, 24 Phil.
year next following, in the larger stockholders Rep., 504.)
retaining their respective interests in the business
of said corporation: In the case cited the court said with reference to the
construction and interpretation of statutes: "As for us, we
Therefore, the undersigned mutually and do not construe or interpret this law. It does not need it.
reciprocally agree not to sell, transfer, or We apply it. By applying the law, we conserve both
otherwise dispose of any part of their present provisions for the benefit of litigants. The first and
holdings of stock in said John R. Edgar & Co. Inc., fundamental duty of courts, in our judgment, is
till after one year from the date hereof. to apply the law. Construction and interpretation come
only after it has been demonstrated that application is
impossible or inadequate without them. They are the very
Either party violating this agreement shall pay to
last functions which a court should exercise. The majority
the other the sum of one thousand (P1,000) pesos
of the law need no interpretation or construction. They
as liquidated damages, unless previous consent
require only application, and if there were more
in writing to such sale, transfer, or other
application and less construction, there would be more
disposition be obtained.
stability in the law, and more people would know what
the law is."
Notwithstanding this contract the defendant Fox on
October 19, 1911, sold his stock in the said corporation to
What we said in that case is equally applicable to
E. C. McCullough of the firm of E. C. McCullough & Co.
contracts between persons. In the case at bar the parties
of Manila, a strong competitor of the said John R. Edgar
expressly stipulated that the contract should last one year.
& Co., Inc.
No reason is shown for saying that it shall last only nine
months. Whatever the object was in specifying the year, it
This sale was made by the defendant against the protest was their agreement that the contract should last a year
of the plaintiff and with the warning that he would be and it was their judgment and conviction that their
held liable under the contract hereinabove set forth and purposes would not be subversed in any less time. What
in accordance with its terms. In fact, the defendant Foz
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reason can give for refusing to follow the plain words of of stock, limiting ourselves to the statement that the
the men who made the contract? We see none. suspension in this particular case is legal and valid.
The appellee urges that the plaintiff cannot recover for the The judgment is reversed, the case remanded with
reason that he did not prove damages, and cites instructions to enter a judgment in favor of the plaintiff
numerous American authorities to the effect that because and against the defendant for P1,000, with interest;
stipulations for liquidated damages are generally in without costs in this instance.
excess of actual damages and so work a hardship upon
the party in default, courts are strongly inclined to treat De Leon v CA | Paras
all such agreements as imposing a penalty and to allow a G.R. No. L-31931 August 31, 1988 |
recovery for actual damages only. He also cites
authorities holding that a penalty, as such, will not be FACTS
enforced and that the party suing, in spite of the penalty • Sps. Briones (Juan Briones and Magdalena Bernardo)
assigned, will be put to his proof to demonstrate the were former registered owners of the fishpond situated at
damages actually suffered by reason of defendants San Roque, Paombong, Bulacan. Said property was
wrongful act or omission. mortgaged twice to secure a loan obtained from, initially
Hermogenes Tantoco but was later on assigned to, Dr.
In this jurisdiction penalties provided in contracts of this Cornelio Tantoco, Hermogenes’ father, in the amounts of
character are enforced . It is the rule that parties who are P20,000 and P68,824 (the later having a 10% interest per
competent to contract may make such agreements within annum). Both mortgages were duly registered in the
the limitations of the law and public policy as they desire, Office of the Register of Deeds of Bulacan and duly
and that the courts will enforce them according to their annotated at the back of the TCT.
terms. (Civil Code, articles 1152, 1153, 1154, and 1155;
Fornow vs. Hoffmeister, 6 Phil. Rep., 33; Palacios vs. • While these two mortgages were still subsisting the Sps.
Municipality of Cavite, 12 Phil. Rep., 140; Gsell vs. Koch, Briones sold the fishpond, which is the subject matter of
16 Phil. Rep., 1.) The only case recognized by the Civil said two mortgages, to plaintiff Sps. De Leon (Fortunato
Code in which the court is authorized to intervene for the de Leon and Juana F. Gonzales de Leon) in the amount of
purpose of reducing a penalty stipulated in the contract P120,000.00. Of the amount of P120,000.00, the Sps.
is when the principal obligation has been partly or Briones actually received only the amount of P31,000.00
irregularly fulfilled and the court can see that the person on June 2, 1959, as the amount of P89,000.00 was withheld
demanding the penalty has received the benefit of such or by the Fortunato de Leon who assumed to answer the
irregular performance. In such case the court is mortgage indebtedness of the Briones to the Tantocos.
authorized to reduce the penalty to the extent of the After the sale Sps. De Leon satisfied the mortgage loan of
benefits received by the party enforcing the penalty. P20,000.00 including 10% interest per annum to
Hermogenes Tantoco who then accordingly executed a
In this jurisdiction, there is no difference between a deed of discharge of mortgage, but the mortgage in favor
penalty and liquidated damages, so far as legal results are of Cornelio S. Tantoco in the amount of P68,824 was not
concerned. Whatever differences exists between them as satisfied. On February 5, 1962 plaintiffs made payment of
a matter of language, they are treated the same legally. In P29,382.50 to the Dr. Cornelio.
either case the party to whom payment is to be made is
entitled to recover the sum stipulated without the • Trying to set the record straight, Dr. Cornelio made the
necessity of proving damages. Indeed one of the primary clarification that the principal obligation of the Briones as
purposes in fixing a penalty or in liquidating damages, is of May 25, 1959 was P68,824.00 and on January 26, 1962
to avoid such necessity. when a letter of demand was sent to them their total
obligation including the agreed interest amounted to
It is also urged by the appelle in this case that the P88,888.98. Hence the above mentioned PNB check will
stipulation in the contract suspending the power to sell be held in abeyance pending remittance of the total
the stock referred to therein is an illegal stipulation, is in obligation after which the necessary document will be
restraint of trade and, therefore, offends public policy. We executed.
do not so regard it. The suspension of the power to sell
has a beneficial purpose, results in the protection of the • On May 8, 1962 the Sps. De Leon filed a complaint with
corporation as well as of the individual parties to the the Court of First Instance of Bulacan against defendant
contract, and is reasonable as to the length of time of the Cornelio S. Tantoco for discharge of mortgage. On May
suspension. We do not here undertake to discuss the 31, 1962 Dr. Cornelio filed his answer with counterclaim
limitations to the power to suspend the right of alienation and third party complaint against the Sps. Briones with
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petition for leave to file third party complaint. He alleged • On the other hand, jurisprudence sets certain conditions
by way of special and affirmative defenses, among others, when exemplary damages may be awarded, to wit: (1)
that the true and real amount of obligation of the Sps. They may be imposed by way of example or correction
Briones is the sum of P68,824.00, Philippine currency, only in addition, among others, to compensatory
with 10% interest secured by a second mortgage in favor damages and cannot be recovered as a matter of right,
of defendant, executed and signed by the Briones spouses their determination depending upon the amount of
on May 26,1959, which deed of second mortgage was compensatory damages that may be awarded to the
duly registered in the Office of the Register of Deeds of claimant; (2) the claimant must first establish his right to
Malolos, Bulacan on May 27, 1959 and properly moral, temperate, liquidated or compensatory damages;
annotated at the back of Transfer Certificate of Title No. and (3) the wrongful act must be accompanied by bad
28296 issued in the names of Juan Briones and Magdalena faith, and the award would be allowed only if the guilty
Bernardo; that the amount of P29,382.50 sent by Sps. party acted in a wanton, fraudulent, reckless, oppressive
DeLeon as alleged counsel of the spouses Juan Briones or malevolant manner.
and Magdalena Bernardo was accepted by Dr. Cornelio
as part payment or partial extinguishment of the • As a lawyer in the practice of law since his admission to
mortgage loan of P68,824.00 with 10% interest thereon per the Bar in 1929, who has held several important positions
annum from May 22, 1959, and Sps. De Leon have been in the government petitioner Fortunato de Leon could not
informed of the tenor of said acceptance and application have missed the import of the annotation at the back of
and, that the latter did not accede to the demand of the TCT regarding the second mortgage for the sum of sixty
former to have the mortgage lien on the property in eight thousand eight hundred twenty-four pesos
question cancelled or discharged because the full amount (P68,824.00) of the property he was buying, in favor of
of the mortgage debt of P68,824.00 plus the 10% interest respondent Cornelio Tantoco. The same annotation was
thereon from May 22, 1959 has not yet been fully paid transferred to the new TCT issued in the name of De Leon
either by the plaintiffs or by the spouses Juan Briones and after the sale of the property was effected and entered in
Magdalena Bernardo. the registry of deeds of Bulacan on June 3, 1959.
Furthermore, Sps. De Leon cannot deny having assumed
• RTC dismissed the complaint and ordered for Sps. De the mortgage debts of the Sps. Briones amounting to
Leon to pay Dr. Cornelio the sum of P64,921.60 with P89,000.00 in favor of the Tantocos. The "Patunay"
interest thereon at 10% per annum from February 5, 1962 executed by the Sps. Briones on June 3, 1959 gives the
until fully paid; payment of the sum of P100,000 as moral information that their property, and fishpond, was sold
and exemplary damages, and further sum of P10,000 as by them to the spouses Fortunato de Leon and Juana F.
attorney’s fees Gonzales for the amount of one hundred twenty
• On appeal, CA affirmed the judgment of trial court with thousand pesos (Pl20,000.00), payment made to them, as
modification respecting the award of moral and follows:
exemplary damages as well as attorney’s fees.
Pinanagutan na aming pagkakautang kay
ISSUES & ARGUMENTS G. Hermogenes Tantoco hanggang Mayo 1959 P 89,000.00
W/N the award of P60,000 in the concept of moral and Cash na tinanggap namin PBC Check No. 57040 11,000.00
exemplary damages is proper? Pagare No. 1 Junio 1, 1959 10,000.00
Pagare No. 2 Junio 1, 1959 10,000.00
HOLDING & RATIO DECIDENDI Kabuuan P 120,000.00
YES. Respondent Court found malice in De Leon's • At the bottom of the "Patunay" in the handwriting of
refusal to satisfy Dr. Tantoco’s lawful claim and in their petitioner Fortunato de Leon is a statement signed by him
subsequent filing of the present case against the latter, signifying that he was assuming the spouses'debt of
and took into consideration the worries and mental P89,000.00 to respondent Tantoco, in the following
anxiety of latter as a result thereof. words:
Ang pagkautang na P89,000.00 sa mga Tantoco ay aking
• Moral damages include physical suffering, mental inaasumihan.
anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation and • The entitlement to moral damages having been
similar injury. Though incapable of pecuniary established the award of exemplary damages is proper.
computation, moral damages may be recovered if they And while the award of moral and exemplary damages
are the proximate result of the defendant's wrongful act in an aggregate amount may not be the usual way of
or omission. awarding said damages there is no question of Dr.
Tantoco's entitlement to moral and exemplary damage.
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The amount should be reduced, however, for being Regional Office and accomplish the necessary papers for
excessive compared to the actual losses sustained by the his reinstatement, but he delayed doing so
aggrieved party. Moral damages though incapable of
pecuniary estimations, are in the category of an award ISSUE: Whether or not petitioner is entitled to his claim
designed to compensate the claimant for actual injury for backwages from the date of his dismissal in 1975 up to
suffered and not to impose a penalty of the wrongdoer. the date of reinstatement and damages.
DIOSDADO OCTOT vs. JOSE R. YBAÑEZ The Court likewise denies petitioner's claim for
moral damages, because if there was any delay in his
G.R.No. L-48643 January 18, 1982
reinstatement, it was attributed to his own fault and
negligence. It is clear that since the separation of
petitioner from the government service had not been
FACTS: Petitioner Diosdado Octot was shown to be in bad faith, an award for damages under the
employed as Security Guard since 1970 and at the time of circumstances would not be just and proper. Neither is it
his separation from the service was receiving a salary of among the cases mentioned in Articles 2219 and 2220 of
P4,632 per annum plus P50.00 per month as cost of living the Civil Code wherein moral damages may be
allowance. In 1975, petitioner was summarily dismissed recovered.
“for being notoriously undesirable” pursuant to P.D. No.
6 and LOI Nos. 14 and 14-A, having been convicted by the
Court of First Instance of the crime of libel, but his appeal
Thus, our jurisprudence sets certain conditions
therefrom was pending in the Court of Appeals.
when exemplary damages may be awarded, as follows:
Believing that his dismissal was illegal, petitioner
First: They may be imposed by way of example or
continued reporting for work the whole month of October
correction only in addition, among others, to
1975 but respondent Regional Director refused to order
compensatory damages, and cannot be recovered as a
the release of his salary for the period and instead ordered
matter of right, their determination depending upon the
that his name be deleted from the office payroll
amount of compensatory damages that may be awarded
When petitioner was acquitted by the Court of to the claimant.
Appeals, and made a request for his reinstatement,
Second: The claimant must first establish his right to
respondents readily took him back and recommended to
moral, temperate, liquidated or compensatory damages.
the authorities concerned his reinstatement.
Third: The wrongful act must be accompanied by bad
Petitioner's papers were likewise favorably acted
faith, 8 and the award would be allowed only if the guilty
upon by the Presidential Executive Assistant but in
party acted in a wanton, fraudulent, reckless, oppressive
returning the papers to the Secretary of Health, attention
or malevolent manner.
was invited to the provision of LOI No. 647, dated
December 27, 1977.
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